<PAGE>
[LOGO OF EXCELSIOR FUNDS APPEARS HERE]
FIXED INCOME
PORTFOLIOS
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
STATEMENTS OF ASSETS AND LIABILITIES...................................... 1
STATEMENTS OF OPERATIONS.................................................. 2
STATEMENTS OF CHANGES IN NET ASSETS....................................... 3
FINANCIAL HIGHLIGHTS--SELECTED PER SHARE DATA AND RATIOS.................. 4
PORTFOLIOS OF INVESTMENTS
Treasury Money Fund...................................................... 6
Government Money Fund.................................................... 7
Money Fund............................................................... 8
Short-Term Government Securities Fund.................................... 9
Intermediate-Term Managed Income Fund.................................... 10
Managed Income Fund...................................................... 11
NOTES TO FINANCIAL STATEMENTS............................................. 12
</TABLE>
For shareholder account information, current price and yield quotations, or to
make an initial purchase or obtain a prospectus, call the appropriate telephone
number listed below:
. INITIAL PURCHASE AND PROSPECTUS INFORMATION AND SHAREHOLDER SERVICES 1-800-
446-1012
. CURRENT PRICE AND YIELD INFORMATION 1-800-233-9180
This report must be preceded or accompanied by a current prospectus.
Prospectuses containing more complete information including charges and
expenses regarding Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc.
may be obtained by contacting the Funds at 1-800-446-1012.
Investors should read the current prospectus carefully prior to investing or
sending money.
Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. are sponsored and
distributed by Edgewood Services, Inc.
You may write to Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. at
the following address:
EXCELSIOR FUNDS, INC.
C/O CHASE GLOBAL FUNDS SERVICES COMPANY
P.O. BOX 2798
BOSTON, MA 02208-2798
SHARES IN THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, UNITED STATES TRUST COMPANY OF NEW YORK, ITS PARENT AND AFFILIATES
AND SHARES ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY. INVESTMENTS IN THE FUNDS INVOLVE
INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. FUND SHARES ARE NOT
INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INTERMEDIATE-
SHORT-TERM TERM
TREASURY GOVERNMENT GOVERNMENT MANAGED MANAGED
MONEY MONEY MONEY SECURITIES INCOME INCOME
FUND FUND FUND FUND FUND FUND
------------ ------------ ------------ ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at cost--
see accompanying
portfolios............ $398,746,390 $542,865,837 $471,305,395 $31,670,320 $84,666,897 $187,785,958
============ ============ ============ =========== =========== ============
Investments, at value
(excluding Repurchase
Agreements) (Note 1).. $398,746,390 $531,352,436 $458,139,049 $31,855,765 $73,871,611 $170,732,812
Repurchase Agreements,
at value.............. -- 11,513,401 13,166,346 -- 11,328,000 17,865,000
Cash................... -- -- 2,340 -- 246 188
Interest receivable.... 4,700,611 152,340 464,161 163,623 847,323 1,746,843
Receivable for fund
shares sold........... -- -- -- 240,114 169,139 509,920
Receivable for
investments sold...... -- -- -- -- -- --
Prepaid expenses....... 4,972 7,330 4,446 596 1,098 2,956
Unamortized
organization costs
(Note 5).............. -- -- -- 1,078 1,078 --
------------ ------------ ------------ ----------- ----------- ------------
TOTAL ASSETS........... 403,451,973 543,025,507 471,776,342 32,261,176 86,218,495 190,857,719
LIABILITIES:
Payable for dividends
declared.............. 1,435,100 2,315,642 1,960,563 109,326 376,977 696,632
Payable for fund shares
redeemed.............. -- -- -- 50,785 24,994 46,309
Investment advisory
fees payable (Note
2).................... 90,095 117,517 91,444 4,375 24,173 100,975
Administration fees
payable
(Note 2).............. 45,738 70,386 55,183 4,003 10,754 24,005
Administrative service
fees payable (Note
2).................... 5,525 15,445 16,988 1,860 3,654 4,387
Directors' fees payable
(Note 2).............. 4,326 6,555 5,652 382 874 2,090
Due to custodian bank.. 28,511,735 421,838 -- -- -- --
Accrued expenses and
other payables........ 30,036 54,125 47,299 15,433 21,952 22,990
------------ ------------ ------------ ----------- ----------- ------------
TOTAL LIABILITIES...... 30,122,555 3,001,508 2,177,129 186,164 463,378 897,388
------------ ------------ ------------ ----------- ----------- ------------
NET ASSETS.............. $373,329,418 $540,023,999 $469,599,213 $32,075,012 $85,755,117 $189,960,331
============ ============ ============ =========== =========== ============
NET ASSETS consist of:
Undistributed
(distributions in
excess of) net
investment income..... $ (55) $ -- $ 180 $ 6,558 $ 2,631 $ 151,806
Accumulated net
realized gain (loss)
on investments........ 15,267 (65,074) (57,655) (407,086) (659,160) (185,006)
Unrealized appreciation
of investments........ -- -- -- 185,445 532,714 811,854
Par value (Note 4)..... 373,314 540,119 469,820 4,588 12,022 21,210
Paid-in capital in
excess of par value... 372,940,892 539,548,954 469,186,868 32,285,507 85,866,910 189,160,467
------------ ------------ ------------ ----------- ----------- ------------
TOTAL NET ASSETS........ $373,329,418 $540,023,999 $469,599,213 $32,075,012 $85,755,117 $189,960,331
============ ============ ============ =========== =========== ============
Shares of Common Stock
Outstanding............ 373,314,108 540,118,926 469,820,476 4,588,443 12,021,899 21,210,605
NET ASSET VALUE PER
SHARE.................. $1.00 $1.00 $1.00 $6.99 $7.13 $8.96
===== ===== ===== ===== ===== =====
</TABLE>
See Notes to Financial Statements
1
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
INTERMEDIATE-
SHORT-TERM TERM
TREASURY GOVERNMENT GOVERNMENT MANAGED MANAGED
MONEY MONEY MONEY SECURITIES INCOME INCOME
FUND FUND FUND FUND FUND FUND
---------- ----------- ----------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income........... $9,806,686 $14,250,042 $13,333,877 $ 922,688 $2,654,590 $ 6,264,634
---------- ----------- ----------- ---------- ---------- -----------
EXPENSES:
Investment advisory fees
(Note 2)................. 551,575 647,703 598,614 46,508 144,053 711,251
Administration fees (Note
2)....................... 281,303 396,394 366,352 23,719 62,972 145,095
Custodian fees............ 49,693 73,382 69,315 6,997 13,476 28,569
Administrative servicing
fees (Note 2)............ 29,475 74,931 104,235 9,561 18,138 21,238
Legal and audit fees...... 25,002 36,595 32,751 2,090 5,405 13,055
Directors' fees and
expenses (Note 2)........ 8,852 13,088 12,031 725 1,971 4,702
Registration and filing
fees..................... 6,082 10,420 11,017 6,706 6,726 5,751
Shareholder reports....... 5,427 7,911 7,209 1,147 2,990 7,102
Shareholder servicing
agent fees............... 4,741 9,109 23,455 3,662 9,646 17,362
Amortization of
organization costs (Note
5)....................... -- -- -- 2,094 2,094 --
Miscellaneous expenses.... 11,047 19,229 12,395 1,715 3,443 7,414
---------- ----------- ----------- ---------- ---------- -----------
TOTAL EXPENSES............ 973,197 1,288,762 1,237,374 104,924 270,914 961,539
Fees waived and reimbursed
by investment adviser and
administrators (Note 2).. (29,475) (74,931) (104,235) (9,561) (18,138) (116,081)
---------- ----------- ----------- ---------- ---------- -----------
NET EXPENSES.............. 943,722 1,213,831 1,133,139 95,363 252,776 845,458
---------- ----------- ----------- ---------- ---------- -----------
NET INVESTMENT INCOME...... 8,862,964 13,036,211 12,200,738 827,325 2,401,814 5,419,176
---------- ----------- ----------- ---------- ---------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(NOTE 1):
Net realized gain (loss)
on
security transactions.... 31,781 (5,362) 12,947 7,261 224,694 4,652,777
Change in unrealized
appreciation/depreciation
of investments........... -- -- -- 268,226 2,880,814 3,032,828
---------- ----------- ----------- ---------- ---------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS............... 31,781 (5,362) 12,947 275,487 3,105,508 7,685,605
---------- ----------- ----------- ---------- ---------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS................ $8,894,745 $13,030,849 $12,213,685 $1,102,812 $5,507,322 $13,104,781
========== =========== =========== ========== ========== ===========
</TABLE>
See Notes to Financial Statements
2
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE-
SHORT-TERM TERM
TREASURY GOVERNMENT GOVERNMENT MANAGED MANAGED
MONEY MONEY MONEY SECURITIES INCOME INCOME
FUND FUND FUND FUND FUND FUND
------------ ------------ ------------ ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
SIX MONTHS ENDED SEPTEMBER
30, 1997 (UNAUDITED)
Net investment income..... $ 8,862,964 $ 13,036,211 $ 12,200,738 $ 827,325 $ 2,401,814 $ 5,419,176
Net realized gain (loss)
on investments........... 31,781 (5,362) 12,947 7,261 224,694 4,652,777
Change in unrealized
appreciation/depreciation
of investments during the
period................... -- -- -- 268,226 2,880,814 3,032,828
------------ ------------ ------------ ----------- ----------- ------------
Net increase in net assets
resulting from
operations............... 8,894,745 13,030,849 12,213,685 1,102,812 5,507,322 13,104,781
Distributions to
shareholders:
From net investment
income.................. (8,862,964) (13,036,211) (12,200,558) (827,421) (2,401,814) (5,419,176)
Increase (decrease) in net
assets from fund share
transactions (Note 4).... 24,210,264 6,195,356 (28,480,081) 995,842 4,208,170 (3,621,442)
------------ ------------ ------------ ----------- ----------- ------------
Net increase (decrease) in
net assets............... 24,242,045 6,189,994 (28,466,954) 1,271,233 7,313,678 4,064,163
NET ASSETS:
Beginning of period...... 349,087,373 533,834,005 498,066,167 30,803,779 78,441,439 185,896,168
------------ ------------ ------------ ----------- ----------- ------------
End of period (1)........ $373,329,418 $540,023,999 $469,599,213 $32,075,012 $85,755,117 $189,960,331
============ ============ ============ =========== =========== ============
--------
(1) Including
undistributed
(distributions in
excess of)
net investment income.. $ (55) $ -- $ 180 $ 6,558 $ 2,631 $ 151,806
============ ============ ============ =========== =========== ============
YEAR ENDED MARCH 31, 1997
Net investment income..... $ 14,144,417 $ 25,698,097 $ 20,072,541 $ 1,540,194 $ 4,272,726 $ 9,936,780
Net realized gain (loss)
on investments........... 22,566 3,043 (3,532) (20,055) (394,734) (1,257,478)
Change in unrealized
appreciation/depreciation
of investments during the
year..................... -- -- -- (201,234) (1,732,379) (1,646,840)
------------ ------------ ------------ ----------- ----------- ------------
Net increase in net assets
resulting from
operations............... 14,166,983 25,701,140 20,069,009 1,318,905 2,145,613 7,032,462
Distributions to
shareholders:
From net investment
income.................. (14,144,362) (25,698,097) (20,072,541) (1,533,540) (4,276,615) (9,852,741)
In excess of net
investment income....... (55) -- -- -- -- --
Increase in net assets
from fund share transac-
tions (Note 4)........... 90,895,420 72,360,696 103,785,017 5,950,622 11,932,322 99,816,809
------------ ------------ ------------ ----------- ----------- ------------
Net increase in net
assets................... 90,917,986 72,363,739 103,781,485 5,735,987 9,801,320 96,996,530
NET ASSETS:
Beginning of year........ 258,169,387 461,470,266 394,284,682 25,067,792 68,640,119 88,899,638
============ ============ ============ =========== =========== ============
End of year (2).......... $349,087,373 $533,834,005 $498,066,167 $30,803,779 $78,441,439 $185,896,168
============ ============ ============ =========== =========== ============
--------
(2) Including
undistributed
(distributions in
excess of)
net investment income.. $ (55) $ -- $ -- $ 6,654 $ 2,631 $ 151,806
============ ============ ============ =========== =========== ============
</TABLE>
See Notes to Financial Statements
3
<PAGE>
EXCELSIOR FUNDS, INC.
FINANCIAL HIGHLIGHTS--SELECTED PER SHARE DATA AND RATIOS
For a Fund share outstanding throughout each period.
<TABLE>
<CAPTION>
DIVIDENDS DISTRIBUTIONS
NET ASSET NET REALIZED TOTAL DIVIDENDS IN EXCESS OF FROM NET
VALUE, NET AND UNREALIZED FROM FROM NET NET REALIZED
BEGINNING INVESTMENT GAIN (LOSS) INVESTMENT INVESTMENT INVESTMENT GAIN ON
OF PERIOD INCOME ON INVESTMENTS OPERATIONS INCOME INCOME INVESTMENTS
--------- ---------- -------------- ---------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
TREASURY MONEY FUND -- (2/13/91*)
Year Ended March 31,
1993................... $1.00 $0.02987 -- $0.02987 $(0.02987) -- $(0.00030)
1994................... 1.00 0.02590 -- 0.02590 (0.02590) -- --
1995................... 1.00 0.04165 -- 0.04165 (0.04165) -- --
1996................... 1.00 0.05043 -- 0.05043 (0.05043) -- --
1997................... 1.00 0.04676 -- 0.04676 (0.04676) -- +++ --
Six Months Ended
September 30, 1997
(Unaudited)........... 1.00 0.02416 -- 0.02416 (0.02416) -- --
GOVERNMENT MONEY FUND -- (5/8/85*)
Year Ended March 31,
1993................... $1.00 $0.03205 -- $0.03205 $(0.03205) -- --
1994................... 1.00 0.02736 -- 0.02736 (0.02736) -- --
1995................... 1.00 0.04397 -- 0.04397 (0.04397) -- --
1996................... 1.00 0.05296 -- 0.05296 (0.05296) -- --
1997................... 1.00 0.04862 -- 0.04862 (0.04862) -- --
Six Months Ended
September 30, 1997
(Unaudited)........... 1.00 0.02522 -- 0.02522 (0.02522) -- --
MONEY FUND -- (5/3/85*)
Year Ended March 31,
1993................... $1.00 $0.03234 -- $0.03234 $(0.03234) -- --
1994................... 1.00 0.02780 -- 0.02780 (0.02780) -- --
1995................... 1.00 0.04494 $0.00002 0.04496 (0.04496) -- --
1996................... 1.00 0.05336 -- 0.05336 (0.05336) -- --
1997................... 1.00 0.04888 -- 0.04888 (0.04888) -- --
Six Months Ended
September 30, 1997
(Unaudited)........... 1.00 0.02554 -- 0.02554 (0.02554) -- --
SHORT-TERM GOVERNMENT SECURITIES FUND -- (12/31/92*)
Year Ended March 31,
1993................... $7.00 $ 0.06 $ 0.06 $ 0.12 $ (0.06) -- --
1994................... 7.06 0.24 (0.09) 0.15 (0.24) -- $ (0.02)
1995................... 6.93 0.33 (0.04) 0.29 (0.33) -- --
1996................... 6.89 0.40 0.09 0.49 (0.40) -- --
1997................... 6.98 0.38 (0.06) 0.32 (0.37) -- --
Six Months Ended
September 30, 1997
(Unaudited)........... 6.93 0.19 0.06 0.25 (0.19) -- --
INTERMEDIATE-TERM MANAGED INCOME FUND -- (12/31/92*)
Year Ended March 31,
1993................... $7.00 $ 0.08 $ 0.19 $ 0.27 $ (0.08) -- --
1994................... 7.19 0.31 (0.27) 0.04 (0.31) -- --
1995................... 6.83 0.39 (0.07) 0.32 (0.39) -- --
1996................... 6.75 0.43 0.31 0.74 (0.43) -- --
1997................... 7.06 0.41 (0.19) 0.22 (0.41) -- --
Six Months Ended
September 30, 1997
(Unaudited)........... 6.87 0.21 0.26 0.47 (0.21) -- --
MANAGED INCOME FUND -- (1/9/86*)
Year Ended March 31,
1993................... $9.15 $ 0.58 $ 0.79 $ 1.37 $ (0.58) -- $ (0.30)
1994................... 9.64 0.47 (0.26) 0.21 (0.47) -- (0.31)
1995................... 8.57 0.51 (0.18) 0.33 (0.51) -- --
1996................... 8.39 0.55 0.44 0.99 (0.54) -- --
1997................... 8.84 0.51 (0.24) 0.27 (0.51) -- --
Six Months Ended
September 30, 1997
(Unaudited)........... 8.60 0.25 0.36 0.61 (0.25) -- --
</TABLE>
* Commencement of operations.
** Annualized.
*** Not Annualized.
+ Expense ratios before waiver of fees and reimbursement of expenses (if
any) by adviser and administrators.
++ Total return data, for periods prior to March 31, 1997, does not reflect
the sales load payable on purchase of shares. The sales load was
eliminated effective February 14, 1997.
+++ Amount represents less than $0.01 per share.
See Notes to Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
RATIO OF RATIO OF RATIO OF
DISTRIBUTIONS NET GROSS NET
IN EXCESS OF NET ASSET NET ASSETS, OPERATING OPERATING INVESTMENT
NET REALIZED VALUE, END EXPENSES EXPENSES INCOME
GAIN ON TOTAL END TOTAL OF PERIOD TO AVERAGE TO AVERAGE TO AVERAGE
INVESTMENTS DISTRIBUTIONS OF PERIOD RETURN++ (000'S) NET ASSETS NET ASSETS+ NET ASSETS
------------- ------------- --------- -------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
TREASURY MONEY FUND -- (2/13/91*)
Year Ended March 31,
1993................... -- $(0.03017) $1.00 3.06% $ 227,794 0.58% 0.58% 2.97%
1994................... -- (0.02590) 1.00 2.62% 254,683 0.58% 0.58% 2.59%
1995................... -- (0.04165) 1.00 4.25% 196,932 0.55% 0.57% 4.09%
1996................... -- (0.05043) 1.00 5.16% 258,169 0.55% 0.57% 5.03%
1997................... -- (0.04676) 1.00 4.78% 349,087 0.52% 0.54% 4.68%
Six Months Ended
September 30, 1997
(Unaudited)........... -- (0.02416) 1.00 2.44%*** 373,329 0.51%** 0.53%** 4.82%**
GOVERNMENT MONEY FUND -- (5/8/85*)
Year Ended March 31,
1993................... -- $(0.03205) $1.00 3.20% $ 710,491 0.50% 0.50% 3.20%
1994................... -- (0.02736) 1.00 2.77% 1,034,908 0.50% 0.50% 2.74%
1995................... -- (0.04397) 1.00 4.49% 725,774 0.50% 0.53% 4.38%
1996................... -- (0.05296) 1.00 5.43% 461,470 0.50% 0.53% 5.36%
1997................... -- (0.04862) 1.00 4.97% 533,834 0.47% 0.51% 4.86%
Six Months Ended
September 30, 1997
(Unaudited)........... -- (0.02522) 1.00 2.55%*** 540,024 0.47%** 0.50%** 5.03%**
MONEY FUND -- (5/3/85*)
Year Ended March 31,
1993................... -- $(0.03234) $1.00 3.25% $ 784,016 0.51% 0.51% 3.21%
1994................... -- (0.02780) 1.00 2.82% 736,077 0.51% 0.51% 2.78%
1995................... -- (0.04496) 1.00 4.59% 824,578 0.49% 0.52% 4.49%
1996................... -- (0.05336) 1.00 5.47% 394,285 0.50% 0.53% 5.40%
1997................... -- (0.04888) 1.00 5.00% 498,066 0.47% 0.53% 4.89%
Six Months Ended
September 30, 1997
(Unaudited)........... -- (0.02554) 1.00 2.58%*** 469,599 0.47%** 0.52%** 5.10%**
SHORT-TERM GOVERNMENT SECURITIES FUND -- (12/31/92*)
Year Ended March 31,
1993................... -- $ (0.06) $7.06 1.70%*** $ 13,367 0.62%** 0.82%** 3.62%**
1994................... $(0.02) (0.28) 6.93 2.12% 25,233 0.62% 0.65% 3.42%
1995................... -- (0.33) 6.89 4.30% 25,216 0.61% 0.67% 4.80%
1996................... -- (0.40) 6.98 7.27% 25,068 0.61% 0.80% 5.72%
1997................... -- (0.37) 6.93 4.77% 30,804 0.61% 0.70% 5.42%
Six Months Ended
September 30, 1997
(Unaudited)........... -- (0.19) 6.99 3.59%*** 32,075 0.62%** 0.68%** 5.34%**
INTERMEDIATE-TERM MANAGED INCOME FUND -- (12/31/92*)
Year Ended March 31,
1993................... -- $ (0.08) $7.19 3.86%*** $ 19,478 0.72%** 0.98%** 4.69%**
1994................... $(0.09) (0.40) 6.83 0.45% 42,564 0.69% 0.69% 4.31%
1995................... (0.01) (0.40) 6.75 4.95% 47,928 0.66% 0.68% 5.91%
1996................... -- (0.43) 7.06 11.13% 68,640 0.64% 0.68% 6.06%
1997................... -- (0.41) 6.87 3.25% 78,441 0.63% 0.68% 5.91%
Six Months Ended
September 30, 1997
(Unaudited)........... -- (0.21) 7.13 6.85%*** 85,755 0.61%** 0.66%** 5.83%**
MANAGED INCOME FUND -- (1/9/86*)
Year Ended March 31,
1993................... -- $ (0.88) $9.64 15.74% $ 110,620 0.89% 1.04% 6.19%
1994................... $(0.50) (1.28) 8.57 1.73% 110,903 0.90% 1.06% 4.89%
1995................... -- (0.51) 8.39 4.06% 86,024 1.00% 1.12% 6.09%
1996................... -- (0.54) 8.84 11.86% 88,900 0.96% 1.12% 6.09%
1997................... -- (0.51) 8.60 3.17% 185,896 0.90% 1.04% 5.90%
Six Months Ended
September 30, 1997
(Unaudited)........... -- (0.25) 8.96 7.19%*** 189,960 0.89%** 1.01%** 5.71%**
PORTFOLIO FEE
TURNOVER WAIVERS
RATE (NOTE 2)
--------- --------
<C> <C>
TREASURY MONEY FUND -- (2/13/91*)
Year Ended March 31,
1993................... -- --
1994................... -- $0.00001
1995................... -- 0.00019
1996................... -- 0.00021
1997................... -- 0.00026
Six Months Ended
September 30, 1997
(Unaudited)........... -- 0.00008
GOVERNMENT MONEY FUND -- (5/8/85*)
Year Ended March 31,
1993................... -- --
1994................... -- $0.00003
1995................... -- 0.00024
1996................... -- 0.00031
1997................... -- 0.00035
Six Months Ended
September 30, 1997
(Unaudited)........... -- 0.00014
MONEY FUND -- (5/3/85*)
Year Ended March 31,
1993................... -- --
1994................... -- $0.00002
1995................... -- 0.00026
1996................... -- 0.00037
1997................... -- 0.00052
Six Months Ended
September 30, 1997
(Unaudited)........... -- 0.00022
SHORT-TERM GOVERNMENT SECURITIES FUND -- (12/31/92*)
Year Ended March 31,
1993................... 93%** --
1994................... 267% --
1995................... 198% --
1996................... 77% $ 0.01
1997................... 82% 0.01
Six Months Ended
September 30, 1997
(Unaudited)........... 18%** -- +++
INTERMEDIATE-TERM MANAGED INCOME FUND -- (12/31/92*)
Year Ended March 31,
1993................... 66%** $ 0.01
1994................... 385% --
1995................... 682% --
1996................... 129% --
1997................... 129% -- +++
Six Months Ended
September 30, 1997
(Unaudited)........... 125%** -- +++
MANAGED INCOME FUND -- (1/9/86*)
Year Ended March 31,
1993................... 455% $ 0.02
1994................... 459% 0.02
1995................... 492% 0.01
1996................... 165% 0.01
1997................... 238% 0.01
Six Months Ended
September 30, 1997
(Unaudited)........... 801%** 0.01
</TABLE>
* Commencement of operations.
** Annualized.
*** Not Annualized.
+ Expense ratios before waiver of fees and reimbursement of expenses (if
any) by adviser and administrators.
++ Total return data, for periods prior to March 31, 1997, does not reflect
the sales load payable on purchase of shares. The sales load was
eliminated effective February 14, 1997.
+++ Amount represents less than $0.01 per share.
See Notes to Financial Statements
5
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
TREASURY MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL DISCOUNT VALUE
AMOUNT RATE (NOTE 1)
--------- -------- ------------
<C> <S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 105.81%
Federal Home Loan Bank
$120,000,000 10/01/97................................. 5.98% $120,000,000
U.S. Treasury Bills
100,000,000 10/31/97................................. 5.29 100,024,127
175,000,000 12/31/97................................. 5.26 174,989,966
------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (Cost $395,014,093).......... 395,014,093
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ ------------
<C> <S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 1.00%
3,732,297 Dreyfus Government Cash Management Fund
(Cost $3,732,297)........................... $ 3,732,297
------------
TOTAL INVESTMENTS
(Cost $398,746,390*)................................... 106.81% $398,746,390
OTHER ASSETS & LIABILITIES (NET)....................... (6.81) (25,416,972)
------ ------------
NET ASSETS............................................. 100.00% $373,329,418
====== ============
</TABLE>
- --------
*Aggregate cost for Federal tax and book purposes.
See Notes to Financial Statements
6
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
GOVERNMENT MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL DISCOUNT VALUE
AMOUNT RATE (NOTE 1)
--------- -------- ------------
<S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 98.32%
Federal Home Loan Bank
$352,560,000 10/01/97................................. 5.99% $352,560,000
100,000,000 12/24/97................................. 5.42 98,736,500
Federal Home Loan Mortgage Corp.
20,000,000 10/31/97................................. 5.49 19,908,500
Federal National Mortgage Association
40,000,000 11/13/97................................. 5.47 39,738,656
20,000,000 11/14/97................................. 5.26# 19,998,832
------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (Cost $530,942,488).......... 530,942,488
------------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- ------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 2.13%
$11,513,401 Agreement with Fuji Securities Inc., 6.20%
dated 09/30/97, due 10/01/97, to be
repurchased at $11,515,384,
collateralized by $8,640,484 Federal Home
Loan Bank Discount Notes, due 12/26/97,
valued at $8,521,677, and $3,321,402
Federal National Mortgage Association
Discount Notes, due 03/30/98, valued at
$3,230,063
(Cost $11,513,401)....................... $ 11,513,401
------------
<CAPTION>
SHARES
------
<S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 0.08%
409,948 Dreyfus Government Cash Management Fund
(Cost $409,948).......................... 409,948
------------
TOTAL INVESTMENTS
(Cost $542,865,837*)................................... 100.53% $542,865,837
OTHER ASSETS & LIABILITIES (NET)....................... (0.53) (2,841,838)
------ ------------
NET ASSETS............................................. 100.00% $540,023,999
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
# Variable or floating rate securities--rate disclosed is as of September 30,
1997.
See Notes to Financial Statements
7
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL DISCOUNT VALUE
AMOUNT RATE (NOTE 1)
--------- -------- ------------
<S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 28.75%
$135,000,000 Federal Home Loan Bank 10/1/97
(Cost $135,000,000)...................... 5.94% $135,000,000
------------
COMMERCIAL PAPER -- 65.93%
8,364,000 Abbott Laboratories, 10/16/97............ 5.55 8,344,658
American Express Co.,
20,000,000 12/29/97................................. 5.59 20,000,000
20,000,000 12/31/97................................. 5.52 19,720,933
20,000,000 Asset Securitization Corp., 12/5/97...... 5.54 19,799,944
20,000,000 Barclays Bank PLC NY, 6/30/98............ 6.02 19,988,607
15,000,000 Bear Stearns Co., Inc., 2/20/98.......... 5.37# 15,000,000
10,500,000 Campbell Soup Co., 10/30/97.............. 5.55 10,453,056
Dow Jones & Co., Inc.,
5,600,000 10/20/97................................. 5.55 5,583,597
10,000,000 10/24/97................................. 5.55 9,964,542
20,000,000 Dupont Instruments Corp., 10/23/97....... 5.54 19,932,289
20,000,000 General Electric Capital Corp.,
11/21/97................................. 5.58 20,000,000
20,000,000 Goldman, Sachs & Co., 10/24/97........... 5.57 19,928,828
11,000,000 H.J. Heinz Co., 10/28/97................. 5.55 10,954,213
20,000,000 Merrill Lynch & Co., Inc., 11/7/97....... 5.55 19,885,917
20,000,000 Metlife Funding, Inc., 11/5/97........... 5.52 19,892,667
13,000,000 Motorola, Inc., 10/14/97................. 5.55 12,973,946
16,500,000 Northern Illinois Gas Co., 10/14/97...... 5.55 16,466,931
20,000,000 PHH Corp., 12/19/97...................... 5.53 19,757,294
8,832,000 Procter & Gamble Co., 10/17/97........... 5.55 8,810,214
12,250,000 Xerox Corp., 12/4/97..................... 5.51 12,130,004
------------
TOTAL COMMERCIAL PAPER
(Cost $309,587,640)...................... 309,587,640
------------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- ------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 2.80%
$13,166,346 Agreement with Fuji Securities Inc.,
6.20%, dated 09/30/97, due 10/01/97, to be
repurchased at $13,168,614, collateralized
by $9,880,973 Federal Home Loan Bank
Discount Notes, due 12/26/97, valued at
$9,745,109, and $3,798,246 Federal
National Mortgage Association Discount
Notes, due 03/30/98, valued at $3,693,794
(Cost $13,166,346)........................ $ 13,166,346
------------
<CAPTION>
SHARES
------
<S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 2.88%
13,551,409 Dreyfus Government Cash Management Fund
(Cost $13,551,409)........................ 13,551,409
------------
TOTAL INVESTMENTS (Cost $471,305,395*)................. 100.36% $471,305,395
OTHER ASSETS & LIABILITIES (NET)....................... (0.36) (1,706,182)
------ ------------
NET ASSETS............................................. 100.00% $469,599,213
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
# Variable or floating rate securities--rate disclosed is as of September 30,
1997.
See Notes to Financial Statements
8
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
SHORT-TERM GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
PRINCIPAL COUPON VALUE
AMOUNT RATE (NOTE 1)
--------- ------ -----------
<S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 95.53%
Federal Home Loan Bank
$11,725,000 10/01/97.................................... 6.00%+ $11,725,000
Federal National Mortgage Association
1,593,190 04/01/01.................................... 5.50 1,564,688
Private Export Funding
320,000 03/15/01.................................... 5.50 314,733
Student Loan Marketing Association
1,475,000 03/03/98.................................... 7.00 1,483,993
U.S. Treasury Notes
1,000,000 05/15/98.................................... 6.13 1,003,751
2,000,000 02/15/99.................................... 5.00 1,980,626
2,000,000 07/31/99.................................... 5.88 2,001,876
4,055,000 01/31/00.................................... 7.75 4,219,738
6,285,000 08/31/00.................................... 6.25 6,345,889
-----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $30,454,849).......................... 30,640,294
-----------
<CAPTION>
VALUE
SHARES (NOTE 1)
------ -----------
<S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 3.79%
541,359 Dreyfus Government Cash Management Fund......... $ 541,359
674,112 Fidelity U.S. Treasury II Fund.................. 674,112
-----------
TOTAL OTHER SHORT-TERM INVESTMENTS
(Cost $1,215,471)............................... 1,215,471
-----------
TOTAL INVESTMENTS
(Cost $31,670,320*)...................................... 99.32% $31,855,765
OTHER ASSETS & LIABILITIES (NET).......................... 0.68 219,247
------ -----------
NET ASSETS................................................ 100.00% $32,075,012
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Discount Rate.
See Notes to Financial Statements
9
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
INTERMEDIATE-TERM MANAGED INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL COUPON VALUE
AMOUNT RATE (NOTE 1)
--------- ------ -----------
<S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 78.62%
Federal Home Loan
Mortgage Corp.
$ 2,000,000 07/30/07................................... 3.48%# $ 982,888
31,461 Pool #218374, 07/01/02..................... 10.50 33,440
2,000,000 Series 16, Class PH, 04/25/21.............. 6.75 2,012,320
6,000,000 Federal National Mortgage Association,
11/23/01................................... 6.35 6,017,514
Government National Mortgage Association
203,304 Pool #195801, 01/15/17..................... 8.50 212,961
228,102 Pool #195833, 04/15/17..................... 8.50 238,937
158,885 Pool #212760, 04/15/17..................... 8.50 166,432
110,226 Pool #334299, 05/15/23..................... 8.00 114,049
1,733,751 Pool #367412, 11/15/23..................... 6.00 1,653,024
3,735,379 Pool #366379, 12/15/23..................... 6.50 3,656,002
5,007,427 Pool #353454, 05/15/27..................... 7.50 5,096,609
U.S. Treasury Notes
4,000,000 10/31/99................................... 7.50 4,128,752
1,000,000 10/31/01................................... 6.25 1,010,001
3,000,000 06/30/02................................... 6.25 3,029,064
26,000,000 08/15/03................................... 5.75 25,610,026
5,000,000 02/15/06................................... 5.63 4,823,440
1,500,000 10/15/06................................... 6.50 1,532,345
4,500,000 02/15/07................................... 6.25 4,525,317
2,500,000 05/15/07................................... 6.63 2,582,815
-----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $66,853,954)......................... 67,425,936
-----------
CORPORATE BONDS -- 6.35%
2,500,000 Anheuser-Busch Co., Inc., 09/01/05......... 7.00 2,554,930
3,000,000 Ford Motor Credit, 01/09/06................ 6.13 2,888,580
-----------
TOTAL CORPORATE BONDS (Cost $5,482,778).... 5,443,510
-----------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- -----------
<S> <C> <C>
REPURCHASE AGREEMENT -- 13.21%
$11,328,000 Agreement with Fuji Securities Inc., 6.20%,
dated 09/30/97, due 10/01/97, to be
repurchased at $11,329,951, collateralized
by $8,501,346 Federal Home Loan Bank
Discount Notes, due 12/26/97, valued at
$8,384,452, and $3,267,917 Federal National
Mortgage Association Discount Notes, due
03/30/98, valued at $3,178,050
(Cost $11,328,000).......................... $11,328,000
-----------
<CAPTION>
SHARES
------
<S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 1.17%
409,999 Dreyfus Government Cash Management Fund..... 409,999
592,166 Fidelity U.S. Treasury II Fund.............. 592,166
-----------
TOTAL OTHER SHORT-TERM INVESTMENTS
(Cost $1,002,165)........................... 1,002,165
-----------
TOTAL INVESTMENTS
(Cost $84,666,897*)...................................... 99.35% $85,199,611
OTHER ASSETS & LIABILITIES (NET)......................... 0.65 555,506
------ -----------
NET ASSETS............................................... 100.00% $85,755,117
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
# Discount Rate.
See Notes to Financial Statements
10
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1997 (UNAUDITED)
MANAGED INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL COUPON VALUE
AMOUNT RATE (NOTE 1)
--------- ------ ------------
<S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 60.81%
Government National
Mortgage Association
$ 4,969,587 Pool #8988, 10/20/26........................ 5.50% $ 4,947,970
5,780,465 Pool #442541, 05/15/27...................... 7.50 5,883,415
14,925,000 Pool #80094, 07/20/27....................... 6.00 15,036,042
5,391,380 Pool #423090, 08/15/27...................... 7.50 5,487,400
4,950,005 Pool #455474, 08/15/27...................... 7.50 5,038,165
6,930,000 Pool #451459, 09/15/27...................... 7.50 7,053,423
U.S. Treasury Bond
39,000,000 02/15/23.................................... 7.13 42,059,082
U.S. Treasury Notes
5,840,000 08/31/01.................................... 6.50 5,947,678
4,000,000 08/31/02.................................... 6.25 4,038,752
20,000,000 08/15/07.................................... 6.13 20,018,760
------------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $114,968,606)......................... 115,510,687
------------
CORPORATE BONDS -- 21.91%
5,000,000 Amgen, Inc., 04/01/69....................... 8.13 5,504,810
5,000,000 Associates Corp. of North America,
09/27/02.................................... 6.71 5,053,815
5,000,000 Chase Manhattan Corp., 05/01/02............. 8.63 5,432,400
5,000,000 Chrysler Corp., 08/01/2097.................. 7.40 5,044,525
5,000,000 First Union Corp., 11/15/02................. 8.00 5,331,485
9,500,000 General Electric Capital Services,
08/21/35.................................... 7.50 10,225,192
5,000,000 +Goldman Sachs Group, 07/15/02.............. 6.60 5,035,930
------------
TOTAL CORPORATE BONDS (Cost $41,365,392).... 41,628,157
------------
ASSET-BACKED SECURITIES -- 4.74%
8,970,000 IMC Home Equity Loan Trust, Series 1997-5
A5, 06/20/13
(Cost $8,991,023)........................... 6.61 8,998,031
------------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
--------- ------------
<S> <C> <C>
REPURCHASE AGREEMENT -- 9.40%
$17,865,000 Agreement with Fuji Securities Inc., 6.20%,
dated 09/30/97, due 10/01/97, to be
repurchased at $17,868,077, collateralized
by $13,407,180 Federal Home Loan Bank
Discount Notes, due 12/26/97, valued at
$13,222,832, and $5,153,720 Federal
National Mortgage Association Discount
Notes, due 03/30/98, valued at $5,011,993
(Cost $17,865,000)......................... $ 17,865,000
------------
<CAPTION>
SHARES
------
<S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 2.42%
2,297,012 Dreyfus Government Cash Management Fund.... 2,297,012
2,298,925 Fidelity U.S. Treasury II Fund............. 2,298,925
------------
TOTAL OTHER SHORT-TERM INVESTMENTS
(Cost $4,595,937).......................... 4,595,937
------------
TOTAL INVESTMENTS
(Cost $187,785,958*).................................... 99.28% $188,597,812
OTHER ASSETS & LIABILITIES (NET)........................ 0.72 1,362,519
------ ------------
NET ASSETS.............................................. 100.00% $189,960,331
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
1997, these securities amounted to $5,035,930 or 2.65% of net assets.
See Notes to Financial Statements
11
<PAGE>
EXCELSIOR FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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 seventeen managed investment
portfolios, each having its own investment objectives and policies. The
following is a summary of significant accounting policies for Treasury Money
Fund, Government Money Fund, Money Fund, Short-Term Government Securities
Fund, Intermediate-Term Managed Income Fund and Managed Income 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.
("Excelsior Tax-Exempt Fund") are presented separately.
With regard to Treasury Money Fund, Government Money Fund and Money Fund, it
is Excelsior Fund's policy, to the extent possible, to maintain a continuous
net asset value per share of $1.00. Each of these Portfolios has adopted
certain investment portfolio, valuation and dividend distribution policies to
enable it to do so. However, there can be no assurance that the net asset
value per share of these Portfolios will not vary. The net asset values of the
shares in Short-Term Government Securities Fund, Intermediate-Term Managed
Income Fund and Managed Income Fund will fluctuate as the market values of
their portfolio securities change in response to changing market rates of
interest and other factors.
(A) PORTFOLIO VALUATION:
Treasury Money Fund, Government Money Fund and Money Fund: Securities are
valued at amortized cost, which has been determined by the Fund's Board of
Directors to represent the fair value of the Fund's investments. Amortized
cost valuation involves valuing an instrument at its cost initially and,
thereafter, assuming a constant amortization to maturity of any discount or
premium.
Short-Term Government Securities Fund, Intermediate-Term Managed Income
Fund and Managed Income Fund: Investments in securities that are traded on
a recognized stock exchange are valued at the last sale price on the
exchange on which such securities are primarily traded or at the last sale
price on the national securities market. Securities traded over-the-counter
are valued each business day on the basis of closing over-the-counter bid
prices. Securities for which there were no transactions are valued at the
average of the most recent bid prices (as calculated by an independent
pricing service (the "Service") based upon its evaluation of the market for
such securities) when, in the judgment of the Service, quoted bid prices
for securities are readily available and are representative of the bid side
of the market. Short-term debt instruments with remaining maturities of 60
days or less are valued at amortized cost, which approximates market value.
Securities and other assets for which market quotations are not readily
available are valued at fair value pursuant to guidelines adopted by
Excelsior Fund's Board of Directors.
12
<PAGE>
Portfolio securities held by Intermediate-Term Managed Income and Managed
Income Funds which 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 the 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 listed or traded on more than one exchange is valued at the
quotation on the exchange determined to be the primary market for such
security.
Investment 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. For
valuation purposes, quotations of foreign securities in foreign currency
are converted to United States dollars equivalent at the prevailing market
rate on the day of conversion.
(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, adjusted for amortization of premiums and, when
appropriate, discounts on investments, is earned from settlement date and
is recorded on the accrual basis.
(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:
Treasury Money Fund, Government Money Fund and Money Fund: Net investment
income dividends are declared daily and paid monthly. Net realized capital
gains, unless offset by any available capital loss carryforward, are
distributed to shareholders annually or more frequently to maintain a net
asset value of $1.00 per share.
Short-Term Government Securities Fund, Intermediate-Term Managed Income
Fund and Managed Income Fund: Dividends from net investment income are
declared daily and paid monthly. Net realized capital gains, unless offset
by any available capital loss carryforward, are distributed to shareholders
at least annually.
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
deferral of losses on wash sales and post-October losses.
13
<PAGE>
In order to avoid a Federal excise tax, each Portfolio is required to
distribute certain minimum amounts of net realized capital gain and net
investment income for the respective periods ending October 31 and December
31 in each calendar year.
(E) FEDERAL TAXES:
It is the policy of Excelsior Fund that each Portfolio continue to
qualify as a regulated investment company, if such qualification is in the
best interest of the shareholders, by complying with the requirements of
the Internal Revenue Code applicable to regulated investment companies, and
by distributing substantially all of its taxable earnings to its
shareholders.
At March 31, 1997, 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,
-------------------------------------------
2001 2002 2003 2004 2005 TOTAL
------- ------- ---------- ------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Treasury Money Fund..... $ -- $13,000 $ -- $ 4,000 $ -- $ 17,000
Government Money Fund... 10,000 -- 48,000 1,000 -- 59,000
Money Fund.............. 14,000 -- 21,000 20,000 12,000 67,000
Short -Term Government
Securities Fund........ -- -- 393,000 -- 14,000 407,000
Intermediate-Term
Managed Income Fund.... 20,000 2,000 467,000 -- 374,000 863,000
Managed Income Fund..... -- -- 3,291,000 -- 842,000 4,133,000
</TABLE>
At September 30, 1997, aggregate gross unrealized appreciation
(depreciation) for all securities for which there was an excess of value
over tax cost and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value were as
follows:
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------ -------------- --------------
<S> <C> <C> <C>
Treasury Money Fund............. $ -- $ -- $ --
Government Money Fund........... -- -- --
Money Fund...................... -- -- --
Short-Term Government Securities
Fund........................... 211,811 (26,366) 185,445
Intermediate-Term Managed Income
Fund........................... 792,270 (259,556) 532,714
Managed Income Fund............. 927,756 (115,902) 811,854
</TABLE>
(F) EXPENSE ALLOCATION:
Expenses directly attributable to a Portfolio are charged to that
Portfolio. Other expenses are allocated to the respective Portfolios based
on average daily net assets.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND RELATED PARTY TRANSACTIONS
United States Trust Company of New York ("U.S. Trust NY") and U.S. Trust
Company of Connecticut ("U.S. Trust CT" and collectively with U.S. Trust NY,
"U.S. Trust") serve as the investment
14
<PAGE>
advisers to the Portfolios. For the services provided pursuant to the
Investment Advisory Agreements, U.S. Trust is entitled to receive a fee,
computed daily and paid monthly, at the annual rates of .25% of the average
daily net assets of Government Money Fund and Money Fund, .30% of the average
daily net assets of Treasury Money Fund and Short-Term Government Securities
Fund, .35% of the average daily net assets of Intermediate-Term Managed Income
Fund and .75% of the average daily net assets of Managed Income Fund. Prior to
May 15, 1997, U.S. Trust NY served as the Portfolios' investment adviser
pursuant to investment advisory agreements substantially similar to those
currently in effect for the Portfolios. U.S. Trust NY and U.S. Trust CT are
wholly-owned subsidiaries of U.S. Trust Corporation, a registered bank holding
company.
U.S. Trust CT, Chase Global Funds Services Company ("CGFSC"), a subsidiary
of The Chase Manhattan Bank, and Federated Administrative Services ("FAS")
(collectively, the "Administrators") provide administrative services to
Excelsior Fund. For the services provided to the Portfolios, the
Administrators are entitled jointly to annual fees, computed daily and paid
monthly, based on the combined aggregate average daily net assets of Excelsior
Fund, Excelsior Tax-Exempt Fund and Excelsior Institutional Trust (excluding
the international equity portfolios of Excelsior Fund and Excelsior
Institutional Trust) all of which are affiliated investment companies, as
follows: .200% of the first $200 million, .175% of the next $200 million, and
.150% over $400 million. Administration fees payable by each Portfolio of the
three investment companies are determined in proportion to the relative
average daily net assets of the respective Portfolios for the period paid.
Prior to May 15, 1997, U.S. Trust NY, CGFSC and FAS served as the Portfolios'
administrators pursuant to administration agreements substantially similar to
those currently in effect for the Portfolios. For the six months ended
September 30, 1997, Administration fees charged by U.S. Trust CT were as
follows:
<TABLE>
<S> <C>
Treasury Money Fund............................................... $47,445
Government Money Fund............................................. 67,018
Money Fund........................................................ 61,661
Short-Term Government Securities Fund............................. 4,007
Intermediate-Term Managed Income Fund............................. 10,649
Managed Income Fund............................................... 24,499
</TABLE>
From time to time, as they may deem appropriate in their sole discretion, or
pursuant to applicable state expense limitations, U.S. Trust and the
Administrators may undertake to waive a portion or all of the fees payable to
them and also may reimburse the Portfolios for a portion of other expenses. In
addition, until further notice to Excelsior Fund, U.S. Trust intends to
voluntarily waive fees and reimburse expenses to the extent necessary for
Short-Term Government Securities Fund and Intermediate-Term Managed Income
Fund to maintain an annual expense ratio of not more than .62% and .72%,
respectively. For the six-months ended September 30, 1997, no expenses were
reimbursed pursuant to these voluntary actions. In addition, currently, U.S.
Trust is voluntarily limiting its investment advisory fee to .65% of the
average daily net assets for Managed Income Fund. For the six months ended
September 30, 1997, U.S. Trust waived investment advisory fees totaling
$94,843 for Managed Income Fund.
Excelsior Fund has also entered into administrative servicing agreements
with various service organizations (which may include affiliates of U.S.
Trust) requiring them to provide administrative support services to their
customers owning shares of the Portfolios. As a consideration for the
15
<PAGE>
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.
Until further notice to Excelsior Fund, U.S. Trust and the Administrators have
voluntarily agreed to waive investment advisory and administration fees
payable by each Portfolio in an amount equal to the administrative service
fees payable by such Portfolio. For the six months ended September 30, 1997,
U.S. Trust and the Administrators waived investment advisory and
administration fees in amounts equal to the administrative service fees for
the Portfolios as set forth below:
<TABLE>
<CAPTION>
U.S. TRUST ADMINISTRATORS
---------- --------------
<S> <C> <C>
Treasury Money Fund............................. $ 29,475 $--
Government Money Fund........................... 74,879 52
Money Fund...................................... 104,234 1
Short-Term Government Securities Fund........... 9,561 --
Intermediate-Term Managed Income Fund........... 17,981 157
Managed Income Fund............................. 21,144 94
</TABLE>
Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, serves as the sponsor and distributor of Excelsior Fund.
Shares of each Portfolio are sold without a sales charge on a continuous basis
by the Distributor.
Each Director of Excelsior Fund receives an annual fee of $9,000, plus a
meeting fee of $1,500 for each meeting attended, and is reimbursed for
expenses incurred for attending meetings. The Chairman receives an additional
annual fee of $5,000.
3. PURCHASES AND SALES OF SECURITIES:
For the six months ended September 30, 1997, purchases and sales of
securities, excluding short-term investments, for the Portfolios aggregated:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Short-Term Government Securities Fund............. $ 1,995,469 $ 6,597,763
Intermediate-Term Managed Income Fund............. 46,824,321 50,329,060
Managed Income Fund............................... 669,871,907 660,511,152
</TABLE>
4. COMMON STOCK:
Excelsior Fund currently has authorized capital of 35 billion shares of
Common Stock representing interests in one of seventeen separate investment
portfolios. Authorized capital currently offered for each Portfolio is as
follows: 375 million shares each of the Treasury Money Fund and the Managed
Income Fund, 1,500 million shares each of the Government Money Fund and the
Money Fund, and 500 million shares each of the Short-Term Government
Securities Fund and the Intermediate-Term Managed Income Fund.
16
<PAGE>
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. Since Treasury Money Fund, Government
Money Fund and Money Fund have sold, reinvested and redeemed shares only at a
constant net asset value of $1.00 per share, the number of shares represented
by such sales, reinvestments and redemptions is the same as the amounts shown
below for such transactions.
<TABLE>
<CAPTION>
TREASURY MONEY FUND
---------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/97 03/31/97
---------------- ---------------
<S> <C> <C>
Sold......................................... $ 1,202,713,884 $ 1,727,536,995
Issued as reinvestment of dividends.......... 899,037 1,153,005
Redeemed..................................... (1,179,402,657) (1,637,794,580)
--------------- ---------------
Net Increase................................. $ 24,210,264 $ 90,895,420
=============== ===============
<CAPTION>
GOVERNMENT MONEY FUND
---------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/97 03/31/97
---------------- ---------------
<S> <C> <C>
Sold......................................... $ 2,091,765,535 $ 3,287,998,018
Issued as reinvestment of dividends.......... 563,528 1,121,860
Redeemed..................................... (2,086,133,707) (3,216,759,182)
--------------- ---------------
Net Increase................................. $ 6,195,356 $ 72,360,696
=============== ===============
<CAPTION>
MONEY FUND
---------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/97 03/31/97
---------------- ---------------
<S> <C> <C>
Sold......................................... $ 1,204,390,619 $ 2,009,777,544
Issued as reinvestment of dividends.......... 1,945,359 2,417,509
Redeemed..................................... (1,234,816,059) (1,908,410,036)
--------------- ---------------
Net Increase (Decrease)...................... $ (28,480,081) $ 103,785,017
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM GOVERNMENT SECURITIES FUND
-----------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/97 03/31/97
--------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Sold......................... 706,501 $ 4,921,133 1,838,725 $ 12,799,856
Contribution in-kind......... -- -- 713,062 4,941,525
Issued as reinvestment of
dividends................... 24,059 167,705 49,084 341,488
Redeemed..................... (588,531) (4,092,996) (1,743,557) (12,132,247)
-------- ----------- ---------- ------------
Net Increase................. 142,029 $ 995,842 857,314 $ 5,950,622
======== =========== ========== ============
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM MANAGED INCOME FUND
--------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/97 03/31/97
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 1,852,912 $ 13,018,324 4,173,471 $ 29,210,056
Issued as reinvestment of
dividends................ 19,455 137,156 36,494 254,679
Redeemed.................. (1,274,167) (8,947,310) (2,505,193) (17,532,413)
---------- ------------ ---------- ------------
Net Increase.............. 598,200 $ 4,208,170 1,704,772 $ 11,932,322
========== ============ ========== ============
<CAPTION>
MANAGED INCOME FUND
--------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/97 03/31/97
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 1,514,315 $ 13,337,571 3,991,365 $ 34,928,291
Contribution in-kind...... -- -- 10,913,709 94,076,172
Issued as reinvestment of
dividends................ 101,703 899,377 208,603 1,822,296
Redeemed.................. (2,029,305) (17,858,390) (3,540,705) (31,009,950)
---------- ------------ ---------- ------------
Net Increase (Decrease)... (413,287) $ (3,621,442) 11,572,972 $ 99,816,809
========== ============ ========== ============
</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.
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