<PAGE>
[LOGO OF EXCELSIOR FUNDS INC.]
FIXED INCOME PORTFOLIOS
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1998
<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, U.S. TRUST COMPANY OF
CONNECTICUT, THEIR PARENT AND AFFILIATES AND SHARES ARE NOT INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
AGENCY. INVESTMENTS IN THE FUNDS INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF PRINCIPAL. FUND SHARES ARE NOT INSURED OR GUARANTEED BY THE U.S.
GOVERNMENT.
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998 (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............ $535,017,097 $590,966,916 $633,843,475 $50,071,307 $112,268,608 $202,870,186
============ ============ ============ =========== ============ ============
Investments, at value
(Note 1).............. $535,017,097 $590,966,916 $633,843,475 $50,852,430 $115,321,659 $210,857,347
Cash................... 309 12,447 -- -- -- --
Interest receivable.... 7,401,677 1,089,050 1,449,695 549,181 1,282,261 2,759,487
Receivable for fund
shares sold........... -- -- 4,987 47,638 80,463 1,196,228
Prepaid expenses....... 10,563 16,866 13,671 14 2,471 4,735
------------ ------------ ------------ ----------- ------------ ------------
TOTAL ASSETS........... 542,429,646 592,085,279 635,311,828 51,449,263 116,686,854 214,817,797
LIABILITIES:
Payable for dividends
declared.............. 2,201,804 2,433,088 2,641,001 195,725 491,465 862,826
Payable for fund shares
redeemed.............. -- -- -- 13,602 305,979 212,139
Investment advisory
fees payable (Note
2).................... 118,652 122,497 94,864 6,333 25,609 106,343
Administration fees
payable
(Note 2).............. 70,975 66,949 73,007 4,078 14,652 27,538
Administrative service
fees payable (Note
2).................... 23,051 28,487 47,939 5,830 10,499 10,973
Directors' fees payable
(Note 2).............. 3,673 5,649 4,885 375 1,359 3,162
Due to custodian bank.. -- -- 7,716 127,498 70,850 22,331
Accrued expenses and
other payables........ 41,051 120,245 82,332 25,777 37,530 60,654
------------ ------------ ------------ ----------- ------------ ------------
TOTAL LIABILITIES...... 2,459,206 2,776,915 2,951,744 379,218 957,943 1,305,966
------------ ------------ ------------ ----------- ------------ ------------
NET ASSETS.............. $539,970,440 $589,308,364 $632,360,084 $51,070,045 $115,728,911 $213,511,831
============ ============ ============ =========== ============ ============
NET ASSETS consist of:
Undistributed
(distributions in
excess of) net
investment income..... $ (6,930) $ -- $ -- $ 20,454 $ 1,212 $ 182,630
Accumulated net
realized gain (loss)
on investments........ 29,546 (68,132) (56,963) (183,992) 2,191,569 5,357,872
Unrealized appreciation
of investments........ -- -- -- 781,123 3,053,051 7,987,161
Par value (Note 4)..... 539,950 589,400 632,587 7,171 15,407 22,378
Paid-in capital in
excess of par value... 539,407,874 588,787,096 631,784,460 50,445,289 110,467,672 199,961,790
------------ ------------ ------------ ----------- ------------ ------------
TOTAL NET ASSETS........ $539,970,440 $589,308,364 $632,360,084 $51,070,045 $115,728,911 $213,511,831
============ ============ ============ =========== ============ ============
Shares of Common Stock
Outstanding............ 539,949,873 589,399,812 632,586,694 7,170,657 15,406,728 22,377,960
NET ASSET VALUE PER
SHARE.................. $1.00 $1.00 $1.00 $7.12 $7.51 $9.54
===== ===== ===== ===== ===== =====
</TABLE>
See Notes to Financial Statements
1
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1998 (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........... $13,546,945 $18,408,239 $16,317,565 $1,146,489 $3,112,213 $ 6,123,819
----------- ----------- ----------- ---------- ---------- -----------
EXPENSES:
Investment advisory fees
(Note 2)................. 771,239 833,612 732,932 61,946 180,551 765,564
Administration fees (Note
2)....................... 393,332 510,170 448,554 31,592 78,926 156,175
Custodian fees............ 68,710 89,999 83,772 9,260 16,702 34,351
Administrative servicing
fees
(Note 2)................. 62,935 88,489 142,968 16,442 29,888 31,842
Legal and audit fees...... 34,540 45,164 43,414 2,283 8,048 26,934
Directors' fees and
expenses
(Note 2)................. 9,827 12,242 11,619 665 2,515 5,348
Registration and filing
fees..................... 7,357 7,373 13,447 6,430 6,162 7,774
Shareholder reports....... 5,991 7,812 7,655 1,624 5,879 12,433
Shareholder servicing
agent fees............... 5,330 7,206 24,872 3,861 8,821 16,574
Miscellaneous expenses.... 36,946 68,710 48,219 3,578 10,335 11,554
----------- ----------- ----------- ---------- ---------- -----------
TOTAL EXPENSES............ 1,396,207 1,670,777 1,557,452 137,681 347,827 1,068,549
Fees waived and reimbursed
by investment adviser and
administrators (Note 2).. (62,935) (88,489) (142,968) (16,442) (29,888) (133,917)
----------- ----------- ----------- ---------- ---------- -----------
NET EXPENSES.............. 1,333,272 1,582,288 1,414,484 121,239 317,939 934,632
----------- ----------- ----------- ---------- ---------- -----------
NET INVESTMENT INCOME...... 12,213,673 16,825,951 14,903,081 1,025,250 2,794,274 5,189,187
----------- ----------- ----------- ---------- ---------- -----------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
(NOTE 1):
Net realized gain on
security transactions.... 38,924 551 1,113 230,605 2,550,997 1,977,977
Change in unrealized
appreciation/depreciation
of investments during the
period................... -- -- -- 550,152 1,665,804 6,319,447
----------- ----------- ----------- ---------- ---------- -----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS....... 38,924 551 1,113 780,757 4,216,801 8,297,424
----------- ----------- ----------- ---------- ---------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM
OPERATIONS................ $12,252,597 $16,826,502 $14,904,194 $1,806,007 $7,011,075 $13,486,611
=========== =========== =========== ========== ========== ===========
</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, 1998 (UNAUDITED)
Net investment income..... $ 12,213,673 $ 16,825,951 $ 14,903,081 $ 1,025,250 $ 2,794,274 $ 5,189,187
Net realized gain on
investments.............. 38,924 551 1,113 230,605 2,550,997 1,977,977
Change in unrealized
appreciation/depreciation
of investments during the
period................... -- -- -- 550,152 1,665,804 6,319,447
------------ ------------ ------------ ----------- ------------ ------------
Net increase in net assets
resulting from
operations............... 12,252,597 16,826,502 14,904,194 1,806,007 7,011,075 13,486,611
Distributions to
shareholders:
From net investment
income.................. (12,220,477) (16,825,951) (14,903,081) (1,025,250) (2,794,274) (5,189,187)
Increase (decrease) in net
assets from fund share
transactions (Note 4).... 70,297,867 (10,809,129) (26,513,187) 17,742,664 16,576,881 9,117,620
------------ ------------ ------------ ----------- ------------ ------------
Net increase (decrease) in
net assets............... 70,329,987 (10,808,578) (26,512,074) 18,523,421 20,793,682 17,415,044
NET ASSETS:
Beginning of period...... 469,640,453 600,116,942 658,872,158 32,546,624 94,935,229 196,096,787
------------ ------------ ------------ ----------- ------------ ------------
End of period (1)........ $539,970,440 $589,308,364 $632,360,084 $51,070,045 $115,728,911 $213,511,831
============ ============ ============ =========== ============ ============
(1) Including
undistributed
(distributions in
excess of) net
investment income...... $ (6,930) $ -- $ -- $ 20,454 $ 1,212 $ 182,630
============ ============ ============ =========== ============ ============
YEAR ENDED MARCH 31, 1998
Net investment income..... $ 19,297,100 $ 28,148,017 $ 26,060,936 $ 1,662,258 $ 4,917,994 $ 10,645,744
Net realized gain (loss)
on investments........... 7,136 (8,971) 12,526 13,550 523,007 8,505,576
Change in unrealized
appreciation/depreciation
of investments during the
year..................... -- -- -- 313,752 3,735,347 3,888,688
------------ ------------ ------------ ----------- ------------ ------------
Net increase in net assets
resulting from
operations............... 19,304,236 28,139,046 26,073,462 1,989,560 9,176,348 23,040,008
Distributions to
shareholders:
From net investment
income.................. (19,297,045) (28,148,017) (26,060,936) (1,662,258) (4,917,994) (10,645,744)
In excess of net
investment income....... (126) -- -- -- -- --
From net realized gain on
investments............. -- -- -- -- -- (257,074)
Increase (decrease) in net
assets from fund share
transactions (Note 4).... 120,546,015 66,291,908 160,793,465 1,415,543 12,235,436 (1,936,571)
------------ ------------ ------------ ----------- ------------ ------------
Net increase in net
assets................... 120,553,080 66,282,937 160,805,991 1,742,845 16,493,790 10,200,619
NET ASSETS:
Beginning of year........ 349,087,373 533,834,005 498,066,167 30,803,779 78,441,439 185,896,168
------------ ------------ ------------ ----------- ------------ ------------
End of year (2).......... $469,640,453 $600,116,942 $658,872,158 $32,546,624 $ 94,935,229 $196,096,787
============ ============ ============ =========== ============ ============
--------
(2) Including
undistributed
(distributions in
excess of) net
investment income...... $ (126) $ -- $ -- $ 20,454 $ 1,212 $ 182,630
============ ============ ============ =========== ============ ============
</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,
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) --++ --
1998................... 1.00 0.04853 -- 0.04853 (0.04853) --++ --
Six Months Ended Sep-
tember 30, 1998 (Unau-
dited)................ 1.00 0.02379 $0.00001 0.02380 (0.02380) -- --
GOVERNMENT MONEY FUND -- (5/8/85*)
Year Ended March 31,
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) -- --
1998................... 1.00 0.05082 -- 0.05082 (0.05082) -- --
Six Months Ended Sep-
tember 30, 1998 (Unau-
dited)................ 1.00 0.02530 -- 0.02530 (0.02530) -- --
MONEY FUND -- (5/3/85*)
Year Ended March 31,
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) -- --
1998................... 1.00 0.05139 -- 0.05139 (0.05139) -- --
Six Months Ended Sep-
tember 30, 1998 (Unau-
dited)................ 1.00 0.02549 -- 0.02549 (0.02549) -- --
SHORT-TERM GOVERNMENT SECURITIES FUND -- (12/31/92*)
Year Ended March 31,
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) -- --
1998................... 6.93 0.37 0.07 0.44 (0.37) -- --
Six Months Ended Sep-
tember 30, 1998 (Unau-
dited)................ 7.00 0.17 0.12 0.29 (0.17) -- --
INTERMEDIATE-TERM MANAGED INCOME FUND -- (12/31/92*)
Year Ended March 31,
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) -- --
1998................... 6.87 0.41 0.36 0.77 (0.41) -- --
Six Months Ended Sep-
tember 30, 1998 (Unau-
dited)................ 7.23 0.20 0.28 0.48 (0.20) -- --
MANAGED INCOME FUND -- (1/9/86*)
Year Ended March 31,
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) -- --
1998................... 8.60 0.49 0.58 1.07 (0.49) -- (0.01)
Six Months Ended Sep-
tember 30, 1998 (Unau-
dited)................ 9.17 0.24 0.37 0.61 (0.24) -- --
</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.
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 PORTFOLIO FEE
GAIN ON TOTAL END TOTAL OF 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>
-- $(0.02590) $1.00 2.62% $ 254,683 0.58% 0.58% 2.59% -- $0.00001
-- (0.04165) 1.00 4.25% 196,932 0.55% 0.57% 4.09% -- 0.00019
-- (0.05043) 1.00 5.16% 258,169 0.55% 0.57% 5.03% -- 0.00021
-- (0.04676) 1.00 4.78% 349,087 0.52% 0.54% 4.68% -- 0.00026
-- (0.04853) 1.00 4.96% 469,640 0.52% 0.54% 4.86% -- 0.00021
-- (0.02380) 1.00 2.40%*** 539,970 0.52%** 0.54%** 4.75%** -- 0.00012
-- $(0.02736) $1.00 2.77% $1,034,908 0.50% 0.50% 2.74% -- $0.00003
-- (0.04397) 1.00 4.49% 725,774 0.50% 0.53% 4.38% -- 0.00024
-- (0.05296) 1.00 5.43% 461,470 0.50% 0.53% 5.36% -- 0.00031
-- (0.04862) 1.00 4.97% 533,834 0.47% 0.51% 4.86% -- 0.00035
-- (0.05082) 1.00 5.20% 600,117 0.47% 0.50% 5.09% -- 0.00030
-- (0.02530) 1.00 2.56%*** 589,308 0.47%** 0.50%** 5.05%** -- 0.00013
-- $(0.02780) $1.00 2.82% $ 736,077 0.51% 0.51% 2.78% -- $0.00002
-- (0.04496) 1.00 4.59% 824,578 0.49% 0.52% 4.49% -- 0.00026
-- (0.05336) 1.00 5.47% 394,285 0.50% 0.53% 5.40% -- 0.00037
-- (0.04888) 1.00 5.00% 498,066 0.47% 0.53% 4.89% -- 0.00052
-- (0.05139) 1.00 5.26% 658,872 0.48% 0.52% 5.14% -- 0.00046
-- (0.02549) 1.00 2.58%*** 632,360 0.48%** 0.53%** 5.08%** -- 0.00024
$(0.02) $ (0.28) $6.93 2.12% $ 25,233 0.62% 0.65% 3.42% 267% --
-- (0.33) 6.89 4.30% 25,216 0.61% 0.67% 4.80% 198% --
-- (0.40) 6.98 7.27% 25,068 0.61% 0.80% 5.72% 77% $ 0.01
-- (0.37) 6.93 4.77% 30,804 0.61% 0.70% 5.42% 82% 0.01
-- (0.37) 7.00 6.47% 32,547 0.62% 0.69% 5.28% 35% -- ++
-- (0.17) 7.12 4.27%*** 51,070 0.59%** 0.67%** 4.96%** 98%** -- ++
$(0.09) $ (0.40) $6.83 0.45% $ 42,564 0.69% 0.69% 4.31% 385% --
(0.01) (0.40) 6.75 4.95% 47,928 0.66% 0.68% 5.91% 682% --
-- (0.43) 7.06 11.13% 68,640 0.64% 0.68% 6.06% 129% --
-- (0.41) 6.87 3.25% 78,441 0.63% 0.68% 5.91% 129% -- ++
-- (0.41) 7.23 11.37% 94,935 0.61% 0.66% 5.68% 86% -- ++
-- (0.20) 7.51 6.72%*** 115,729 0.62%** 0.67%** 5.41%** 241%** -- ++
$(0.50) $ (1.28) $8.57 1.73% $ 110,903 0.90% 1.06% 4.89% 459% $ 0.02
-- (0.51) 8.39 4.06% 86,024 1.00% 1.12% 6.09% 492% 0.01
-- (0.54) 8.84 11.86% 88,900 0.96% 1.12% 6.09% 165% 0.01
-- (0.51) 8.60 3.17% 185,896 0.90% 1.04% 5.90% 238% 0.01
-- (0.50) 9.17 12.79% 196,097 0.90% 1.02% 5.51% 538% 0.01
-- (0.24) 9.54 6.71%*** 213,512 0.92%** 1.05%** 5.08%** 208%** 0.01
</TABLE>
See Notes to Financial Statements
5
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
TREASURY MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL DISCOUNT VALUE
AMOUNT RATE (NOTE 1)
--------- -------- ------------
<C> <S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 98.73%
Federal Home Loan Bank
$ 30,000,000 10/01/98................................. 5.40% $ 30,000,000
25,000,000 11/06/98................................. 5.27# 24,999,038
49,466,000 01/29/99................................. 4.97 48,646,513
10,000,000 03/10/99................................. 5.14 9,771,556
25,000,000 03/17/99................................. 4.91 24,430,576
Student Loan Marketing Association
20,000,000 10/01/98................................. 5.39 20,000,000
U.S. Treasury Bills
275,000,000 10/31/98................................. 5.39 275,098,325
100,000,000 02/28/99................................. 5.15 100,161,047
------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (Cost $533,107,055).......... 533,107,055
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ ------------
<C> <S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 0.35%
1,910,042 Dreyfus Government Cash Management Fund
(Cost $1,910,042)............................ $ 1,910,042
------------
TOTAL INVESTMENTS (Cost $535,017,097*).................. 99.08% $535,017,097
OTHER ASSETS & LIABILITIES (NET)........................ 0.92 4,953,343
------ ------------
NET ASSETS.............................................. 100.00% $539,970,440
====== ============
</TABLE>
- --------
*Aggregate cost for Federal tax and book purposes.
# Variable or floating rate securities---rate disclosed is as of September 30,
1998.
See Notes to Financial Statements
6
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
GOVERNMENT MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL DISCOUNT VALUE
AMOUNT RATE (NOTE 1)
--------- -------- ------------
<C> <S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 97.25%
Federal Farm Credit Bank
$ 47,510,000 10/06/98................................. 5.14% $ 47,476,083
Federal Home Loan Bank
75,000,000 10/23/98................................. 5.18 74,762,583
121,000,000 11/06/98................................. 5.27# 120,995,346
50,000,000 01/29/99................................. 4.97 49,171,667
100,000,000 02/03/99................................. 5.21 98,190,972
48,000,000 03/05/99................................. 5.14 46,937,733
Federal Home Loan Mortgage Corp.
100,000,000 03/26/99................................. 4.90 97,604,445
Student Loan Marketing Association
38,000,000 10/02/98................................. 5.14 37,994,575
------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (Cost $573,133,404).......... 573,133,404
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ ------------
<C> <S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 3.03%
17,833,512 Dreyfus Government Cash Management Fund
(Cost $17,833,512)........................ $ 17,833,512
------------
TOTAL INVESTMENTS (Cost $590,966,916*)................. 100.28% $590,966,916
OTHER ASSETS & LIABILITIES (NET)....................... (0.28) (1,658,552)
------ ------------
NET ASSETS............................................. 100.00% $589,308,364
====== ============
</TABLE>
- --------
*Aggregate cost for Federal tax and book purposes.
# Variable or floating rate securities--rate disclosed is as of September 30,
1998.
See Notes to Financial Statements
7
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
MONEY FUND
<TABLE>
<CAPTION>
PRINCIPAL DISCOUNT VALUE
AMOUNT RATE (NOTE 1)
--------- -------- ------------
<C> <S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 31.15%
Federal Home Loan Bank
$ 25,000,000 11/06/98................................. 5.27%# $ 24,999,038
Federal Home Loan Mortgage Corp.
45,000,000 01/25/99................................. 4.97 44,279,350
30,000,000 01/28/99................................. 5.00 29,504,167
100,000,000 02/03/99................................. 5.21 98,190,972
------------
TOTAL U.S. GOVERNMENT & AGENCY
OBLIGATIONS (Cost $196,973,527).......... 196,973,527
------------
COMMERCIAL PAPER -- 61.27%
20,000,000 Air Products,
03/05/99................................. 5.02 19,567,722
25,000,000 American Express Co., 11/23/98........... 5.49 25,000,000
25,000,000 Anheuser Busch Co., 10/01/98............. 5.67 25,000,000
25,000,000 Associates Corp. of North America,
01/21/99................................. 5.05 24,607,222
25,000,000 Campbell Soup Co., 04/06/99.............. 4.92 24,360,589
20,000,000 CIT Group Inc.,
11/23/98................................. 5.18 19,847,478
25,000,000 Citibank Canada,
11/10/98................................. 5.56 25,000,000
25,000,000 Ford Motor Credit Co., 11/24/98.......... 5.48 25,000,000
25,000,000 General Electric Capital Corp.,
11/23/98................................. 5.50 25,000,000
25,000,000 H.J. Heinz Co.,
10/02/98................................. 5.50 24,996,181
25,000,000 IBM Corp.,
11/20/98................................. 5.49 25,000,000
25,000,000 Merrill Lynch & Co., Inc., 11/24/98...... 5.50 24,793,750
25,000,000 Morgan Stanley Dean Witter & Co.,
01/22/99................................. 5.20 24,591,944
25,000,000 PHH Corp.,
11/24/98................................. 5.47 24,794,875
25,000,000 Pitney Bowes Credit Corp., 10/22/98...... 5.25 24,923,437
25,000,000 Prudential Funding Corp., 08/31/99....... 5.04# 25,000,000
------------
TOTAL COMMERCIAL PAPER (Cost
$387,483,198)............................ 387,483,198
------------
CERTIFICATE OF DEPOSIT -- 3.95%
25,000,000 Banque Nationale de Paris, 07/14/99
(Cost $25,000,000)....................... 5.59# 25,000,000
------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ ------------
<C> <S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 3.86%
24,386,750 Dreyfus Government Cash Management Fund
(Cost $24,386,750).......................... $ 24,386,750
------------
TOTAL INVESTMENTS (Cost $633,843,475*).................. 100.23% $633,843,475
OTHER ASSETS & LIABILITIES (NET)........................ (0.23) (1,483,391)
------ ------------
NET ASSETS.............................................. 100.00% $632,360,084
====== ============
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
# Variable or floating rate securities--rate disclosed is as of September 30,
1998.
See Notes to Financial Statements
8
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
SHORT-TERM GOVERNMENT SECURITIES FUND
<TABLE>
<CAPTION>
PRINCIPAL COUPON VALUE
AMOUNT RATE (NOTE 1)
--------- ------ -----------
<C> <S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 98.71%
Federal Home Loan Bank
$ 4,000,000 12/17/98..................................... 5.83% $ 4,006,904
10,750,000 06/02/00..................................... 5.63 10,908,971
19,250,000 03/19/01..................................... 5.63 19,688,881
Federal National Mortgage Association
4,000,000 06/12/00..................................... 5.65 4,062,832
2,500,000 08/10/00..................................... 5.55 2,538,540
1,258,591 Pool #190748, 04/01/01....................... 5.50 1,260,404
Private Export Funding Corp.
320,000 03/15/01..................................... 5.50 326,343
U.S. Treasury Notes
2,000,000 02/15/99..................................... 5.00 2,003,126
2,000,000 07/31/99..................................... 5.88 2,020,002
3,500,000 11/15/00..................................... 5.75 3,596,253
-----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $49,631,133)........................... 50,412,256
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
------ -----------
<C> <S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 0.86%
215,070 Dreyfus Government Cash Management Fund........ $ 215,070
225,104 Fidelity U.S. Treasury II Fund................. 225,104
-----------
TOTAL OTHER SHORT-TERM INVESTMENTS
(Cost $440,174)................................ 440,174
-----------
TOTAL INVESTMENTS (Cost $50,071,307*).................... 99.57% $50,852,430
OTHER ASSETS & LIABILITIES (NET)......................... 0.43 217,615
------ -----------
NET ASSETS............................................... 100.00% $51,070,045
====== ===========
</TABLE>
- --------
* Aggregate cost for Federal tax and book purposes.
See Notes to Financial Statements
9
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS SEPTEMBER 30, 1998 (UNAUDITED)
INTERMEDIATE-TERM MANAGED INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL COUPON VALUE
AMOUNT RATE (NOTE 1)
--------- ------ -----------
<C> <S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 55.49%
Federal Home Loan Mortgage Corp.
$ 20,651 Pool #218374, 07/01/02...................... 10.50% $ 21,963
15,150,000 04/15/08.................................... 5.75 16,017,656
2,000,000 04/25/21.................................... 6.75 2,082,090
Federal National Mortgage Association
4,000,000 10/06/98.................................... 5.13+ 3,997,148
7,250,000 08/10/00.................................... 5.55 7,361,766
10,000,000 12/24/07.................................... 6.48 10,603,870
5,943,936 Pool #437416, 09/01/28...................... 6.00 5,938,367
1,287,939 Pool #439102, 09/01/28...................... 6.00 1,286,732
Government National Mortgage Association
133,459 Pool #195801, 01/15/17...................... 8.50 141,259
193,036 Pool #195833, 04/15/17...................... 8.50 204,316
96,938 Pool #212760, 04/15/17...................... 8.50 102,603
86,474 Pool #334299, 05/15/23...................... 8.00 90,176
1,665,485 Pool #367412, 11/15/23...................... 6.00 1,673,293
3,291,787 Pool #366379, 12/15/23...................... 6.50 3,365,852
4,230,932 Pool #353454, 05/15/27...................... 7.50 4,386,947
2,976,634 Pool #460827, 06/15/28...................... 6.50 3,043,608
U.S. Treasury Bond
3,175,000 08/15/26.................................... 6.75 3,899,300
-----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $62,343,626).......................... 64,216,946
-----------
CORPORATE BONDS -- 24.29%
2,000,000 American General Finance, Series D,
11/06/01.................................... 6.42 2,060,208
2,650,000 Associates Corp. of North America,
07/15/02.................................... 6.38 2,750,939
2,775,000 Canadian Imperial Bank, Series CD,
08/01/00.................................... 6.20 2,816,622
1,500,000 Comerica Bank, 10/15/02..................... 7.25 1,605,813
1,500,000 Equitable Companies, Inc., 04/01/08......... 6.50 1,557,195
3,000,000 Ford Motor Credit Co., 06/15/07............. 7.20 3,304,089
2,500,000 General Electric Capital Corp., Series A,
05/11/01.................................... 5.89 2,547,378
3,000,000 Household Finance Corp., 07/15/02........... 6.13 3,034,488
1,875,000 Household Finance Corp., 06/17/08........... 6.40 1,985,250
1,600,000 International Lease Finance Corp., Series J,
05/07/01.................................... 5.98 1,628,896
2,175,000 McDonald's Corp., 05/11/01.................. 5.90 2,228,970
2,500,000 NationsBank Corp., 07/15/04................. 6.13 2,584,593
-----------
TOTAL CORPORATE BONDS (Cost $27,308,180).... 28,104,441
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL COUPON VALUE
AMOUNT RATE (NOTE 1)
--------- ------ ------------
<C> <S> <C> <C>
ASSET-BACKED SECURITIES -- 7.83%
$5,000,000 California Infrastructure PG&E, Series 1997-
1 A3, 06/25/02.............................. 6.15% $ 5,083,875
3,925,000 Caterpillar Financial Asset Trust, Series
1998-A A3, 04/25/03......................... 5.85 3,983,227
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $8,921,548)........................... 9,067,102
------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 6.79%
1,968,513 First Union-Lehman Brothers-Bank of America,
1998-C2 A1, 06/18/07........................ 6.28 2,030,137
1,570,452 Mortgage Capital Funding, Inc., 1998-MC1 A1,
06/18/07.................................... 6.42 1,628,441
4,000,000 Nomura Asset Securities Corp., 1998-D6 A1B,
03/17/28.................................... 6.59 4,196,820
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $7,617,482)........................... 7,855,398
------------
<CAPTION>
SHARES
------
<C> <S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 5.25%
3,045,937 Dreyfus Government Cash Management Fund..... 3,045,937
3,031,835 Fidelity U.S. Treasury II Fund.............. 3,031,835
------------
TOTAL OTHER SHORT-TERM INVESTMENTS
(Cost $6,077,772)........................... 6,077,772
------------
TOTAL INVESTMENTS (Cost $112,268,608*).................. 99.65% $115,321,659
OTHER ASSETS & LIABILITIES (NET)........................ 0.35 407,252
------ ------------
NET ASSETS.............................................. 100.00% $115,728,911
====== ============
</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, 1998 (UNAUDITED)
MANAGED INCOME FUND
<TABLE>
<CAPTION>
PRINCIPAL COUPON VALUE
AMOUNT RATE (NOTE 1)
--------- ------ -----------
<C> <S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 46.99%
Federal Home Loan Bank
$ 5,000,000 08/17/01..................................... 5.58% $ 5,126,155
Federal Home Loan Mortgage Corp.
4,465,000 07/15/03..................................... 5.75 4,656,656
26,995,000 04/15/08..................................... 5.75 28,541,031
Federal National Mortgage Association
12,000,000 04/15/03..................................... 5.75 12,504,732
6,580,000 Pool #380633, 09/01/08....................... 6.18 6,682,555
3,580,000 Pool #380639, 09/01/08....................... 6.18 3,635,798
Government National Mortgage Association
4,961,086 Pool #2562, 03/20/28......................... 6.00 4,984,344
5,944,712 Pool #2576, 04/20/28......................... 6.00 5,972,581
9,815,162 Pool #80198, 05/20/28........................ 5.50 9,873,439
U.S. Treasury Bond
5,735,000 05/15/16..................................... 7.25 7,132,912
U.S. Treasury Note
10,900,000 08/15/00..................................... 6.00 11,213,386
-----------
TOTAL U.S. GOVERNMENT & AGENCY OBLIGATIONS
(Cost $96,768,567)........................... 100,323,589
-----------
CORPORATE BONDS -- 30.23%
2,500,000 Amgen, Inc., 04/01/2097...................... 8.13 3,101,357
5,000,000 Associates Corp. of North America, Series H,
09/27/02..................................... 6.71 5,245,375
5,500,000 Bristol-Myers Squibb Co., 08/01/2097......... 6.88 6,015,625
4,000,000 Ford Motor Co., 02/15/47..................... 9.98 5,990,400
9,500,000 General Electric Capital Services, 08/21/35.. 7.50 11,144,935
5,000,000 ++Goldman Sachs Group, 07/15/02.............. 6.60 5,096,100
4,000,000 International Lease Finance Corp., Series J,
05/07/01..................................... 5.98 4,072,240
5,000,000 Lehman Brothers Holdings, 10/15/03........... 7.25 5,050,115
4,000,000 McDonald's Corp., 05/11/01................... 5.90 4,099,256
5,000,000 Morgan Stanley Dean Witter & Co., 08/01/02... 6.38 5,172,805
7,962,000 New Jersey Economic and Development
Authority, Revenue Bonds, Series A,
02/15/29..................................... 7.43 9,545,482
-----------
TOTAL CORPORATE BONDS (Cost $61,078,839)..... 64,533,690
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL COUPON VALUE
AMOUNT RATE (NOTE 1)
--------- ------ ------------
<C> <S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 13.03%
$4,984,462 Bear Stearns Mortgage Securities, 1998-C1
A1, 10/16/07................................ 6.34% $ 5,155,454
3,285,351 First Union-Lehman Brothers-Bank of America,
1998-C2 A1, 06/18/07........................ 6.28 3,388,199
2,500,000 First Union-Lehman Brothers Commercial
Mortgage, 1997-C1 B, 04/18/07............... 7.43 2,712,787
5,000,000 Merrill Lynch Mortgage Investors, Inc.,
1996-C2 B, 11/21/28......................... 6.96 5,306,250
3,850,000 Mortgage Capital Funding, Inc., 1997-MC2 A2,
09/20/07.................................... 6.66 4,047,447
2,906,096 Mortgage Capital Funding, Inc., 1998-MC1 A1,
06/18/07.................................... 6.42 3,013,404
4,000,000 Nomura Asset Securities Corp., 1998-D6 A1B,
03/17/28.................................... 6.59 4,196,820
------------
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS
(Cost $27,093,363).......................... 27,820,361
------------
ASSET-BACKED SECURITIES -- 3.16%
3,000,000 California Infrastructure SDG&E, Series
1997-1 A5, 09/25/05......................... 6.19 3,157,545
3,500,000 ContiMortgage Home Equity Loan Trust, 1998-2
A5, 09/15/16................................ 6.28 3,591,927
------------
TOTAL ASSET-BACKED SECURITIES
(Cost $6,499,182)........................... 6,749,472
------------
<CAPTION>
SHARES
------
<C> <S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 5.35%
5,716,679 Dreyfus Government Cash Management Fund..... 5,716,679
5,713,556 Fidelity U.S. Treasury II Fund.............. 5,713,556
------------
TOTAL OTHER SHORT-TERM INVESTMENTS
(Cost $11,430,235).......................... 11,430,235
------------
TOTAL INVESTMENTS (Cost $202,870,186*).................. 98.76% $210,857,347
OTHER ASSETS & LIABILITIES (NET)........................ 1.24 2,654,484
------ ------------
NET ASSETS.............................................. 100.00% $213,511,831
====== ============
</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,
1998, these securities amounted to $5,096,100 or 2.39% 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 eighteen 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 Excelsior Fund's
Board of Directors to represent the fair value of the Funds' 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 (including
accrued interest).
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.
13
<PAGE>
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 net capital losses incurred after
October 31 and within the taxable year ("Post-October losses").
In order to avoid a Federal excise tax, each Portfolio is required to
distribute certain minimum amounts of net realized capital gain and net
investment income for the respective periods ending October 31 and December
31 in each calendar year.
(E) FEDERAL TAXES:
It is the policy of Excelsior Fund that each Portfolio continue to
qualify as a regulated investment company, if such qualification is in the
best interest of the shareholders, by complying with the requirements of
the Internal Revenue Code applicable to regulated investment companies, and
by distributing substantially all of its taxable earnings to its
shareholders.
At March 31, 1998, the 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 2006 TOTAL
------- ---- -------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Government Money Fund... $10,000 -- $ 48,000 $ 1,000 -- $6,000 $ 65,000
Money Fund.............. 4,000 -- 21,000 21,000 $ 12,000 -- 58,000
Short-Term Government
Securities Fund........ -- -- 393,000 -- 14,000 -- 407,000
Intermediate -Term
Managed Income Fund.... -- -- -- -- 335,000 -- 335,000
</TABLE>
At September 30, 1998, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over tax cost and
aggregate gross unrealized depreciation for all securities 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 (DEPRECIATION) APPRECIATION
------------ -------------- ------------
<S> <C> <C> <C>
Short-Term Government Securities
Fund............................ $ 781,123 -- $ 781,123
Intermediate-Term Managed Income
Fund............................ 3,053,644 $ (593) 3,053,051
Managed Income Fund.............. 8,124,397 (137,236) 7,987,161
</TABLE>
(F) EXPENSE ALLOCATION:
Expenses directly attributable to a Portfolio are charged to that
Portfolio. Other expenses are allocated to the respective Portfolios based
on average daily net assets.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE AND RELATED PARTY TRANSACTIONS
United States Trust Company of New York ("U.S. Trust NY") and U.S. Trust
Company of Connecticut ("U.S. Trust CT" and, collectively with U.S. Trust NY,
"U.S. Trust") serve as the investment adviser to the Portfolios. For the
services provided pursuant to the Investment Advisory Agreements, U.S.
14
<PAGE>
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 the Government Money
Fund and the Money Fund, .30% of the average daily net assets of the Treasury
Money Fund and the Short-Term Government Securities Fund, .35% of the average
daily net assets of the Intermediate-Term Managed Income Fund, and .75% of the
average daily net assets of the Managed Income Fund. 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, 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, 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. For the six months
ended September 30, 1998, administration fees charged by U.S. Trust CT were as
follows:
<TABLE>
<S> <C>
Treasury Money Fund.............................................. $ 92,019
Government Money Fund............................................ 119,253
Money Fund....................................................... 104,917
Short-Term Government Securities Fund............................ 7,394
Intermediate-Term Managed Income Fund............................ 18,471
Managed Income Fund.............................................. 36,544
</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. 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, 1998, 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, 1998, U.S. Trust waived investment advisory fees
totaling $102,075 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
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.
15
<PAGE>
Administrative service fees paid to affiliates of U.S. Trust amounted to
$364,691 for the six months ended September 30, 1998. Until further notice to
Excelsior Fund, U.S. Trust and the Administrators have voluntarily agreed to
waive investment advisory and administration fees payable by each Portfolio in
an amount equal to the administrative service fees payable (including fees
paid to affiliates of U.S. Trust) by such Portfolio. For the six months ended
September 30, 1998, U.S. Trust and the Administrators waived investment
advisory and administration fees in amounts equal to the administrative
service fees for the Portfolios as set forth below:
<TABLE>
<CAPTION>
U.S. TRUST ADMINISTRATORS
---------- --------------
<S> <C> <C>
Treasury Money Fund................................... $ 62,935 $--
Government Money Fund................................. 88,452 37
Money Fund............................................ 142,964 4
Short-Term Government Securities Fund................. 16,401 41
Intermediate-Term Managed Income Fund................. 29,686 202
Managed Income Fund................................... 31,733 109
</TABLE>
Edgewood Services, Inc. ("the Distributor"), a wholly-owned subsidiary of
Federated Investors, Inc., 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, 1998, 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................ $ 42,126,075 $ 17,512,698
Intermediate-Term Managed Income Fund................ 132,978,671 110,199,474
Managed Income Fund.................................. 231,058,673 193,917,797
</TABLE>
4. COMMON STOCK:
Excelsior Fund has authorized capital of 35 billion shares of Common Stock,
23.875 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: 2 billion shares each of the
Treasury Money Fund, the Government Money Fund, and the Money Fund, 375
million shares of the Managed Income Fund, and 500 million shares each of the
Short-Term Government Securities Fund and the Intermediate-Term Managed Income
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
16
<PAGE>
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
09/30/98 03/31/98
---------------- ---------------
<S> <C> <C>
Sold......................................... $ 1,246,358,841 $ 2,515,769,963
Issued as reinvestment of dividends.......... 1,589,133 1,959,784
Redeemed..................................... (1,177,650,107) (2,397,183,732)
--------------- ---------------
Net Increase................................. $ 70,297,867 $ 120,546,015
=============== ===============
<CAPTION>
GOVERNMENT MONEY FUND
---------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98
---------------- ---------------
<S> <C> <C>
Sold......................................... $ 2,519,540,620 $ 4,837,865,828
Issued as reinvestment of dividends.......... 804,262 1,392,643
Redeemed..................................... (2,531,154,011) (4,772,966,563)
--------------- ---------------
Net Increase (Decrease)...................... $ (10,809,129) $ 66,291,908
=============== ===============
<CAPTION>
MONEY FUND
---------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98
---------------- ---------------
<S> <C> <C>
Sold......................................... $ 1,667,683,103 $ 2,611,474,493
Issued as reinvestment of dividends.......... 2,197,850 4,120,591
Redeemed..................................... (1,696,394,140) (2,454,801,619)
--------------- ---------------
Net Increase (Decrease)...................... $ (26,513,187) $ 160,793,465
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM GOVERNMENT SECURITIES FUND
-----------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Sold......................... 2,975,703 $20,926,053 1,570,677 $10,975,144
Issued as reinvestment of
dividends................... 31,056 217,893 44,519 311,065
Redeemed..................... (484,825) (3,401,282) (1,412,887) (9,870,666)
--------- ----------- ---------- -----------
Net Increase................. 2,521,934 $17,742,664 202,309 $ 1,415,543
========= =========== ========== ===========
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM MANAGED INCOME FUND
--------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 3,198,731 $ 23,318,697 4,118,110 $ 29,395,499
Issued as reinvestment of
dividends................ 20,186 146,714 35,038 249,767
Redeemed.................. (945,156) (6,888,530) (2,443,880) (17,409,830)
---------- ------------ ---------- ------------
Net Increase.............. 2,273,761 $ 16,576,881 1,709,268 $ 12,235,436
========== ============ ========== ============
<CAPTION>
MANAGED INCOME FUND
--------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
09/30/98 03/31/98
------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Sold...................... 3,348,121 $ 31,187,160 3,432,506 $ 30,874,198
Issued as reinvestment of
dividends................ 86,060 795,954 185,721 1,667,354
Redeemed.................. (2,450,915) (22,865,494) (3,847,425) (34,478,123)
---------- ------------ ---------- ------------
Net Increase (Decrease)... 983,266 $ 9,117,620 (229,198) $ (1,936,571)
========== ============ ========== ============
</TABLE>
5. LINE OF CREDIT:
The Portfolios and other affiliated funds participate in a $250 million
unsecured line of credit provided by a syndication of banks under a line of
credit agreement. Borrowings may be made to temporarily finance the repurchase
of Portfolio shares. Interest is charged to each Portfolio, based on its
borrowings, at a rate equal to the Federal Funds Rate plus 2% per year. In
addition, a commitment fee, based on the average daily unused portion of the
line of credit, is allocated among the participating Portfolios at the end of
each quarter. For the six months ended September 30, 1998, the Portfolios had
no borrowings under the agreement.
18
