<PAGE>
Investment Advisers
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
U.S. Trust Company
225 High Ridge Road
Stamford, CT 06905
Transfer Agent
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
(800) 446-1012
Distributor
Edgewood Services, Inc.
5800 Corporate Drive
Pittsburgh, PA 15237
SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND, FEDERAL RE-
SERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. ALTHOUGH THE FUNDS SEEK TO
PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE
TO LOSE MONEY BY INVESTING IN THE FUNDS.
US EXMMIS A00
[LOGO OF EXCELSIOR FUNDS]
Institutional
MONEY FUND
Annual Report
March 31, 2000
<PAGE>
LETTER TO SHAREHOLDERS
--------------------------------------------------------------------------------
Dear Shareholder:
The fiscal year ended March 31, 2000 was exciting and rewarding both
domestically and abroad. In the U.S. and around the world, preparations for
"Y2K" and millennium celebrations consumed everyone's thoughts. The U.S.
economy was in the midst of an extraordinary expansion. Simultaneously, Europe
prepared for and converted to a new central currency, the Euro. Meanwhile, Asia
rebounded from fiscal turmoil in several key markets in early 1999.
All the major domestic equity indices exhibited strong performance. As the
fiscal year ended, the breadth of performance extended from the familiar large-
capitalization stocks to the mid-sized and small-cap stocks. Technology stocks
led all market sectors to new highs. This occurred, despite several interest
rate hikes by the Federal Reserve Board. The rising interest rate environment
and continued economic expansion seemed to temper only the performance of the
fixed-income markets.
Given the continued rate of expansion of the U.S. economy, we believe
interest rate increases are inevitable. This environment will make the coming
year a challenging one in the financial markets. We are confident that the
broad array of domestic and international equity as well as taxable and tax-
exempt fixed-income funds will help you meet your financial objectives.
On May 31, 2000, U.S. Trust Corporation, parent of the advisers to the
Excelsior Fund family ("U.S. Trust"), merged with a subsidiary of The Charles
Schwab Corporation. Earlier in the month, shareholders of the Excelsior Funds
approved new advisory contracts that will enable U.S. Trust to remain as the
investment adviser to the Excelsior Funds after the merger. We look forward to
participating in the benefits which the merger of such outstanding
organizations may bring to Excelsior Funds.
Sincerely,
/s/ Frederick S. Wonham
Frederick S. Wonham
Chairman of the Board and President
<PAGE>
Excelsior Funds, Inc.
Portfolio of Investments March 31, 2000
Money Fund
<TABLE>
<CAPTION>
Principal Discount Value
Amount Rate (Note 1)
--------- -------- --------------
<C> <S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 87.32%
Federal Farm Credit Bank
$120,000,000 04/03/00............................... 6.05% $ 119,959,667
Federal Home Loan Bank
850,000,000 04/03/00............................... 6.05 849,714,305
350,000,000 04/05/00............................... 5.87 349,771,722
100,000,000 02/15/01............................... 6.55 100,000,000
Student Loan Marketing Association
100,000,000 08/10/00............................... 6.39# 99,989,263
--------------
TOTAL U.S. GOVERNMENT
& AGENCY OBLIGATIONS (Cost
$1,519,434,957)........................ 1,519,434,957
--------------
COMMERCIAL PAPER -- 9.44%
23,000,000 Citibank Canada, 07/20/00.............. 6.15 23,000,000
75,000,000 Goldman Sachs Group, Inc., 04/04/00.... 5.85 74,963,438
44,264,000 Metlife Funding Inc., 04/03/00......... 5.85 44,249,614
22,000,000 Proctor & Gamble, 04/04/00............. 5.85 21,989,275
--------------
TOTAL COMMERCIAL PAPER
(Cost $164,202,327).................... 164,202,327
--------------
</TABLE>
<TABLE>
<CAPTION>
Principal Discount Value
Amount Rate (Note 1)
--------- -------- --------------
<C> <S> <C> <C>
CORPORATE BONDS -- 2.87%
$50,000,000 Morgan Stanley Dean Witter, Series C,
03/16/01 (Cost $50,000,000)............ 6.36% $ 50,000,000
--------------
<CAPTION>
Shares
------
<C> <S> <C> <C>
OTHER SHORT-TERM INVESTMENTS -- 0.98%
16,198,417 Dreyfus Government Cash Management
Fund................................... 16,198,417
885,592 Dreyfus Treasury Prime Cash Management
Fund................................... 885,592
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $17,084,009)..................... 17,084,009
--------------
TOTAL INVESTMENTS (Cost $1,750,721,293*)............ 100.61% $1,750,721,293
OTHER ASSETS & LIABILITIES (NET).................... (0.61) (10,541,635)
------ --------------
NET ASSETS.......................................... 100.00% $1,740,179,658
====== ==============
</TABLE>
--------
* Aggregate cost for Federal tax and book purposes.
# Variable or floating rate securities--rate disclosed is as of March 31, 2000.
See Notes to Financial Statements
<PAGE>
Excelsior Funds, Inc.
Money Fund
Statement of Assets and Liabilities
March 31, 2000
<TABLE>
<S> <C>
ASSETS:
Investments, at cost--see accompanying portfolio............ $1,750,721,293
==============
Investments, at value (Note 1).............................. $1,750,721,293
Interest receivable......................................... 2,507,907
Prepaid expenses............................................ 104,466
--------------
Total Assets................................................ 1,753,333,666
LIABILITIES:
Payable for dividends declared.............................. 7,950,830
Investment advisory fees payable (Note 2)................... 9,651
Administration fees payable (Note 2)........................ 352,602
Administrative service fees payable (Note 2)................ 562,475
Directors' fees payable (Note 2)............................ 10,584
Due to custodian bank....................................... 4,067,261
Accrued expenses and other payables......................... 200,605
--------------
Total Liabilities........................................... 13,154,008
--------------
NET ASSETS................................................... $1,740,179,658
==============
NET ASSETS consist of:
Undistributed net investment income......................... $ 362
Accumulated net realized loss on investments................ (19,324)
Par value (Note 3).......................................... 1,740,381
Paid-in capital in excess of par value...................... 1,738,458,239
--------------
Total Net Assets............................................. $1,740,179,658
==============
Net Assets:
Shares...................................................... $1,467,182,804
Institutional Shares........................................ 272,996,854
Shares of Common Stock Outstanding (Note 3):
Shares...................................................... 1,467,382,208
Institutional Shares........................................ 272,998,826
NET ASSET VALUE PER SHARE:
Shares...................................................... $1.00
=====
Institutional Shares........................................ $1.00
=====
</TABLE>
See Notes to Financial Statements
<PAGE>
Excelsior Funds, Inc.
Money Fund
Statement of Operations
Year Ended March 31, 2000
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income............................................... $66,548,195
-----------
EXPENSES:
Investment advisory fees (Note 2)............................. 2,994,776
Administration fees (Note 2).................................. 1,822,501
Administrative servicing fees (Note 2)........................ 1,182,749
Custodian fees................................................ 372,125
Legal and audit fees.......................................... 120,576
Shareholder servicing agent fees.............................. 69,676
Shareholder reports........................................... 37,320
Directors' fees and expenses (Note 2)......................... 30,821
Registration and filing fees.................................. 28,760
Miscellaneous expenses........................................ 171,699
-----------
Total Expenses................................................ 6,831,003
Fees waived and reimbursed by investment adviser and
administrators (Note 2)...................................... (1,362,718)
-----------
Net Expenses.................................................. 5,468,285
-----------
NET INVESTMENT INCOME.......................................... 61,079,910
-----------
REALIZED GAIN ON INVESTMENTS (Note 1):
Net realized gain on security transactions.................... 34,486
-----------
Net increase in net assets resulting from operations........... $61,114,396
===========
</TABLE>
See Notes to Financial Statements
<PAGE>
Excelsior Funds, Inc.
Money Fund
Statement of Change in Net Assets
<TABLE>
<S> <C>
Year Ended March 31, 2000
Net investment income....................................... $ 61,079,910
Net realized gain on investments............................ 34,486
--------------
Net increase in net assets resulting from operations........ 61,114,396
Distributions to shareholders:
From net investment income
Shares..................................................... (56,402,552)
Institutional Shares*...................................... (4,676,979)
Increase in net assets from fund share transactions (Note
3):
Shares..................................................... 493,480,150
Institutional Shares*...................................... 272,997,023
--------------
Net increase in net assets.................................. 766,512,038
NET ASSETS:
Beginning of year.......................................... 973,667,620
--------------
End of year (1)............................................ $1,740,179,658
==============
--------
(1) Including undistributed net investment income.......... $ 362
==============
Year Ended March 31, 1999
Net investment income....................................... $ 35,599,290
Net realized gain on investments............................ 4,266
--------------
Net increase in net assets resulting from operations........ 35,603,556
Distributions to shareholders:
From net investment income................................. (35,599,290)
In excess of net investment income......................... (17)
Increase in net assets from fund share transactions (Note
3)......................................................... 314,791,213
--------------
Net increase in net assets.................................. 314,795,462
NET ASSETS:
Beginning of year.......................................... 658,872,158
--------------
End of year (2)............................................ $ 973,667,620
==============
--------
(2) Including distributions in excess of net investment
income................................................. $ (17)
==============
</TABLE>
* Institutional Shares of the Money Fund commenced operations on December 16,
1999.
See Notes to Financial Statements
<PAGE>
Excelsior Funds, Inc.
Financial Highlights-Selected Per Share Data and Ratios
For a Fund share outstanding throughout the period.
<TABLE>
<CAPTION>
Net Asset Total Dividends Dividends
Value, Net Net Realized From From Net in Excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income on Investments Operations Income Income
--------- ---------- -------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
MONEY FUND
Institutional Shares --
(12/16/99)*
Period Ended March 31,
2000.................. $1.00 $0.01688 -- $0.01688 $(0.01688) --
</TABLE>
* Commencement of operations
+ Expense ratios before waiver of fees and reimbursement of expenses (if any)
by adviser and administrators.
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Ratio of Ratio of Ratio of
Net Gross Net
Net Asset Net Assets, Operating Operating Investment
Value, End Expenses Expenses Income Fee
Total End of Total of Period to Average to Average to Average Waivers
Distributions Period Return (000's) Net Assets Net Assets+ Net Assets (Note 2)
------------- --------- ------ ----------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$(0.01688) $1.00 1.70% $272,997 0.25% 0.49% 5.72% $0.00071
</TABLE>
See Notes to Financial Statements
<PAGE>
EXCELSIOR FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies
Excelsior Funds, Inc. ("Excelsior Fund") was incorporated under the laws of
the State of Maryland on August 2, 1984 and is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
Excelsior Fund currently offers shares in eighteen managed investment
portfolios, each having its own investment objectives and policies. The
following is a summary of significant accounting policies for Money Fund, (the
"Portfolio"). Such policies are in conformity with generally accepted
accounting principles and are consistently followed by the 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 Portfolio offers two classes of shares: Shares and Institutional Shares.
The Financial Highlights of Shares as well as the financial statements for the
remaining portfolios of Excelsior Fund are presented separately.
With regard to the Portfolio, it is Excelsior Fund's policy, to the extent
possible, to maintain a continuous net asset value per share of $1.00. The
Portfolio 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 Portfolio will not vary.
(a) Portfolio Valuation:
Securities are valued at amortized cost, which has been determined by the
Portfolio's Board of Directors to represent the fair value of the
Portfolio'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.
(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 subcustodian or are maintained in the Federal Reserve/Treasury
book-entry system and must have,
<PAGE>
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 Portfolio 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:
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.
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, the 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 the 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, 2000, the Portfolio 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,
---------------------
2004 2005 Total
----- ------- -------
<S> <C> <C> <C>
7,000 $12,000 $19,000
</TABLE>
To the extent that such carryforwards are utilized, no capital gain
distributions will be made. During the year ended March 31, 2000, the
Portfolio utilized capital loss carryforwards for Federal tax purposes
totaling approximately $35,000.
(f) Expense Allocation:
Expenses directly attributable to the Portfolio are charged to it and
expenses directly attributable to a particular class of shares are charged
to such class. Other expenses are allocated to the Portfolio based on
average daily net assets.
<PAGE>
2. Investment Advisory Fee, Administration Fee and Related Party Transactions
United States Trust Company of New York ("U.S. Trust NY") and U.S. Trust
Company (collectively with U.S. Trust NY, "U.S. Trust") serve as the
investment adviser to the Portfolio. For the services provided pursuant to the
Investment Advisory Agreements, U.S. Trust is entitled to receive a fee,
computed daily and paid monthly, at the annual rate of .25% of the average
daily net assets of the Portfolio. U.S. Trust NY is a state-chartered bank and
trust company and a member bank of the Federal Reserve System. U.S. Trust
Company is a Connecticut state bank and trust company. Each is a wholly-owned
subsidiary of U.S. Trust Corporation, a registered bank holding company.
On January 12, 2000, The Charles Schwab Corporation ("Schwab") and U.S.
Trust Corporation entered into a definitive agreement to merge (the "Merger").
After the Merger, U.S. Trust Corporation will be a wholly-owned subsidiary of
Schwab. The Merger is subject to the approval of U.S. Trust Corporation
shareholders. The Merger is expected to take place on or about May 31, 2000,
but could occur later.
As a consequence of the Merger and in order to provide continuity of
investment advisory services, the Board of Directors of Excelsior Fund
proposed for the approval of its shareholders a new advisory agreement with
U.S. Trust. The new proposed advisory agreement was submitted to and approved
by a vote of Excelsior Fund shareholders--see "Voting Results of Special
Meeting of Shareholders". The new advisory agreement will become effective on
the date of the Merger.
U.S. Trust Company, Chase Global Funds Services Company, a corporate
affiliate of The Chase Manhattan Bank, and Federated Administrative Services
(collectively, the "Administrators") provide administrative services to
Excelsior Fund. For the services provided to the Portfolio, 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 year ended
March 31, 2000, administration fees charged by U.S. Trust Company to the
Portfolio were $590,499.
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 Portfolio for a portion of
other expenses. Beginning November 19, 1999, U.S. Trust contractually agreed
to waive investment advisory fees and to reimburse other ordinary operating
expenses through March 31, 2000 to the extent necessary to maintain an annual
expense ratio of not more than 0.50% for Shares of the Portfolio. With regard
to Institutional Shares, for the period December 16, 1999 (commencement of
operations) through March 31, 2000, U.S. Trust contractually agreed to waive
fees and reimburse expenses to the extent necessary to maintain an annual
expense ratio of not more than .25%. U.S. Trust has extended these contractual
agreements through the fiscal year ended March 31, 2001.
For the year ended March 31, 2000, U.S. Trust waived investment advisory
fees totaling $179,969 for the Portfolio.
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
<PAGE>
customers owning shares of the Portfolio. As a consideration for the
administrative services provided by each service organization to its
customers, the Portfolio will pay the service organization an administrative
service fee at the annual rate of up to .40% of the average daily net asset
value of its shares held by the service organization's customers. Such
services may include assisting in processing purchase, exchange and redemption
requests; transmitting and receiving funds in connection with customer orders
to purchase, exchange or redeem shares; and providing periodic statements.
Administrative service fees paid by the Portfolio to affiliates of U.S.
Trust amounted to $1,182,726 for the year ended March 31, 2000. Through the
year ended March 31, 2000, U.S. Trust and the Administrators voluntarily
agreed to waive investment advisory and administration fees payable by the
Portfolio in an amount equal to the administrative service fees payable
(including fees paid to affiliates of U.S. Trust) by the Portfolio. They will
continue to do so through July 31, 2000. Effective August 1, 2000, U.S. Trust
has voluntarily agreed to continue waiving investment advisor and
administration fees payable by the portfolio in an amount equal to the
administrative services fees expense paid to subsidiaries of U.S. Trust
Corporation. For the year ended March 31, 2000, U.S. Trust and the
Administrators waived investment advisory and administration fees in an amount
equal to the administrative service fee of $1,182,749 for the Portfolio.
Edgewood Services, Inc. ("the Distributor"), a wholly-owned subsidiary of
Federated Investors, Inc., serves as the distributor of Excelsior Fund. Shares
of the 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. Effective March 3, 2000, the members of the Nominating
Committees of Excelsior Fund receive an annual fee of $2,000 per committee for
their services.
3. Common Stock:
Excelsior Fund has authorized capital of 35 billion shares of Common Stock,
28.875 billion of which is currently classified to represent interests in one
of eighteen separate investment portfolios. Authorized capital currently
classified for the Portfolio is 2 billion shares.
Each share has a par value of $.001 and represents an equal proportionate
interest in the Portfolio with other shares of the Portfolio, and is entitled
to such dividends and distributions of taxable earnings on the assets
belonging to the Portfolio as are declared at the discretion of Excelsior
Fund's Board of Directors. Since the Portfolio has 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.
<PAGE>
<TABLE>
<CAPTION>
Year Ended
------------------------------
03/31/00 03/31/99
-------------- --------------
<S> <C> <C>
Sold:
Shares........................................ $6,092,031,150 $4,459,113,083
Institutional Shares*......................... 934,355,336 N/A
Issued as reinvestment of dividends:
Shares........................................ 5,196,004 5,478,185
Institutional Shares*......................... 514,849 N/A
Redeemed:
Shares........................................ (5,603,747,004) (4,149,800,055)
Institutional Shares*......................... (661,873,162) N/A
-------------- --------------
Net Increase.................................... $ 766,477,173 $ 314,791,213
============== ==============
</TABLE>
--------
* Institutional Shares of the Money Fund commenced operations December 16,
1999.
4. Line of Credit:
The Portfolio and other affiliated funds participate in a $250 million
unsecured line of credit provided by a syndication of banks under a line of
credit agreement. Borrowings may be made to temporarily finance the repurchase
of Portfolio shares. Interest is charged to each Portfolio, based on its
borrowings, at a rate equal to the Federal Funds Rate plus up to 2% per year.
In addition, a commitment fee, based on the average daily unused portion of
the line of credit, is allocated among the participating Portfolios at the end
of each quarter. For the year ended March 31, 2000, the Portfolio had no
borrowings under the agreement.
5. Reorganization
On November 29, 1999, shareholders of Excelsior Funds (the "Trust") approved
an Agreement and Plan of Reorganization (the "Reorganization") by and between
Excelsior Funds, Inc. and the Trust. The Reorganization, which occurred as of
the close of business on December 15, 1999, provided for (a) the acquisition
by Money Fund of all of the assets and the assumption by Money Fund of the
liabilities of the Trust's Institutional Money Fund in exchange for
Institutional Shares of the Money Fund; (b) the distribution of Institutional
Shares of the Money Fund to the Trust's Institutional Money Fund shareholders
in liquidation of the Trust; and (c) the deregistration and termination of the
Trust.
As a result of the Reorganization, each shareholder of the Trust's
Institutional Money Fund became a shareholder of the Money Fund and held,
immediately after the Reorganization occurred, the same number of
Institutional Shares of the Money Fund as the shareholder held in the Trust's
Institutional Money Fund immediately before the Reorganization occurred.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders
and Board of Directors of
Excelsior Funds, Inc.
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of the Money Fund, (one of the
portfolios constituting the Excelsior Funds, Inc.) (the "Fund") as of March 31,
2000, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards required that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements and financial highlights. Our
procedures included confirmation of securities owned as of March 31, 2000, by
correspondence with the custodian and brokers or by other appropriate auditing
procedures where replies from brokers were not received. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Money Fund at March 31, 2000, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for the periods indicated therein, in
conformity with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 24, 2000
<PAGE>
Federal Tax Information: (Unaudited)
For the year ended March 31, 2000, the percentage of income earned from
direct treasury obligations was 33.15%.
Voting Results of Special Meeting of Shareholders: (Unaudited)
The proposal described below was submitted to a vote of shareholders of
Excelsior Fund at a special meeting of shareholders held on May 19, 2000 (the
"Meeting"):
Proposal--Approval of a new investment advisory agreement between the
Portfolio and U.S. Trust:
At the Meeting, the shareholders of the Portfolio approved the Proposal as
follows:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- ----------
<S> <C> <C>
986,630,912 802,496 15,842,264
</TABLE>
