<PAGE>
================================================================================
A Letter To Our Shareholders
Dear Shareholder:
The six-month period ended February 28, 1998 was a good one for most
financial assets, especially U.S. stocks and bonds. A remarkably resilient
economy, low rates of inflation and lower interest rates were primarily
responsible for the above-average returns provided by longer-term investments.
However, shorter-term assets -- including money market securities -- did not
share the benefits these positive economic influences provided. As interest
rates declined during the period, so did yields on most money market
securities. Despite the difficult market environment for short-term
fixed-income securities, the Portfolio provided shareholders with a competitive
level of investment income. Excelsior Institutional Money Fund's annualized
current 7-day yield for the period ended February 28, 1998 was 5.52% and for
the same period the Fund's annualized effective 7-day yield was 5.61% after
taking into account the effect of compounding.*
Throughout the period, the Portfolio was managed in a manner consistent
with providing liquidity and as high a level of current income as is consistent
with the preservation of capital. Through its investment in the Portfolio,
Excelsior Institutional Money Fund seeks to offer an attractive yield and a
competitive expense ratio by investing in a portfolio of high-quality short-term
domestic and foreign dollar denominated money market instruments.
This Semi-Annual Report reviews the Fund and Portfolio's investment
activities and performance over the past six months. On behalf of the Board of
Trustees and staff of Excelsior Funds, I want to extend our sincere
appreciation to all of our shareholders. We thank you for your confidence and
participation and we look forward to continuing to help you achieve your
financial goals.
/s/ Frederick S. Wonham
- -----------------------------------
Frederick S. Wonham
Chairman of the Board and President
April 20, 1998
*Annualized effective yield is based upon dividends declared daily and
reinvested monthly.
The shares of the Fund are neither insured nor guaranteed by the U.S.
Government. While the Fund seeks to maintain a stable net asset value of $1.00
per share, there can be no assurance that it will be able to do so on a
continuing basis.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY OR
GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND, THE FEDERAL
RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. AN INVESTMENT IN THE FUND IS
SUBJECT TO INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF PRINCIPAL AMOUNT
INVESTED.
<PAGE>
Excelsior Institutional Money Fund
- --------------------------------------------------------------------------------
Statement Of Assets And Liabilities February 28, 1998 (unaudited)
<TABLE>
<S> <C>
Assets:
Investment in Cash Reserves Portfolio (the "Portfolio"), at value (Note 1) .. $ 301,889,674
Deferred organization expenses (Note 1) ..................................... 29,413
-------------
Total assets ............................................................. 301,919,087
-------------
Liabilities:
Dividends payable ........................................................... 395,013
Shareholder servicing fees payable (Note 2) ................................. 297,197
Administration service fees payable (Note 2) ................................ 11,297
Transfer agent fees payable (Note 2) ........................................ 1,948
Other accrued expenses ...................................................... 26,858
-------------
Total liabilities ........................................................ 732,313
-------------
Net Assets for 301,186,774 shares of beneficial interest outstanding .. ..... $ 301,186,774
=============
Represented by:
Paid-in capital ............................................................. $ 301,186,774
=============
Net Asset Value, Offering Price and Redemption Price Per Share .............. $ 1.00
=============
</TABLE>
Excelsior Institutional Money Fund
- --------------------------------------------------------------------------------
Statement Of Operations
Six Months Ended February 28, 1998 (unaudited)
<TABLE>
<S> <C> <C>
Investment Income from Portfolio (Note 1):
Interest Income (includes $10,144 of net realized gains) ........ $5,906,875
Allocated expenses .............................................. (102,100)
----------
Net investment income from Portfolio ......................... 5,804,775
Expenses (Note 1):
Shareholder servicing fees (Note 2) ............................. $ 404,635
Administration service fees (Note 2) ............................ 101,159
Professional fees ............................................... 25,865
Amortization of organization expenses (Note 1) .................. 21,043
Registration fees ............................................... 17,892
Prospectus and shareholders' reports ............................ 12,759
Transfer agent fees (Note 2) .................................... 12,640
Trustees' fees and expenses (Note 2) ............................ 9,917
Insurance expense ............................................... 4,048
Miscellaneous expenses .......................................... 1,488
----------
Total expenses ............................................... 611,446
Less: Waiver of shareholder servicing fees (Note 2) .......... (390,873)
Less: Waiver of administration service fees (Note 2) ......... (67,512)
----------
Net expenses ................................................. 153,061
----------
Net investment income from operations ........................... $5,651,714
==========
</TABLE>
See notes to financial statements
<PAGE>
Excelsior Institutional Money Fund
- --------------------------------------------------------------------------------
Statement Of Changes In Net Assets
<TABLE>
<CAPTION>
Six Months Ended
February 28, 1998 Year Ended
(unaudited) August 31, 1997
------------------- -------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Net investment income from operations ................. $ 5,651,714 $ 16,949,906
---------------- ----------------
Dividends to shareholders from net investment income .. (5,651,714) (16,949,906)
---------------- ----------------
Transactions in Shares of Beneficial Interest
($1.00 Per Share)
Net proceeds from shares sold ......................... 1,396,440,128 4,074,986,293
Reinvestment of dividends ............................. 1,935,033 6,115,286
Cost of shares redeemed ............................... (1,412,949,089) (4,058,630,393)
---------------- ----------------
Net increase (decrease) in net assets resulting from
transactions in shares of beneficial interest ...... (14,573,928) 22,471,186
---------------- ----------------
Total increase (decrease) in net assets .............. (14,573,928) 22,471,186
Net Assets:
Beginning of period ................................... 315,760,702 293,289,516
---------------- ----------------
End of period ......................................... $ 301,186,774 $ 315,760,702
================ ================
</TABLE>
Excelsior Institutional Money Fund
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
For the period
November 8, 1993
Six Months Ended (commencement of
February 28, 1998 For the Year Ended August 31, operations) to
(unaudited) 1997 1996 1995 August 31, 1994
------------------- ------------- ------------- ------------- ------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income from operations..... 0.0275 0.0543 0.0547 0.0579 0.0308
Dividends from net investment income ..... (0.0275) (0.0543) (0.0547) (0.0579) (0.0308)
---------- --------- --------- --------- -----------
Net Asset Value, end of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========= ========= ===========
Total Return ............................. 5.61%(2) 5.57% 5.61% 5.95% 3.87%(2)
========== ========= ========= ========= ===========
Ratios:
Net investment income to average net
assets(1) ............................. 5.59%(2) 5.40% 5.55% 5.59% 4.39%(2)
Expenses to average net assets(1) ....... 0.25%(2) 0.25% 0.25% 0.25% 0.19%(2)
Total Net Assets, end of period (000's
omitted) ................................ $ 301,187 $315,761 $293,290 $638,111 $ 770,658
- ------------
(1) Reflects the Fund's proportionate share of the Portfolio's expenses as well as voluntary fee waivers by agents of the
Portfolio and the Trust. If the voluntary fee waivers had not been in place, the ratios of net investment income and
expenses to average net assets would have been as follows:
Net investment income to average
net assets ..................... 5.02%(2) 4.92% 5.11% 5.16% 4.28%(2)
Expenses to average net assets .... 0.82%(2) 0.74% 0.69% 0.68% 0.31%(2)
(2) Annualized.
</TABLE>
See notes to financial statements
<PAGE>
Excelsior Institutional Money Fund
- --------------------------------------------------------------------------------
Notes To Financial Statements (unaudited)
(1) Significant Accounting Policies
Excelsior Institutional Money Fund (the "Fund") is a series of Excelsior Funds
(the "Trust"), an open-end diversified management investment company registered
under the Investment Company Act of 1940.
U.S. Trust Company of Connecticut ("U.S. Trust Connecticut"), Chase Global
Funds Services Company ("CGFSC"), a subsidiary of Chase Manhattan Bank, and
Federated Administrative Services ("FAS"), a wholly-owned subsidiary of
Federated Investors, (collectively, the "Administrators") serve as
Administrators of the Trust. U.S. Trust Connecticut is a wholly-owned
subsidiary of U.S. Trust Corporation, a registered bank holding company.
Edgewood Services, Inc. ("Edgewood"), a wholly-owned subsidiary of Federated
Investors, serves as distributor to the Fund.
It is the Fund's policy, to the extent possible, to maintain a continuous net
asset value of $1.00 per share; the Fund has adopted certain investment,
valuation, dividend and distribution policies to enable it to do so.
The Fund invests all of its investable assets in Cash Reserves Portfolio (the
"Portfolio"), an open-end diversified management investment company for which
Citibank, N.A. serves as Investment Advisor. The value of such investment
reflects the Fund's proportionate interest in the net assets of the Portfolio
(3.5% at February 28, 1998).
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates.
The performance of the Fund is directly affected by the performance of the
Portfolio. The financial statements of the Portfolio, including the Portfolio
of Investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
A. Investment Valuation - Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements, which are included
elsewhere in this report.
B. Investment Income - The Fund earns interest income, net of Portfolio
expenses, daily on its investment in the Portfolio. Realized gain and loss from
securities transactions are recorded by the Portfolio on the identified cost
basis, when recognized, and allocated to the Fund, along with net investment
income, based on its investment in the Portfolio.
C. Dividends to Shareholders - Dividends from net investment income are
declared daily and paid monthly. Distributions from net realized gains or
losses, if any, are declared daily as income and paid monthly.
D. Federal Income Taxes - It is the policy of the Fund to 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.
E. Expenses - The fund bears all costs of its operations other than expenses
specifically assumed by the Administrators.
F. Deferred Organization Expenses - Organization expenses have been deferred
and are being amortized on a straight line basis over a period not to exceed
five years beginning with the commencement of operations of the Fund. The
amount paid by the Fund on any redemption of the Fund's initial shares, will be
reduced by the pro rata portion of any unamortized organization expenses which
the number of initial shares redeemed bears to the total number of initial
shares outstanding immediately prior to such redemption.
G. Other - All the net income of the Portfolio is allocated pro rata among the
Fund and the other investors in the Portfolio at the time of such
determination.
<PAGE>
Excelsior Institutional Money Fund
- --------------------------------------------------------------------------------
Notes To Financial Statements (unaudited) continued
(2) Administration Fee and Other
Transactions With Affiliates
A. Administration Fee - For services provided to the Fund, the Administrators
are entitled jointly to a annual fee, payable monthly, at a maximum annual rate
of 0.10% of the average daily net assets of the Fund. For the six months ended
February 28, 1998, U.S Trust received fees amounting to $18,473, which is net
of $67,512 which was voluntarily waived, for providing administration services
to the fund.
For the six months ended February 28, 1998, the Fund paid FAS administration
fees totaling $15,174. Edgewood receives no compensation from the Fund in its
capacity as distributor of the Fund's shares.
For the six months ended February 28, 1998, CGFSC received fees amounting to
$12,640, for providing transfer agency services to the Fund.
B. Shareholder Servicing Fee - The Trust, on behalf of the Fund, has entered
into Shareholder servicing agreements with United States Trust Company of New
York, BISYS and Mid Atlantic Capital Group Inc. (the "Service Organizations")
pursuant to which each Service Organization, as agent for its customers,
provides administrative support services. For its services, each Service
Organization may receive a fee from the Fund, which may not exceed, on an
annual basis, an amount equal to 0.40% of the average daily net assets of Fund
shares owned by customers of the Service Organization. For the six months
ended February 28, 1998, the Service Organizations received fees amounting to
$13,762, which is net of $390,873 which was voluntarily waived, for providing
shareholder servicing to the Fund.
C. Other - Independent Trustees receive an annual retainer of $4,000 and an
additional $250 for each meeting of the Board of Trustees attended. In
addition, the Trust reimburses independent Trustees for reasonable expenses
incurred when acting in their capacity as Trustees.
<PAGE>
Cash Reserves Portfolio
PORTFOLIO OF INVESTMENTS February 28, 1998
(Unaudited)
Principal
Amount
Issuer (000's omitted) Value
- -----------------------------------------------------------------------
Asset Backed -- 9.8%
- -----------------------------------------------------------------------
Asset Backed Securities
Investment Trust
5.625% due 6/15/98 $157,000 $ 156,990,756
Steers
5.625% due 10/15/98 160,000 160,000,000
5.625% due 11/10/98 191,000 190,974,441
Strategic Money Market
Trust Receipts
5.625% due 3/05/99 213,000 213,000,000
Strats Trust
5.647% due 12/15/98 130,000 130,000,000
-----------
850,965,197
-----------
Bank Notes 12.7%
- -----------------------------------------------------------------------
Bank America of Chicago
5.85% due 3/13/98 100,000 99,996,717
Bank of New York
5.50% due 2/17/99 100,000 99,935,194
FCC National Bank
5.70% due 4/07/98 200,000 199,992,380
5.64% due 7/02/98 100,000 99,970,640
5.86% due 10/02/98 100,000 99,966,353
First USA Bank
5.715% due 4/29/98 100,000 100,018,929
Key Bank National
Association
5.66% due 7/07/98 100,000 99,976,228
5.655% due 9/28/98 200,000 199,916,652
Morgan Guaranty
Trust Co.
5.93% due 8/31/98 100,000 99,980,938
-------------
1,099,754,031
-------------
Certificates Of Deposit (Domestic) 2.3%
- -----------------------------------------------------------------------
Morgan Guaranty
Trust Co.
5.85% due 3/16/98 100,000 99,998,024
5.55% due 2/02/99 100,000 100,000,000
-------------
199,998,024
-------------
<PAGE>
Cash Reserves Portfolio
PORTFOLIO OF INVESTMENTS February 28, 1998
(Unaudited) Continued
Principal
Amount
Issuer (000's omitted) Value
- -----------------------------------------------------------------------
Asset Backed -- 9.8%
- -----------------------------------------------------------------------
Certificates Of Deposit (Yankee) 37.9%
- ------------------------------------------------------------------------
Bank America National
Association
5.64% due 6/30/98 200,000 199,942,538
Bank of Nova Scotia
5.89% due 9/16/98 $150,000 $ 149,961,093
Bank of Tokyo Mitsubishi
5.75% due 3/30/98 100,000 100,000,000
5.77% due 3/30/98 200,000 200,000,000
6.00% due 4/06/98 100,000 100,000,000
Barclays Bank
5.84% due 3/11/98 100,000 99,999,292
5.82% due 10/05/98 200,000 199,943,126
5.53% due 2/23/99 100,000 99,943,534
Bayeriche Landesbank
5.86% due 7/17/98 100,000 99,979,957
Bayerische Vereinsbank
5.71% due 10/06/98 30,000 29,992,791
5.70% due 1/07/99 100,000 99,967,345
Canadian Imperial Bank
5.86% due 8/10/98 70,000 69,984,922
Credit Suisse
5.84% due 3/11/98 30,000 29,999,788
5.73% due 10/07/98 300,000 300,000,000
5.73% due 11/09/98 125,000 125,000,000
Deutsche Bank
5.85% due 10/20/98 90,000 89,972,637
5.62% due 2/26/99 100,000 99,952,587
5.65% due 3/02/99 100,000 99,952,075
Dresdner Bank
5.95% due 10/20/98 70,000 70,035,067
Natwest BankCorp
5.933% due 6/26/98 100,000 99,979,497
Rabobank Nederland
6.18% due 5/01/98 100,000 99,996,864
Royal Bank of Canada
6.08% due 5/27/98 75,000 75,013,663
5.93% due 9/15/98 150,000 149,953,570
5.54% due 2/16/99 200,000 199,868,375
Societe Generale Bank
5.87% due 3/03/98 125,000 124,999,869
5.86% due 7/21/98 50,000 49,992,609
5.77% due 10/07/98 66,000 65,995,259
Swiss Bank Corp.
5.69% due 1/07/99 150,000 149,926,533
-------------
3,280,352,991
-------------
<PAGE>
Cash Reserves Portfolio
PORTFOLIO OF INVESTMENTS February 28, 1998
(Unaudited) Continued
Principal
Amount
Issuer (000's omitted) Value
- -----------------------------------------------------------------------
Commercial Paper 12.7%
- ----------------------------------------------------------------------
Associates Corp. of
North America
5.67% due 3/02/98 150,000 150,000,000
Atlantis One Fundings Corp.
5.50% due 4/07/98 $97,745 $ 96,908,737
Caisse D. Amortissement
5.68% due 6/11/98 100,000 98,406,444
Diageo Capital PLC
5.45% due 8/31/98 100,000 97,244,722
Ford Motor Credit Co.
5.70% due 3/02/98 100,000 100,000,000
General Electric Capital Corp.
5.68% due 3/24/98 150,000 149,479,333
J. P. Morgan & Co., Inc.
5.64% due 6/15/98 100,000 98,355,000
Merrill Lynch & Co., Inc.
5.67% due 6/01/98 100,000 98,566,750
Prudential Fundings Corp.
5.67% due 3/02/98 100,000 100,000,000
Receivables Capital Corp.
5.53% due 3/05/98 110,290 110,239,175
-------------
1,099,200,161
-------------
Corporate Notes 9.0%
- -----------------------------------------------------------------------
Associates Corp. of
North America
5.71% due 1/04/99 200,000 199,899,874
Bank One, Columbus
5.59% due 5/14/98 75,000 74,989,845
Bank One, Wisconsin
5.58% due 10/23/98 100,000 99,949,710
Key Bank National
Association
5.65% due 7/02/98 100,000 99,973,895
Morgan Stanley
Group, Inc.
5.76% due 5/18/98 75,000 75,000,000
PNC Bank National
Association
5.74% due 10/02/98 230,000 229,907,930
-----------
779,721,254
-----------
<PAGE>
Cash Reserves Portfolio
portfolio of investments February 28, 1998
(Unaudited) Continued
Principal
Amount
Issuer (000's omitted) Value
- -----------------------------------------------------------------------
Medium Term Notes 5.5%
- -----------------------------------------------------------------------
Abbey National Treasury
Services
6.00% due 6/17/98 $100,000 $ 99,988,796
5.54% due 1/20/99 125,000 124,980,830
5.525% due 1/26/99 100,000 99,960,952
Sigma Finance Corp.
5.94% due 11/17/98 150,000 150,000,000
------------
474,930,578
------------
Promissory Notes 4.1%
- -----------------------------------------------------------------------
Goldman Sachs Group
5.625% due 11/13/98 350,000 350,000,000
-----------
Time Deposits 7.0%
- -----------------------------------------------------------------------
Den Danske
5.531% due 3/02/98 150,000 150,000,000
First Union National Bank
5.438% due 3/02/98 153,820 153,820,000
Harris Trust and
Savings Bank
5.719% due 3/02/98 150,000 150,000,000
Nationsbank
5.50% due 3/02/98 150,000 150,000,000
-----------
603,820,000
-----------
Total Investments at
Amortized Cost 101.0% 8,738,742,236
Other Assets,
Less Liabilities (1.0) (89,586,231)
----- --------------
Net Assets 100.0% $8,649,156,005
===== ==============
See notes to financial statements
<PAGE>
<PAGE>
Cash Reserves Portfolio
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1998 (Unaudited)
================================================================================
Assets:
Investments at value (Note 1A) $8,738,742,236
Cash 898
Interest receivable 109,503,307
- --------------------------------------------------------------------------------
Total assets 8,848,246,441
- --------------------------------------------------------------------------------
Liabilities:
Payable for investment purchased 198,184,037
Payable to affiliate--Investment Advisory fee (Note 2A) 529,266
Accrued expenses and other liabilities 377,133
- --------------------------------------------------------------------------------
Total liabilities 199,090,436
- --------------------------------------------------------------------------------
Net Assets $8,649,156,005
================================================================================
Represented by:
Paid-in capital for beneficial interests $8,649,156,005
================================================================================
Cash Reserves Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1998 (Unaudited)
================================================================================
Interest Income (Note 1B): $256,547,997
Expenses:
Investment Advisory fees (Note 2A) $6,618,719
Administrative fees (Note 2B) 2,206,240
Custodian fees 656,895
Auditing fees 26,500
Trustees' fees 23,334
Legal fees 17,783
Other 135,055
- --------------------------------------------------------------------------------
Total expenses 9,684,526
Less aggregate amounts waived by Investment Adviser
and Administrator (Notes 2A, and 2B) (5,247,106)
Less fees paid indirectly (Note 1E) (547)
- --------------------------------------------------------------------------------
Net expenses 4,436,873
- --------------------------------------------------------------------------------
Net investment income $252,111,124
================================================================================
See notes to financial statements
<PAGE>
Cash Reserves Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 28, 1998 Year Ended
(Unaudited) August 31, 1997
================================================================================
Increase (Decrease) in Net Assets from
Operations:
Net investment income $ 252,111,124 $ 339,604,126
- --------------------------------------------------------------------------------
Capital Transactions:
Proceeds from contributions 16,267,169,184 33,685,999,190
Value of withdrawals (15,527,524,243) (30,810,390,668)
- --------------------------------------------------------------------------------
Net increase in net assets from
capital transactions 739,644,941 2,875,608,522
- --------------------------------------------------------------------------------
Net Increase in Net Assets 991,756,065 3,215,212,648
- --------------------------------------------------------------------------------
Net Assets:
Beginning of period 7,657,399,940 4,442,187,292
- --------------------------------------------------------------------------------
End of period $ 8,649,156,005 $ 7,657,399,940
================================================================================
Cash Reserves Portfolio
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months
Ended
February 28, Year Ended August 31,
1998 -----------------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
=================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data:
Net assets (000's omitted) $8,649,156 $7,657,400 $4,442,187 $4,765,406 $2,147,361 $781,470
Ratio of expenses to
average net assets 0.10%+ 0.10% 0.10% 0.10% 0.11% 0.20%
Ratio of net investment
income to average
net assets 5.68%+ 5.57% 5.64% 5.88% 3.87% 3.15%
Note: If agents of the Portfolio had not voluntarily waived a portion of their fees for the periods indicated,
the ratios would have been as follows:
Ratios:
Expenses to average
net assets 0.22%+ 0.23% 0.23% 0.23% 0.24% 0.25%
Net investment income
to average net assets 5.56%+ 5.44% 5.50% 5.75% 3.74% 3.10%
==================================================================================================================
+ Annualized
</TABLE>
See notes to financial statements
<PAGE>
Cash Reserves Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. Significant Accounting Policies Cash Reserves Portfolio (the
"Portfolio") is registered under the U.S. Investment Company Act of 1940, as
amended, as a no-load, diversified, open-end management investment company
which was organized as a trust under the laws of the State of New York. The
Declaration of Trust permits the Trustees to issue beneficial interests in the
Portfolio. Signature Financial Group (Grand Cayman), Ltd. ("SFG") acts as the
Portfolio's Administrator and Citibank, N.A. ("Citibank") acts as the
Investment Adviser. The preparation of financial statements in accordance with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
The significant accounting policies consistently followed by the
Portfolio are as follows:
A. Valuation of Investments Money market instruments are valued at
amortized cost, which the Trustees have determined in good faith constitutes
fair value. This method involves valuing a portfolio security at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium. The Portfolio's use of amortized cost is subject to the Portfolio's
compliance with certain conditions as specified under Rule 2a-7 of the U.S.
Investment Company Act of 1940.
B. Interest Income and Expenses Interest income consists of interest
accrued and discount earned (including both original issue and market
discount) on the investments of the Portfolio, accrued ratably to the date of
maturity, plus or minus net realized gain or loss, if any, on investments.
Expenses of the Portfolio are accrued daily. The Portfolio bears all costs of
its operations other than expenses specifically assumed by Citibank and SFG.
C. U.S. Federal Income Taxes The Portfolio is considered a partnership
under the U.S. Internal Revenue Code. Accordingly, no provision for federal
income taxes is necessary.
D. Repurchase Agreements It is the policy of the Portfolio to require the
custodian bank to take possession, to have legally segregated in the Federal
Reserve Book Entry System or to have segregated within the custodian bank's
vault, all securities held as collateral in support of repurchase agreement
investments. Additionally, procedures have been established by the Portfolio
to monitor, on a daily basis, the market value of the repurchase agreement's
underlying investments to ensure the existence of a proper level of
collateral.
E. Fees Paid Indirectly The Portfolio's custodian bank calculates its
fees based on the Portfolio's average daily net assets. The fees are reduced
according to a fee arrangement, which provides for custody fees to be reduced
based on a formula developed to measure the value of cash deposited with the
custodian by the Portfolio. This amount is shown as a reduction of expenses on
the Statement of Operations.
F. Other Purchases, maturities and sales of money market instruments are
accounted for on the date of the transaction.
<PAGE>
Cash Reserves Portfolio
NOTES TO FINANCIAL STATEMENTS (Unaudited)
2. Investment Advisory Fees and Administrative Fees
A. Investment Advisory Fee -- The Investment advisory fees paid to
Citibank, as compensation for overall investment management services, amounted
to $6,618,719, of which $3,040,866 was voluntarily waived for the six months
ended February 28, 1998. The investment advisory fees are computed at an
annual rate of 0.15% of the Portfolio's average daily net assets.
B. Administrative Fees -- Under the terms of an Administrative Services
Agreement, the administrative fee paid to the Administrator, as compensation
for overall administrative services and general office facilities, are
computed at the annual rate of 0.05% of the Portfolio's average daily net
assets. The Administrative fees amounted to $2,206,240, all of which were
voluntarily waived for the six months ended February 28, 1998. The Portfolio
pays no compensation directly to any Trustee or to any officer who is
affiliated with the Administrator, all of whom receive remuneration for their
services to the Portfolio from the Administrator or its affiliates. Certain of
the officers and a Trustee of the Portfolio are officers and a director of the
Administrator or its affiliates.
3. Investment Transactions
Purchases, maturities and sales of money market instruments aggregated
$165,501,676,391 and $164,382,220,872, respectively, for the six months ended
February 28, 1998.
4. Line of Credit
The Portfolio, along with other CitiFunds, entered into an agreement with
a bank which allows the Funds collectively to borrow up to $60 million for
temporary or emergency purposes. Interest on borrowings, if any, is charged to
the specific fund executing the borrowing at the base rate of the bank. The
line of credit requires a quarterly payment of a commitment fee based on the
average daily unused portion of the line of credit. For the six months ended
February 28, 1998, the commitment fee allocated to the Portfolio was $15,151.
Since the line of credit was established, there have been no borrowings.
<PAGE>
Administrators of the Fund
U.S. Trust Company of Connecticut
225 High Ridge Road
Stamford, CT 06905 EXCELSIOR
FUNDS
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
(617) 557-8000
Federated Administrative Services
Federated Investment Tower
1001 Liberty Avenue
Pittsburgh, PA 15222
Investment Adviser of the Portfolio
Citibank, N.A. Institutional
153 East 53rd Street Money Fund
New York, NY 10043
Transfer Agent of the Fund
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
(800) 909-1989
Custodian and Transfer Agent
of the Portfolio
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
Distributor of the Fund
Edgewood Services, Inc.
Clearing Operations
P.O. Box 897 Semi-Annual Report
Pittsburgh, PA 15230 February 28, 1998
Independent Accountants of the Fund
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
USTEXIMS98
