<PAGE>
- --------------------------------------------------------------------------------
A Letter To Our Shareholders
- --------------------------------------------------------------------------------
Dear Shareholder:
The six-month period ended February 28, 1999 was a good one for the U.S.
economy and short-term money market securities. Early in the period, concerns
about the potential spread of the Asian currency and credit crisis to Latin
America contributed to the Federal Reserve Board's decision to reduce key
short-term interest rates three times between September and November. While
this easing of monetary policy caused short-term money market yields to
decline, very low inflation continued to support above-average real returns,
which are nominal yields less the rate of inflation. In contrast, longer term
fixed-income securities did not fare as well as money market securities. That's
because longer term yields rose in response to reports of robust U.S. economic
growth in the fourth quarter of 1998 and the first two months of 1999.
Accordingly, money market funds generally performed better than longer term
bond funds over the six-month period.
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. Excelsior
Institutional Money Fund's annualized current 7-day yield for the period ended
February 28, 1999 was 4.86% and for the same period the Fund's annualized
effective 7-day yield was 4.98% after taking into account the effect of
compounding.*
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
finacial goals.
/s/FS Wonham
- -----------------------------------
Frederick S. Wonham
Chairman of the Board and President
April 16, 1999
* 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, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C>
Assets:
Investments in Cash Reserves Portfolio (the "Portfolio"), at value (Note 1) .... $ 182,597,933
-------------
Liabilities:
Dividends payable .............................................................. 495,295
Administrative servicing fees payable (Note 2) ................................. 326,133
Administration fees payable (Note 2) ........................................... 2,163
Transfer agent fees payable (Note 2) ........................................... 2,056
Other accrued expenses ......................................................... 35,627
-------------
Total liabilities ............................................................. 861,274
-------------
Net Assets for 181,736,659 shares of beneficial interest outstanding ........... $ 181,736,659
=============
Represented by:
Paid-in capital ................................................................ $ 181,736,659
=============
Net Asset Value, Offering Price and Redemption Price Per Share ................. $ 1.00
=============
</TABLE>
Excelsior Institutional Money Fund
- --------------------------------------------------------------------------------
Statement Of Operations
For the six months ended February 28, 1999 (unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Investment Income from Portfolio (Note 1):
Interest income (includes $12,823 of net realized gains) ....... $4,718,889
Allocated expenses ............................................. (88,195)
----------
4,630,694
Expenses (Note 1):
Administrative servicing fees (Note 2) ......................... $ 352,709
Administration fees (Note 2) ................................... 88,177
Professional fees .............................................. 36,565
Registration fees .............................................. 18,040
Transfer agent fees (Note 2) ................................... 12,351
Prospectus and shareholders' reports ........................... 11,377
Trustees' fees and expenses (Note 2) ........................... 9,875
Amortization of organization expense (Note 1) .................. 8,021
Miscellaneous expenses ......................................... 500
----------
Total expenses ................................................ 537,615
Less: Waiver of administrative servicing fees (Note 2) ........ (347,705)
Less: Waiver of administration fees (Note 2) .................. (57,794)
----------
Net expenses .................................................. 132,116
----------
Net investment income from operations .......................... $4,498,578
==========
</TABLE>
See notes to financial statements
<PAGE>
Excelsior Institutional Money Fund
- --------------------------------------------------------------------------------
Statement Of Changes In Net Assets
<TABLE>
<CAPTION>
Six Months Ended For the Year
February 28, 1999 Ended
(unaudited) August 31, 1998
------------------- -------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Net investment income from operations ...................... $ 4,498,578 $ 10,308,761
-------------- ----------------
Dividends to shareholders from net investment income ....... (4,498,578) (10,308,761)
-------------- ----------------
Transactions in Shares of Beneficial Interest
($1.00 Per Share)
Net proceeds from shares sold .............................. 594,373,194 2,050,291,956
Reinvestment of dividends .................................. 1,602,460 3,681,052
Cost of shares redeemed .................................... (586,058,151) (2,197,914,554)
-------------- ----------------
Net increase (decrease) in net assets resulting from
transactions in shares of beneficial interest ........... 9,917,503 (143,941,546)
-------------- ----------------
Total increase (decrease) in net assets ................... 9,917,503 (143,941,546)
Net Assets:
Beginning of period ........................................ 171,819,156 315,760,702
-------------- ----------------
End of period .............................................. $ 181,736,659 $ 171,819,156
============== ================
</TABLE>
Excelsior Institutional Money Fund
- --------------------------------------------------------------------------------
Financial Highlights
<TABLE>
<CAPTION>
Six Months Ended
February 28, 1999 For the Year Ended August 31,
(unaudited) 1998 1997 1996 1995
------------------- ------------- ------------- ------------- -------------
<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 .............................. 0.0254 0.0551 0.0543 0.0547 0.0579
Dividends from net investment
income .................................. (0.0254) (0.0551) (0.0543) (0.0547) (0.0579)
----------- -------- ------- ------- -------
Net Asset Value, end of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== ======== ======= ======= =======
Total Return ............................. 5.16%(2) 5.65% 5.57% 5.61% 5.95%
=========== ======== ======= ======= =======
Ratios:
Net investment income to average
net assets (1) ......................... 5.10%(2) 5.52% 5.40% 5.55% 5.59%
Expenses to average net assets (1) ...... 0.25%(2) 0.25% 0.25% 0.25% 0.25%
Total Net Assets, end of period (000's
omitted) ................................ $ 181,737 $171,819 $315,761 $293,290 $638,111
(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 .................... 4.64%(2) 5.06% 4.92% 5.11% 5.16%
Expenses in average net assets ........ 0.71%(2) 0.71% 0.74% 0.69% 0.68%
(2) Annualized
</TABLE>
<PAGE>
[RESTUBBED]
<TABLE>
<CAPTION>
For the period
November 8, 1993
(commencement of
operations) to
August 31, 1994
-------------------
<S> <C>
Net Asset Value, beginning of period ..... $ 1.00
Net investment income from
operations .............................. 0.0308
Dividends from net investment
income .................................. (0.0308)
------------
Net Asset Value, end of period ........... $ 1.00
============
Total Return ............................. 3.87%(2)
===============
Ratios:
Net investment income to average
net assets (1) ......................... 4.39%(2)
Expenses to average net assets (1) ...... 0.19%(2)
Total Net Assets, end of period (000's
omitted) ................................ $ 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 .................... 4.28%(2)
Expenses in average net assets ........ 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 corporate affiliate of The 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 ("U.S. Trust"), 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
(1.6% at February 28, 1999).
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.
<PAGE>
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 an annual fee, payable monthly, at a maximum annual rate
of 0.10% of the average daily net assets of the Fund. For the period ended
February 28, 1999, administration fees totaling $74,950 were charged by U.S.
Trust Connecticut, of which $57,794 were waived.
For the period ended February 28, 1999, the Fund paid FAS administration fees
totaling $13,227. Edgewood receives no compensation from the Fund in its
capacity as distributor of the Fund's shares.
For the period ended February 28, 1999, CGFSC received fees amounting to $12,351
for providing transfer agency services to the Fund.
B. Administrative Servicing Fee -- The Trust, on behalf of the Fund, has entered
into shareholder servicing agreements with United States Trust Company of New
York, a wholly-owned subsidiary of U.S. Trust, 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 period ended February 28, 1999, the Service Organizations
received fees amounting to $5,004, 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, 1999
(Unaudited)
Principal
Amount
Issuer (000's omitted) Value
- --------------------------------------------------------------------------------
Asset Backed -- 9.5%
- --------------------------------------------------------------------------------
Lincs-Ser *
4.936% due 3/18/99 $ 100,000 $ 99,998,386
Lincs-Ser *
4.986% due 2/15/00 87,500 87,500,000
SMM Trust *
5.047% due 1/26/00 100,000 100,000,000
Steers *
4.94% due 3/25/99 76,118 76,118,294
4.998% due 11/10/99 201,000 201,000,000
Strategic Money Market
Trust Receipts *
4.937% due 3/05/99 213,000 213,000,000
5.32% due 12/15/99 200,000 200,000,000
Strats Trust *
4.94% due 8/18/99 50,000 50,000,000
Triangle Funding Ltd.
5.07% due 10/15/99 82,000 82,000,000
--------------
1,109,616,680
--------------
Bank Notes -- 10.0%
- --------------------------------------------------------------------------------
FCC National Bank
5.12% due 5/12/99 100,000 100,001,950
5.86% due 6/03/99 50,000 49,991,365
4.90% due 12/16/99 185,000 184,929,047
First Union National Bank
5.35% due 9/13/99 50,000 50,002,582
Key Bank National
Association
4.995% due 9/23/99 350,000 349,901,233
Nationsbank *
5.00% due 11/19/99 160,000 160,000,000
5.15% due 3/12/99 50,000 50,000,000
5.04% due 6/01/99 32,000 32,000,000
4.98% due 6/10/99 100,000 100,000,000
4.82% due 6/25/99 100,000 99,984,427
--------------
1,176,810,604
--------------
Certificates Of Deposit
(Domestic) -- 4.4%
- --------------------------------------------------------------------------------
BankBoston
5.23% due 3/09/99 50,000 50,000,000
Centric Capital Corp.
4.86% due 4/19/99 55,493 55,125,914
Chase Manhattan Bank
Corp
5.74% due 5/10/99 57,000 56,993,721
<PAGE>
Principal
Amount
Issuer (000's omitted) Value
- --------------------------------------------------------------------------------
Monte Rosa Capital Corp.
4.86% due 4/13/99 $ 72,625 $ 72,203,412
4.85% due 4./16/99 145,338 144,437,308
Newport Funding Corp.
4.87% due 3/01/99 140,226 140,226,000
------------
518,986,355
------------
Certificates Of Deposit (Euro) -- 7.5%
- --------------------------------------------------------------------------------
Abby National
5.07% due 5/12/99 100,000 100,000,000
Algemene Bank
5.62% due 4/14/99 75,000 74,995,666
5.50% due 9/02/99 70,000 70,168,808
Bayer Hypo Vereinsbank
5.09% due 5/10/99 100,000 100,000,000
5.09% due 5/12/99 100,000 100,001,950
Bayerische Vereinsbank
4.99% due 11/10/99 171,000 171,023,254
5.02% due 11/23/99 100,000 100,006,647
Halifax
5.07% due 5/12/99 100,000 100,000,000
International Nederlanden
Group
4.935% due 6/30/99 60,000 60,000,985
------------
876,197,310
------------
Certificates Of Deposit (Yankee) -- 25.4%
- --------------------------------------------------------------------------------
Bank of Nova Scotia
5.65% due 3/29/99 38,000 37,995,977
4.96% due 6/11/99 46,500 46,501,592
Bayerische Vereinsbank
4.91% due 7/08/99 120,000 120,000,000
Canadian Imperial Bank
5.745% due 4/27/99 54,000 54,010,520
Credit Agricole Indosuez
5.74% due 4/26/99 50,000 49,993,919
4.93% due 7/12/99 100,000 100,007,210
5.31% due 9/13/99 50,000 50,095,581
Credit Communal de Belgique
5.62% due 3/19/99 45,000 44,997,777
Credit Suisse First Boston
5.06% due 10/07/99 325,000 325,000,000
5.69% due 7/06/99 100,000 100,000,000
Deutsche Bank
5.65% due 3/02/99 100,000 99,999,869
Dresdner Bank
5.09% due 5/06/99 55,000 54,999,788
<PAGE>
Cash Reserves Portfolio
PORTFOLIO OF INVESTMENTS (Continued) February 28, 1999
(Unaudited)
Principal
Amount
Issuer (000's omitted) Value
- --------------------------------------------------------------------------------
Landesbank Hessen
Thuringen
5.00% due 4/06/99 $ 50,000 $ 50,000,000
5.19% due 3/01/00 100,000 99,971,037
Morgan Guarantee Trust
Co
4.90% due 10/15/99 85,000 84,948,558
Rabobank Nederland
5.71% due 6/11/99 100,000 99,986,368
5.69% due 6/30/99 75,000 74,996,325
5.64% due 7/30/99 53,000 53,002,363
Societe Generale Bank
5.75% due 4/06/99 100,000 99,995,749
5.76% due 4/16/99 75,000 74,996,380
Societe Generale Bank*
4.85% due 5/20/99 175,800 175,773,654
Svenska Handelsbanken
5.75% due 5/04/99 57,000 56,995,215
5.76% due 5/25/99 75,000 74,989,972
5.74% due 6/01/99 77,000 76,986,818
Swiss Bank Corp.
5.68% due 5/28/99 40,000 40,051,628
5.715% due 6/14/99 100,000 99,988,980
Toronto Dominion
5.03% due 6/03/99 200,000 200,000,000
5.71% due 6/23/99 85,000 84,989,826
5.60% due 8/17/99 50,000 50,143,031
4.79% due 8/18/99 135,000 134,950,642
UBS AG
5.00% due 5/19/99 50,000 49,997,560
Westdeutsche Landesbank
5.125% due 9/15/99 48,000 48,035,924
5.21% due 9/22/99 50,000 50,074,907
4.84% due 11/05/99 116,000 115,969,420
--------------
2,980,446,590
--------------
Commercial Paper -- 19.3%
- --------------------------------------------------------------------------------
Aspen Funding Corp.
4.86% due 4/12/99 200,000 198,866,000
BankAmerica Corp.
4.92% due 4/09/99 50,000 49,733,500
Banco Santander
4.85% due 3/01/99 100,000 100,000,000
Barton Capital Corp.
4.87% due 4/06/99 120,285 119,699,212
Caisse d'Amortissement
4.735% due 10/08/99 76,000 73,790,859
<PAGE>
Principal
Amount
Issuer (000's omitted) Value
- --------------------------------------------------------------------------------
Cregem Inc.
4.96% due 4/07/99 $ 50,000 $ 49,745,111
4.81% due 7/08/99 150,000 147,414,625
4.81% due 7/09/99 115,000 113,002,514
Deutsche Bank
4.81% due 8/10/99 165,000 161,428,575
General Electric Capital
Corp
5.12% due 3/11/99 250,000 249,644,444
4.75% due 10/04/99 125,000 121,421,007
4.75% due 10/05/99 125,000 121,404,514
4.88% due 3/01/99 75,000 75,000,000
J. P. Morgan & Co., Inc.*
4.74% due 10/04/99 70,000 67,999,983
Province de Quebec
5.04% due 3/16/99 100,000 99,790,000
Repsol International
Finance
4.87% due 7/15/99 100,000 98,160,222
Sigma Finance Corp.
5.35% due 3/05/99 120,000 119,928,667
5.125% due 2/09/00 250,000 250,000,000
Variable Funding Capital
Corp
4.85% due 3/08/99 50,000 49,952,847
--------------
2,266,982,080
--------------
Corporate Notes -- 7.4%
- --------------------------------------------------------------------------------
Associates Corp. of
North America*
4.91% due 6/29/99 150,000 149,961,490
Bear Stearns*
5.00% due 6/04/99 225,000 225,000,000
J. P. Morgan & Co., Inc.*
4.82% due 7/07/99 210,000 209,957,330
Key Bank National
Association*
4.915% due 5/12/99 88,000 87,987,666
Royal Bank of Canada*
4.92% due 6/07/99 200,000 200,011,567
--------------
872,918,053
--------------
Medium Term Notes -- 7.1%
- --------------------------------------------------------------------------------
Abbey National Treasury
Services
4.771% due 6/15/99 100,000 99,968,429
5.58% due 8/25/99 100,000 99,980,986
<PAGE>
Cash Reserves Portfolio
PORTFOLIO OF INVESTMENTS (Continued) February 28, 1999
(Unaudited)
Principal
Amount
Issuer (000's omitted) Value
- --------------------------------------------------------------------------------
Goldman Sachs Group*
5.05% due 1/31/00 $ 335,500 $ 335,500,000
Norwest Financial Inc.
5.55% due 8/31/99 100,000 99,985,567
Sigma Finance Corp.
4.89% due 8/27/99 197,000 196,995,459
----------------
832,430,441
----------------
Time Deposits -- 7.1%
- --------------------------------------------------------------------------------
Banco Bilbao Vizcaya
Nassau
4.84% due 3/01/99 150,000 150,000,000
Chase Bank
4.75% due 3/01/99 386,966 386,966,000
Suntrust
4.81% due 3/01/99 50,000 50,000,000
Svenska Grand Cayman
4.844% due 3/01/99 250,000 250,000,000
----------------
836,966,000
----------------
United States Government Agency -- 2.6%
- --------------------------------------------------------------------------------
Federal Home Loan Bank
4.71% due 3/16/99 50,000 49,901,874
4.69% due 4/16/99 600 596,404
5.06% due 3/03/00 100,000 99,937,000
Federal National
Mortgage Association
4.86% due 2/10/99 100,000 99,922,269
Student Loan Marketing
Discount Note
4.69% due 4/16/99 50,000 49,700,361
----------------
300,057,908
----------------
United States Treasury Bills -- 0.3%
- --------------------------------------------------------------------------------
United States Treasury Bills
4.135% due 10/14/99 25,000 24,348,163
4.175% due 12/09/99 15,000 14,507,698
----------------
38,855,861
----------------
Total Investments at Value
/Amortized Cost 100.6% 11,810,267,882
Other Assets,
Less Liabilities (0.6%) (75,220,905)
------ ----------------
----------------
Net Assets 100.0% $ 11,735,046,977
===== ================
* Variable interest rate - subject to periodic change.
See notes to financial statements
<PAGE>
Cash Reserves Portfolio
STATEMENT OF ASSETS AND LIABILITIES
February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Assets:
Investments at value (Note 1A) $11,810,267,882
Interest receivable 125,683,746
- --------------------------------------------------------------------------------
Total assets 11,935,951,628
- --------------------------------------------------------------------------------
Liabilities:
Payable for investments purchased 199,908,037
Payable to affiliate--Investment Advisory fee (Note 2A) 663,133
Accrued expenses and other liabilities 333,481
- --------------------------------------------------------------------------------
Total liabilities 200,904,651
- --------------------------------------------------------------------------------
Net Assets $11,735,046,977
- --------------------------------------------------------------------------------
Represented by:
Paid-in capital for beneficial interests $11,735,046,977
- --------------------------------------------------------------------------------
Cash Reserves Portfolio
STATEMENT OF OPERATIONS
For the Six Months Ended February 28, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Interest Income (Note 1B): $292,120,478
Expenses:
Investment Advisory fees (Note 2A) $8,190,847
Administrative fees (Note 2B) 2,730,282
Custody and fund accounting fees 1,095,415
Trustees' fees 53,954
Legal fees 32,082
Audit fees 22,300
Miscellaneous 87,395
- --------------------------------------------------------------------------------
Total expenses 12,212,275
Less aggregate amounts waived by Investment Adviser
and Administrator (Notes 2A, and 2B) (6,745,592)
Less fees paid indirectly (Note 1E) (11)
- --------------------------------------------------------------------------------
Net expenses 5,466,672
- --------------------------------------------------------------------------------
Net investment income $286,653,806
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
Cash Reserves Portfolio
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
February 28, 1999 Year Ended
(Unaudited) August 31, 1998
- --------------------------------------------------------------------------------
Increase (Decrease) in Net Assets from
Operations:
Net investment income $ 286,653,806 $ 504,627,904
- --------------------------------------------------------------------------------
Capital Transactions:
Proceeds from contributions 22,079,029,546 30,335,511,897
Value of withdrawals (19,436,545,991) (29,691,630,125)
- --------------------------------------------------------------------------------
Net increase in net assets from
capital transactions 2,642,483,555 643,881,772
- --------------------------------------------------------------------------------
Net Increase in Net Assets 2,929,137,361 1,148,509,676
- --------------------------------------------------------------------------------
Net Assets:
Beginning of period 8,805,909,616 7,657,399,940
- --------------------------------------------------------------------------------
End of period $11,735,046,977 $ 8,805,909,616
- --------------------------------------------------------------------------------
Cash Reserves Portfolio
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Six Months Ended Year Ended August 31,
February 28, 1999 --------------------------------------------------
(Unaudited) 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Ratios/Supplemental Data:
Net assets (000's omitted) $11,735,047 $8,805,910 $7,657,400 $4,442,187 $4,765,406
Ratio of expenses to
average net assets 0.10%* 0.10% 0.10% 0.10% 0.10%
Ratio of net investment
income to average
net assets 5.25%* 5.65% 5.57% 5.64% 5.88%
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%* 0.22% 0.23% 0.23% 0.23%
Net investment income
to average net assets 5.13%* 5.53% 5.44% 5.50% 5.75%
- ----------------------------------------------------------------------------------------------------
</TABLE>
* Annualized
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.
Citibank is a wholly-owned subsidiary of Citigroup Inc. Citigroup Inc. was
formed as a result of the merger of Citicorp and Travelers Group, Inc. which was
completed on October 8, 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 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
$8,190,847, of which $4,015,310 was voluntarily waived for the six months ended
February 28, 1999. 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 $2,730,282, all of which were voluntarily waived
for the six months ended February 28, 1999. 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 $96,550,935,887 and $93,524,876,338, respectively, for
the six months ended February 28, 1999.
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, 1999, the commitment fee allocated to the Portfolio was
$15,271. 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
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.
153 East 53rd Street
New York, NY 10043
Transfer Agent of the Fund
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108
(800) 909-1989
Distributor of the Fund
Edgewood Services, Inc.
5800 Corporate Drive
Pittsburgh, PA 15237
Independent Accountants of the Fund
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
USTEXIMS99
<PAGE>
[GRAPHIC OMITTED]
Institutional
Money Fund
Semi-Annual Report
February 28, 1999
