BT INSTITUTIONAL FUNDS, 497, 1996-05-14

BT INSTITUTIONAL FUNDS
497, 1996-05-14

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BT INSTITUTIONAL FUNDS

PROSPECTUS: APRIL 29, 1996
Please read this Prospectus carefully before investing and retain it for future
reference. It contains important information about the Fund that you should know
and can refer to in deciding whether the Fund's goals match your own.

A Statement of Additional Information with the same date has been filed with the
Securities and Exchange Commission, and is incorporated herein by reference. You
may request a free copy of the Statement by calling the Fund's Service Agent at
1-800-368-4031.

UNLIKE OTHER MUTUAL FUNDS, THE FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE BY
INVESTING ALL OF ITS INVESTABLE ASSETS IN A SEPARATE INVESTMENT COMPANY (A
"PORTFOLIO") WITH AN IDENTICAL INVESTMENT OBJECTIVE. THE INVESTMENT PERFORMANCE
OF THE FUND WILL CORRESPOND DIRECTLY TO THE INVESTMENT PERFORMANCE OF THE
PORTFOLIO. SEE "SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE" ON
PAGE 10.

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, BANKERS TRUST COMPANY AND THE SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. AN INVESTMENT IN THE FUND IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF
THE INVESTMENT TO FLUCTUATE, AND WHEN THE INVESTMENT IS REDEEMED, THE VALUE MAY
BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED BY THE INVESTOR.

LIKE SHARES OF ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Equity 500
Index Fund

o Seeks to match the performance of the stock market, as represented by the S&P
500 market index, before expenses.

BANKERS TRUST COMPANY
Investment Adviser of the
Portfolio and Administrator

SIGNATURE BROKER-
DEALER SERVICES, INC.
Distributor
6 St. James Avenue
Boston, Massachusetts 02116

<PAGE>

TABLE OF CONTENTS
- ------------------------------------------------------------------------------
PAGE
..............................................................................
Summary of Fund Expenses 3
Fund Financial Highlights 5
Investment Objective, Policies and Risks 6
Risk Factors; Matching the Fund to Your Investment Needs 9
Net Asset Value 11
Purchase and Redemption of Shares 12
Dividends, Distributions and Taxes 15
Performance Information and Reports 16
Management of the Trust and Portfolio 17
Additional Information 21
- ------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES
The following table provides (i) a summary of expenses relating to purchases
and sales of the shares of Equity 500 Index Fund (the "Fund") and the annual
operating expenses of the Fund and the expenses of the Equity 500 Index
Portfolio (the "Portfolio"), as a percentage of average net assets of the Fund
and (ii) an example illustrating the dollar cost of such expenses on a $1,000
investment in the Fund. THE TRUSTEES OF BT INSTITUTIONAL FUNDS (THE "TRUST")
BELIEVE THAT THE AGGREGATE PER SHARE EXPENSES OF THE FUND AND THE PORTFOLIO
WILL BE LESS THAN OR APPROXIMATELY EQUAL TO THE EXPENSES WHICH THE FUND WOULD
INCUR IF THE TRUST RETAINED THE SERVICES OF AN INVESTMENT ADVISER AND THE
INVESTABLE ASSETS ("ASSETS") OF THE FUND WERE INVESTED DIRECTLY IN THE TYPE OF
SECURITIES BEING HELD BY THE PORTFOLIO.

- ------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES
(as a percentage of the average daily net assets of the Fund)
..............................................................................
Investment advisory fee (after reimbursements or waivers) 0.07%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.03
..............................................................................
Total operating expenses (after reimbursements or waivers) 0.10%
..............................................................................
EXAMPLE 1 year 3 years 5 years 10 years
..............................................................................
You would pay the following expenses on
a $1,000 investment, assuming: (1) 5%
annual return and(2) redemption at
the end of each time period $1 $3 $6 $13
- ------------------------------------------------------------------------------

The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of the Fund. While
reimbursement of distribution expenses in amounts up to 0.10% of average net
assets are authorized to be made pursuant to the Plan of Distribution under Rule
12b-1 of the Investment Company Act of 1940, as amended (the "1940 Act"), it is
not expected that any payments will actually be made under that plan in the
foreseeable future. Bankers Trust Company ("Bankers Trust") has voluntarily
agreed to waive a portion of its investment advisory fee. Without such waiver,
the Portfolio's investment advisory fee would be equal to 0.10%. The expense
table and the example reflect a voluntary undertaking by Bankers Trust or
Signature Broker-Dealer Services, Inc. ("Signature") to waive or reimburse
expenses such that the total operating expenses will not exceed 0.10% of the
Fund's average net assets annually. In the absence of this undertaking, for the
fiscal year ended December 31, 1995, the total operating expenses would have
been equal to approximately 0.23% of the Fund's average net assets annually. THE
EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND
ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Moreover, while each
example assumes a 5% annual return, actual performance will vary and may result
in a return greater or less than 5%.

The Fund is sold by Signature as the Trust's distributor (the "Distributor") to
customers of Bankers Trust or to customers of another bank or a dealer or other
institution that has a sub-shareholder servicing agreement with Bankers Trust
(along with Bankers Trust, a "Service Agent"). Some Service Agents may impose
certain conditions on their customers in addition to or different from those
imposed by the Fund and may charge their customers a direct fee for their
services. Each Service Agent has agreed to transmit to shareholders who are its
customers appropriate disclosures of any fees that it may charge them directly.

In addition to the customers of Bankers Trust or other institutions described
above, the Fund is available for (a) accounts where an investment adviser or a
financial planner has discretion over such account and the account holder pays
such person as compensation for its advice and other services an annual fee of
at least 0.50% on the assets in the account; (b) accounts established under a
"wrap fee" program or formal asset allocation program where the account holder
pays the program sponsor an annual fee of at least 0.50% on the assets in the
account; and (c) accounts established through an automated clearing or similar
system established for the use of investment professionals and through which
purchases and redemptions are transmitted to the Fund on an omnibus basis.

For more information with respect to the expenses of the Fund and the Portfolio
see "Management of the Trust and Portfolio" herein.

FUND FINANCIAL HIGHLIGHTS
The following table shows selected data for a share outstanding, total
investment return, ratios to average net assets and other supplemental data
for the Fund for each period indicated and has been audited by Coopers &
Lybrand L.L.P., the Fund's independent accountants, whose report thereon
appears in the Fund's Annual Report which is incorporated by reference in the
Fund's Statement of Additional Information.
- ------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE PERIOD
DECEMBER 31, DECEMBER 31, 1992
----------------------------------------------- (COMMENCEMENT
1995 1994 1993 OF OPERATIONS)
..................................................................................................................................
<S> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $10.44 $10.68 $10.00 $10.00
..................................................................................................................................
Income from Investment Operations
Net Investment Income 0.30 0.28 0.25 --
Net Realized and Unrealized Gain (Loss) on
Securities and Futures Transactions 3.59 (0.13) 0.73 --
..................................................................................................................................
Total from Investment Operations 3.89 0.15 0.98 --
..................................................................................................................................
Distributions from
Net Investment Income (0.30) (0.28) (0.25) --
Net Realized Gain from Securities and Futures
Transactions (0.06) (0.11) (0.05) --
..................................................................................................................................
Total Distributions (0.36) (0.39) (0.30) --
..................................................................................................................................
Net Asset Value, End of Period $13.97 $10.44 $10.68 $10.00
..................................................................................................................................
TOTAL INVESTMENT RETURN 37.59% 1.40% 9.84% --
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average
Net Assets 2.52% 2.84% 2.67% --
Ratio of Expenses to Average Net Assets, Including
Expenses of the Equity 500 Index Portfolio 0.10% 0.10% 0.10% --
Decrease Reflected in Above Expense Ratio Due to
Absorption of Expenses by Bankers Trust 0.13% 0.13% 0.25% --
Net Assets, End of Period (000's omitted) $800,551 $371,216 $170,508 $9,335
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

INVESTMENT OBJECTIVE, POLICIES AND RISKS
The Fund seeks to provide investment results that, before expenses, correspond
to the total return (i.e., the combination of capital changes and income) of
common stocks publicly traded in the United States, as represented by the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500"). The Fund
offers investors a convenient means of diversifying their holdings of common
stocks while relieving those investors of the administrative burdens typically
associated with purchasing and holding these instruments.

The Trust seeks to achieve the investment objective of the Fund by investing all
the Assets of the Fund in the Portfolio, which has the same investment objective
as the Fund. There can be no assurances that the investment objective of either
the Fund or the Portfolio will be achieved. The investment objective of each of
the Fund and the Portfolio is not a fundamental policy and may be changed upon
notice to but without the approval of the Fund's shareholders or the Portfolio's
investors, respectively. See "Special Information Concerning Master-Feeder Fund
Structure" on page 10 herein.

EQUITY 500 INDEX PORTFOLIO
The Portfolio is not managed according to traditional methods of "active"
investment management, which involve the buying and selling of securities based
upon economic, financial, and market analyses and investment judgment. Instead,
the Portfolio, utilizing a "passive" or "indexing" investment approach, attempts
to replicate, before expenses, the performance of the S&P 500. There is no
assurance that the Portfolio will achieve its investment objective.

Under normal conditions when the Portfolio's assets are above $10 million, the
Portfolio will invest at least 80% of its assets in common stocks of companies
which compose the S&P 500. In seeking to duplicate the performance of the S&P
500, Bankers Trust, the Portfolio's investment adviser, will attempt over time
to allocate the Portfolio's investments among common stocks in approximately the
same weightings as the S&P 500, beginning with the heaviest-weighted stocks that
make up a larger portion of the Index's value. Over the long term, Bankers Trust
seeks a correlation between the performance of the Portfolio, before expenses,
and that of the S&P 500 of 0.98 or better (.95 or better if Portfolio asset
levels are below $10 million). A figure of 1.00 would indicate perfect
correlation. In the unlikely event that the correlation is not achieved, the
Portfolio's Board of Trustees will consider alternative structures.

The Adviser utilizes a two-stage sampling approach in seeking to obtain its
objective. Stage one, which encompasses large cap stocks, maintains the stock
holdings at or near their benchmark weights. Large capitalization stocks are
defined as those securities which represent 0.10% or more of the index. In stage
two, smaller stocks are analyzed and selected using risk characteristics and
industry weights in order to match the sector and risk characteristics of the
smaller companies in the S&P 500. This approach helps to maximize portfolio
liquidity while minimizing costs.

Bankers Trust generally will seek to match the composition of the S&P 500 but
usually will not invest the Portfolio's stock portfolio to mirror the Index
exactly. Because of the difficulty and expense of executing relatively small
stock transactions, the Portfolio may not always be invested in the less heavily
weighted S&P 500 stocks, and may at times have its portfolio weighted
differently from the S&P 500, particularly if the Portfolio has a low level of
assets. When the Portfolio's size is greater, Bankers Trust expects to purchase
more of the stocks in the S&P 500 and to match the relative weighting of the S&P
500 more closely, and anticipates that the Portfolio will be able to mirror,
before expenses, the performance of the S&P 500 with little variance at asset
levels of $10 million or more. In addition, the Portfolio may omit or remove any
S&P 500 stock from the Portfolio if, following objective criteria, Bankers Trust
judges the stock to be insufficiently liquid or believes the merit of the
investment has been substantially impaired by extraordinary events or financial
conditions. Bankers Trust will not purchase the stock of Bankers Trust New York
Corporation, which is included in the Index, and instead will overweight its
holdings of companies engaged in similar businesses.

Under normal conditions, Bankers Trust will attempt to invest as much of the
Portfolio's assets as is practical in common stocks included in the S&P 500.
However, the Portfolio may maintain up to 20% of its assets in short-term debt
securities and money market instruments hedged with stock index futures and
options to meet redemption requests or to facilitate the investment in common
stocks. See "Additional Information" for further information.

When the Portfolio has cash from new investments in the Portfolio or holds a
portion of its assets in money market instruments, it may enter into stock index
futures or options to attempt to increase its exposure to the stock market.
Strategies the Portfolio could use to accomplish this include purchasing futures
contracts, writing put options, and purchasing call options. When the Portfolio
wishes to sell securities, because of shareholder redemptions or otherwise, it
may use stock index futures or options thereon to hedge against market risk
until the sale can be completed. These strategies could include selling futures
contracts, writing call options, and purchasing put options.

Bankers Trust will choose among futures and options strategies based on its
judgment of how best to meet the Portfolio's goals. In selecting futures and
options, Bankers Trust will assess such factors as current and anticipated stock
prices, relative liquidity and price levels in the options and futures markets
compared to the securities markets, and the Portfolio's cash flow and cash
management needs. If Bankers Trust judges these factors incorrectly, or if price
changes in the Portfolio's futures and options positions are not well correlated
with those of its other investments, the Portfolio could be hindered in the
pursuit of its objective and could suffer losses. The Portfolio could also be
exposed to risks if it could not close out its futures or options positions
because of an illiquid secondary market.

Short-Term Instruments. The Portfolio intends to stay invested in the securities
described above to the extent practical in light of its objective and long-term
investment perspective. However, the Portfolio's assets may be invested in
short-term instruments with remaining maturities of 397 days or less to meet
anticipated redemptions and expenses or for day-to-day operating purposes.
Short-term instruments consist of (i) short-term obligations of the U.S.
government, its agencies, instrumentalities, authorities or political
subdivisions; (ii) other short-term debt securities rated Aa or higher by
Moody's Investors Service, Inc. ("Moody's") or AA or higher by Standard & Poor's
Corporation ("S&P") or, if unrated, of comparable quality in the opinion of
Bankers Trust; (iii) commercial paper; (iv) bank obligations, including
negotiable certificates of deposit, time deposits and bankers' acceptances; and
(v) repurchase agreements. At the time the Portfolio invests in commercial
paper, bank obligations or repurchase agreements, the issuer or the issuer's
parent must have outstanding debt rated Aa or higher by Moody's or AA or higher
by S&P or outstanding commercial paper or bank obligations rated Prime-1 by
Moody's or A-1 by S&P; or, if no such ratings are available, the instrument must
be of comparable quality in the opinion of Bankers Trust.

ADDITIONAL INVESTMENT LIMITATIONS
As a diversified fund, no more than 5% of the assets of the Portfolio may be
invested in the securities of one issuer (other than U.S. Government
securities), except that up to 25% of the Portfolio's assets may be invested
without regard to this limitation. The Portfolio will not invest more than 25%
of its assets in the securities of issuers in any one industry. In the unlikely
event that the S&P 500 should concentrate to an extent greater than that amount,
the Portfolio's ability to achieve its investment objective may be impaired.
These are fundamental investment policies of the Portfolio which may not be
changed without investor approval. No more than 15% of the Portfolio's net
assets may be invested in illiquid or not readily marketable securities
(including repurchase agreements and time deposits with remaining maturities of
more than seven calendar days). Additional investment policies of the Portfolio
are contained in the Statement of Additional Information.

ABOUT THE S&P 500 INDEX
The S&P 500 is a well-known stock market index that includes common stocks of
500 companies from several industrial sectors representing a significant portion
of the market value of all common stocks publicly traded in the United States,
most of which are listed on the New York Stock Exchange Inc. (the "NYSE").
Stocks in the S&P 500 are weighted according to their market capitalization
(i.e., the number of shares outstanding multiplied by the stock's current
price). Bankers Trust believes that the performance of the S&P 500 is
representative of the performance of publicly traded common stocks in general.
The composition of the S&P 500 is determined by Standard & Poor's Corporation
S&P and is based on such factors as the market capitalization and trading
activity of each stock and its adequacy as a representation of stocks in a
particular industry group, and may be changed from time to time.

The Fund and the Portfolio are not sponsored, endorsed, sold or promoted by S&P.
S&P makes no representation or warranty, express or implied, to the owners of
the Fund or the Portfolio or any member of the public regarding the advisability
of investing in securities generally or in the Fund and the Portfolio
particularly or the ability of the S&P 500 to track general stock market
performance. S&P does not guarantee the accuracy and/or the completeness of the
S&P 500 or any data included therein.

S&P makes no warranty, express or implied, as to the results to be obtained by
the Fund or the Portfolio, owners of the Fund or the Portfolio, or any other
person or entity from the use of the S&P 500 or any data included therein. S&P
makes no express or implied warranties and hereby expressly disclaims all such
warranties of merchantability or fitness for a particular purpose or use with
respect to the S&P 500 or any data included therein.

For more complete information about the S&P 500, see the Statement of Additional
Information.

RISK FACTORS; MATCHING THE FUND TO YOUR INVESTMENT NEEDS
By itself, the Fund does not constitute a balanced investment plan. The Fund is
designed as a relatively low-cost means for investors to diversify their
investment portfolios. As described above, the Portfolio invests in an index of
securities that is representative of the stock market as a whole. While the
performance of the S&P 500 has fluctuated considerably, the long-term
performance of the S&P 500 has been greater than inflation. Thus, the Fund may
make sense for you if you can afford to ride out changes in the stock market.
The Fund's share price, yield and total return will fluctuate and your
investment may be worth more or less than your original cost when you redeem
your shares.

The ability of the Fund and the Portfolio to meet their investment objective
depends to some extent on the cash flow experienced by the Fund and by the other
investors in the Portfolio, since investments and redemptions by shareholders of
the Fund will generally require the Portfolio to purchase or sell securities.
Bankers Trust will make investment changes to accommodate cash flow in an
attempt to maintain the similarity of the Portfolio to the S&P 500. You should
also be aware that the performance of the S&P 500 is a hypothetical number which
does not take into account brokerage commissions and other costs of investing,
unlike the Portfolio which must bear these costs. Finally, since the Portfolio
seeks to track the S&P 500, Bankers Trust generally will not attempt to judge
the merits of any particular stock as an investment.

PORTFOLIO TURNOVER
The frequency of portfolio transactions -- the Portfolio's turnover rate -- will
vary from year to year depending on market conditions and the Portfolio's cash
flows. The Portfolio's annual turnover rate is not expected to exceed 100%. The
Portfolio's turnover rate for the years ended December 31, 1995, 1994 and 1993
was 6%, 21% and 31%, respectively. The decrease in the Portfolio's turnover rate
from the year 1994 to 1995 was due to the growth of assets in the period.

DERIVATIVES
The Portfolio may invest in stock index futures and options thereon which are
commonly known as derivatives. Generally, a derivative is a financial
arrangement, the value of which is based on, or "derived" from, a traditional
security, asset or market index. Some "derivatives" such as mortgage-related and
other asset-backed securities are in many respects like any other investment,
although they may be more volatile or less liquid than more traditional debt
securities. There are, in fact, many different types of derivatives and many
different ways to use them. There are a range of risks associated with those
uses. Futures and options are commonly used for traditional hedging purposes to
attempt to protect a fund from exposure to changing interest rates, securities
prices or currency exchange rates and for cash management purposes as a low cost
method of gaining exposure to a particular securities market without investing
directly in those securities. The Adviser will only use derivatives for cash
management purposes. Derivatives will not be used to increase portfolio risk
above the level that could be achieved using only traditional investment
securities or to acquire exposure to changes in the value of assets or indices
that by themselves would not be purchased for the Portfolio.

SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE
Unlike other open-end management investment companies (mutual funds) which
directly acquire and manage their own portfolio securities, the Fund seeks to
achieve its investment objective by investing all of its Assets in the
Portfolio, a separate registered investment company with the same investment
objective as the Fund. Therefore, an investor's interest in the Portfolio's
securities is indirect. In addition to selling a beneficial interest to the
Fund, the Portfolio may sell beneficial interests to other mutual funds or
institutional investors. Such investors will invest in the Portfolio on the same
terms and conditions and will pay a proportionate share of the Portfolio's
expenses. However, the other investors investing in the Portfolio are not
required to sell their shares at the same public offering price as the Fund due
to variations in sales commissions and other operating expenses. Therefore,
investors in the Fund should be aware that these differences may result in
differences in returns experienced by investors in the different funds that
invest in the Portfolio. Such differences in returns are also present in other
mutual fund structures. Information concerning other holders of interests in the
Portfolio is available from Bankers Trust at (800) 368- 4031.

The master-feeder structure has been developed relatively recently, so
shareholders should carefully consider this investment approach.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, the Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the Securities and Exchange Commission
("SEC"), whenever the Trust is requested to vote on matters pertaining to the
Portfolio, the Trust will hold a meeting of shareholders of the Fund and will
cast all of its votes in the same proportion as the votes of the Fund's
shareholders. Fund shareholders who do not vote will not affect the Trust's
votes at the Portfolio meeting. The percentage of the Trust's votes representing
the Fund's shareholders not voting will be voted by the Trustees or officers of
the Trust in the same proportion as the Fund shareholders who do, in fact, vote.

Certain changes in the Portfolio's investment objective, policies or
restrictions may require the Fund to withdraw its interest in the Portfolio. Any
such withdrawal could result in a distribution "in kind" of portfolio securities
(as opposed to a cash distribution from the Portfolio). If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, the distribution in kind may result in a
less diversified portfolio of investments or adversely affect the liquidity of
the Fund. Notwithstanding the above, there are other means for meeting
redemption requests, such as borrowing.

The Fund may withdraw its investment from the Portfolio at any time, if the
Board of Trustees of the Trust determines that it is in the best interests of
the shareholders of the Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including the
investment of all the Assets of the Fund in another pooled investment entity
having the same investment objective as the Fund or the retaining of an
investment adviser to manage the Fund's assets in accordance with the investment
policies described below with respect to the Portfolio.

The Fund's investment objective is not a fundamental policy and may be changed
upon notice to but without the approval of the Fund's shareholders. If there is
a change in the Fund's investment objective, the Fund's shareholders should
consider whether the Fund remains an appropriate investment in light of their
then-current needs. The investment objective of the Portfolio is also not a
fundamental policy. Shareholders of the Fund will receive 30 days prior written
notice with respect to any change in the investment objective of the Fund or the
Portfolio. See "Investment Objective, Policies and Risks" for a description of
the fundamental policies of the Portfolio that cannot be changed without
approval by the holders of "a majority of the outstanding voting securities" (as
defined in the 1940 Act) of the Portfolio.

For descriptions of the investment objective, policies and restrictions of the
Portfolio, see "Investment Objective, Policies and Risks." For descriptions of
the management of the Portfolio, see "Management of the Trust and Portfolio"
herein and in the Statement of Additional Information. For descriptions of the
expenses of the Portfolio, see "Management of the Trust and Portfolio" herein.

NET ASSET VALUE
The net asset value per share of the Fund is calculated on each day on which the
NYSE is open (each such day being a "Valuation Day"). The NYSE is currently open
on each day, Monday through Friday, except (a) January 1st, Presidents' Day (the
third Monday in February), Good Friday, Memorial Day (the last Monday in May),
July 4th, Labor Day (the first Monday in September), Thanksgiving Day (the last
Thursday in November) and December 25th; and (b) the preceding Friday or the
subsequent Monday when one of the calendar determined holidays falls on a
Saturday or Sunday, respectively.

The net asset value per share of the Fund is calculated once on each Valuation
Day as of the close of regular trading on the NYSE (the "Valuation Time"), which
is currently 4:00 p.m., New York time or in the event that the NYSE closes
early, at the time of such early closing. The net asset value per share of the
Fund is computed by dividing the value of the Fund's Assets (i.e., the value of
its investment in the Portfolio and other assets), less all liabilities, by the
total number of its shares outstanding. The Portfolio's securities and other
assets are valued primarily on the basis of market quotations or, if quotations
are not readily available, by a method which the Portfolio's Board of Trustees
believes accurately reflects fair value.

Under procedures adopted by the Board, a net asset value for a Fund later
determined to have been inaccurate for any reason will be recalculated.
Purchases and redemptions made at a net asset value determined to have been
inaccurate will be adjusted, although in certain circumstances, such as where
the difference between the original net asset value and the recalculated net
asset value divided by the recalculated net asset value is $0.005 ( 1/2 of 1%)
or less or shareholder transactions are otherwise insubstantially affected,
further action is not required.

PURCHASE AND REDEMPTION OF SHARES
PURCHASE OF SHARES
The Trust accepts purchase orders for shares of the Fund at the net asset value
per share of the Fund next determined on each Valuation Day. See "Net Asset
Value" above. There is no sales charge on the purchase of shares, but costs of
distributing shares of the Fund may be reimbursed from its assets, as described
herein. Excluding retirement plans, the minimum initial investment in the Trust
is $5,000,000. The subsequent minimum investment in the Fund is $100,000
(excluding retirement plans). Service Agents may impose initial and subsequent
investment minimums that differ from these amounts. Shares of the Fund may be
purchased in only those states where they may be lawfully sold.

Purchase orders for shares of the Fund that are received by a Service Agent and
transmitted to Bankers Trust, as the Trust's transfer agent (the "Transfer
Agent"), prior to the Valuation Time (currently 4:00 p.m., New York time or
earlier, should the NYSE close earlier) on any Valuation Day will be effective
at that day's Valuation Time. The Trust and Signature reserve the right to
reject any purchase order.

Shares must be purchased in accordance with procedures established by the
Transfer Agent and Service Agents, including Bankers Trust, in connection with
customers' accounts. It is the responsibility of each Service Agent to transmit
to the Transfer Agent purchase and redemption orders and to transmit to Bankers
Trust as the Trust's custodian (the "Custodian") purchase payments on behalf of
its customers by the following business day (trade date <p1>1) after an order
for shares is placed, and a shareholder must settle with the Service Agent his
or her entitlement to an effective purchase or redemption order as of a
particular time. Because Bankers Trust is the Custodian and Transfer Agent of
the Trust, funds may be transferred directly from or to a customer's account
with Bankers Trust to or from the Fund without incurring the additional costs or
delays associated with the wiring of federal funds.

Certificates for shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or the Transfer Agent.

Automatic Investment Plan. The Fund may offer shareholders an automatic
investment plan under which shareholders may authorize some Service Agents to
place a purchase order each month or quarter for Fund shares. For further
information regarding the automatic investment plan, shareholders should contact
their Service Agent.

Service Agents may allow redemptions or exchanges by telephone and may disclaim
liability for following instructions communicated by telephone that the Service
Agent reasonably believes to be genuine. The Service Agent must provide the
investor with an opportunity to choose whether or not to utilize the telephone
redemption or exchange privilege. The Service Agent must employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
If the Service Agent does not do so, it may be liable for any losses due to
unauthorized or fraudulent instructions. Such procedures may include, among
others, requiring some form of personal identification prior to acting upon
instructions received by telephone, providing written confirmation of such
transactions and/or tape recording of telephone instructions.

Redemption orders are processed without charge by the Trust. A Service Agent may
on at least 30 days' notice involuntarily redeem a shareholder's account with
the Fund having a current value of less than $1,000,000 (excluding retirement
plans), but not if an account is below $1,000,000 due to a change in market
value.

Automatic Cash Withdrawal Plan. The Fund may offer shareholders an automatic
cash withdrawal plan, under which shareholders who own shares of the Fund may
elect to receive periodic cash payments. Retirement plan accounts are eligible
for automatic cash withdrawal plans only where the shareholder is eligible to
receive qualified distributions. For further information regarding the automatic
cash withdrawal plan, shareholders should contact their Service Agent.

EXCHANGE PRIVILEGE
Shareholders may exchange their shares for shares of certain other funds in the
BT Family of Funds registered in their state. The Fund reserves the right to
terminate or modify the exchange privilege in the future. To make an exchange,
follow the procedures indicated in "Purchase of Shares" and "Redemption of
Shares." Before making an exchange, please note the following:

* Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.

* Complete and sign an application, taking care to register your new account in
the same name, address and taxpayer identification number as your existing
account(s).

* Each exchange represents the sale of shares of one fund and the purchase of
shares of another, which may produce a gain or loss for tax purposes. Your
Service Agent will send a written confirmation of each exchange transaction.

TAX-SAVING RETIREMENT PLANS
Retirement plans offer significant tax savings and are available to individuals,
partnerships, small businesses, corporations, nonprofit organizations and other
institutions. Contact your Service Agent or Bankers Trust for further
information. Bankers Trust can set up your new account in the Fund under a
number of several tax-sheltered plans. These plans contain special tax
advantages and let you invest for retirement while sheltering your investment
income from current taxes. Minimums may differ from those listed elsewhere in
the Prospectus.

* Individual Retirement Accounts (IRAs): personal savings plans that offer
tax advantages for individuals to set aside money for retirement and allow
new contributions of $2,000 per tax year.

* Rollover IRAs: tax-deferred retirement accounts that retain the special tax
advantages of lump sum distributions from qualified retirement plans and
transferred IRA accounts.

* Simplified Employee Pension Plans (SEP): a relatively easy and inexpensive
alternative to retirement planning for sole proprietors, partnerships and
corporations. Under a SEP, employers make tax-deductible contributions to
their own and to eligible employees' IRA accounts. Employee contributions are
available through a "Salary Deferral" SEP for businesses with fewer than 25
eligible employees.

* Keogh Plans: defined contribution plans available to individuals with self-
employed income and nonincorporated businesses such as sole proprietors,
professionals and partnerships. Contributions are tax-deductible to the
employer and earnings are tax-sheltered until distribution.

* Corporate Profit-Sharing and Money-Purchase Plans: defined contribution
plans available to corporations to benefit their employees by making
contributions on their behalf and in some cases permitting their employees
to make contributions.

* 401(k) Programs: defined contribution plans available to corporations allowing
tax-deductible employer contributions and permitting employees to contribute a
percentage of their wages on a tax-deferred basis.

* 403(b) Custodian Accounts: defined contribution plans open to employees of
most nonprofit organizations and educational institutions.

* Deferred Benefit Plans: plan sponsors may invest all or part of their
pension assets in the Fund.

DIVIDENDS, DISTRIBUTIONS AND TAXES
Distributions. The Fund distributes substantially all of its net investment
income and capital gains to shareholders each year. Income dividends are
distributed on the first business day in April, July and October. In December,
another income dividend will be distributed plus any net capital gains. Unless a
shareholder instructs the Trust to pay such dividends and distributions in cash,
they will be automatically reinvested in additional shares of the Fund.

Federal Taxes. The Trust intends to qualify the Fund as a regulated investment
company, as defined in the Internal Revenue Code of 1986, as amended (the
"Code"). Provided the Fund meets the requirements imposed by the Code and
distributes all of its income and gains, the Fund will not pay any Federal
income or excise taxes. The Portfolio will also not be required to pay any
Federal income or excise taxes.

Distributions from the Fund's income and short-term capital gains are taxed as
dividends, and long-term capital gain distributions are taxed as long-term
capital gains. The Fund's distributions are taxable when they are paid, whether
you take them in cash or reinvest them in additional shares. Distributions
declared to shareholders of record in November and December and paid in January
are taxable as if paid on December 31. The Fund will send each shareholder a tax
statement by January 31 showing the tax status of the distributions received in
the past year.

Capital Gains. You may realize a capital gain or loss when you redeem (sell) or
exchange shares. Because the tax treatment also depends on your purchase price
and your personal tax position, you should keep your regular account statements
to use in determining your tax.

"Buying a Dividend." On the ex-date for a distribution from income and/or
capital gains, the Fund's share value is reduced by the amount of the
distribution. If you buy shares just before the ex-date ("buying a dividend"),
you will pay the full price for the shares and then receive a portion of the
price back as a taxable distribution.

Other Tax Information. In addition to Federal taxes, you may be subject to state
or local taxes on your investment, depending on the laws in your area. You
should consult with your own tax adviser concerning the application of Federal,
state and local taxes to your distributions from the Fund.

PERFORMANCE INFORMATION AND REPORTS
The Fund's performance may be used from time to time in advertisements,
shareholder reports or other communications to shareholders or prospective
shareholders. Performance information may include the Fund's investment results
and/or comparisons of its investment results to various unmanaged indices, such
as the S&P 500, or results of other mutual funds or investment or savings
vehicles. In addition, the Fund may compare various Portfolio characteristics
such as beta, price earnings ratio and sector diversification to those of
various unmanaged indices or other mutual funds or investment or savings
vehicles. The Fund's investment results as used in such communications will be
calculated on a yield or total rate of return basis in the manner set forth
below. From time to time, fund rankings may be quoted from various sources, such
as Lipper Analytical Services, Inc., Value Line and Morningstar, Inc.

The Trust may provide period and average annualized "total return" quotations
for the Fund. The Fund's "total return" refers to the change in the value of an
investment in the Fund over a stated period based on any change in net asset
value per share and including the value of any shares purchasable with any
dividends or capital gains distributed during such period. Period total return
may be annualized. An annualized total return is a compounded total return which
assumes that the period total return is generated over a one-year period, and
that all dividends and capital gain distributions are reinvested. An annualized
total return will be higher than a period total return if the period is shorter
than one year, because of the compounding effect.

The Trust may provide annualized "yield" quotations for the Fund. The "yield" of
the Fund refers to the income generated by an investment in the Fund over a
30-day or one-month period (which period shall be stated in any such
advertisement or communications). This income is then annualized; that is, the
amount generated by the investment over the period is assumed to be generated
over a one-year period and is shown as a percentage of investment.

Unlike some bank deposits or other investments which pay a fixed yield for a
stated period of time, the total return of the Fund will vary depending upon
interest rates, the current market value of the securities held by the Portfolio
and changes in the Fund's expenses. In addition, during certain periods for
which total return or yields may be provided, Bankers Trust, as Adviser, Service
Agent or Administrator, or Signature, as Distributor, may have voluntarily
agreed to waive portions of their fees on a month-to-month basis. Such waivers
will have the effect of increasing the Fund's net income (and therefore its
total return or yield) during the period such waivers are in effect.

Shareholders will receive financial reports semi-annually that include the
Portfolio's financial statements, including a listing of investment securities
held by the Portfolio at those dates. Annual reports are audited by independent
accountants.

MANAGEMENT OF THE TRUST AND PORTFOLIO
BOARD OF TRUSTEES
The affairs of the Trust and the Portfolio are managed under the supervision of
their respective Boards of Trustees. By virtue of the responsibilities assumed
by Bankers Trust, the administrator of the Trust and Portfolio, neither the
Trust nor the Portfolio requires employees other than its executive officers.
None of the executive officers of the Trust or Portfolio devotes full time to
the affairs of the Trust or the Portfolio.

The Trustees of the Trust who are not "interested persons" (as defined in the
1940 Act) (the "Independent Trustees") of the Trust or of the Portfolio, as the
case may be, have adopted written procedures reasonably appropriate to deal with
potential conflicts of interest, up to and including creating separate boards of
trustees, arising from the fact that several of the same individuals are
Trustees of the Trust and the Portfolio. For more information with respect to
the Trustees of both the Trust and the Portfolio, see "Management of the Trust
and the Portfolio" in the Statement of Additional Information.

INVESTMENT ADVISER
The Trust has not retained the services of an investment adviser since the Trust
seeks to achieve the investment objective of the Fund by investing all the
Assets of the Fund in the Portfolio. The Portfolio has retained the services of
Bankers Trust, as investment adviser. Mr. Frank Salerno, Managing Director of
Bankers Trust, is responsible for the day-to-day management of the Portfolio.
Mr. Salerno has been employed by Bankers Trust since prior to 1989 and has
managed the Portfolio's assets since the Portfolio commenced operations.

Bankers Trust, a New York banking corporation with principal offices at 280 Park
Avenue, New York, New York 10017, is a wholly owned subsidiary of Bankers Trust
New York Corporation. Bankers Trust conducts a variety of general banking and
trust activities and is a major wholesale supplier of financial services to the
international and domestic institutional market. As of December 31, 1995,
Bankers Trust New York Corporation was the ninth largest bank holding company in
the United States with total assets of approximately $104 billion. Bankers Trust
is a worldwide merchant bank dedicated to servicing the needs of corporations,
governments, financial institutions and private clients through a global network
of over 120 offices in more than 40 countries. Investment management is a core
business of Bankers Trust, built on a tradition of excellence from its roots as
a trust bank founded in 1903. The scope of Bankers Trust's investment management
capability is unique due to its leadership positions in both active and passive
quantitative management and its presence in major equity and fixed income
markets around the world. Bankers Trust is one of the nation's largest and most
experienced investment managers, with approximately $200 billion in assets under
management globally. Of that total, approximately $84 billion are in U.S. equity
index assets alone. When bond and international funds are included, Bankers
Trust manages over $97 billion in total index assets. This makes Bankers Trust
one of the nation's leading managers of index funds.

Bankers Trust has more than 50 years of experience managing retirement assets
for the nation's largest corporations and institutions. In the past, these
clients have been serviced through separate account and commingled fund
structures. Bankers Trust's officers have had extensive experience in managing
investment portfolios having objectives similar to those of the Portfolio.

Bankers Trust, subject to the supervision and direction of the Board of Trustees
of the Portfolio, manages the Portfolio in accordance with the Portfolio's
investment objective and stated investment policies, makes investment decisions
for the Portfolio, places orders to purchase and sell securities and other
financial instruments on behalf of the Portfolio and employs professional
investment managers and securities analysts who provide research services to the
Portfolio. Bankers Trust may utilize the expertise of any of its worldwide
subsidiaries and affiliates to assist in its role as investment adviser. All
orders for investment transactions on behalf of the Portfolio are placed by
Bankers Trust with broker-dealers and other financial intermediaries that it
selects, including those affiliated with Bankers Trust. A Bankers Trust
affiliate will be used in connection with a purchase or sale of an investment
for the Portfolio only if Bankers Trust believes that the affiliate's charge for
the transaction does not exceed usual and customary levels. The Portfolio will
not invest in obligations for which Bankers Trust or any of its affiliates is
the ultimate obligor or accepting bank. The Portfolio may, however, invest in
the obligations of correspondents and customers of Bankers Trust.

Under its Investment Advisory Agreement, Bankers Trust receives a fee from the
Portfolio, computed daily and paid monthly, at the annual rate of 0.10% (before
waiver) of the average daily net assets of the Portfolio.

Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Trust and the Portfolio
described in this Prospectus and the Statement of Additional Information without
violation of the Glass-Steagall Act or other applicable banking laws or
regulations. State laws on this issue may differ from the interpretations of
relevant Federal law and banks and financial institutions may be required to
register as dealers pursuant to state securities law.

ADMINISTRATOR
Under its Administration and Services Agreement with the Trust, Bankers Trust
calculates the net asset value of the Fund and generally assists the Board of
Trustees of the Trust in all aspects of the administration and operation of the
Trust. The Administration and Services Agreement provides for the Trust to pay
Bankers Trust a fee, computed daily and paid monthly, at the annual rate of
0.05% of the average daily net assets of the Fund.

Under an Administration and Services Agreement with the Portfolio, Bankers Trust
calculates the value of the assets of the Portfolio and generally assists the
Board of Trustees of the Portfolio in all aspects of the administration and
operation of the Portfolio. The Administration and Services Agreement provides
for the Portfolio to pay Bankers Trust a fee, computed daily and paid monthly,
at the rate of 0.05% of the average daily net assets of the Portfolio. Under
each Administration and Services Agreement, Bankers Trust may delegate one or
more of its responsibilities to others, including Signature, at Bankers Trust's
expense. For more information see the Statement of Additional Information.

DISTRIBUTOR
Under its Distribution Agreement with the Trust, Signature, as Distributor,
serves as the Trust's principal underwriter on a best efforts basis. In
addition, Signature provides the Trust with office facilities. Signature is a
wholly owned subsidiary of Signature Financial Group, Inc. ("SFG"). SFG and its
affiliates currently provide administration and distribution services for other
registered investment companies. The principal business address of SFG and
Signature is 6 St. James Avenue, Boston, Massachusetts 02116.

Pursuant to the terms of the Trust's Plan of Distribution pursuant to Rule 12b-1
under the 1940 Act (the "Plan"), Signature may seek reimbursement in an amount
not exceeding 0.10% of the Fund's average daily net assets annually for expenses
incurred in connection with any activities primarily intended to result in the
sale of the Fund's shares, including, but not limited to: compensation to and
expenses (including overhead and telephone expenses) of account executives or
other employees of Signature who, as their primary activity, engage in or
support the distribution of shares; printing of prospectuses, statements of
additional information and reports for other than existing Fund shareholders in
amounts in excess of that typically used in connection with the distribution of
shares of the Fund; costs of placing advertising in various media; services of
parties other than Signature or its affiliates in formulating sales literature;
and typesetting, printing and distribution of sales literature. All costs and
expenses in connection with implementing and operating the Plan will be paid by
the Fund, subject to the 0.10% of net assets limitation. All costs and expenses
associated with preparing the prospectuses and statements of additional
information and in connection with printing them for and distributing them to
existing shareholders and regulatory authorities, which costs and expenses would
not be considered distribution expenses for purposes of the Plan, will also be
paid by the Fund. To the extent expenses of Signature under the Plan in any
fiscal year of the Trust exceed amounts payable under the Plan during that year,
those expenses will not be reimbursed in any succeeding fiscal year. Expenses
incurred in connection with distribution activities will be identified to the
Fund or the other series of the Trust involved, although it is anticipated that
some activities may be conducted on a Trust-wide basis, with the result that
those activities will not be identifiable to any particular series. In the
latter case, expenses will be allocated among the series of the Trust on the
basis of their relative net assets. It is not expected that any payments will be
made under the Plan in the foreseeable future.

SERVICE AGENT
All shareholders must be represented by a Service Agent. Bankers Trust acts as a
Service Agent pursuant to its Administration and Services Agreement with the
Trust and receives no additional compensation from the Fund for such shareholder
services. The service fees of any other Service Agents, including
broker-dealers, will be paid by Bankers Trust from its fees. The services
provided by a Service Agent may include establishing and maintaining shareholder
accounts, processing purchase and redemption transactions, arranging for bank
wires, performing shareholder sub-accounting, answering client inquiries
regarding the Trust, assisting clients in changing dividend options, account
designations and addresses, providing periodic statements showing the client's
account balance, transmitting proxy statements, periodic reports, updated
prospectuses and other communications to shareholders and, with respect to
meetings of shareholders, collecting, tabulating and forwarding to the Trust
executed proxies and obtaining such other information and performing such other
services as the Administrator or the Service Agent's clients may reasonably
request and agree upon with the Service Agent. Service Agents may separately
charge their clients additional fees only to cover provision of additional or
more comprehensive services not already provided under the Administration and
Services Agreement with Bankers Trust, or of the type or scope not generally
offered by a mutual fund, such as cash management services or enhanced
retirement or trust reporting. In addition, investors may be charged a
transaction fee if they effect transactions in Fund shares through a broker or
agent. Each Service Agent has agreed to transmit to shareholders, who are its
customers, appropriate disclosures of any fees that it may charge them directly.

CUSTODIAN AND TRANSFER AGENT
Bankers Trust acts as Custodian of the assets of the Trust and the Portfolio and
serves as the Transfer Agent for the Trust and the Portfolio under the
Administration and Services Agreement with the Trust and the Portfolio.

ORGANIZATION OF THE TRUST
The Trust was organized on March 26, 1990 under the laws of the Commonwealth of
Massachusetts. The Fund is a separate series of the Trust. The Trust offers
shares of beneficial interest of separate series, par value $0.001 per share.
The shares of the other series of the Trust are offered through separate
prospectuses. No series of shares has any preference over any other series.

The Trust is an entity commonly known as a "Massachusetts business trust." Under
Massachusetts law, shareholders of such a business trust may, under certain
circumstances, be held personally liable as partners for its obligations.
However, the risk of a shareholder incurring financial loss on account of
shareholder liability is limited to circumstances in which both inadequate
insurance existed and the Trust itself was unable to meet its obligations.

When matters are submitted for shareholder vote, shareholders of the Fund will
have one vote for each full share held and proportionate, fractional votes for
fractional shares held. A separate vote of the Fund is required on any matter
affecting the Fund on which shareholders are entitled to vote. Shareholders of
the Fund are not entitled to vote on Trust matters that do not affect the Fund.
There normally will be no meetings of shareholders for the purpose of electing
Trustees unless and until such time as less than a majority of Trustees holding
office have been elected by shareholders, at which time the Trustees then in
office will call a shareholders' meeting for the election of Trustees. Any
Trustee may be removed from office upon the vote of shareholders holding at
least two-thirds of the Trust's outstanding shares at a meeting called for that
purpose. The Trustees are required to call such a meeting upon the written
request of shareholders holding at least 10% of the Trust's outstanding shares.

The Portfolio, in which all the Assets of the Fund will be invested, is
organized as a trust under the laws of the State of New York. The Portfolio's
Declaration of Trust provides that the Fund and other entities investing in the
Portfolio (e.g., other investment companies, insurance company separate accounts
and common and commingled trust funds) will each be liable for all obligations
of the Portfolio. However, the risk of the Fund incurring financial loss on
account of such liability is limited to circumstances in which both inadequate
insurance existed and the Portfolio itself was unable to meet its obligations.
Accordingly, the Trustees of the Trust believe that neither the Fund nor its
shareholders will be adversely affected by reason of the Fund's investing in the
Portfolio.

Each series in the Trust will not be involved in any vote involving a Portfolio
in which it does not invest its Assets. Shareholders of all of the series of the
Trust will, however, vote together to elect Trustees of the Trust and for
certain other matters. Under certain circumstances, the shareholders of one or
more series could control the outcome of these votes.

EXPENSES OF THE TRUST
The Fund bears its own expenses. Operating expenses for the Fund generally
consist of all costs not specifically borne by Bankers Trust or Signature,
including administration and services fees, fees for necessary professional
services, amortization of organizational expenses, and costs associated with
regulatory compliance and maintaining legal existence and shareholder relations.
Bankers Trust and Signature have agreed to reimburse the Fund to the extent
required by applicable state law for certain expenses that are described in the
Statement of Additional Information. The Portfolio bears its own expenses.
Operating expenses for the Portfolio generally consist of all costs not
specifically borne by Bankers Trust or Signature, including investment advisory
and administration and services fees, fees for necessary professional services,
amortization of organizational expenses, the costs associated with regulatory
compliance and maintaining legal existence and investor relations.

ADDITIONAL INFORMATION
Repurchase Agreements. In a repurchase agreement the Portfolio buys a security
and simultaneously agrees to sell it back at a higher price. In the event of the
bankruptcy of the other party to either a repurchase agreement or a securities
loan, the Portfolio could experience delays in recovering either its cash or the
securities it lent. To the extent that, in the meantime, the value of the
securities repurchased had decreased or the value of the securities lent had
increased, the Portfolio could experience a loss. In all cases, Bankers Trust
must find the creditworthiness of the other party to the transaction
satisfactory. A repurchase agreement is considered a collateralized loan under
the 1940 Act.

Securities Lending. The Portfolio is permitted to lend up to 30% of the total
value of its securities. These loans must be secured continuously by cash or
equivalent collateral or by a letter of credit at least equal to the market
value of the securities loaned plus accrued income. By lending its securities,
the Portfolio can increase its income by continuing to receive income on the
loaned securities as well as by the opportunity to receive interest on the
collateral. Any gain or loss in the market price of the borrowed securities
which occurs during the term of the loan inures to the Portfolio and its
investors. In lending securities to brokers, dealers and other organizations,
the Portfolio is subject to risk which, like those associated with other
extensions of credit, includes delays in recovery and possible loss of rights in
the collateral should the borrower fail financially.

When-Issued and Delayed Delivery Securities. The Portfolio may purchase
securities on a when-issued or delayed delivery basis. Delivery of and payment
for these securities may take place as long as a month or more after the date of
the purchase commitment. The value of these securities is subject to market
fluctuation during this period and no income accrues to the Portfolio until
settlement takes place. The Portfolio maintains with the Custodian a segregated
account containing high grade liquid securities in an amount at least equal to
these commitments. When entering into a when-issued or delayed delivery
transaction, the Portfolio will rely on the other party to consummate the
transaction; if the other party fails to do so, the Portfolio may be
disadvantaged.

Options on Stock Indices. The Portfolio may purchase and write put and call
options on stock indices listed on stock exchanges. A stock index fluctuates
with changes in the market values of the stocks included in the index.

Options on stock indices are generally similar to options on stock except that
the delivery requirements are different. Instead of giving the right to take or
make delivery of stock at a specified price, an option on a stock index gives
the holder the right to receive a cash "exercise settlement amount" equal to (a)
the amount, if any, by which the fixed exercise price of the option exceeds (in
the case of a put) or is less than (in the case of a call) the closing value of
the underlying index on the date of exercise, multiplied by (b) a fixed "index
multiplier." Receipt of this cash amount will depend upon the closing level of
the stock index upon which the option is based being greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
The amount of cash received will be equal to such difference between the closing
price of the index and the exercise price of the option expressed in dollars
times a specified multiple. The writer of the option is obligated, in return for
the premium received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or the option may expire unexercised.

Because the value of an index option depends upon movements in the level of the
index rather than the price of a particular stock, whether the Portfolio will
realize a gain or loss from the purchase or writing of options on an index
depends upon movements in the level of stock prices in the stock market
generally or, in the case of certain indices, in an industry or market segment,
rather than movements in the price of a particular stock. Accordingly,
successful use by the Portfolio of options on stock indices will be subject to
Bankers Trust's ability to predict correctly movements in the direction of the
stock market generally or of a particular industry. This requires different
skills and techniques than predicting changes in the price of individual stocks.

Futures Contracts on Stock Indices. The Portfolio may enter into contracts
providing for the making and acceptance of a cash settlement based upon changes
in the value of an index of securities ("Futures Contracts"). This investment
technique is designed only to hedge against anticipated future change in general
market prices which otherwise might either adversely affect the value of
securities held by the Portfolio or adversely affect the prices of securities
which are intended to be purchased at a later date for the Portfolio. A Futures
Contract may also be entered into to close out or offset an existing futures
position.

In general, each transaction in Futures Contracts involves the establishment of
a position which will move in a direction opposite to that of the investment
being hedged. If these hedging transactions are successful, the futures
positions taken for the Portfolio will rise in value by an amount which
approximately offsets the decline in value of the portion of the Portfolio's
investments that are being hedged. Should general market prices move in an
unexpected manner, the full anticipated benefits of Futures Contracts may not be
achieved or a loss may be realized.

Although Futures Contracts would be entered into for cash management purposes
only, such transactions do involve certain risks. These risks could include a
lack of correlation between the Futures Contract and the equity market, a
potential lack of liquidity in the secondary market and incorrect assessments of
market trends which may result in poorer overall performance than if a Futures
Contract had not been entered into.

Brokerage costs will be incurred and "margin" will be required to be posted and
maintained as a good-faith deposit against performance of obligations under
Futures Contracts written for the Portfolio. The Portfolio may not purchase or
sell a Futures Contract (or options thereon) if immediately thereafter its
margin deposits on its outstanding Futures Contracts (and its premium paid on
outstanding options thereon) would exceed 5% of the market value of the
Portfolio's total assets.

Options on Futures Contracts. The Portfolio may invest in options on such
Futures Contracts for similar purposes.

Asset Coverage. The Portfolio will cover the Portfolio's transactions in futures
and related options, as well as in when-issued and delayed delivery, as required
under applicable interpretations of the SEC, either by owning the underlying
securities or by establishing a segregated account with the Portfolio's
Custodian containing high grade liquid debt securities in an amount at all times
equal to or exceeding the Portfolio's commitment with respect to these
instruments or contracts.

<PAGE>

INVESTMENT ADVISER OF THE PORTFOLIO AND ADMINISTRATOR
BANKERS TRUST COMPANY

DISTRIBUTOR
SIGNATURE BROKER-DEALER SERVICES, INC.

CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY

INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.

COUNSEL
WILLKIE FARR & GALLAGHER

.................................
No person has been authorized to give any information or to make any
representations other than those contained in the Trust's Prospectuses, its
Statements of Additional Information or the Trust's official sales literature
in connection with the offering of the Trust's shares and, if given or made,
such other information or representations must not be relied on as having been
authorized by the Trust. This Prospectus does not constitute an offer in any
state in which, or to any person to whom, such offer may not lawfully be made.
.................................
<PAGE>

BT INSTITUTIONAL FUNDS

PROSPECTUS: APRIL 29, 1996 Please read this Prospectus carefully before
investing and retain it for future reference. It contains important information
about the Fund that you should know and can refer to in deciding whether the
Fund's goals match your own.

A Statement of Additional Information (SAI) with the same date has been filed
with the Securities and Exchange Commission, and is incorporated herein by
reference. You may request a free copy of the Statement by calling the Fund's
Service Agent at 1-800-368-4031

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, BANKERS TRUST COMPANY AND THE SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. THE FUND INTENDS TO MAINTAIN A CONSTANT $1.00 PER SHARE NET ASSET VALUE,
ALTHOUGH THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO DO SO.

Cash Management Fund

A money market fund that provides high current income to the extent consistent
with liquidity and capital preservation.

BANKERS TRUST COMPANY
Investment Adviser of the
Portfolio and Administrator

SIGNATURE BROKER-
DEALER SERVICES, INC.
Distributor
6 St. James Avenue
Boston, Massachusetts 02116
<PAGE>

TABLE OF CONTENTS
- ------------------------------------------------------------------------------
PAGE
..............................................................................
Summary of Fund Expenses 3
Fund Financial Highlights 5
Investment Objective and Policies 6
Risk Factors; Matching the Fund to Your Investment Needs 10
Net Asset Value 11
Purchase and Redemption of Shares 12
Dividends, Distributions and Taxes 15
Performance Information and Reports 16
Management of the Trust and Portfolio 17
- -----------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES
The following table provides (i) a summary of expenses relating to purchases
and sales of shares of the Institutional Cash Management Fund (the "Fund") and
the aggregate annual operating expenses of the Fund and the expenses of the
Cash Management Portfolio (the "Portfolio"), as a percentage of average net
assets of the Fund and (ii) an example illustrating the dollar cost of such
expenses on a $1,000 investment in the Fund. THE TRUSTEES OF THE BT
INSTITUTIONAL FUNDS (THE "TRUST") BELIEVE THAT THE AGGREGATE PER SHARE
EXPENSES OF THE FUND AND THE PORTFOLIO WILL BE LESS THAN OR APPROXIMATELY
EQUAL TO THE EXPENSES WHICH THE FUND WOULD INCUR IF THE TRUST RETAINED THE
SERVICES OF AN INVESTMENT ADVISER AND THE INVESTABLE ASSETS ("ASSETS") OF THE
FUND WERE INVESTED DIRECTLY IN THE TYPE OF SECURITIES BEING HELD BY THE
PORTFOLIO.

- ------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES
(as a percentage of the average daily net assets of the Fund)
..............................................................................
Investment advisory fee 0.15%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.08
..............................................................................
Total operating expenses (after reimbursements or waivers) 0.23%
..............................................................................
EXAMPLE 1 year 3 years 5 years 10 years
..............................................................................
You would pay the following expenses
on a $1,000 investment, assuming:
(1) 5% annual return and (2)
redemption at the end of
each time period $2 $7 $13 $29
- ------------------------------------------------------------------------------

The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of the Fund. While
reimbursement of distribution expenses in amounts up to 0.10% of average net
assets are authorized to be made pursuant to the Plan of Distribution under Rule
12b-1 of the Investment Company Act of 1940, as amended (the "1940 Act"), it is
not expected that any payments will actually be made under that plan in the
foreseeable future. The expense table and the example reflect a voluntary
undertaking by Bankers Trust Company ("Bankers Trust") or Signature Broker-
Dealer Services, Inc. ("Signature") to waive or reimburse expenses such that the
total operating expenses will not exceed 0.23% of the Fund's average net assets
annually. In the absence of this undertaking, for the fiscal year ended December
31, 1995 the total operating expenses would have been equal to approximately
0.27% of the Fund's average net assets annually. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. Moreover, while each example assumes a 5%
annual return, actual performance will vary and may result in a return greater
or less than 5%.

For more information with respect to the expenses of the Fund and the Portfolio
see "Management of the Trust and Portfolio" herein.

FOR THE PERIOD
FOR THE YEAR ENDED DECEMBER 31, JULY 25, 1990
----------------------------------------------------------- (COMMENCEMENT OF
OPERATIONS) TO
1995 1994 1993 1992 1991 DECEMBER 31, 1990
.................................................................................................................................
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
.................................................................................................................................
Income from Investment Operations
Net Investment Income 0.06 0.04 0.03 0.04 0.06 0.03
Net Realized Gain (Loss) from Securities
Transactions 0.00+ (0.01) 0.00+ 0.00+ 0.00)+ --
.................................................................................................................................
Total from Investment Operations 0.06 0.03 0.03 0.04 0.06 0.03
.................................................................................................................................
Contribution of Capital -- 0.01 -- -- -- --
.................................................................................................................................
Distributions From:
Net Investment Income (0.06) (0.04) (0.03) (0.04) (0.06) (0.03)
Distributions from Net Realized Gain from
Securities Transactions -- -- (0.00)+ (0.00)+ (0.00) --
.................................................................................................................................
Total Distributions (0.06) (0.04) (0.03) (0.04) (0.06) (0.03)
.................................................................................................................................
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
.................................................................................................................................
TOTAL INVESTMENT RETURN 5.89% 4.18%++ 3.05% 3.58% 6.20% 8.29%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 5.72% 3.98% 3.01% 3.48% 5.82% 7.90%*
Ratio of Expenses to Average Net Assets,
Including Expenses of the Cash Management
Portfolio 0.23% 0.23% 0.25% 0.25% 0.25% 0.25%*
Decrease Reflected in Above Expense Ratio Due
to Absorption of Expenses by Bankers Trust 0.04% 0.03% 0.02% 0.04% 0.09% 0.21%*
Net Assets, End of Period
(000's omitted) $1,010,874 $664,149 $1,850,222 $1,334,517 $806,690 $301,546
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Annualized
+ Less than $0.01 per share
++ Increased by 0.91% due to Contribution of Capital.
</TABLE>
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks a high level of current income consistent with liquidity and the
preservation of capital through investment in high quality money market
instruments. The Fund offers investors a convenient means of diversifying their
holdings of short-term securities while relieving those investors of the
administrative burdens typically associated with purchasing and holding these
instruments, such as coordinating maturities and reinvestments, providing for
safekeeping and maintaining detailed records. High quality short-term
instruments may result in a lower yield than instruments with a lower quality or
a longer term.

The Trust seeks to achieve the investment objective of the Fund by investing all
the Assets of the Fund in the Portfolio, which has the same investment objective
as the Fund. There can be no assurances that the investment objective of either
the Fund or the Portfolio will be achieved. The investment objective of each of
the Fund and the Portfolio is a fundamental policy and may not be changed
without the approval of the Fund's shareholders or the Portfolio's investors,
respectively. See "Special Information Concerning Master-Feeder Fund Structure"
on page 10 herein.

CASH MANAGEMENT PORTFOLIO
The Portfolio will attempt to achieve its investment objective by investing in
the following money market instruments:

Bank Obligations. The Portfolio may invest in fixed rate or variable rate
obligations of U.S. or foreign banks which have total assets at the time of
purchase in excess of $1 billion and are rated Prime-1 by Moody's Investors
Service, Inc. ("Moody's") or A-1 or higher by Standard & Poor's Corporation
("S&P") or, if not rated, are believed by Bankers Trust, acting under the
supervision of the Board of Trustees of the Portfolio, to be of comparable
quality. Bank obligations in which the Portfolio invests include certificates of
deposit, bankers' acceptances, time deposits and other U.S. dollar-denominated
instruments issued or supported by the credit of U.S. or foreign banks. If
Bankers Trust, acting under the supervision of the Board of Trustees of the
Portfolio, deems the instruments to present minimal credit risk, the Portfolio
may invest in obligations of foreign banks or foreign branches of U.S. banks,
which include subsidiaries of U.S. banks located in the United Kingdom, Grand
Cayman Island, Nassau, Japan and Canada. Investments in these obligations may
entail risks that are different from those of investments in obligations of U.S.
domestic banks because of differences in political, regulatory and economic
systems and conditions. These risks include future political and economic
developments, currency blockage, the possible imposition of withholding taxes on
interest payments, differing reserve requirements, reporting and recordkeeping
requirements and accounting standards, possible seizure or nationalization of
foreign deposits, difficulty or inability of pursuing legal remedies and
obtaining judgments in foreign courts, possible establishment of exchange
controls or the adoption of other foreign governmental restrictions that might
affect adversely the payment of principal and interest on bank obligations.
Under normal market conditions, the Portfolio will invest more than 25% of its
assets in the foreign and domestic bank obligations described above. The
Portfolio's concentration of its investments in bank obligations will cause the
Portfolio to be subject to the risks peculiar to the domestic and foreign
banking industries to a greater extent than if its investments were not so
concentrated. A description of the ratings set forth above is provided in the
Appendix to the Statement of Additional Information.

Commercial Paper. The Portfolio may invest in fixed rate or variable rate
commercial paper, including variable rate master demand notes, issued by U.S. or
foreign corporations. Commercial paper when purchased by the Portfolio must be
rated Prime-1 by Moody's or A-1 or higher by S&P or, if not rated, must be
believed by Bankers Trust, acting under the supervision of the Board of Trustees
of the Portfolio, to be of comparable quality. Any commercial paper issued by a
foreign corporation and purchased by the Portfolio must be U.S.
dollar-denominated and must not be subject to foreign withholding tax at the
time of purchase. Investing in foreign commercial paper generally involves risks
similar to those described above relating to obligations of foreign banks or
foreign branches of U.S. banks.

Variable rate master demand notes are unsecured instruments that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate. Because variable rate master demand notes are direct lending
arrangements between the Portfolio and the issuer, they are not normally traded.
Although no active secondary market may exist for these notes, the Portfolio
will purchase only those notes under which it may demand and receive payment of
principal and accrued interest daily or may resell the note to a third party.
While the notes are not typically rated by credit rating agencies, issuers of
variable rate master demand notes must satisfy Bankers Trust, acting under the
supervision of the Board of Trustees of the Portfolio, that the same criteria as
set forth above for issuers of commercial paper are met. In the event an issuer
of a variable rate master demand note defaulted on its payment obligation, the
Portfolio might be unable to dispose of the note because of the absence of a
secondary market and could, for this or other reasons, suffer a loss to the
extent of the default.

Other Corporate Debt Obligations. The Portfolio may invest in bonds, notes and
debentures issued by U.S. corporations that at the time of purchase have
outstanding commercial paper meeting the above rating requirements, or if such
commercial paper is unrated or if no such commercial paper is outstanding, are
rated at least AA by S&P or Aa by Moody's. Such obligations, at the time of
investment, must have or be deemed to have less than 397 days to maturity.

U.S. Government Obligations. The Portfolio may invest in obligations issued or
guaranteed by the U.S. Treasury or by agencies or instrumentalities of the U.S.
Government ("U.S. Government Obligations"). Obligations of certain agencies and
instrumentalities of the U.S. Government, such as short-term obligations of the
Government National Mortgage Association, are supported by the "full faith and
credit" of the U.S. Government; others, such as those of the Export-Import Bank
of the U.S., are supported by the right of the issuer to borrow from the U.S.
Treasury; others, such as those of the Federal National Mortgage Association,
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; and still others, such as those of the Student Loan
Marketing Association, are supported only by the credit of the instrumentality.
No assurance can be given that the U.S. Government would provide financial
support to U.S. Government-sponsored instrumentalities if it is not obligated to
do so by law.

Repurchase Agreements. The Portfolio may engage in repurchase agreement
transactions with banks and governmental securities dealers approved by the
Board of Trustees of the Portfolio. Under the terms of a typical repurchase
agreement, the Portfolio would acquire an underlying debt obligation of a kind
in which the Portfolio could invest for a relatively short period (usually not
more than one week), subject to an obligation of the seller to repurchase, and
the Portfolio to resell, the obligation at an agreed price and time, thereby
determining the yield during the Portfolio's holding period. This arrangement
results in a fixed rate of return that is not subject to market fluctuations
during the Portfolio's holding period. The value of the underlying securities
will be at least equal at all times to the total amount of the repurchase
obligations, including interest. The Portfolio bears a risk of loss in the event
that the other party to a repurchase agreement defaults on its obligations and
the Portfolio is delayed in or prevented from exercising its rights to dispose
of the collateral securities, including the risk of a possible decline in the
value of the underlying securities during the period in which the Portfolio
seeks to assert these rights. Bankers Trust, acting under the supervision of the
Board of Trustees of the Portfolio, reviews the creditworthiness of those banks
and dealers with which the Portfolio enters into repurchase agreements and
monitors on an ongoing basis the value of the securities subject to repurchase
agreements to ensure that it is maintained at the required level.

Securities Lending. The Portfolio is permitted to lend up to 20% of the total
value of its securities to brokers, dealers and other financial organizations.
These loans must be secured continuously by cash or equivalent collateral or by
a letter of credit at least equal to 100% of the current market value of the
securities loaned plus accrued income. By lending its securities, the Portfolio
can increase its income by continuing to receive income on the loaned securities
as well as by the opportunity to receive interest on the collateral. Any gain or
loss in the market price of the borrowed securities which occurs during the term
of the loan inures to the Portfolio and its investors. There may be risks of
delay in receiving additional collateral or risks of delay in recovery of the
securities or even loss of rights in the collateral should the borrower of the
securities fail financially.

ADDITIONAL INVESTMENT TECHNIQUES
The Portfolio may enter into reverse repurchase agreements. See "Investment
Objectives and Policies" in the Statement of Additional Information for a more
detailed description of reverse repurchase agreements.

PORTFOLIO QUALITY AND MATURITY
The Portfolio will maintain a dollar-weighted average maturity of 90 days or
less. All securities in which the Portfolio invests will have or be deemed to
have remaining maturities of 397 days or less on the date of their purchase,
will be denominated in U.S. dollars and will have been granted the required
ratings established herein by two nationally recognized statistical rating
organizations ("NRSRO") (or one such NRSRO if that NRSRO is the only such NRSRO
which rates the security), or if unrated, are believed by Bankers Trust, under
the supervision of the Portfolio's Board of Trustees, to be of comparable
quality. A description of such ratings is provided in the Appendix to the
Statement of Additional Information. Bankers Trust, acting under the supervision
of and procedures adopted by the Board of Trustees of the Portfolio, will also
determine that all securities purchased by the Portfolio present minimal credit
risks. Bankers Trust will cause the Portfolio to dispose of any security as soon
as practicable if the security is no longer of the requisite quality, unless
such action would not be in the best interest of the Portfolio.

ADDITIONAL INVESTMENT LIMITATIONS
The Fund's and the Portfolio's investment objectives, together with the
investment restrictions described in this paragraph and the Statement of
Additional Information, except as noted, are "fundamental policies," which means
that they may not be changed without the approval of the holders of the Fund's
and the Portfolio's outstanding voting securities. The Fund has the same
investment restrictions as the Portfolio, except that the Fund may invest all of
its Assets in another open-end investment company with the same investment
objective, such as the Portfolio. The Portfolio may not invest more than 25% of
its total assets in the securities of issuers in any single industry, except
that, under normal market conditions, more than 25% of the total assets of the
Portfolio will be invested in foreign and domestic bank obligations. As an
operating policy, the Portfolio may not invest more than 5% of its total assets
in the obligations of any one issuer except for U.S. Government Obligations and
repurchase agreements, which may be purchased without limitation. The Portfolio
is also authorized to borrow, including entering into reverse repurchase
transactions, in an amount up to 5% of its total assets for temporary purposes,
but not for leverage, and to pledge its assets to the same extent in connection
with these borrowings. See the Statement of Additional Information for
additional information with respect to reverse repurchase transactions. At the
time of an investment, the Portfolio's aggregate holdings of repurchase
agreements having a remaining maturity of more than seven calendar days (or
which may not be terminated within seven calendar days upon notice by the
Portfolio), time deposits having remaining maturities of more than seven
calendar days, illiquid securities, restricted securities and securities lacking
readily available market quotations will not exceed 10% of the Portfolio's net
assets. If changes in the liquidity of certain securities cause the Portfolio to
exceed such 10% limit, the Portfolio will take steps to bring the aggregate
amount of its illiquid securities back below 10% of its net assets as soon as
practicable, unless such action would not be in the best interest of the
Portfolio. The Statement of Additional Information contains further information
on the Fund's and the Portfolio's investment restrictions.

RISK FACTORS; MATCHING THE FUND TO YOUR INVESTMENT NEEDS
The Fund is designed for conservative investors looking for high current income
approximating money market rates while remaining conveniently liquid with a
stable share price. The Portfolio follows practices which enable the Fund to
attempt to maintain a $1.00 share price: limiting average maturity of the
securities held by the Portfolio to 90 days or less; buying securities which
mature in 397 days or less; and buying only high quality securities with minimal
credit risks. Of course, the Fund cannot guarantee a $1.00 share price, but
these practices help to minimize any price fluctuations that might result from
rising or declining interest rates. While the Portfolio invests in high quality
money market securities, you should be aware that your investment is not without
risk. All money market instruments, including U.S. Government securities, can
change in value when interest rates or an issuer's creditworthiness changes.

The master-feeder structure has been developed relatively recently, so
shareholders should carefully consider this investment approach.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, the Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the SEC, whenever the Trust is requested to
vote on matters pertaining to the Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same proportion
as the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the Trust's votes at the Portfolio meeting. The percentage of the
Trust's votes representing the Fund's shareholders not voting will be voted by
the Trustees or officers of the Trust in the same proportion as the Fund
shareholders who do, in fact, vote.

For descriptions of the investment objective, policies and restrictions of the
Portfolio, see "Investment Objective and Policies." For descriptions of the
management of the Portfolio, see "Management of the Trust and Portfolio" herein
and in the Statement of Additional Information. For descriptions of the expenses
of the Portfolio, see "Management of the Trust and Portfolio" herein.

NET ASSET VALUE
The net asset value per share of the Fund is calculated on each day on which the
Fund is open (each such day being a "Valuation Day"). The Fund is currently open
on each day, Monday through Friday, except (a) January 1st, Martin Luther King,
Jr.'s Birthday (the third Monday in January); Presidents' Day (the third Monday
in February), Good Friday, Memorial Day (the last Monday in May), July 4th,
Labor Day (the first Monday in September), Columbus Day (the second Monday in
October), Veteran's Day (November 11th), Thanksgiving Day (the last Thursday in
November) and December 25th; and (b) the preceding Friday or the subsequent
Monday when one of the calendar determined holidays falls on a Saturday or
Sunday, respectively.

The net asset value per share of the Fund is calculated on each Valuation Day as
of the close of regular trading on the New York Stock Exchange Inc. (the
"NYSE"), which is currently 4:00 p.m., New York time or in the event that the
NYSE closes early, at the time of such early closing. The net asset value per
share of the Fund is computed by dividing the value of the Fund's assets (i.e.,
the value of its investment in the Portfolio and other assets), less all
liabilities, by the total number of its shares outstanding. The Fund's net asset
value will normally be $1.00.

The assets of the Portfolio are valued by using the amortized cost method of
valuation. This method involves valuing each security held by the Portfolio at
its cost at the time of its purchase and thereafter assuming a constant
amortization to maturity of any discount or premium. Accordingly, immaterial
fluctuations in the market value of the securities held by the Portfolio will
not be reflected in the Fund's net asset value. The Board of Trustees of the
Portfolio will monitor the valuation of assets by this method and will make such
changes as it deems necessary to assure that the assets of the Portfolio are
valued fairly and in good faith.

PURCHASE AND REDEMPTION OF SHARES
PURCHASE OF SHARES
The Trust accepts purchase orders for shares of the Fund at the net asset value
per share of the Fund next determined on each Valuation Day. See "Net Asset
Value" above. There is no sales charge on the purchase of shares, but costs of
distributing shares of the Fund may be reimbursed from its assets, as described
herein. Excluding retirement plans, the minimum initial investment in the Trust
is $1,000,000 which may be allocated in amounts not less than $100,000 per fund
in certain funds in the BT Family of Funds. The subsequent minimum investment in
the Fund is $100,000 (excluding retirement plans). Service Agents may impose
initial and subsequent investment minimums that differ from these amounts.
Shares of the Fund may be purchased in only those states where they may be
lawfully sold.

Purchase orders for shares of the Fund will receive, on any Valuation Day, the
net asset value next determined following receipt by the Service Agent and
transmission to Bankers Trust, as the Trust's transfer agent (the "Transfer
Agent") of such order. If the purchase order is received by the Service Agent
and transmitted to the Transfer Agent prior to 4:00 p.m. (New York time or
earlier, should the NYSE close earlier), and if payment in the form of federal
funds is received on that day by Bankers Trust, as the Trust's custodian (the
"Custodian"), the shareholder will receive the dividend declared on that day.
The Trust and Signature reserve the right to reject any purchase order.

Shares must be purchased in accordance with procedures established by the
Transfer Agent and Service Agents, including Bankers Trust, in connection with
customers' accounts. It is the responsibility of each Service Agent to transmit
to the Transfer Agent purchase and redemption orders and to transmit to the
Custodian purchase payments on behalf of its customers in a timely manner, and a
shareholder must settle with the Service Agent his or her entitlement to an
effective purchase or redemption order as of a particular time. Because Bankers
Trust is the Custodian and Transfer Agent of the Trust, funds may be transferred
directly from or to a customer's account with Bankers Trust to or from the Fund
without incurring the additional costs or delays associated with the wiring of
federal funds.

Certificates for shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or the Transfer Agent.

Checkwriting. Shareholders of the Fund may redeem shares by check. Checks may
not be used to close an account. Shareholders will continue to earn dividends on
shares to be redeemed until the check clears. Checks will be returned to
shareholders at the end of the month. There is no charge for redemption of
shares by check. Additional information regarding the checkwriting privilege may
be obtained from a Service Agent.

* Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.

* Complete and sign an application, taking care to register your new account in
the same name, address and taxpayer identification number as your existing
account(s).

* Individual Retirement Accounts (IRAs): personal savings plans that offer tax
advantages for individuals to set aside money for retirement and allow new
contributions of $2,000 per tax year.

* Rollover IRAs: tax-deferred retirement accounts that retain the special tax
advantages of lump sum distributions from qualified retirement plans and
transferred IRA accounts.

* 403(b) Custodian Accounts: defined contribution plans open to employees of
most nonprofit organizations and educational institutions.

* Deferred Benefit Plans: plan sponsors may invest all or part of their
pension assets in the Fund.

DIVIDENDS, DISTRIBUTIONS AND TAXES
The Portfolio determines its net income and realized capital gains, if any, on
each Valuation Day and allocates all such income and gain pro rata among the
Fund and the other investors in the Portfolio at the time of such determination.
The Fund declares dividends from its net income (i.e., the Fund's pro rata share
of the net income of the Portfolio) on each Valuation Day and pays dividends for
the preceding month within the first five Valuation Days of each month. The Fund
reserves the right to include realized short-term gains, if any, in such daily
dividends. Distributions of the Fund's pro rata share of the Portfolio's net
realized long-term capital gains, if any, and any undistributed net realized
short-term capital gains are normally declared and paid annually at the end of
the fiscal year in which they were earned to the extent they are not offset by
any capital loss carryforwards. Since the Fund is subject to a 4% nondeductible
excise tax on certain undistributed amounts of ordinary income and capital
gains, the Fund expects to make such other distributions as are necessary to
avoid the application of this tax. Unless a shareholder instructs the Fund to
pay dividends or capital gains distributions in cash, dividends and
distributions will automatically be reinvested at net asset value in additional
shares of the Fund.

The Trust intends to qualify the Fund as a regulated investment company, as
defined in the Internal Revenue Code of 1986, as amended (the "Code".) Provided
the Fund meets the requirements imposed by the Code, the Fund will not pay any
Federal income or excise taxes. The Portfolio will also not be required to pay
any Federal income or excise taxes. Dividends paid by the Fund from its taxable
net investment income and distributions by the Fund of its net realized
short-term capital gains are taxable to shareholders as ordinary income, whether
received in cash or reinvested in additional shares of the Fund. The Trust does
not expect that the Fund will realize long-term capital gains and thus does not
contemplate paying distributions taxable to shareholders as long-term capital
gains. The Fund's dividends and distributions will not qualify for the
dividends-received deduction for corporations.

PERFORMANCE INFORMATION AND REPORTS
From time to time, the Trust may advertise "current yield" and/or "effective
yield" for the Fund. All yield figures are based on historical earnings and are
not intended to indicate future performance. The "current yield" of the Fund
refers to the income generated by an investment in the Fund over a seven-day
period (which period will be stated in the advertisement). This income is then
"annualized;'" that is, the amount of income generated by the investment during
that week is assumed to be generated each week over a 52-week period and is
shown as a percentage of the investment. The "effective yield" is calculated
similarly but, when annualized, the income earned by an investment in the Fund
is assumed to be reinvested. The "effective yield" will be slightly higher than
the "current yield" because of the compounding effect of this assumed
reinvestment. The Trust may include this information in sales material and
advertisements for the Fund.

Yield is a function of the quality, composition and maturity of the securities
held by the Portfolio and operating expenses of the Fund and the Portfolio. In
particular, the Fund's yield will rise and fall with short-term interest rates,
which can change frequently and sharply. In periods of rising interest rates,
the yield of the Fund will tend to be somewhat lower than prevailing market
rates, and in periods of declining interest rates, the yield will tend to be
somewhat higher. In addition, when interest rates are rising, the inflow of net
new money to the Fund from the continuous sale of its shares will likely be
invested by the Portfolio in instruments producing higher yields than the
balance of the Portfolio's securities, thereby increasing the current yield of
the Fund. In periods of falling interest rates, the opposite can be expected to
occur. Accordingly, yields will fluctuate and do not necessarily indicate future
results. While yield information may be useful in reviewing the performance of
the Fund, it may not provide a basis for comparison with bank deposits, other
fixed rate investments, or other investment companies that may use a different
method of calculating yield. Any fees charged by Service Agents for processing
purchase and/or redemption transactions will effectively reduce the yield for
those shareholders.

From time to time, advertisements or reports to shareholders may compare the
yield of the Fund to that of other mutual funds with similar investment
objectives or to that of a particular index. The yield of the Fund might be
compared with, for example, the IBC/Donoghue's Taxable First Tier Institutional
Only Money Fund Average which is an average compiled by IBC/ Donoghue's Money
Fund Report, a widely recognized, independent publication that monitors the
performance of money market mutual funds. Similarly, the yield of the Fund might
be compared with rankings prepared by Micropal Limited and/or Lipper Analytical
Services, Inc., which are widely recognized, independent services that monitor
the investment performance of mutual funds. The yield of the Fund might also be
compared with the average yield reported by the Bank Rate Monitor for money
market deposit accounts offered by the 50 leading banks and thrift institutions
in the top five standard metropolitan areas. Shareholders may make inquiries
regarding the Fund, including current yield quotations and performance
information, by contacting any Service Agent.

MANAGEMENT OF THE TRUST AND PORTFOLIO
BOARD OF TRUSTEES
The affairs of the Trust and Portfolio are managed under the supervision of
their respective Board of Trustees. By virtue of the responsibilities assumed by
Bankers Trust, the administrator of the Trust and Portfolio, neither the Trust
nor Portfolio require employees other than its executive officers. None of the
executive officers of the Trust or Portfolio devotes full time to the affairs of
the Trust or Portfolio.

The Trustees of the Trust who are not "interested persons" (as defined in the
1940 Act) (the "Independent Trustees") of the Trust or of the Portfolio, as the
case may be, have adopted written procedures reasonably appropriate to deal with
potential conflicts of interest, up to and including creating separate boards of
trustees, arising from the fact that several of the same individuals are
Trustees of the Trust and the Portfolio. For more information with respect to
the Trustees of both the Trust and the Portfolio, see "Management of the Trust
and Portfolios" in the Statement of Additional Information.

Bankers Trust, a New York banking corporation with principal offices at 280 Park
Avenue, New York, New York 10017, is a wholly-owned subsidiary of Bankers Trust
New York Corporation. Bankers Trust conducts a variety of general banking and
trust activities and is a major wholesale supplier of financial services to the
international and domestic institutional markets. As of December 31, 1995,
Bankers Trust New York Corporation was the ninth largest bank holding company in
the United States with total assets of approximately $104 billion. Bankers Trust
is a worldwide merchant bank dedicated to servicing the needs of corporations,
governments, financial institutions and private clients through a global network
of over 120 offices in more than 40 countries. Investment management is a core
business of Bankers Trust, built on a tradition of excellence from its roots as
a trust bank founded in 1903. The scope of Bankers Trust's investment management
capability is unique due to its leadership positions in both active and passive
quantitative management and its presence in major equity and fixed income
markets around the world. Bankers Trust is one of the nation's largest and most
experienced investment managers, with approximately $200 billion in assets under
management globally. Of that total, approximately $45 billion are in cash assets
alone. This makes Bankers Trust one of the nation's leading managers of cash
funds.

Bankers Trust, subject to the supervision and direction of the Board of Trustees
of the Portfolio, manages the Portfolio in accordance with the Portfolio's
investment objective and stated investment policies, makes investment decisions
for the Portfolio, places orders to purchase and sell securities and other
financial instruments on behalf of the Portfolio and employs professional
investment managers and securities analysts who provide research services to the
Portfolio. All orders for investment transactions on behalf of the Portfolio are
placed by Bankers Trust with broker-dealers and other financial intermediaries
that it selects, including those affiliated with Bankers Trust. A Bankers Trust
affiliate will be used in connection with a purchase or sale of an investment
for the Portfolio only if Bankers Trust believes that the affiliate's charge for
the transaction does not exceed usual and customary levels. The Portfolio will
not invest in obligations for which Bankers Trust or any of its affiliates is
the ultimate obligor or accepting bank. The Portfolio may, however, invest in
the obligations of correspondents and customers of Bankers Trust.

Under its Investment Advisory Agreement, Bankers Trust receives a fee from the
Portfolio, computed daily and paid monthly, at the annual rate of 0.15% of the
average daily net assets of the Portfolio.

Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Trust and the Portfolio
described in this prospectus and the statement of additional information without
violation of the Glass-Steagall Act or other applicable banking laws or
regulations. State laws on this issue may differ from the interpretations of
relevant Federal law and banks and financial institutions may be required to
register as dealers pursuant to state securities law.

Under an Administration and Services Agreement with the Portfolio, Bankers Trust
calculates the value of the assets of the Portfolio and generally assists the
Board of Trustees of the Portfolio in all aspects of the administration and
operation of the Portfolio. The Administration and Services Agreement provides
for the Portfolio to pay Bankers Trust a fee, computed daily and paid monthly,
at the annual rate of 0.05% of the average daily net assets of the Portfolio.
Under each Administration and Services Agreement, Bankers Trust may delegate one
or more of its responsibilities to others, including Signature, at Bankers
Trust's expense. For more information, see the Statement of Additional
Information.

DISTRIBUTOR
Under its Distribution Agreement with the Trust, Signature, as Distributor,
serves as the Trust's principal underwriter on a best efforts basis. In
addition, Signature provides the Trust with office facilities. Signature is a
wholly-owned subsidiary of Signature Financial Group, Inc. ("SFG"). SFG and its
affiliates currently provide administration and distribution services for other
registered investment companies. The principal business address of SFG and
Signature is 6 St. James Avenue, Boston, Massachusetts 02116.

Pursuant to the terms of the Trust's Plan of Distribution pursuant to Rule 12b-1
under the 1940 Act (the "Plan"), Signature may seek reimbursement in an amount
not exceeding 0.10% of the Fund's average daily net assets annually for expenses
incurred in connection with any activities primarily intended to result in the
sale of the Fund's shares, including, but not limited to: compensation to and
expenses (including overhead and telephone expenses) of account executives or
other employees of Signature who, as their primary activity, engage in or
support the distribution of shares; printing of prospectuses, statements of
additional information and reports for other than existing Fund shareholders in
amounts in excess of that typically used in connection with the distribution of
shares of the Fund; costs of placing advertising in various media; services of
parties other than Signature or its affiliates in formulating sales literature;
and typesetting, printing and distribution of sales literature. All costs and
expenses in connection with implementing and operating the Plan will be paid by
the Fund, subject to the 0.10% of net assets limitation. All costs and expenses
associated with preparing the prospectuses and statements of additional
information and in connection with printing them for and distributing them to
existing shareholders and regulatory authorities, which costs and expenses would
not be considered distribution expenses for purposes of the Plan, will also be
paid by the Fund. To the extent expenses of Signature under the Plan in any
fiscal year of the Trust exceed amounts payable under the Plan during that year,
those expenses will not be reimbursed in any succeeding fiscal year. Expenses
incurred in connection with distribution activities will be identified to the
Fund or other series of the Trust involved, although it is anticipated that some
activities may be conducted on a Trust-wide basis, with the result that those
activities will not be identifiable to any particular series. In the latter
case, expenses will be allocated among the series of the Trust on the basis of
their relative net assets. It is not expected that any payments will be made
under the Plan in the foreseeable future.

SERVICE AGENT
All shareholders must be represented by a Service Agent. Bankers Trust acts as a
Service Agent pursuant to its Administration and Services Agreement with the
Trust and receives no additional compensation from the Fund for such shareholder
services. The service fees of any other Service Agent, including broker-dealers,
will be paid by Bankers Trust from its fees. The services provided by a Service
Agent may include establishing and maintaining shareholder accounts, processing
purchase and redemption transactions, arranging for bank wires, performing
shareholder sub-accounting, answering client inquiries regarding the Trust,
assisting clients in changing dividend options, account designations and
addresses, providing periodic statements showing the client's account balance,
transmitting proxy statements, periodic reports, updated prospectuses and other
communications to shareholders and, with respect to meetings of shareholders,
collecting, tabulating and forwarding to the Trust executed proxies and
obtaining such other information and performing such other services as the
Administrator or the Service Agent's clients may reasonably request and agree
upon with the Service Agent. Service Agents may separately charge their clients
additional fees only to cover provision of additional or more comprehensive
services not already provided under the Administration and Services Agreement
with Bankers Trust, or of the type or scope not generally offered by a mutual
fund, such as cash management services or enhanced retirement or trust
reporting. In addition, investors may be charged a transaction fee if they
effect transactions in Fund shares through a broker or agent. Each Service Agent
has agreed to transmit to shareholders, who are its customers, appropriate
disclosures of any fees that it may charge them directly.

CUSTODIAN AND TRANSFER AGENT
Bankers Trust acts as Custodian of the assets of the Trust and the Portfolio and
serves as the Transfer Agent for the Trust and the Portfolio under the
respective Administration and Services Agreement with the Trust and the
Portfolio.

Each series in the Trust will not be involved in any vote involving a Portfolio
in which it does not invest its Assets. Shareholders of all the series of the
Trust will, however, vote together to elect Trustees of the Trust and for
certain other matters. Under certain circumstances, the shareholders of one or
more series could control the outcome of these votes.

EXPENSES OF THE TRUST
The Fund bears its own expenses. Operating expenses for the Fund generally
consist of all costs not specifically borne by Bankers Trust or Signature,
including administration and services fees, fees for necessary professional
services, the costs of regulatory compliance and costs associated with
maintaining legal existence and shareholder relations. Bankers Trust and
Signature have agreed to reimburse the Fund to the extent required by applicable
state law for certain expenses that are described in the Statement of Additional
Information. The Portfolio bears its own expenses. Operating expenses for the
Portfolio generally consist of all costs not specifically borne by Bankers Trust
or Signature, including investment advisory and administration and services
fees, fees for necessary professional services, amortization of organizational
expenses, the costs associated with regulatory compliance and maintaining legal
existence and investor relations.
<PAGE>

INVESTMENT ADVISER OF THE PORTFOLIO AND ADMINISTRATOR
BANKERS TRUST COMPANY

DISTRIBUTOR
SIGNATURE BROKER-DEALER SERVICES, INC.

CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY

INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.

COUNSEL
WILLKIE FARR & GALLAGHER

..............................................................................
No person has been authorized to give any information or to make any
representations other than those contained in the Trust's Prospectuses, its
Statement of Additional Information or the Trust's official sales literature
in connection with the offering of the Trust's shares and, if given or made,
such other information or representations must not be relied on as having been
authorized by the Trust. This Prospectus does not constitute an offer in any
state in which, or to any person to whom, such offer may not lawfully be made.
..............................................................................
<PAGE>

BT INSTITUTIONAL FUNDS

Institutional
Cash Reserves

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, BANKERS TRUST COMPANY AND THE SHARES ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER
AGENCY. THE FUND INTENDS TO MAINTAIN A CONSTANT $1.00 PER SHARE NET ASSET VALUE,
ALTHOUGH THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO DO SO.

o A money market fund that provides high current income to the extent consistent
with liquidity and capital preservation.

BANKERS TRUST COMPANY
Investment Adviser of the
Portfolio and Administrator

SIGNATURE BROKER-
DEALER SERVICES, INC.
Distributor
6 St. James Avenue
Boston, Massachusetts 02116

<PAGE>

TABLE OF CONTENTS
- ------------------------------------------------------------------------------
PAGE
..............................................................................
Summary of Fund Expenses 3
Fund Financial Highlights 5
Investment Objective and Policies 6
Risk Factors; Matching the Fund to Your Investment Needs 10
Net Asset Value 11
Purchase and Redemption of Shares 12
Dividends, Distributions and Taxes 15
Performance Information and Reports 16
Management of the Trust and Portfolio 17
- ------------------------------------------------------------------------------

SUMMARY OF FUND EXPENSES
The following table provides (i) a summary of expenses relating to purchases and
sales of shares of Institutional Cash Reserves (the "Fund") and the aggregate
annual operating expenses of the Fund and the expenses of the Cash Management
Portfolio (the "Portfolio"), as a percentage of average net assets of the Fund
and (ii) an example illustrating the dollar cost of such expenses on a $1,000
investment in the Fund. THE TRUSTEES OF THE BT INSTITUTIONAL FUNDS (THE "TRUST")
BELIEVE THAT THE AGGREGATE PER SHARE EXPENSES OF THE FUND AND THE PORTFOLIO WILL
BE LESS THAN OR APPROXIMATELY EQUAL TO THE EXPENSES WHICH THE FUND WOULD INCUR
IF THE TRUST RETAINED THE SERVICES OF AN INVESTMENT ADVISER AND THE INVESTABLE
ASSETS (THE "ASSETS") OF THE FUND WERE INVESTED DIRECTLY IN THE TYPE OF
SECURITIES BEING HELD BY THE PORTFOLIO.
- ------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES
(as a percentage of the average daily net assets of the Fund)
..............................................................................
Investment advisory fee 0.15%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.03
..............................................................................
Total operating expenses (after reimbursements or waivers) 0.18%
..............................................................................
EXAMPLE 1 year 3 years 5 years 10 years
..............................................................................
You would pay the following expenses
on a $1,000 investment, assuming:
(1) 5% annual return and (2)
redemption at the end of each
time period $2 $5 $9 $18
- ------------------------------------------------------------------------------

The expense table and the example above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of the Fund. While
reimbursement of distribution expenses in amounts up to 0.20% of average net
assets are authorized to be made pursuant to the Plan of Distribution under Rule
12b-1 of the Investment Company Act of 1940, as amended (the "1940 Act"), it is
not expected that any payments will actually be made under that plan in the
foreseeable future. The expense table and the example reflect a voluntary
undertaking by Bankers Trust Company ("Bankers Trust") or Signature Broker-
Dealer Services, Inc. ("Signature") to waive or reimburse expenses such that the
total operating expenses will not exceed 0.18% of the Fund's average net assets
annually. In the absence of this undertaking, for the fiscal year ended December
31, 1995 the total operating expenses would have been equal to 0.25% of the
Fund's average net assets annually. THE EXAMPLE SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. Moreover, while each example assumes a 5% annual return,
actual performance will vary and may result in a return greater or less than 5%.

For more information with respect to the expenses of the Fund and the Portfolio
see "Management of the Trust and Portfolio" herein.

<PAGE>

- ------------------------------------------------------------------------------
FOR THE
PERIOD
JANUARY 25, 1994
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
DECEMBER 31,1995 DECEMBER 31, 1994
..............................................................................
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $1.00 $1.00
..............................................................................
Income from Investment Operations
Net Investment Income 0.06 0.04
Net Realized Gain (Loss) from Securities
Transactions 0.00+ (0.01)
..............................................................................
Total from Investment Operations 0.06 0.03
..............................................................................
Contribution of Capital -- 0.01
..............................................................................
Distributions From:
Net Investment Income (0.06) (0.04)
..............................................................................
Net Asset Value, End of Period $1.00 $1.00
..............................................................................
TOTAL INVESTMENT RETURN 5.94% 4.32%*+
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average
Net Assets 5.80% 4.32%*
Ratio of Expenses to Average Net Assets,
Including Expenses of the Cash Management
Portfolio 0.18% 0.18%*
Decrease Reflected in Above Expense Ratio
Due to Absorption of Expenses by Bankers
Trust 0.07% 0.08%*
Net Assets, End of Period (000's omitted) $820,973 $920,722
- ------------------------------------------------------------------------------
* Annualized
+ Increased by 0.81% due to Contribution of Capital.

<PAGE>

INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks a high level of current income consistent with liquidity and the
preservation of capital through investment in high quality money market
instruments. The Fund offers investors a convenient means of diversifying their
holdings of short-term securities while relieving those investors of the
administrative burdens typically associated with purchasing and holding these
instruments, such as coordinating maturities and reinvestments, providing for
safekeeping and maintaining detailed records. High quality, short-term
instruments may result in a lower yield than instruments with a lower quality or
a longer term.

The Trust seeks to achieve the investment objective of the Fund by investing all
the Assets of the Fund in the Portfolio, which has the same investment objective
as the Fund. There can be no assurances that the investment objective of either
the Fund or the Portfolio will be achieved. The investment objective of each of
the Fund and the Portfolio is a fundamental policy and may not be changed
without the approval of the Fund's shareholders or the Portfolio's investors,
respectively. See "Special Information Concerning Master-Feeder Fund Structure"
on page 10 herein.

CASH MANAGEMENT PORTFOLIO
The Portfolio will attempt to achieve its investment objective by investing in
the following money market instruments:

ADDITIONAL INVESTMENT LIMITATIONS
The Fund's and the Portfolio's investment objectives, together with the
investment restrictions described in this paragraph and the Statement of
Additional Information, except as noted, are "fundamental policies," which means
that they may not be changed without the approval of the holders of the Fund's
and the Portfolio's outstanding voting securities. The Fund has the same
investment restrictions as the Portfolio, except that the Fund may invest all of
its assets in another open-end investment company with the same investment
objective, such as the Portfolio. The Portfolio may not invest more than 25% of
its total assets in the securities of issuers in any single industry, except
that, under normal market conditions, more than 25% of the total assets of the
Portfolio will be invested in foreign and domestic bank obligations. As an
operating policy, the Portfolio may not invest more than 5% of its total assets
in the obligations of any one issuer except for U.S. Government Obligations and
repurchase agreements, which may be purchased without limitation. The Portfolio
is also authorized to borrow, including entering into reverse repurchase
transactions, in an amount up to 5% of its total assets for temporary purposes,
but not for leverage, and to pledge its assets to the same extent in connection
with these borrowings. See the Statement of Additional Information for
additional information with respect to reverse repurchase transactions. At the
time of an investment, the Portfolio's aggregate holdings of repurchase
agreements having a remaining maturity of more than seven calendar days (or
which may not be terminated within seven calendar days upon notice by the
Portfolio), time deposits having remaining maturities of more than seven
calendar days, illiquid securities, restricted securities and securities lacking
readily available market quotations will not exceed 10% of the Portfolio's net
assets. If changes in the liquidity of certain securities cause the Portfolio to
exceed such 10% limit, the Portfolio will take steps to bring the aggregate
amount of its illiquid securities back below 10% of its net assets as soon as
practicable, unless such action would not be in the best interest of the
Portfolio. The Statement of Additional Information contains further information
on the Fund's and the Portfolio's investment restrictions.

SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE Unlike other
open-end management investment companies (mutual funds) which directly acquire
and manage their own portfolio securities, the Fund seeks to achieve its
investment objective by investing all of its Assets in the Portfolio, a separate
registered investment company with the same investment objective as the Fund.
Therefore, an investor's interest in the Portfolio's securities is indirect. In
addition to selling a beneficial interest to the Fund, the Portfolio may sell
beneficial interests to other mutual funds or institutional investors. Such
investors will invest in the Portfolio on the same terms and conditions and will
pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the different funds that invest in the Portfolio.
Such differences in returns are also present in other mutual fund structures.
Information concerning other holders of interests in the Portfolio is available
from Bankers Trust at (800) 368- 4031.

The master-feeder structure has been developed relatively recently, so
shareholders should carefully consider this investment approach.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns (however, this possibility
exists as well for traditionally structured funds which have large institutional
investors). Additionally, the Portfolio may become less diverse, resulting in
increased portfolio risk. Also, funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Except as permitted by the SEC, whenever the Trust is requested to
vote on matters pertaining to the Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same proportion
as the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the Trust's votes at the Portfolio meeting. The percentage of the
Trust's votes representing Fund shareholders not voting will be voted by the
Trustees or officers of the Trust in the same proportion as the Fund
shareholders who do, in fact, vote.

The Fund may withdraw its investment from the Portfolio at any time, if the
Board of Trustees of the Trust determines that it is in the best interests of
the shareholders of the Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including the
investment of all the Assets of the Fund in another pooled investment entity
having the same investment objective as the Fund or the retaining of an
investment adviser to manage the Fund's Assets in accordance with the investment
policies described below with respect to the Portfolio.

NET ASSET VALUE
The net asset value per share of the Fund is calculated on each day on which the
Fund is open (each such day being a "Valuation Day"). The Fund is currently open
on each day, Monday through Friday, except (a) January 1st, Martin Luther King,
Jr.'s Birthday (the third Monday in January), Presidents' Day (the third Monday
in February), Good Friday, Memorial Day (the last Monday in May), July 4th,
Labor Day (the first Monday in September), Columbus Day (the second Monday in
October), Veteran's Day (November 11th), Thanksgiving Day (the last Thursday in
November) and December 25th: and (b) the preceding Friday or the subsequent
Monday when one of the calendar determined holidays falls on a Saturday or
Sunday, respectively.

The net asset value per share of the Fund is calculated on each Valuation Day as
of the close of regular trading on the New York Stock Exchange Inc. ("NYSE"),
which is currently 4:00 p.m., New York time or in the event that the NYSE closes
early, at the time of such early closing. The net asset value per share of the
Fund is computed by dividing the value of the Fund's assets (i.e., the value of
its investment in the Portfolio and other assets), less all liabilities, by the
total number of its shares outstanding. The Fund's net asset value will normally
be $1.00.

PURCHASE AND REDEMPTION OF SHARES
PURCHASE OF SHARES
The Trust accepts purchase orders for shares of the Fund at the net asset value
per share of the Fund next determined on each Valuation Day. See "Net Asset
Value" above. There is no sales charge on the purchase of shares, but costs of
distributing shares of the Fund may be reimbursed from its assets, as described
herein. Excluding retirement plans, the minimum initial investment in the Trust
is $50,000,000 which may be allocated in amounts not less than $1,000,000 per
fund in certain funds in the BT Family of Funds. The subsequent minimum
investment in the Fund is $1,000,000 (excluding retirement plans). Service
Agents may impose initial and subsequent investment minimums that differ from
these amounts. Shares of the Fund may be purchased in only those states where
they may be lawfully sold.

Purchase orders for shares of the Fund will receive, on any Valuation Day, the
net asset value next determined following receipt by the Service Agent and
transmission to Bankers Trust, as the Trust's transfer agent (the "Transfer
Agent") of such order. If the purchase order is received by the Service Agent
and transmitted to the Transfer Agent prior to 4:00 p.m. (New York time or
earlier, should the NYSE close earlier) and if payment in the form of federal
funds is received on that day by Bankers Trust, as the Trust's custodian (the
"Custodian"), the shareholder will receive the dividend declared on that day.
The Trust and Signature reserve the right to reject any purchase order.

Shares must be purchased in accordance with procedures established by the
Transfer Agent and Service Agents, including Bankers Trust, in connection with
customers' accounts. It is the responsibility of each Service Agent to transmit
to the Transfer Agent purchase and redemption orders and to transmit to the
Custodian purchase payments on behalf of its customers in a timely manner, and a
shareholder must settle with the Service Agent his or her entitlement to an
effective purchase or redemption order as of a particular time. Because Bankers
Trust is the Custodian and Transfer Agent of the Trust, funds may be transferred
directly from or to a customer's account with Bankers Trust to or from the Fund
without incurring the additional costs or delays associated with the wiring of
federal funds.

Certificates for shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or the Transfer Agent.

* Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.

* Complete and sign an application, taking care to register your new account in
the same name, address, and taxpayer identification number as your existing
account(s).

* Individual Retirement Accounts (IRAs): personal savings plans that offer tax
advantages for individuals to set aside money for retirement and allow new
contributions of $2,000 per tax year.

* Rollover IRAs: tax-deferred retirement accounts that retain the special tax
advantages of lump sum distributions from qualified retirement plans and
transferred IRA accounts.

* 403(b) Custodian Accounts: defined contribution plans open to employees of
most nonprofit organizations and educational institutions.

* Deferred Benefit Plans: plan sponsors may invest all or part of their
pension assets in the Fund.

The Trust intends to qualify the Fund as a regulated investment company, as
defined in the Internal Revenue Code of 1986, as amended (the "Code"). Provided
the Fund meets the requirements imposed by the Code, the Fund will not pay any
Federal income or excise taxes. The Portfolio will also not be required to pay
any Federal income or excise taxes. Dividends paid by the Fund from its taxable
net investment income and distributions by the Fund of its net realized
short-term capital gains are taxable to shareholders as ordinary income, whether
received in cash or reinvested in additional shares of the Fund. The Trust does
not expect that the Fund will realize long-term capital gains and thus does not
contemplate paying distributions taxable to shareholders as long-term capital
gains. The Fund's dividends and distributions will not qualify for the
dividends-received deduction for corporations.

From time to time, advertisements or reports to shareholders may compare the
yield of the Fund to that of other mutual funds with similar investment
objectives or to that of a particular index. The yield of the Fund might be
compared with, for example, the IBC/Donoghue's Taxable First Tier Institutional
Only Money Fund Average, which is an average compiled by IBC/ Donoghue's Money
Fund Report, a widely recognized, independent publication that monitors the
performance of money market mutual funds. Similarly, the yield of the Fund might
be compared with rankings prepared by Micropal Limited and/or Lipper Analytical
Services, Inc., which are widely recognized, independent services that monitor
the investment performance of mutual funds. The yield of the Fund might also be
compared with the average yield reported by the Bank Rate Monitor for money
market deposit accounts offered by the 50 leading banks and thrift institutions
in the top five standard metropolitan areas. Shareholders may make inquiries
regarding the Fund, including current yield quotations and performance
information, by contacting any Service Agent.

MANAGEMENT OF THE TRUST AND PORTFOLIO
BOARD OF TRUSTEES
The affairs of the Trust and the Portfolio are managed under the supervision of
their respective Board of Trustees. By virtue of the responsibilities assumed by
Bankers Trust, the administrator of the Trust and Portfolio, neither the Trust
nor the Portfolio require employees other than its executive officers. None of
the executive officers of the Trust or the Portfolio devotes full time to the
affairs of the Trust or the Portfolio.

The Trustees of the Trust who are not "interested persons" (as defined in the
1940 Act) (the "Independent Trustees") of the Trust or of the Portfolio, as the
case may be, have adopted written procedures reasonably appropriate to deal with
potential conflicts of interest, up to and including creating separate boards of
trustees, arising from the fact that several of the same individuals are
Trustees of the Trust and the Portfolio. For more information with respect to
the Trustees of both the Trust and the Portfolio, see "Management of the Trust
and Portfolios" in the Statement of Additional Information.

Bankers Trust, a New York banking corporation with principal offices at 280 Park
Avenue, New York, New York 10017, is a wholly-owned subsidiary of Bankers Trust
New York Corporation. Bankers Trust conducts a variety of general banking and
trust activities and is a major wholesale supplier of financial services to the
international and domestic institutional markets. As of December 31, 1995,
Bankers Trust New York Corporation was the ninth largest bank holding company in
the United States with total assets of approximately $104 billion. Bankers Trust
is a worldwide merchant bank dedicated to servicing the needs of corporations,
governments, financial institutions and private clients through a global network
of over 120 offices in more than 40 countries. Investment management is a core
business of Bankers Trust, built on a tradition of excellence from its roots as
a trust bank founded in 1903. The scope of Bankers Trust's investment management
capability is unique due to its leadership positions in both active and passive
quantitative management and its presence in major equity and fixed income
markets around the world. Bankers Trust is one of the nation's largest and most
experienced investment managers, with approximately $200 billion in assets under
management globally. Of that total, approximately $45 billion are in money
market instruments alone. This makes Bankers Trust one of the nation's leading
managers of cash funds.

Bankers Trust, subject to the supervision and direction of the Board of Trustees
of the Portfolio, manages the Portfolio in accordance with the Portfolio's
investment objective and stated investment policies, makes investment decisions
for the Portfolio, places orders to purchase and sell securities and other
financial instruments on behalf of the Portfolio and employs professional
investment managers and securities analysts who provide research services to the
Portfolio. All orders for investment transactions on behalf of the Portfolio are
placed by Bankers Trust with broker-dealers and other financial intermediaries
that it selects, including those affiliated with Bankers Trust. A Bankers Trust
affiliate will be used in connection with a purchase or sale of an investment
for the Portfolio only if Bankers Trust believes that the affiliate's charge for
the transaction does not exceed usual and customary levels. The Portfolio will
not invest in obligations for which Bankers Trust or any of its affiliates is
the ultimate obligor or accepting bank. The Portfolio may, however, invest in
the obligations of correspondents and customers of Bankers Trust.

Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Trust and the Portfolio
described in this prospectus and the statement of additional information without
violation of the Glass-Steagall Act or other applicable banking laws or
regulations. State laws on this issue may differ from the interpretations of
relevant federal law and banks and financial institutions may be required to
register as dealers pursuant to state securities law.

Under an Administration and Services Agreement with the Portfolio, Bankers Trust
calculates the value of the assets of the Portfolio and generally assists the
Board of Trustees of the Portfolio in all aspects of the administration and
operation of the Portfolio. The Administration and Services Agreement provides
for the Portfolio to pay Bankers Trust a fee, computed daily and paid monthly,
at the annual rate of 0.05% of the average daily net assets of the Portfolio.
Under each Administration and Services Agreement, Bankers Trust may delegate one
or more of its responsibilities to others, including Signature, at Bankers
Trust's expense. For more information, see the Statement of Additional
Information.

DISTRIBUTOR
Under its Distribution Agreement with the Trust, Signature, as Distributor,
serves as the Trust's principal underwriter on a best efforts basis. In
addition, Signature provides the Trust with office facilities. Signature is a
wholly-owned subsidiary of Signature Financial Group, Inc. ("SFG"). SFG and its
affiliates currently provide administration and distribution services for other
registered investment companies. The principal business address of SFG and
Signature is 6 St. James Avenue, Boston, Massachusetts 02116.

Pursuant to the terms of the Trust's Plan of Distribution pursuant to Rule 12b-1
under the 1940 Act (the "Plan"), Signature may seek reimbursement in an amount
not exceeding 0.20% of the Fund's average daily net assets annually for expenses
incurred in connection with any activities primarily intended to result in the
sale of the Fund's shares, including, but not limited to: compensation to and
expenses (including overhead and telephone expenses) of account executives or
other employees of Signature who, as their primary activity, engage in or
support the distribution of shares; printing of prospectuses, statements of
additional information and reports for other than existing Fund shareholders in
amounts in excess of that typically used in connection with the distribution of
shares of the Fund; costs of placing advertising in various media; services of
parties other than Signature or its affiliates in formulating sales literature;
and typesetting, printing and distribution of sales literature. All costs and
expenses in connection with implementing and operating the Plan will be paid by
the Fund, subject to the 0.20% of net assets limitation. All costs and expenses
associated with preparing the prospectuses and statements of additional
information and in connection with printing them for and distributing them to
existing shareholders and regulatory authorities, which costs and expenses would
not be considered distribution expenses for purposes of the Plan, will also be
paid by the Fund. To the extent expenses of Signature under the Plan in any
fiscal year of the Trust exceed amounts payable under the Plan during that year,
those expenses will not be reimbursed in any succeeding fiscal year. Expenses
incurred in connection with distribution activities will be identified to the
Fund or other series of the Trust involved, although it is anticipated that some
activities may be conducted on a Trust-wide basis, with the result that those
activities will not be identifiable to any particular series. In the latter
case, expenses will be allocated among the series of the Trust on the basis of
their relative net assets. It is not expected that any payments will be made
under the Plan in the foreseeable future.

SERVICE AGENT
All shareholders must be represented by a Service Agent. Bankers Trust acts as a
Services Agent pursuant to its Administration and Service Agreement with the
Trust and receives no additional compensation from the Fund for such shareholder
services. The service fee of any other Service Agent, including broker-dealers,
will be paid by Bankers Trust from its fees. The services provided by a Service
Agent may include establishing and maintaining shareholder accounts, processing
purchase and redemption transactions, performing shareholder sub-accounting,
answering client inquiries regarding the Trust, investing client cash account
balances automatically in Fund shares and processing redemption transactions at
the request of clients, assisting clients in changing dividend options, account
designations and addresses, providing periodic statements showing the client's
account balance and integrating these statements with those of other
transactions and balances in the client's other accounts serviced by the Service
Agent, transmitting proxy statements, periodic reports, updated prospectuses and
other communications to shareholders and, with respect to meetings of
shareholders, collecting, tabulating and forwarding to the Trust executed
proxies, arranging for bank wires and obtaining such other information and
performing such other services as the Administrator or the Service Agent's
clients may reasonably request and agree upon with the Service Agent. Service
Agents may separately charge their clients additional fees only to cover
provision of additional or more comprehensive services not already provided
under the Administration and Services Agreement with Bankers Trust, or of the
type or scope not generally offered by a mutual fund, such as cash management
services or enhanced retirement or trust reporting. In addition, investors may
be charged a transaction fee if they effect transactions in Fund shares through
a broker or agent. Each Service Agent has agreed to transmit to shareholders,
who are its customers, appropriate disclosures of any fees that it may charge
them directly.

Each series in the Trust will not be involved in any vote involving a Portfolio
in which it does not invest its Assets. Shareholders of all the series of the
Trust will, however, vote together to elect Trustees of the Trust and for
certain other matters. Under certain circumstances, the shareholders or one or
more series could control the outcome of these votes.

EXPENSES OF THE TRUST
The Fund bears its own expenses. Operating expenses for the Fund generally
consist of all costs not specifically borne by Bankers Trust or Signature,
including administration and services fees, fees for necessary professional
services, amortization of organizational expenses, the costs of regulatory
compliance and costs associated with maintaining legal existence and shareholder
relations. Bankers Trust and Signature have agreed to reimburse the Fund to the
extent required by applicable state law for certain expenses that are described
in the Statement of Additional Information. The Portfolio bears its own
expenses. Operating expenses for the Portfolio generally consist of all costs
not specifically borne by Bankers Trust or Signature, including investment
advisory and administration and services fees, fees for necessary professional
services, the costs associated with regulatory compliance and maintaining legal
existence and investor relations.
<PAGE>

INVESTMENT ADVISER OF THE PORTFOLIO AND ADMINISTRATOR
BANKERS TRUST COMPANY

DISTRIBUTOR
SIGNATURE BROKER-DEALER SERVICES, INC.

CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY

INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.

COUNSEL
WILLKIE FARR & GALLAGHER

PROSPECTUS: APRIL 29, 1996

Please read this Prospectus carefully before investing and retain it for future
reference. It contains important information about the Funds that you should
know and can refer to in deciding whether a Fund's goals match your own.

UNLIKE OTHER MUTUAL FUNDS, EACH FUND SEEKS TO ACHIEVE ITS INVESTMENT OBJECTIVE
BY INVESTING ALL OF ITS INVESTABLE ASSETS IN A SEPARATE INVESTMENT COMPANY (A
"PORTFOLIO") WITH AN IDENTICAL INVESTMENT OBJECTIVE. THE INVESTMENT PERFORMANCE
OF EACH FUND WILL CORRESPOND DIRECTLY TO THE INVESTMENT PERFORMANCE OF THE
CORRESPONDING PORTFOLIO. SEE "SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND
STRUCTURE" ON PAGE 16.

SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, BANKERS TRUST COMPANY AND THE SHARES ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY. EACH FUND INTENDS TO MAINTAIN A CONSTANT $1.00 PER SHARE NET ASSET
VALUE, ALTHOUGH THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO DO SO.

Cash Management Fund
Treasury Money Fund
NY Tax Free Money Fund
Tax Free Money Fund

A family of money market funds, each of which provides high current income to
the extent consistent with liquidity and capital preservation.

BANKERS TRUST COMPANY
Investment Adviser of the Portfolio and Administrator

SIGNATURE BROKER-DEALER SERVICES, INC.
Distributor
6 St. James Avenue
Boston, Massachusetts 02116
<PAGE>
TABLE OF CONTENTS
- ------------------------------------------------------------------------------
PAGE
..............................................................................
Summary of the Funds Expenses 3
Fund Financial Highlights 4
Investment Objectives and Policies 6
Risk Factors; Matching the Funds to Your Investment Needs 15
Net Asset Value 17
Purchase and Redemption of Shares 18
Dividends, Distributions and Taxes 21
Performance Information and Reports 23
Management of the Trust and Portfolios 24
- ------------------------------------------------------------------------------

SUMMARY OF THE FUNDS EXPENSES
The following tables provide (i) a summary of expenses relating to purchases
and sales of shares of Institutional Cash Management Fund, Institutional
Treasury Money Fund, Institutional NY Tax Free Money Fund and Institutional
Tax Free Money Fund (each, a "Fund" and collectively, the "Funds") and the
aggregate annual operating expenses of each Fund and the expenses of the
corresponding Portfolio (as defined below), as a percentage of average net
assets of that Fund and (ii) examples illustrating the dollar cost of such
expenses on a $1,000 investment in each Fund. THE TRUSTEES OF THE BT
INSTITUTIONAL FUNDS (THE "TRUST") BELIEVE THAT THE AGGREGATE PER SHARE
EXPENSES OF EACH FUND AND CASH MANAGEMENT PORTFOLIO, TREASURY MONEY PORTFOLIO,
NY TAX FREE MONEY PORTFOLIO OR TAX FREE MONEY PORTFOLIO (EACH A "PORTFOLIO"
AND COLLECTIVELY, THE "PORTFOLIOS") WILL BE LESS THAN OR APPROXIMATELY EQUAL
TO THE EXPENSES WHICH THAT FUND WOULD INCUR IF THE TRUST RETAINED THE SERVICES
OF AN INVESTMENT ADVISER AND THE INVESTABLE ASSETS ("ASSETS") OF THAT FUND
WERE INVESTED DIRECTLY IN THE TYPE OF SECURITIES BEING HELD BY THE
CORRESPONDING PORTFOLIO.
- ------------------------------------------------------------------------------
ANNUAL OPERATING EXPENSES: INSTITUTIONAL TREASURY MONEY, INSTITUTIONAL TAX
FREE MONEY AND INSTITUTIONAL NY TAX FREE MONEY FUNDS
(as a percentage of the average daily net assets of each Fund)
..............................................................................
Investment advisory fee 0.15%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.10
..............................................................................
Total operating expenses (after reimbursements or waivers) 0.25%
..............................................................................
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
.................................................................................................................................
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming: (1) 5% annual return and (2) redemption at the end of
each time period $3 $8 $14 $32
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
ANNUAL OPERATING EXPENSES: INSTITUTIONAL CASH MANAGEMENT FUND
(as a percentage of the average daily net assets of the Fund)
..............................................................................
Investment advisory fee 0.15%
12b-1 fees 0.00
Other expenses (after reimbursements or waivers) 0.08
..............................................................................
Total operating expenses (after reimbursements or waivers) 0.23%
..............................................................................
<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
.................................................................................................................................
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment,
assuming: (1) 5% annual return and (2) redemption at the end of
each time period $2 $7 $13 $29
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The expense tables and the examples above show the costs and expenses that an
investor will bear directly or indirectly as a shareholder of each of the
Funds. While reimbursment of distribution expenses in amounts up to 0.10% of
average net assets are authorized to be made pursuant to the Plan of
Distribution under Rule 12b-1 of the Investment Company Act of 1940, as
amended (the "1940 Act"), it is not expected that any payments will actually
be made under that plan in the foreseeable future. The expense tables and the
examples reflect a voluntary undertaking by Bankers Trust Company ("Bankers
Trust") or Signature Broker-Dealer Services, Inc. ("Signature") to waive or
reimburse expenses such that the total operating expenses of Institutional
Treasury Money, Institutional Tax Free Money and Institutional NY Tax Free
Money Funds will not exceed 0.25% of the Fund's average net assets annually
and the total operating expenses of Institutional Cash Management Fund will
not exceed 0.23% of its average daily net assets annually. In the absence of
these undertakings, for the fiscal year ended December 31, 1995 the total
operating expenses would have been equal to approximately 0.32% and 0.27%,
respectively, of the Institutional Treasury Money and the Institutional Cash
Management Funds' average net assets annually. The estimated total operating
expenses for the Institutional Tax Free Money and Institutional N.Y. Tax Free
Money Funds (which have not commenced investment operations) are each
approximately 0.32% assuming total assets of $200 million in each Fund. THE
EXAMPLES SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES
AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Moreover, while
each example assumes a 5% annual return, actual performance will vary and may
result in a return greater or less than 5%.

The Funds are sold by Signature as the Trust's distributor (the "Distributor")
to customers of Bankers Trust or to customers of another bank or a dealer or
other institution that has a sub-shareholder servicing agreement with Bankers
Trust (along with Bankers Trust, a "Service Agent"). Some Service Agents may
impose certain conditions on their customers in addition to or different from
those imposed by the Funds and may charge their customers a direct fee for
their services. Each Service Agent has agreed to transmit to shareholders who
are its customers appropriate disclosures of any fees that it may charge them
directly.

In addition to the customers of Bankers Trust or other institutions described
above, the Funds are available for (a) accounts where an investment adviser or a
financial planner has discretion over such account and the account holder pays
such person as compensation for its advice and other services an annual fee of
at least 0.50% on the assets in the account; (b) accounts established under a
"wrap fee" program or formal asset allocation program where the account holder
pays the program sponsor an annual fee of at least 0.50% on the assets in the
account; and (c) accounts established through an automated clearing or similar
system established for the use of investment professionals and through which
purchases and redemptions are transmitted to the Funds on an omnibus basis. For
more information with respect to the expenses of the Funds and the Portfolios
see "Management of the Trust and Portfolios" herein.

FUND FINANCIAL HIGHLIGHTS
The following tables show selected data for a share outstanding, total
investment return, ratios to average net assets and other supplemental data
for each Fund for the periods indicated and have been audited by Coopers &
Lybrand L.L.P., the Funds' independent accountants, whose reports thereon
appear in the Funds' Annual Reports which are incorporated by reference in the
Funds' Statement of Additional Information. The Institutional Tax Free Money
Fund and the Institutional NY Tax Free Money Fund did not commence operations
as of December 31, 1995.

<PAGE>

INSTITUTIONAL CASH MANAGEMENT FUND
- ------------------------------------------------------------------------------

FOR THE PERIOD
FOR THE YEAR ENDED DECEMBER 31, JULY 25, 1990
------------------------------------------------------------ (COMMENCEMENT OF
OPERATIONS) TO
1995 1994 1993 1992 1991 DECEMBER 31, 1990
.................................................................................................................................
SELECTED PER SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
.................................................................................................................................
Income from Investment Operations
Net Investment Income 0,06 0.04 0.03 0.04 0.06 0.03
Net Realized Gain (Loss) from
Securities Transactions 0.001+ (0.01) 0.00+ 0.00+ 0.00+ --
.................................................................................................................................
Total from Investment Operations 0.06 0.03 0.03 0.04 0.06 0.03
.................................................................................................................................
Contribution of Capital -- 0.01 -- -- -- --
.................................................................................................................................
Distributions From:
Net Investment Income (0.06) (0.04) (0.03) (0.04) (0.06) (0.03)
Net Realized Gain from Securities Transactions -- -- (0.00)+ (0.00)+ (0.00)+ --
.................................................................................................................................
Total Distributions (0.06) (0.04) (0.03) (0.04) (0.06) (0.03)
.................................................................................................................................
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
.................................................................................................................................
TOTAL INVESTMENT RETURN 5.89% 4.18%++ 3.05% 3.58% 6.20% 8.29%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net
Assets 5.72% 3.98% 3.01% 3.48% 5.82% 7.90%*
Ratio of Expenses to Average Net Assets,
Including Expenses of the Cash Management
Portfolio 0.23% 0.23% 0.25% 0.25% 0.25% 0.25%*
Decrease Reflected in Above Expense Ratio Due
to Absorption of Expenses by Bankers Trust 0.04% 0.03% 0.02% 0.04% 0.09% 0.21%*
Net Assets, End of Period
(000's omitted) $1,010,874 $664,149 $1,850,222 $1,334,517 $806,690 $301,546
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Annualized
+ Less than $0.01 per share
++ Increased by 0.91% due to Contribution of Capital.
</TABLE>

<PAGE>

INSTITUTIONAL TREASURY MONEY FUND
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
JULY 25, 1990
FOR THE YEAR ENDED DECEMBER 31, (COMMENCEMENT OF
--------------------------------------------------------- OPERATIONS) TO
1995 1994 1993 1992 1991 DECEMBER 31, 1990
.................................................................................................................................
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
.................................................................................................................................
Income from Investment Operations
Net Investment Income 0.06 0.04 0.03 0.04 0.06 0.03
Net Realized Gain (Loss) from Securities
Transactions 0.00+ (0.00)+ 0.00+ 0.00+ 0.00+ 0.00+
.................................................................................................................................
Total from Investment Operations 0.06 0.04 0.03 0.04 0.06 0.03
.................................................................................................................................
Distributions From:
Net Investment Income (0.06) (0.04) (0.03) (0.04) (0.06) (0.03)
Net Realized Gain from Securities Transactions (0.00)+ -- (0.00)+ (0.00)+ (0.00)+ (0.00)+
.................................................................................................................................
Total Distributions (0.06) (0.04) (0.03) (0.04) (0.06) (0.03)
.................................................................................................................................
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
.................................................................................................................................
TOTAL INVESTMENT RETURN 5.71% 3.92% 2.94% 3.56% 5.84% 7.90%*
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net
Assets 5.53% 3.97% 2.88% 3.47% 5.54% 7.36%*
Ratio of Expenses to Average Net Assets,
Including Expenses of the Treasury Money
Portfolio 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%*
Decrease Reflected in Above Expense Ratio Due
to Absorption of Expenses by Bankers Trust 0.07% 0.04% 0.03% 0.04% 0.12% 0.39%*
Net Assets, End of Period
(000's omitted) $1,325,069 $182,101 $143,966 $102,182 $131,406 $57,184
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Annualized
+ Less than $0.01 per share
</TABLE>

INVESTMENT OBJECTIVES AND POLICIES
Each Fund seeks a high level of current income consistent with liquidity and
the preservation of capital through investment in high quality money market
instruments. The Funds offer investors a convenient means of diversifying
their holdings of short-term securities while relieving those investors of the
administrative burdens typically associated with purchasing and holding these
instruments, such as coordinating maturities and reinvestments, providing for
safekeeping and maintaining detailed records. High quality short-term
instruments may result in a lower yield than instruments with a lower quality
or a longer term.

The Trust seeks to achieve the investment objective of each Fund by investing
all the Assets of the Fund in the corresponding Portfolio, each of which has
the same investment objective as the corresponding Fund. There can be no
assurances that the investment objective of either the Funds or the Portfolios
will be achieved. The investment objective of each Fund and each Portfolio is
a fundamental policy and may not be changed without the approval of the Fund's
shareholders or the Portfolio's investors, respectively. See "Special
Information Concerning Master-Feeder Fund Structure" on page 16 herein.

CASH MANAGEMENT PORTFOLIO
The Cash Management Portfolio will attempt to achieve its investment
objectives by investing in the following money market instruments:

Bank Obligations. The Portfolio may invest in fixed rate or variable rate
obligations of U.S. or foreign banks which have total assets at the time of
purchase in excess of $1 billion and are rated Prime-1 by Moody's Investors
Service, Inc. ("Moody's") or A-1 or higher by Standard & Poor's Corporation
("S&P") or, if not rated, are believed by Bankers Trust, acting under the
supervision of the Board of Trustees of the Portfolio, to be of comparable
quality. Bank obligations in which the Portfolio invests include certificates
of deposit, bankers' acceptances, time deposits and other U.S. dollar-
denominated instruments issued or supported by the credit of U.S. or foreign
banks. If Bankers Trust, acting under the supervision of the Board of Trustees
of the Portfolio, deems the instruments to present minimal credit risk, the
Portfolio may invest in obligations of foreign banks or foreign branches of
U.S. banks, which include subsidiaries of U.S. banks located in the United
Kingdom, Grand Cayman Island, Nassau, Japan and Canada. Investments in these
obligations may entail risks that are different from those of investments in
obligations of U.S. domestic banks because of differences in political,
regulatory and economic systems and conditions. These risks include future
political and economic developments, currency blockage, the possible
imposition of withholding taxes on interest payments, differing reserve
requirements, reporting and recordkeeping requirements and accounting
standards, possible seizure or nationalization of foreign deposits, difficulty
or inability of pursuing legal remedies and obtaining judgments in foreign
courts, possible establishment of exchange controls or the adoption of other
foreign governmental restrictions that might affect adversely the payment of
principal and interest on bank obligations. Under normal market conditions,
the Portfolio will invest more than 25% of its assets in the foreign and
domestic bank obligations described above. The Portfolio's concentration of
its investments in bank obligations will cause the Portfolio to be subject to
the risks peculiar to the domestic and foreign banking industries to a greater
extent than if its investments were not so concentrated. A description of the
ratings set forth above is provided in the Appendix to the Statement of
Additional Information.

Commercial Paper. The Portfolio may invest in fixed rate or variable rate
commercial paper, including variable rate master demand notes, issued by U.S.
or foreign corporations. Commercial paper when purchased by the Portfolio must
be rated Prime-1 by Moody's or A-1 or higher by S&P or, if not rated, must be
believed by Bankers Trust, acting under the supervision of the Board of
Trustees of the Portfolio, to be of comparable quality. Any commercial paper
issued by a foreign corporation and purchased by the Portfolio must be U.S.
dollar-denominated and must not be subject to foreign withholding tax at the
time of purchase. Investing in foreign commercial paper generally involves
risks similar to those described above relating to obligations of foreign
banks or foreign branches of U.S. banks.

Variable rate master demand notes are unsecured instruments that permit the
indebtedness thereunder to vary and provide for periodic adjustments in the
interest rate. Because variable rate master demand notes are direct lending
arrangements between the Portfolio and the issuer, they are not normally
traded. Although no active secondary market may exist for these notes, the
Portfolio will purchase only those notes under which it may demand and receive
payment of principal and accrued interest daily or may resell the note to a
third party. While the notes are not typically rated by credit rating
agencies, issuers of variable rate master demand notes must satisfy Bankers
Trust, acting under the supervision of the Board of Trustees of the Portfolio,
that the same criteria as set forth above for issuers of commercial paper are
met. In the event an issuer of a variable rate master demand note defaulted on
its payment obligation, the Portfolio might be unable to dispose of the note
because of the absence of a secondary market and could, for this or other
reasons, suffer a loss to the extent of the default.

U.S. Government Obligations. The Portfolio may invest in obligations issued or
guaranteed by the U.S. Treasury or by agencies or instrumentalities of the
U.S. Government ("U.S. Government Obligations"). Obligations of certain
agencies and instrumentalities of the U.S. Government, such as short-term
obligations of the Government National Mortgage Association, are supported by
the "full faith and credit" of the U.S. Government; others, such as those of
the Export-Import Bank of the U.S., are supported by the right of the issuer
to borrow from the U.S. Treasury; others, such as those of the Federal
National Mortgage Association, are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; and still others,
such as those of the Student Loan Marketing Association, are supported only
by the credit of the instrumentality. No assurance can be given that the U.S.
Government would provide financial support to U.S. Government-sponsored
instrumentalities if it is not obligated to do so by law.

Repurchase Agreements. The Portfolio may engage in repurchase agreement
transactions with banks and governmental securities dealers approved by the
Board of Trustees of the Portfolio. Under the terms of a typical repurchase
agreement, the Portfolio would acquire an underlying debt obligation of a kind
in which the Portfolio could invest for a relatively short period (usually not
more than one week), subject to an obligation of the seller to repurchase, and
the Portfolio to resell, the obligation at an agreed price and time, thereby
determining the yield during the Portfolio's holding period. This arrangement
results in a fixed rate of return that is not subject to market fluctuations
during the Portfolio's holding period. The value of the underlying securities
will be at least equal at all times to the total amount of the repurchase
obligations, including interest. The Portfolio bears a risk of loss in the
event that the other party to a repurchase agreement defaults on its
obligations and the Portfolio is delayed in or prevented from exercising its
rights to dispose of the collateral securities, including the risk of a
possible decline in the value of the underlying securities during the period
in which the Portfolio seeks to assert these rights. Bankers Trust, acting
under the supervision of the Board of Trustees of the Portfolio, reviews the
creditworthiness of those banks and dealers with which the Portfolio enters
into repurchase agreements and monitors on an ongoing basis the value of the
securities subject to repurchase agreements to ensure that it is maintained at
the required level.

Securities Lending. The Portfolio is permitted to lend up to 20% of the total
value of its securities. These loans must be secured continuously by cash or
equivalent collateral or by a letter of credit at least equal to the market
value of the securities loaned plus accrued income. By lending its securities,
the Portfolio can increase its income by continuing to receive income on the
loaned securities as well as by the opportunity to receive interest on the
collateral. Any gain or loss in the market price of the borrowed securities
which occurs during the term of the loan inures to the Portfolio and its
investors. There may be risks of delay in receiving additional collateral or
risks of delay in recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail financially.

TREASURY MONEY PORTFOLIO
The Treasury Money Portfolio will attempt to achieve its investment objectives
by investing only in (a) direct obligations of the U.S. Treasury, including
Treasury Bills, Notes and Bonds, and (b) repurchase agreements with respect to
those obligations. Information about the repurchase agreements in which the
Portfolio may invest appears under the caption "Cash Management Portfolio--
Repurchase Agreements." While obligations of the U.S. Treasury are guaranteed
by the U.S. Government as to the timely payment of principal and interest, the
market value of such obligations is not guaranteed and may rise and fall in
response to changes in interest rates. The shares of Institutional Treasury
Money Fund and the interests in the Treasury Money Portfolio are not
guaranteed or insured by the U.S. Government.

TAX FREE MONEY PORTFOLIO AND NY TAX FREE MONEY PORTFOLIO
Tax Free Money Portfolio. The Tax Free Money Portfolio will attempt to achieve
its investment objectives by investing, under normal market conditions, no
less than 80% of its net assets in obligations issued by states and their
authorities, agencies, instrumentalities and political subdivisions which are
exempt from Federal income taxes ("Municipal Obligations"). While the
Portfolio is authorized to invest up to 20% of its net assets in taxable
securities, it is anticipated that ordinarily the Portfolio's assets will be
substantially fully invested in Municipal Obligations. Although not a policy
of the Portfolio, the Portfolio generally intends to invest no more than 25%
of its assets in Municipal Obligations of issuers in any one state, territory
or possession of the United States.

NY Tax Free Money Portfolio. The NY Tax Free Money Portfolio will attempt to
achieve its investment objectives by investing, under normal market
conditions, no less than 80% of its net assets in Municipal Obligations and no
less than 65% of its net assets in Municipal Obligations of the State of New
York and its authorities, agencies, instrumentalities and political
subdivisions, as well as of certain other governmental issuers, such as Puerto
Rico, which are exempt from New York State and City income taxes ("New York
Municipal Obligations"). While the Portfolio is authorized to invest up to 20%
of its net assets in taxable securities, it is anticipated that ordinarily the
Portfolio's assets will be substantially fully invested in New York Municipal
Obligations. Dividends paid by the Portfolio that are derived from interest
attributable to New York Municipal Obligations will be excluded from gross
income for Federal income tax purposes and exempt from New York State and New
York City personal income taxes. Dividends derived from interest on Municipal
Obligations other than New York Municipal Obligations will be exempt from
Federal income tax, but will be subject to New York State and New York City
income taxes.

The Tax Free Money Portfolio and the NY Tax Free Money Portfolio may invest in
securities of other investment companies that invest in high quality, short-
term securities in which the Portfolio could itself invest and that determine
their net asset value per share based on the amortized cost method, provided
that the investments are within the limits prescribed by the 1940 Act. Under
the 1940 Act, the Portfolio may not invest in securities of other investment
companies, except in connection with a merger, consolidation, acquisition or
reorganization, if: (i) more than 10% of the market value of the Portfolio's
total assets would be invested in securities of other investment companies;
(ii) more than 5% of the market value of the Portfolio's total assets would be
invested in the securities of any one investment company; or (iii) the
Portfolio would own more than 3% of any other investment company's voting
securities. The Portfolio will not invest in any investment company which is,
or the investment adviser of which is, an "affiliated person" under the 1940
Act of the Portfolio or the Trust.

The NY Tax Free Money Portfolio is classified as a non-diversified investment
company under the 1940 Act, which means that the Portfolio is not limited by
the 1940 Act in the proportion of its assets that it may invest in obligations
of a single issuer. However, the Portfolio intends to conduct its operations
so that each of its investors may qualify as a "regulated investment company"
for purposes of the Internal Revenue Code of 1986, as amended (the "Code"),
which will relieve each investor of any liability for Federal income tax to
the extent its earnings are distributed to its shareholders. To permit such
qualification, among other requirements, the Portfolio will limit its
investments so that, at the close of each quarter of the taxable year: (i) not
more than 25% of the market value of the Portfolio's total assets will be
invested in the securities of a single issuer; and (ii) with respect to 50% of
the market value of its total assets, not more than 5% of the market value of
its total assets will be invested in the securities of a single issuer and the
Portfolio will not own more than 10% of the outstanding voting securities of a
single issuer. The Portfolio's assumption of large positions in the
obligations of a small number of issuers may cause the Portfolio's yield to
fluctuate to a greater extent than that of a diversified company, such as the
Tax Free Money Portfolio, as a result of changes in the financial condition or
in the market's assessment of the issuers.

SPECIAL CONSIDERATIONS AFFECTING THE NY TAX FREE MONEY PORTFOLIO AND THE FUND
The Portfolio's ability to achieve its investment objective is dependent upon
the ability of the issuers of New York Municipal Obligations to meet their
continuing obligations for the payment of principal and interest. New York
State and New York City face long-term economic problems that could seriously
affect their ability and that of other issuers of New York Municipal
Obligations to meet their financial obligations.

Certain substantial issuers of New York Municipal Obligations (including
issuers whose obligations may be acquired by the Portfolio) have experienced
serious financial difficulties in recent years. These difficulties have at
times jeopardized the credit standing and impaired the borrowing abilities of
all New York issuers and have generally contributed to higher interest costs
for their borrowings and fewer markets for their outstanding debt obligations.
In recent years, several different issues of municipal securities of New York
State and its agencies and instrumentalities and of New York City have been
downgraded by S&P and Moody's. On the other hand, strong demand for New York
Municipal Obligations has at times had the effect of permitting New York
Municipal Obligations to be issued with yields relatively lower, and after
issuance, to trade in the market at prices relatively higher, than comparably
rated municipal obligations issued by other jurisdictions. A recurrence of the
financial difficulties previously experienced by certain issuers of New York
Municipal Obligations could result in defaults or declines in the market
values of those issuers' existing obligations and, possibly, in the
obligations of other issuers of New York Municipal Obligations. Although as of
the date of this Prospectus, no issuers of New York Municipal Obligations are
in default with respect to the payment of their municipal obligations, the
occurrence of any such default could affect adversely the market values and
marketability of all New York Municipal Obligations and, consequently, the net
asset value of the Portfolio's investments.

Other considerations affecting the Portfolio's investments in New York
Municipal Obligations are summarized in the Statement of Additional
Information.

Municipal Obligations. The two principal classifications of Municipal
Obligations consist of "notes" and "bonds." Municipal Obligations are further
classified as "general obligation" and "revenue" issues and the securities
held by the Portfolios may include "moral obligation" issues, which are
normally issued by special purpose authorities. General obligation bonds are
secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest. Revenue bonds are payable only from the
revenues derived from a particular facility or class of facilities or in some
cases, from the proceeds of a special excise tax or other specific revenue
source, such as the user of the facility being financed. The Portfolios may
invest in "private activity" bonds, described below, which as a general rule
will be revenue bonds and, accordingly, are not payable from the unrestricted
revenues of the issuer. Among other instruments, the Portfolios may purchase
tax-exempt commercial paper and short-term municipal notes, such as tax
anticipation notes, bond anticipation notes, revenue anticipation notes,
construction loan notes and other forms of short-term loans. These notes are
issued with a short-term maturity in anticipation of the receipt of tax funds,
the proceeds of bond placements or other revenues. The Portfolios may also
acquire participations in privately negotiated loans to municipal borrowers.
The types, forms and offerings of Municipal Obligations are continually
changing, and the Portfolios could invest in instruments that may be developed
and offered in the market place in the future, provided they meet the
Portfolios' investment quality and Federal income tax criteria. These new
instruments will be described in the Funds' then current prospectus prior to
an investment by a Portfolio. A more detailed discussion of the categories of
Municipal Obligations is contained in the Statement of Additional Information.

Interest income on certain types of private activity bonds issued after August
7, 1986 to finance nongovernmental activities is a specific tax preference
item for purposes of the Federal individual and corporate alternative minimum
taxes. Individual and corporate shareholders of the Funds may be subject to a
Federal alternative minimum tax to the extent the Portfolios' income is
derived from interest on these bonds. Accordingly, these private activity
bonds are not included in the term "Municipal Obligations" for purposes of
determining compliance with the 80% test described under "Additional
Investment Limitations" below. However, while up to 20% of the Portfolios' net
assets may be invested in these private activity bonds, it is anticipated that
they will ordinarily not constitute a significant portion of the securities
held by each Portfolio. Dividends paid by the Funds which are derived from
interest income on Municipal Obligations are a "current earnings" adjustment
item for purposes of the Federal corporate alternative minimum tax.

Certain Municipal Obligations bear interest at rates that are not fixed, but
that vary with changes in specified market rates or indices. Certain of these
obligations may carry a demand feature that permits the Portfolios to tender
them back to the issuer or remarketing agent at par value prior to maturity.
The Portfolios may invest in floating rate and variable rate obligations
carrying stated maturities in excess of one year at the date of purchase by
the Portfolios if the obligations carry demand features that comply with
conditions established by the Securities and Exchange Commission (the "SEC")
or its staff. Each Portfolio will limit, its purchases of floating rate and
variable rate Municipal Obligations to those meeting the quality standards set
forth below. Frequently these obligations are secured by letters of credit or
other credit support arrangements provided by banks. The quality of the
underlying credit or of the bank as the case may be, must also be equivalent
to the quality standards set forth below, as determined by Bankers Trust under
the supervision of the Boards of Trustees of the Portfolios.

The Portfolios may invest in the following Municipal Obligations: (i) notes
rated MIG-1 or VMIG-1 by Moody's or SP-1 or higher by S&P (or an equivalent
rating by another nationally recognized statistical rating organization
("NRSRO")) or which are considered to be of comparable quality by Bankers
Trust pursuant to guidelines established and maintained in good faith by the
Board of Trustees of the respective Portfolio; or (ii) other Municipal
Obligations issued by issuers with municipal notes outstanding, comparable in
priority and security, meeting the rating criteria described herein or, if no
such notes are outstanding or if they are unrated, are rated at least AA by
S&P or Aa by Moody's. The NY Tax Free Money Portfolio may also invest in
municipal notes rated MIG-2 or VMIG-2 by Moody's or SP-2 by S&P when Bankers
Trust deems it advisable. A description of the ratings set forth above is
provided in the Appendix to the Statement of Additional Information.

The Portfolios may invest in Municipal Obligations the income on which may be
derived from economically related projects or projects of a similar type. To
the extent that a Portfolio's assets are concentrated in Municipal Obligations
payable from revenues on economically related projects and facilities, or
issued by issuers in particular states, the Portfolio will be subject to the
particular risks presented by those projects, facilities or states to a
greater extent than it would be if the Portfolio's assets were not so
concentrated. In addition, the Portfolios may invest in private activity bonds
the interest on which is not subject to an alternative minimum tax, as
described above, and may invest without limitation in Municipal Obligations
backed by letters of credit or guarantees issued by banks or other financial
institutions.

Taxable Investments. When, in the opinion of Bankers Trust, adverse market
conditions exist for Municipal Obligations or New York Municipal Obligations
and a "defensive" investment posture is warranted, each Portfolio may
temporarily invest more than 20% of its total assets in "Taxable Investments,"
which are money market instruments having maturity and quality characteristics
comparable to those discussed above for Municipal Obligations, but that
produce interest not exempt from Federal income taxation; and the NY Tax Free
Money Portfolio may temporarily invest more than 35% of its total assets in
instruments that produce income excluded from gross income for Federal income
tax purposes but subject to New York State and New York City personal income
taxation. Periods when a defensive posture is warranted include those periods
when the NY Tax Free Money Portfolio's monies available for investment exceed
the New York Municipal Obligations available for purchase that meet the
Portfolio's rating, maturity and other investment criteria. Each Portfolio may
invest in Taxable Investments pending the investment of proceeds from sales of
shares or portfolio securities into Municipal Obligations or in anticipation
of redemptions. Each Portfolio also has the right to hold cash reserves as it
deems necessary for temporary defensive purposes. While each Portfolio is
authorized to invest up to 20% of its net assets under normal market
conditions in Taxable Investments, it is anticipated that they will not
ordinarily constitute a significant portion of either Portfolio's investments.

Taxable Investments will be limited to: (i) U.S. Government securities; (ii)
commercial paper and certificates of deposit, bankers' acceptances and short-
term obligations of foreign and domestic banks with total assets of $1 billion
or more, in each case rated Prime-1 by Moody's or A-1 or higher by S&P, or, if
not rated, believed to be of equivalent investment quality by Bankers Trust
acting under the supervision of the Board of Trustees; (iii) short-term
corporate debt obligations of issuers which have commercial paper outstanding
meeting the rating requirements described herein or, if such commercial paper
is unrated, or if no such commercial paper is outstanding, are rated at least
Aa by Moody's or AA by S&P; and (iv) repurchase agreements with an underlying
security that would otherwise qualify for investment by the Portfolio. Taxable
Investments are described in more detail under the caption "Cash Management
Portfolio."

ADDITIONAL INVESTMENT TECHNIQUES
The Cash Management Portfolio and Treasury Money Portfolio may enter into
reverse repurchase agreements and lend securities held by it to brokers,
dealers and other financial organizations. Loans of securities by a Portfolio,
if and when made, may not exceed 20% of the Portfolio's total assets and will
be collateralized by cash, letters of credit or U.S. Government Obligations
that are maintained at all times in an amount equal to at least 100% of the
current market value of the loaned securities. The Tax Free Money Portfolio
and the NY Tax Free Money Portfolio may also enter into reverse repurchase
agreements and purchase participation interests and standby commitments. See
"Investment Objectives and Policies" in the Statement of Additional
Information for a more detailed description of reverse repurchase agreements,
participation interests and standby commitments.

PORTFOLIO QUALITY AND MATURITY
Each Portfolio will maintain a dollar-weighted average maturity of 90 days or
less. All securities in which each Portfolio invests will have or be deemed to
have remaining maturities of 397 days or less on the date of their purchase,
will be denominated in U.S. dollars and will have been granted the required
ratings established herein by two NRSROs (or one such NRSRO if that NRSRO is
the only such NRSRO which rates the security), or if unrated, are believed by
Bankers Trust, under the supervision of the respective Portfolio's Board of
Trustees, to be of comparable quality. A description of such ratings is
provided in the Appendix to the Statement of Additional Information. Bankers
Trust, acting under the supervision of and procedures adopted by the Board of
Trustees of each Portfolio, will also determine that all securities purchased
by a Portfolio present minimal credit risks. Bankers Trust will cause a
Portfolio to dispose of any security as soon as practicable if the security is
no longer of the requisite quality, unless such action would not be in the
best interest of that Portfolio.

ADDITIONAL INVESTMENT LIMITATIONS
Each Fund's and Portfolio's investment objectives, together with the
investment restrictions described in this paragraph and the Statement of
Additional Information, except as noted, are "fundamental policies," which
means that they may not be changed without the approval of the holders of each
Fund's and each Portfolio's outstanding voting securities. Each Fund has the
same investment restrictions as the Portfolios, except that the Funds may
invest all of its Assets in another open-end investment company with the same
investment objectives, such as the corresponding Portfolio. The Tax Free Money
Portfolio and the NY Tax Free Money Portfolio will invest at least 80% of
their respective net assets in tax-exempt Municipal Obligations under normal
market conditions. Each Portfolio may not invest more than 25% of its total
assets in the securities of issuers in any single industry, except that, under
normal market conditions, more than 25% of the total assets of the Cash
Management Portfolio will be invested in foreign and domestic bank
obligations. As an operating policy, the Cash Management Portfolio and the
Treasury Money Portfolio may not invest more than 5% of its total assets in
the obligations of any one issuer except for U.S. Government Obligations and
repurchase agreements, which may be purchased without limitation. The same is
true with respect to 75% of the assets of the Tax Free Money Portfolio. This
restriction, however, shall not preclude the purchase by the Tax Free Money
Portfolio of issues backed by letters of credit or guarantees of banks or
other financial institutions, even though any such bank or financial
institution provides a letter of credit or guarantee with respect to
securities that in the aggregate represent more than 5%, but not more than
10%, of the total assets of the Portfolio, and will consider the issuer of the
security (and not the letter of credit or guarantee) the principal obligor of
the obligation. Each Portfolio is also authorized to borrow, including
entering into reverse repurchase transactions, in an amount up to 5% of its
total assets for temporary purposes, but not for leverage, and to pledge its
assets to the same extent in connection with these borrowings. See the
Statement of Additional Information for additional information with respect to
reverse repurchase transactions. At the time of an investment, a Portfolio's
aggregate holdings of repurchase agreements having remaining maturities of
more than seven calendar days (or which may not be terminated within seven
calendar days upon notice by the Portfolio), time deposits having a remaining
maturity of more than seven calendar days, illiquid securities (including
floating and variable rate Municipal Obligations having a demand feature of
more than seven calendar days), restricted securities and securities lacking
readily available market quotations will not exceed 10% of the Portfolio's net
assets. If changes in the liquidity of certain securities cause a Portfolio to
exceed such 10% limit, that Portfolio will take steps to bring the aggregate
amount of its illiquid securities back below 10% of its net assets as soon as
practicable, unless such action would not be in the best interest of the
Portfolio. The Statement of Additional Information contains further
information on the Funds' and the Portfolios' investment restrictions.

RISK FACTORS; MATCHING THE FUNDS TO YOUR INVESTMENT NEEDS
Each Fund is designed for conservative investors looking for high current
income approximating taxable or tax free, as the case may be, money market
rates while remaining conveniently liquid with a stable share price. Each
Portfolio follows practices which enable the corresponding Fund to attempt to
maintain a $1.00 share price: limiting average maturity of the securities held
by the Portfolio to 90 days or less; buying securities which mature in 397
days or less; and buying only high quality securities with minimal credit
risks. Of course, the Funds cannot guarantee a $1.00 share price, but these
practices help to minimize any price fluctuations that might result from
rising or declining interest rates. While each Portfolio invests in high
quality money market securities, you should be aware that your investment is
not without risk. All money market instruments, including U.S. Government
securities, can change in value when interest rates or an issuer's
creditworthiness changes.

SPECIAL INFORMATION CONCERNING MASTER-FEEDER FUND STRUCTURE
Unlike other open-end management investment companies (mutual funds) which
directly acquire and manage their own portfolio securities, each Fund seeks to
achieve its investment objective by investing all of its Assets in a
corresponding Portfolio, a separate registered investment company with the
same investment objectives as the Fund. Therefore, an investor's interest in a
Portfolio's securities is indirect. In addition to selling a beneficial
interest to each Fund, each Portfolio may sell beneficial interests to other
mutual funds or institutional investors. Such investors will invest in that
Portfolio on the same terms and conditions and will pay a proportionate share
of the Portfolio's expenses. However, the other investors investing in the
Portfolio are not required to sell their shares at the same public offering
price as the respective Fund due to variations in sales commissions and other
operating expenses. Therefore, investors in each of the Funds should be aware
that these differences may result in differences in returns experienced by
investors in the different funds that invest in each of the Portfolios. Such
differences in returns are also present in other mutual fund structures.
Information concerning other holders of interests in any of the Portfolios is
available from Bankers Trust at (800) 368-4031.

The master-feeder structure has been developed relatively recently, so
shareholders should carefully consider this investment approach.

Smaller funds investing in a Portfolio may be materially affected by the
actions of larger funds investing in the same Portfolio. For example, if a
large fund withdraws from the Portfolio, the remaining funds may experience
higher pro rata operating expenses, thereby producing lower returns (however,
this possibility exists as well for traditionally structured funds which have
large institutional investors). Additionally, the Portfolio may become less
diverse, resulting in increased portfolio risk. Also, funds with a greater pro
rata ownership in the Portfolio could have effective voting control of the
operations of the Portfolio. Except as permitted by the SEC, whenever the
Trust is requested to vote on matters pertaining to a Portfolio, the Trust
will hold a meeting of shareholders of the respective Fund and will cast all
of its votes in the same proportion as the votes of the Fund's shareholders.
Fund shareholders who do not vote will not affect the Trust's votes at the
Portfolio meeting. The percentage of the Trust's votes representing the Fund's
shareholders not voting will be voted by the Trustees or officers of the Trust
in the same proportion as the Fund shareholders who do, in fact, vote.

Certain changes in a Portfolio's investment objectives, policies or
restrictions may require the respective Fund to withdraw its interest in the
Portfolio. Any such withdrawal could result in a distribution "in kind" of
portfolio securities (as opposed to a cash distribution from the Portfolio).
If securities are distributed, a Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of a Fund. Notwithstanding the above, there are other
means for meeting redemption requests, such as borrowing.

Each Fund may withdraw its investment from a corresponding Portfolio at any
time, if the Board of Trustees of the Trust determines that it is in the best
interests of the shareholders of the Fund to do so. Upon any such withdrawal,
the Board of Trustees of the Trust would consider what action might be taken,
including the investment of all the Assets of the Fund in another pooled
investment entity having the same investment objective as the Fund or the
retaining of an investment adviser to manage the Fund's assets in accordance
with the investment policies described below with respect to the Portfolio.

For descriptions of the investment objectives, policies and restrictions of
the Portfolios, see "Investment Objectives and Policies." For descriptions of
the management of the Portfolios, see "Management of the Trust and Portfolios"
herein and in the Statement of Additional Information. For descriptions of the
expenses of the Portfolios, see "Management of the Trust and Portfolios"
herein.

NET ASSET VALUE
The net asset value per share of each Fund is calculated on each day on which
the Funds are open (each such day being a "Valuation Day"). The Funds are
currently open on each day, Monday through Friday, except (a) January 1st,
Martin Luther King, Jr.'s Birthday (the third Monday in January), Presidents'
Day (the third Monday in February), Good Friday, Memorial Day (the last Monday
in May), July 4th, Labor Day (the first Monday in September), Columbus Day
(the second Monday in October), Veteran's Day (November 11th), Thanksgiving
Day (the last Thursday in November) and December 25th; and (b) the preceding
Friday or the subsequent Monday when one of the calendar determined holidays
falls on a Saturday or Sunday, respectively.

The net asset value per share of the Institutional Tax Free Money Fund and
Institutional NY Tax Free Money Fund is calculated twice on each Valuation Day
as of 12:00 noon, New York time and as of the close of regular trading on the
New York Stock Exchange Inc. (the "NYSE"), which is currently 4:00 p.m., New
York time or in the event that the NYSE closes early, at the time of such early
closing. The net asset value of the Institutional Treasury Money Fund is
calculated twice on each Valuation Day as of 2:00 p.m., New York time and as of
the close of regular trading on the NYSE which is currently 4:00 p.m., New York
time or earlier, should the NYSE close earlier. The net asset value per share of
Institutional Cash Management Fund is calculated as of the close of regular
trading on the NYSE (currently 4:00 p.m., New York time or earlier, should the
NYSE close earlier). The net asset value per share of each Fund is computed by
dividing the value of the Fund's assets (i.e., the value of its investment in
the corresponding Portfolio and other assets), less all liabilities, by the
total number of its shares outstanding. Each Fund's net asset value will
normally be $1.00.

The assets of each Portfolio are valued by using the amortized cost method of
valuation. This method involves valuing each security held by a Portfolio at
its cost at the time of its purchase and thereafter assuming a constant
amortization to maturity of any discount or premium. Accordingly, immaterial
fluctuations in the market value of the securities held by a Portfolio will
not be reflected in the corresponding Fund's net asset value. The Board of
Trustees of each Portfolio will monitor the valuation of assets by this method
and will make such changes as it deems necessary to assure that assets are
valued fairly and in good faith by that Portfolio.

PURCHASE AND REDEMPTION OF SHARES
PURCHASE OF SHARES
The Trust accepts purchase orders for shares of each Fund at the net asset
value per share of the Fund next determined on each Valuation Day. See "Net
Asset Value" above. There is no sales charge on the purchase of shares, but
costs of distributing shares of the Funds may be reimbursed from their
respective assets, as described herein. Excluding retirement plans, the
minimum initial investment in the Trust is $1,000,000 which may be allocated
in amounts not less than $100,000 per fund in certain funds in the BT Family
of Funds. The subsequent minimum investment in each Fund is $100,000
(excluding retirement plans). Service Agents may impose initial and subsequent
investment minimums that differ from these amounts. Shares of the Funds may be
purchased in only those states where they may be lawfully sold.

Purchase orders for shares of the Funds will receive, on any Valuation Day,
the net asset value next determined following receipt by the Service Agent and
transmission to Bankers Trust, as the Trust's transfer agent (the "Transfer
Agent") of such order. If a purchase order is so received and transmitted
prior to 12:00 noon (New York time) for Institutional Tax Free Money Fund and
Institutional NY Tax Free Money Fund, 2:00 p.m. (New York time) for
Institutional Treasury Money Fund and 4:00 p.m. (New York time) for
Institutional Cash Management Fund, prior to the close of the NYSE, and
payment in the form of federal funds is received on that day by Bankers Trust,
as the Trust's custodian (the "Custodian"), the shareholder will receive the
dividend declared on that day. If the purchase order is received by the
Service Agent and transmitted to the Transfer Agent after 12:00 noon (New York
time) for Institutional Tax Free Money Fund and Institutional NY Tax Free
Money Fund, 2:00 p.m. (New York time) for Institutional Treasury Money Fund
and the close of regular trading on the NYSE (currently 4:00 p.m. New York
time or earlier, should the NYSE close earlier) for Institutional Cash
Management Fund, the shareholder will receive the dividend declared on the
following day even if the Custodian receives federal funds on that day. The
Trust and Signature reserve the right to reject any purchase order.

Shares must be purchased in accordance with procedures established by the
Transfer Agent and Service Agents, including Bankers Trust, in connection with
customers' accounts. It is the responsibility of each Service Agent to
transmit to the Transfer Agent purchase and redemption orders and to transmit
to the Custodian purchase payments on behalf of its customers in a timely
manner, and a shareholder must settle with the Service Agent his or her
entitlement to an effective purchase or redemption order as of a particular
time. Because Bankers Trust is the Custodian and Transfer Agent of the Trust,
funds may be transferred directly from or to a customer's account with Bankers
Trust to or from a particular Fund without incurring the additional costs or
delays associated with the wiring of federal funds.

Certificates for shares will not be issued. Each shareholder's account will be
maintained by a Service Agent or the Transfer Agent.

REDEMPTION OF SHARES
Shareholders may redeem shares at the net asset value per share next
determined on each Valuation Day. Redemption requests should be transmitted by
customers in accordance with procedures established by the Transfer Agent and
the shareholder's Service Agent. Redemption requests for shares of the Funds
received by the Service Agent and transmitted to the Transfer Agent prior to
12:00 noon (New York time) for Institutional Tax Free Money Fund and
Institutional NY Tax Free Money Fund, 2:00 p.m. (New York time) for
Institutional Treasury Money Fund and 4:00 p.m. (New York time) for
Institutional Cash Management Fund, and prior to the close of the NYSE on each
Valuation Day will be redeemed at the net asset value per share next
determined for each respective Fund and the redemption proceeds normally will
be delivered to the shareholder's account with the Service Agent on that day;
no dividend will be paid on the day of redemption. Redemption requests
received by the Service Agent and transmitted to the Transfer Agent after
12:00 noon (New York time) for Institutional Tax Free Money Fund and
Institutional NY Tax Free Money Fund, after 2:00 p.m. for Institutional
Treasury Money Fund and after the close of regular trading on the NYSE
(currently 4:00 p.m. New York time or earlier should the NYSE close earlier)
for Institutional Cash Management Fund, will be redeemed at the net asset
value per share next determined for each respective Fund and the redemption
proceeds normally will be delivered to the shareholder's account with the
Service Agent the following day; shares redeemed in this manner will receive
the dividend declared on the day of the redemption. Payments for redemptions
will in any event be made within seven calendar days following receipt of the
request.

Service Agents may allow redemptions or exchanges by telephone and may
disclaim liability for following instructions communicated by telephone that
the Service Agent reasonably believes to be genuine. The Service Agent must
provide the investor with an opportunity to choose whether or not to utilize
the telephone redemption or exchange privilege. The Service Agent must employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine. If the Service Agent does not do so, it may be liable for any
losses due to unauthorized or fraudulent instructions. Such procedures may
include, among others, requiring some form of personal identification prior to
acting upon instructions received by telephone, providing written confirmation
of such transactions and/or tape recording of telephone instructions.

Redemption orders are processed without charge by the Trust. A Service Agent
may on at least 30 days' notice involuntarily redeem a shareholder's account
with a Fund having a current value of less than $100,000 (excluding retirement
plans).

Automatic Cash Withdrawal Plan. The Funds may offer shareholders an automatic
cash withdrawal plan, under which shareholders who own shares of the Fund may
elect to receive periodic cash payments. Retirement plan accounts are eligible
for automatic cash withdrawal plans only where the shareholder is eligible to
receive qualified distributions. For further information regarding the
automatic cash withdrawal plan, shareholders should contact their Service
Agent.

Checkwriting. Shareholders of the Funds may redeem shares by check. Checks may
not be used to close an account. Shareholders will continue to earn dividends
on shares to be redeemed until the check clears. Checks will be returned to
shareholders at the end of the month. There is no charge for redemption of
shares by check. Additional information regarding the checkwriting privilege
may be obtained from a Service Agent.

EXCHANGE PRIVILEGE
Shareholders may exchange their shares for shares of certain other funds in
the BT Family of Funds registered in their state. The Funds reserve the right
to terminate or modify the exchange privilege in the future. To make an
exchange, follow the procedures indicated in "Purchase of Shares" and
"Redemption of Shares." Before making an exchange, please note the following:

* Call your Service Agent for information and a prospectus. Read the
prospectus for relevant information.

* Complete and sign an application, taking care to register your new account
in the same name, address and taxpayer identification number as your
existing account(s).

TAX-SAVING RETIREMENT PLANS
Retirement plans offer significant tax savings and are available to
individuals, partnerships, small businesses, corporations, nonprofit
organizations and other institutions. Contact your Service Agent or Bankers
Trust for further information. Bankers Trust can set up your new account in
the Fund under a number of several tax-sheltered plans. These plans contain
special tax advantages and let you invest for retirement while sheltering your
investment income from current taxes. Minimums may differ from those listed
elsewhere in the Prospectus.

* Individual Retirement Accounts (IRAs): personal savings plans that offer tax
advantages for individuals to set aside money for retirement and allow new
contributions of $2,000 per tax year.

* Rollover IRAs: tax-deferred retirement accounts that retain the special tax
advantages of lump sum distributions from qualified retirement plans and
transferred IRA accounts.

* Simplified Employee Pension Plans (SEP): a relatively easy and inexpensive
alternative to retirement planning for sole proprietors, partnerships and
corporations. Under a SEP, employers make tax-deductible contributions to
their own and to eligible employees' IRA accounts. Employee contributions
are available through a "Salary Deferral" SEP for businesses with fewer than
25 eligible employees.

* 401(k) Programs: defined contribution plans available to corporations
allowing tax-deductible employer contributions and permitting employees to
contribute a percentage of their wages on a tax-deferred basis.

* 403(b) Custodian Accounts: defined contribution plans open to employees of
most nonprofit organizations and educational institutions.

* Deferred Benefit Plans: plan sponsors may invest all or part of their
pension assets in the Fund.

DIVIDENDS, DISTRIBUTIONS AND TAXES
Each Portfolio determines its net income and realized capital gains, if any,
on each Valuation Day and allocates all such income and gain pro rata among
the corresponding Fund and the other investors in that Portfolio at the time
of such determination. Each Fund declares dividends from its net income (i.e.,
that Fund's pro rata share of the net income of the corresponding Portfolio)
on each Valuation Day and pays dividends for the preceding month within the
first five Valuation Days of each month. Each Fund reserves the right to
include realized short-term gains, if any, in such daily dividends.
Distributions of each Fund's pro rata share of the corresponding Portfolio's
net realized long-term capital gains, if any, and any undistributed net
realized short-term capital gains are normally declared and paid annually at
the end of the fiscal year in which they were earned to the extent they are
not offset by any capital loss carryforwards. Since each Fund is subject to a
4% nondeductible excise tax on certain undistributed amounts of ordinary
income and capital gains, each Fund expects to make such other distributions
as are necessary to avoid the application of this tax. Unless a shareholder
instructs the Trust to pay dividends or capital gains distributions in cash,
dividends and distributions will automatically be reinvested at net asset
value in additional shares of the Fund that paid the dividend or distribution.

The Trust intends to qualify each Fund as a regulated investment company, as
defined in the Code. Provided each Fund meets the requirements imposed by the
Code, that Fund will not pay any Federal income or excise taxes. Each
Portfolio will also not be required to pay any Federal income or excise taxes.
Dividends paid by a Fund from its taxable net investment income and
distributions by a Fund of its net realized short-term capital gains (whether
from tax-exempt or taxable obligations) are taxable to shareholders as
ordinary income, whether received in cash or reinvested in additional shares
of that Fund. The Trust does not expect that any Fund will realize long-term
capital gains and thus does not contemplate paying distributions taxable to
shareholders as long-term capital gains. Exempt-interest dividends may be
excluded by shareholders of a Fund from their gross income for Federal income
tax purposes although (i) a portion of these dividends will be a specific
preference item for purposes of the Federal individual and corporate
alternative minimum taxes to the extent they are derived from cetain types of
private activity bonds issued after August 7, 1986 and (ii) all exempt-
interest dividends will be a component of the "curent earnings" adjustment
item for purposes of the Federal corporate alternative minimum tax. In
addition, corporate shareholders may incur a greater Federal "environmental"
tax liability through receipt of Fund dividends and distributions. Each Fund's
dividends and distributions will not qualify for the dividends-received
deduction for corporations.

Statements as to the tax status of each shareholder's dividends and
distributions, if any, are mailed annually. Each shareholder will also
receive, if appropriate, various written notices after the end of a Fund's
prior taxable year as to the Federal income tax status of his or her dividends
and distributions which were received from that Fund during that year.
Furthermore, if appropriate, the statements from the Institutional Tax Free
Money Fund will set forth the dollar amount of the shareholder's exempt-
interest dividends which is excluded from Federal income taxation, and the
statements from the Institutional NY Tax Free Money Fund will set forth the
dollar amount of the shareholder's exempt-interest dividends which is excluded
from Federal income and exempt from New York State and City personal income
taxes. These statements will also designate the amount of exempt-interest
dividends that is a specific preference item for purposes of the Federal
individual and corporate alternative minimum taxes. Shareholders should
consult their tax advisers to assess the consequences of investing in a Fund
under state and local laws and to determine whether dividends paid by a Fund
that represent interest derived from U.S. Government Obligations are exempt
from any applicable state or local income taxes.

PERFORMANCE INFORMATION AND REPORTS
From time to time, the Trust may advertise "current yield," "effective yield"
and/or "tax equivalent yield" for a Fund. All yield figures are based on
historical earnings and are not intended to indicate future performance. The
"current yield" of a Fund refers to the income generated by an investment in
the Fund over a seven-day period (which period will be stated in the
advertisement). This income is then "annualized;'" that is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the
investment. The "effective yield" is calculated similarly but, when
annualized, the income earned by an investment in a Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "current
yield" because of the compounding effect of this assumed reinvestment. The
"tax equivalent yield" demonstrates the yield on a taxable investment
necessary to produce an after-tax yield equal to a Fund's tax free yield. It
is calculated by increasing the yield shown for the Fund to the extent
necessary to reflect the payment of specified tax rates. The Trust may include
this information in sales material and advertisements for the Fund.

Yield is a function of the quality, composition and maturity of the securities
held by the corresponding Portfolio and operating expenses of a Fund and the
corresponding Portfolio. In particular, a Fund's yield will rise and fall with
short-term interest rates, which can change frequently and sharply. In periods
of rising interest rates, the yield of a Fund will tend to be somewhat lower
than prevailing market rates, and in periods of declining interest rates, the
yield will tend to be somewhat higher. In addition, when interest rates are
rising, the inflow of net new money to a Fund from the continuous sale of its
shares will likely be invested by the corresponding Portfolio in instruments
producing higher yields than the balance of that Portfolio's securities,
thereby increasing the current yield of the Fund. In periods of falling
interest rates, the opposite can be expected to occur. Accordingly, yields
will fluctuate and do not necessarily indicate future results. While yield
information may be useful in reviewing the performance of a Fund, it may not
provide a basis for comparison with bank deposits, other fixed rate
investments, or other investment companies that may use a different method of
calculating yield. Any fees charged by Service Agents for processing purchase
and/or redemption transactions will effectively reduce the yield for those
shareholders.

From time to time, advertisements or reports to shareholders may compare the
yield of a Fund to that of other mutual funds with similar investment
objectives or to that of a particular index. The yield of the Institutional
Cash Management Fund might be compared with, for example, the IBC/Donoghue's
Taxable First Tier Institutional Only Money Fund Average, that of the
Institutional Treasury Money Fund might be compared with IBC/Donoghue's
Government Only/Institutional Only Money Fund Average, and that of the
Institutional Tax Free Money Fund and the Institutional NY Tax Free Money Fund
might be compared with IBC/Donoghue's Tax Free Stockbroker and General Purpose
Money Fund Average, which are averages compiled by IBC/Donoghue's Money Fund
Report, a widely recognized, independent publication that monitors the
performance of money market mutual funds. Similarly, the yield of a Fund might
be compared with rankings prepared by Micropal Limited and/or Lipper
Analytical Services, Inc., which are widely recognized, independent services
that monitor the investment performance of mutual funds. The yield of a Fund
might also be compared with the average yield reported by the Bank Rate
Monitor for money market deposit accounts offered by the 50 leading banks and
thrift institutions in the top five standard metropolitan areas. Shareholders
may make inquiries regarding the Funds, including current yield quotations and
performance information, by contacting any Service Agent.

Shareholders will receive financial reports semi-annually that include
listings of investment securities held by a Fund's corresponding Portfolio at
those dates. Annual reports are audited by independent accountants.

MANAGEMENT OF THE TRUST AND PORTFOLIOS
BOARD OF TRUSTEES
The affairs of the Trust and Portfolios are managed under the supervision of
their respective Board of Trustees. By virtue of the responsibilities assumed
by Bankers Trust, the administrator of the Trust and each Portfolio, neither
the Trust nor any Portfolio require employees other than its executive
officers. None of the executive officers of the Trust or any Portfolio devote
full time to the affairs of the Trust or a Portfolio.

The Trustees of the Trust who are not "interested persons" (as defined in the
1940 Act) (the "Independent Trustees") of the Trust or of the Portfolios, as
the case may be, have adopted written procedures reasonably appropriate to
deal with potential conflicts of interest, up to and including creating
separate boards of trustees, arising from the fact that several of the same
individuals are Trustees of the Trust and the Portfolios. For more information
with respect to the Trustees of both the Trust and the Portfolios, see
"Management of the Trust and Portfolios" in the Statement of Additional
Information.

INVESTMENT ADVISER
The Trust has not retained the services of an investment adviser since the
Trust seeks to achieve the investment objective of each Fund by investing all
the Assets of the Fund in the corresponding Portfolio. Each Portfolio has
retained the services of Bankers Trust, as investment adviser.

Bankers Trust, a New York banking corporation with principal offices at 280
Park Avenue, New York, New York 10017, is a wholly-owned subsidiary of Bankers
Trust New York Corporation. Bankers Trust conducts a variety of general
banking and trust activities and is a major wholesale supplier of financial
services to the international and domestic institutional markets. As of
December 31, 1995, Bankers Trust New York Corporation was the ninth largest
bank holding company in the United States with total assets of approximately
$104 billion. Bankers Trust is a worldwide merchant bank dedicated to
servicing the needs of corporations, governments, financial institutions and
private clients through a global network of over 120 offices in more than 40
countries. Investment management is a core business of Bankers Trust, built on
a tradition of excellence from its roots as a trust bank founded in 1903. The
scope of Bankers Trust's investment management capability is unique due to its
leadership positions in both active and passive quantitative management and
its presence in major equity and fixed income markets around the world.
Bankers Trust is one of the nation's largest and most experienced investment
managers, with approximately $200 billion in assets under management globally.
Of that total, approximately $45 billion are in cash assets alone. This makes
Bankers Trust one of the nation's leading managers of cash funds.

Bankers Trust, subject to the supervision and direction of the Board of
Trustees of each Portfolio, manages each Portfolio in accordance with that
Portfolio's investment objectives and stated investment policies, makes
investment decisions for each Portfolio, places orders to purchase and sell
securities and other financial instruments on behalf of each Portfolio and
employs professional investment managers and securities analysts who provide
research services to each Portfolio. All orders for investment transactions on
behalf of any Portfolio are placed by Bankers Trust with broker-dealers and
other financial intermediaries that it selects, including those affiliated
with Bankers Trust. A Bankers Trust affiliate will be used in connection with
a purchase or sale of an investment for a Portfolio only if Bankers Trust
believes that the affiliate's charge for the transaction does not exceed usual
and customary levels. Each Portfolio will not invest in obligations for which
Bankers Trust or any of its affiliates is the ultimate obligor or accepting
bank. Each Portfolio may, however, invest in the obligations of correspondents
and customers of Bankers Trust.

Under its Investment Advisory Agreement, Bankers Trust receives a fee from
each Portfolio, computed daily and paid monthly, at the annual rate of 0.15%
of the average daily net assets of the Portfolio.

Bankers Trust has been advised by its counsel that, in counsel's opinion,
Bankers Trust currently may perform the services for the Trust and the
Portfolios described in this Prospectus and the Statement of Additional
Information without violation of the Glass-Steagall Act or other applicable
banking laws or regulations. State laws on this issue may differ from the
interpretations of relevant Federal law and banks and financial institutions
may be required to register as dealers pursuant to state securities law.

ADMINISTRATOR
Under its Administration and Services Agreement with the Trust, Bankers Trust
calculates the net asset value of each Fund and generally assists the Board of
Trustees of the Trust in all aspects of the administration and operation of
the Trust. The Administration and Services Agreement provides for the Trust to
pay Bankers Trust a fee, computed daily and paid monthly, at the annual rate
of 0.05% of the average daily net assets of each Fund.

Under an Administration and Services Agreement with each Portfolio, Bankers
Trust calculates the value of the assets of that Portfolio and generally
assists the Board of Trustees of the Portfolio in all aspects of the
administration and operation of that Portfolio. Each Administration and
Services Agreement provides for the Portfolio to pay Bankers Trust a fee,
computed daily and paid monthly, at the annual rate of 0.05% of the average
daily net assets of that Portfolio. Under each Administration and Services
Agreement, Bankers Trust may delegate one or more of its responsibilities to
others, including Signature, at Bankers Trust's expense. For more information,
see the Statement of Additional Information.

DISTRIBUTOR
Under its Distribution Agreement with the Trust, Signature, as Distributor,
serves as the Trust's principal underwriter on a best efforts basis. In
addition, Signature provides the Trust with office facilities. Signature is a
wholly-owned subsidiary of Signature Financial Group, Inc. ("SFG"). SFG and
its affiliates currently provide administration and distribution services for
other registered investment companies. The principal business address of SFG
and Signature is 6 St. James Avenue, Boston, Massachusetts 02116.

Pursuant to the terms of the Trust's Plan of Distribution pursuant to Rule
12b-1 under the 1940 Act (the "Plan"), Signature may seek reimbursement in an
amount not exceeding 0.10% of each Fund's average daily net assets annually
for expenses incurred in connection with any activities primarily intended to
result in the sale of the Fund's shares, including, but not limited to:
compensation to and expenses (including overhead and telephone expenses) of
account executives or other employees of Signature who, as their primary
activity, engage in or support the distribution of shares; printing of
prospectuses, statements of additional information and reports for other than
existing Fund shareholders in amounts in excess of that typically used in
connection with the distribution of shares of that Fund; costs of placing
advertising in various media; services of parties other than Signature or its
affiliates in formulating sales literature; and typesetting, printing and
distribution of sales literature. All costs and expenses in connection with
implementing and operating the Plan will be paid by the Funds, subject to the
0.10% of net assets limitation. All costs and expenses associated with
preparing the prospectuses and statements of additional information and in
connection with printing them for and distributing them to existing
shareholders and regulatory authorities, which costs and expenses would not be
considered distribution expenses for purposes of the Plan, will also be paid
by the Funds. To the extent expenses of Signature under the Plan in any fiscal
year of the Trust exceed amounts payable under the Plan during that year,
those expenses will not be reimbursed in any succeeding fiscal year. Expenses
incurred in connection with distribution activities will be identified to the
Fund or other series of the Trust involved, although it is anticipated that
some activities may be conducted on a Trust-wide basis, with the result that
those activities will not be identifiable to any particular series. In the
latter case, expenses will be allocated among the Funds on the basis of their
relative net assets. It is not expected that any payments will be made under
the Plan in the foreseeable future.

SERVICE AGENT
All shareholders must be represented by a Service Agent. Bankers Trust acts as
a Service Agent pursuant to its Administration and Services Agreement with the
Trust and receives no additional compensation from the Funds for such
shareholder services. The service fees of any other Service Agents, including
broker-dealers, will be paid by Bankers Trust from its fees. The services
provided by a Service Agent may include establishing and maintaining
shareholder accounts, processing purchase and redemption transactions,
performing shareholder sub-accounting, answering client inquiries regarding
the Trust, investing client cash account balances automatically in Fund shares
and processing redemption transactions at the request of clients, assisting
clients in changing dividend options, account designations and addresses,
providing periodic statements showing the client's account balance and
integrating these statements with those of other transactions and balances in
the client's other accounts serviced by the Service Agent, transmitting proxy
statements, periodic reports, updated prospectuses and other communications to
shareholders and, with respect to meetings of shareholders, collecting,
tabulating and forwarding to the Trust executed proxies, arranging for bank
wires and obtaining such other information and performing such other services
as the Administrator or the Service Agent's clients may reasonably request and
agree upon with the Service Agent. Service Agents may separately charge their
clients additional fees only to cover provision of additional or more
comprehensive services not already provided under the Administration and
Service Agreement with Bankers Trust, or of the type or scope not generally
offered by a mutual fund, such as cash management services or enhanced
retirement or trust reporting. In addition, investors may be charged a
transaction fee if they effect transactions in Fund shares through a broker or
agent. Each Service Agent has agreed to transmit to shareholders, who are its
customers, appropriate disclosures of any fees that it may charge them
directly.

CUSTODIAN AND TRANSFER AGENT
Bankers Trust acts as Custodian of the assets of the Trust and each Portfolio
and serves as the Transfer Agent for the Trust and each Portfolio under the
respective Administration and Services Agreement with the Trust and each
Portfolio.

ORGANIZATION OF THE TRUST
The Trust was organized on March 26, 1990 under the laws of the Commonwealth
of Massachusetts. Each Fund is a separate series of the Trust. The Trust
offers shares of beneficial interest of separate series, par value $0.001 per
share. The shares of the other series of the Trust are offered through
separate prospectuses. No series of shares has any preference over any other
series.

The Trust is an entity commonly known as a "Massachusetts business trust."
Under Massachusetts law, shareholders of such a business trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the risk of a shareholder incurring financial loss on
account of shareholder liability is limited to circumstances in which both
inadequate insurance existed and the Trust itself was unable to meet its
obligations.

When matters are submitted for shareholder vote, shareholders of each Fund
will have one vote for each full share held and proportionate, fractional
votes for fractional shares held. A separate vote of a Fund is required on any
matter affecting the Fund on which shareholders are entitled to vote.
Shareholders of one Fund are not entitled to vote on a matter that does not
affect that Fund. There normally will be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less than a
majority of Trustees holding office have been elected by shareholders, at
which time the Trustees then in office will call a shareholders' meeting for
the election of Trustees. Any Trustee may be removed from office upon the vote
of shareholders holding at least two-thirds of the Trust's outstanding shares
at a meeting called for that purpose. The Trustees are required to call such a
meeting upon the written request of shareholders holding at least 10% of the
Trust's outstanding shares.

Each Portfolio, in which all the Assets of a corresponding Fund will be
invested, is organized as a trust under the laws of the State of New York.
Each Portfolio's Declaration of Trust provides that a Fund and other entities
investing in that Portfolio (e.g., other investment companies, insurance
company separate accounts and common and commingled trust funds) will each be
liable for all obligations of that Portfolio. However, the risk of a Fund
incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and that Portfolio
itself was unable to meet its obligations. Accordingly, the Trustees of the
Trust believe that neither a Fund nor its shareholders will be adversely
affected by reason of a Fund's investing in the corresponding Portfolio.

Each series in the Trust will not be involved in any vote involving a
Portfolio in which it does not invest its Assets. Shareholders of all the
series of the Trust will, however, vote together to elect Trustees of the
Trust and for certain other matters. Under certain circumstances, the
shareholders of one or more series could control the outcome of these votes.

EXPENSES OF THE TRUST
Each Fund bears its own expenses. Operating expenses for each Fund generally
consist of all costs not specifically borne by Bankers Trust or Signature,
including administration and services fees, fees for necessary professional
services, the costs of regulatory compliance and costs associated with
maintaining legal existence and shareholder relations. Bankers Trust and
Signature have agreed to reimburse a Fund to the extent required by applicable
state law for certain expenses that are described in the Statement of
Additional Information. Each Portfolio bears its own expenses. Operating
expenses for each Portfolio generally consist of all costs not specifically
borne by Bankers Trust or Signature, including investment advisory and
administration and services fees, fees for necessary professional services,
the costs associated with regulatory compliance and maintaining legal
existence and investor relations.

<PAGE>

INVESTMENT ADVISER OF EACH PORTFOLIO AND ADMINISTRATOR
BANKERS TRUST COMPANY

DISTRIBUTOR
SIGNATURE BROKER-DEALER SERVICES, INC.

CUSTODIAN AND TRANSFER AGENT
BANKERS TRUST COMPANY

INDEPENDENT ACCOUNTANTS
COOPERS & LYBRAND L.L.P.

COUNSEL
WILLKIE FARR & GALLAGHER