EXCELSIOR FUNDS, 485BPOS, 1997-12-30

EXCELSIOR FUNDS
485BPOS, 1997-12-30

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<PAGE>

As filed with the Securities and Exchange Commission on December 30, 1997
File Nos. 33-71306, 811-8132

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 6
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 7

Excelsior Funds
(Exact Name of Registrant as Specified in Charter)

73 Tremont Street, Boston, Massachusetts 02108-3913
(Address of Principal Executive Offices)

Registrant's Telephone Number, including Area Code: 617-557-8000

W. Bruce McConnel, III, Esq.
Drinker Biddle & Reath LLP
Philadelphia National Bank Building, 1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
(Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box)

[X] Immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.

If appropriate, check the following box:

[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Title of Securities Being Registered: Shares of Beneficial Interest

This Registration Statement has also been executed by Cash Reserves Portfolio.

<PAGE>

EXCELSIOR FUNDS
CROSS-REFERENCE SHEET
(As Required by Rule 495)
Institutional Money Fund

PART A
ITEM NUMBER Prospectus Headings
- ----------- -------------------

1. COVER PAGE Cover Page.

2. SYNOPSIS Summary of Expenses.

3. CONDENSED FINANCIAL INFORMATION Financial Highlights.

4. GENERAL DESCRIPTION OF REGISTRANT Cover Page; Investment
Objective and Policies; Special
Information Concerning Hub and
Spoke(R) Structure

5. MANAGEMENT OF THE FUND Management of the Trust
and the Portfolio.

5A. MANAGEMENT'S DISCUSSION
OF FUND PERFORMANCE Not applicable.

6. CAPITAL STOCK AND OTHER SECURITIES Cover Page;
Pricing of Shares; How to
Purchase and Redeem Shares;
Net Income, Dividends and
Distributions; Taxes;
Management of the Trust and
the Portfolio; Description of
Shares, Voting Rights and
Liabilities.

7. PURCHASE OF SECURITIES BEING OFFERED How to Purchase and Redeem
Shares; Investor Programs.

8. REDEMPTION OR REPURCHASE How to Purchase and Redeem
Shares; Investor Programs.

9. PENDING LEGAL PROCEEDINGS Not applicable.

<PAGE>

[GRAPHIC OMITTED]

EXCELSIOR INSTITUTIONAL MONEY FUND
- --------------------------------------------------------------------------------

Excelsior Funds
73 Tremont Street, Boston, Massachusetts 02108-3913
For initial purchase or existing account information, call (800) 909-1989
(from overseas, call (617) 557-1755)
- --------------------------------------------------------------------------------
This Prospectus describes the Excelsior Institutional Money Fund (the
"Fund"), a diversified mutual fund offered to institutional investors. The Fund
is a separate series of Excelsior Funds (the "Trust"), an open-end management
investment company.

SHARES OF THE FUND ("SHARES") ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK AND THE SHARES ARE NOT FEDERALLY INSURED
BY, GUARANTEED BY, OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S.
GOVERNMENT, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD, OR ANY OTHER GOVERNMENTAL AGENCY. THE FUND SEEKS TO MAINTAIN ITS NET
ASSET VALUE PER SHARE AT $1.00 FOR PURPOSES OF PURCHASES AND REDEMPTIONS,
ALTHOUGH THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO DO SO ON A
CONTINUING BASIS. INVESTMENT IN THE FUND INVOLVES INVESTMENT RISK, INCLUDING
THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.

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.

Unlike other mutual funds which directly acquire and manage their own
portfolios of securities, the Fund seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio. Consequently, the
investment experience of the Fund will correspond directly with the investment
experience of the Portfolio. The Fund invests in the Portfolio through
Signature Financial Group, Inc.'s two-tier structure known as the Hub and
Spoke(R) financial services method. The Hub and Spoke(R) investment fund
structure employs a two-tier master/feeder fund structure and is a registered
service mark of Signature Financial Group, Inc. See "Special Information
Concerning Hub and Spoke(R) Structure."

The Fund is distributed by Edgewood Services, Inc. The Portfolio is
advised by Citibank, N.A. ("Citibank" or the "Investment Adviser").

This Prospectus sets forth concisely the information about the Fund that a
prospective investor should consider before investing. Investors should read
this Prospectus carefully and retain it for future reference. Additional
information about the Fund is contained in a Statement of Additional
Information, which has been filed with the Securities and Exchange Commission
and is available without charge upon request by writing to the Trust at its
address shown above or by calling (800) 909-1989. The Statement of Additional
Information bears the same date as this Prospectus and is incorporated by
reference in its entirety into this Prospectus. The Securities and Exchange
Commission maintains a World Wide Web site (http://www.sec.gov) that contains
the Statement of Additional Information and other information regarding the
Trust.

Prospectus dated January 1, 1998

<PAGE>

SUMMARY OF EXPENSES

The following tables provide (i) a summary of expenses relating to
purchases and sales of Shares of the Fund and the aggregate annual operating
expenses for the Fund and the Portfolio for the fiscal year ended August 31,
1997, expressed as a percentage of the 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.
<TABLE>
<CAPTION>
<S> <C>
Shareholder Transaction Expenses ................................. None
Advisory Fees (after fee waivers)(1).............................. 0.07%
12b-1 Fees ...................................................... None
Other Expenses
Administration Fees (after fee waivers)(2) ..................... 0.01%
Administrative Servicing Fees ................................. 0.08%
Other Operating Expenses(2) .................................... 0.09%
----
Total Fund Operating Expenses (after fee waivers and expense reim-
bursements) 0.25%
====
</TABLE>
- ---------------------
(1) Reflects fees incurred by the Portfolio for advisory services rendered by
the Investment Adviser. See "Management of the Trust and the Portfolio"
below.

(2) Includes the expenses of the Portfolio that are allocable to the Fund. See
"Management of the Trust and the Portfolio" below.

Example

You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption of your investment at the end of the
following periods:

1 Year ................................................... $ 3
3 Years ................................................ $ 8
5 Years ................................................ $14
10 Years ................................................ $32

The purpose of the foregoing tables is to assist investors in
understanding the various costs and expenses that shareholders of the Fund will
bear directly or indirectly. The Fund's administrators have voluntarily agreed
to waive fees and/or reimburse the Fund for certain expenses, and the
Investment Adviser and the Portfolio's administrator have each voluntarily
agreed to waive a portion of their fees such that, following such waivers and
reimbursements, the total operating expenses for the current fiscal year
(including amortization of organization costs and the Fund's allocated portion
of the Portfolio's expenses, but exclusive of taxes, interest, brokerage
commissions and extraordinary expenses) of the Fund on an annual basis would
not exceed 0.25% of the average daily net assets of the Fund. These fee waivers
and expense reimbursements are reflected in the expense table and example.
These fee waivers and expense reimbursements may be modified or terminated at
any time. Without such waivers and reimbursements, the advisory fee of the
Portfolio would be equal on an annual basis to 0.15% of the Portfolio's average
daily net assets, "Administration Fees" of the Fund, including the Fund's share
of Portfolio administration fees, would be equal on an annual basis to 0.15% of
the Fund's average daily net assets, and "Total Fund Operating Expenses,"
including the Fund's share of Portfolio expenses, would be equal on an annual
basis to 0.74% of the Fund's average daily net assets. For more information
about the expenses of the Fund and the Portfolio, see "Management of the Trust
and the Portfolio."

1
<PAGE>

THE EXAMPLE ABOVE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES AND RETURNS MAY BE GREATER OR
LESS THAN THOSE SHOWN IN THE EXPENSE SUMMARY AND EXAMPLE.

The Trustees of 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 paid directly for the services
of an investment adviser and the assets of the Fund were invested directly in
the kinds of securities being held by the Portfolio.

FINANCIAL HIGHLIGHTS

The following selected data for a Share of the Fund outstanding for the
indicated periods should be read in conjunction with the financial statements
appearing in the Fund's annual report to shareholders, which are incorporated
by reference into the Statement of Additional Information. The financial
statements and notes, as well as the table below, have been audited by Price
Waterhouse LLP, independent accountants. Copies of the annual report may be
obtained from the Trust free of charge by calling the number on the front cover
of this Prospectus.

For the period
November 8, 1993
(Commencement of
For the Year Ended August 31, Operations) to
1997 1996 1995 August 31, 1994
---------- ----------- ----------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income from operations ............ 0.0543 0.0547 0.0579 0.0308
Dividends from net investment income ............ (0.0543) (0.0547) (0.0579) (0.0308)
--------- --------- ---------- ---------
Net asset value, end of period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========== =========
Total return .................................... 5.57% 5.61% 5.95% 3.87%(2)
Ratios:
Net investment income to average net assets1 ..... 5.40% 5.55% 5.59% 4.39%(2)
Expenses to average net assets(1)................. 0.25% 0.25% 0.25% 0.19%(2)
Total net assets, end of period (000's omitted) ... $ 315,761 $ 293,290 $ 638,111 $ 770,658
</TABLE>

- ---------------------
(1) Reflects the Fund's proportionate share of the Portfolio's expenses as well
as voluntary fee waivers by agents of the Portfolio and the Trust. If the
voluntary fee waivers had not been in place, the ratios of net investment
income and expenses to average net assets would have been as follows:

<TABLE>
<S> <C> <C> <C> <C>
Net investment income to average net assets ...... 4.92% 5.11% 5.16% 4.28%(2)
Expenses to average net assets .................. 0.74% 0.69% 0.68% 0.31%(2)
</TABLE>

(2) Annualized.

2
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

Introduction

The Trust was organized as a business trust under the laws of the State of
Delaware, with the Fund established as separate series of the Trust, on October
25, 1993. Shares of the Fund are continuously sold only to institutional
investors.

Investment Objective

The investment objective of the Fund is to provide shareholders with
liquidity and as high a level of current income as is consistent with the
preservation of capital. The Fund seeks to achieve its investment objective by
investing all of its investable assets in Cash Reserves Portfolio (the
"Portfolio"), a diversified open-end management investment company with the
same investment objective as the Fund. The Portfolio seeks to achieve its
investment objective by investing in U.S. dollar-denominated money market
obligations with maturities of 397 days or less issued by U.S. and non-U.S.
issuers. The approval of the Fund's shareholders is not required to change its
investment objective and investment policies, and the approval of the investors
in the Portfolio is not required to change the Portfolio's investment objective
or any of the Portfolio's investment policies discussed below, except that the
concentration policy with respect to bank obligations described in paragraph
(1) below is fundamental. Any changes in the Fund's or the Portfolio's
non-fundamental investment objective or policies could result in the Fund
having an investment objective or policies different from those applicable at
the time of a shareholder's investment in the Fund.

Investment Policies and Strategies

Since the investment characteristics of the Fund are the same as those of
the Portfolio, the following is a discussion of the various investment policies
and strategies employed by the Portfolio. The Portfolio uses the amortized cost
method to value its securities, and has a dollar-weighted portfolio maturity
not exceeding 90 days.

The Portfolio seeks to achieve its investment objective through
investments limited to the following types of U.S. dollar-denominated money
market instruments. All investments by the Portfolio mature or are deemed to
mature within 397 days from the date of acquisition, and the average maturity
of the investments held by the Portfolio (on a dollar-weighted basis) is 90
days or less. All investments by the Portfolio are in securities of high
quality (i.e., rated in the highest rating category for short-term obligations
by at least two nationally recognized statistical rating organizations (each an
"NRSRO") assigning a rating to the security or issuer or, if only one NRSRO
assigns a rating, that NRSRO, or, in the case of an investment which is not
rated, of comparable quality as determined by the Investment Adviser) and are
determined by the Investment Adviser to present minimal credit risks.
Investments in high quality, short-term instruments may, in many circumstances,
result in lower yield than would be available from investments in instruments
with a lower quality or a longer term. Under the Investment Company Act of
1940, as amended (the "1940 Act"), the Fund and the Portfolio are each
classified as "diversified," although in the case of the Fund, all of its
investable assets are invested in the Portfolio. In accordance with the
portfolio diversification requirements of the 1940 Act, the Portfolio must
invest all of its assets

3
<PAGE>

in cash and cash items, U.S. Government securities, investment company
securities and other securities limited as to any one issuer to not more than
5% of the total assets of the investment company and not more than 10% of the
voting securities of the issuer.

The Portfolio will limit its investments to the types of instruments
described below:

(1) Bank obligations. The Portfolio invests at least 25% of its assets,
and may invest up to 100% of its assets, in bank obligations. This
concentration policy is fundamental and may not be changed without the approval
of the investors in the Portfolio. These obligations include, but are not
limited to, negotiable certificates of deposit, bankers' acceptances and fixed
time deposits. The Portfolio limits its investments in U.S. bank obligations
(including their non-U.S. branches) to banks having total assets in excess of
$1 billion and which are subject to regulation by an agency of the U.S.
Government. The Portfolio may also invest in certificates of deposit issued by
banks the deposits in which are insured by the Federal Deposit Insurance
Corporation ("FDIC"), through either the Bank Insurance Fund or the Savings
Association Insurance Fund, having total assets of less than $1 billion,
provided that the Portfolio at no time owns more than $100,000 principal amount
of certificates of deposit (or any higher principal amount which in the future
may be fully insured by FDIC insurance) of any one of those issuers. Fixed time
deposits are obligations which are payable at a stated maturity date and bear a
fixed rate of interest. Generally, fixed time deposits may be withdrawn on
demand by the Portfolio, but they may be subject to early withdrawal penalties
which vary depending upon market conditions and the remaining maturity of the
obligation. Although fixed time deposits do not have a market, there are no
contractual restrictions on the Portfolio's right to transfer a beneficial
interest in the deposit to a third party.

The Portfolio limits its investments in non-U.S. bank obligations (i.e.,
obligations of non-U.S. branches and subsidiaries of U.S. banks, and U.S. and
non-U.S. branches of non-U.S. banks) to U.S. dollar-denominated obligations of
banks which at the time of investment are branches or subsidiaries of U.S.
banks which meet the criteria in the preceding paragraph or are branches of
non-U.S. banks which (i) have more than $10 billion, or the equivalent in other
currencies, in total assets; (ii) in terms of assets are among the 75 largest
non-U.S. banks in the world; (iii) have branches or agencies in the United
States; and (iv) in the opinion of the Investment Adviser, are of an investment
quality comparable to obligations of U.S. banks which may be purchased by the
Portfolio. These obligations may be general obligations of the parent bank, in
addition to the issuing branch or subsidiary, but the parent bank's obligations
may be limited by the terms of the specific obligation or by governmental
regulation. The Portfolio also limits its investments in non-U.S. bank
obligations to banks, branches and subsidiaries located in Western Europe
(United Kingdom, France, Germany, Belgium, the Netherlands, Italy,
Switzerland), Scandinavia (Denmark, Norway, Sweden), Australia, Japan, the
Cayman Islands, the Bahamas and Canada. The Portfolio does not purchase any
bank obligation issued by the Investment Adviser or any of its affiliates.

Since the Portfolio invests at least 25% of its assets, and may invest up
to 100% of its assets, in bank obligations, an investment in the Fund should be
made with an understanding of the characteristics of the banking industry and
the risks which such an investment may entail. Banks are subject to extensive
governmental regulation which may limit both the amounts and types of loans and
other financial commitments which may be made and interest rates and fees which
may be charged. The profitability of this industry is largely dependent on the
availability and cost of capital funds for the purpose of financing lending
operations under prevailing money market conditions. Also, general economic
conditions play an important part in the operation of this industry, and
exposure to credit losses arising from possible financial difficulties of
borrowers might affect a bank's ability to meet its obligations.

4
<PAGE>

Since the Portfolio may hold obligations of non-U.S. branches and
subsidiaries of U.S. banks, and U.S. and non-U.S. branches of non-U.S. banks,
an investment in the Fund involves certain additional risks. Such investment
risks include future political and economic developments, the possible
imposition of non-U.S. withholding taxes on interest income payable on such
obligations held by the Portfolio, the possible seizure or nationalization of
non-U.S. deposits, and the possible establishment of exchange controls or other
non-U.S. governmental laws or restrictions applicable to the payment of the
principal of and interest on certificates of deposit or time deposits that
might affect adversely such payment on such obligations held by the Portfolio.
In addition, there may be less publicly-available information about a non-U.S.
branch or subsidiary of a U.S. bank or a U.S. or non-U.S. branch of a non-U.S.
bank than about a U.S. bank, and such branches and subsidiaries may not be
subject to the same or similar regulatory requirements that apply to U.S.
banks, such as mandatory reserve requirements, loan limitations, and
accounting, auditing and financial record keeping standards and requirements.
The Statement of Additional Information includes more detailed information
concerning U.S. and non-U.S. bank obligations under the caption "Investment
Objective, Policies and Restrictions -- Cash Reserves Portfolio."

(2) Obligations of, or guaranteed by, non-U.S. governments. The Portfolio
limits its investments in non-U.S. government obligations to obligations of or
guaranteed by the governments of Western Europe (United Kingdom, France,
Germany, Belgium, the Netherlands, Italy, Switzerland), Scandinavia (Denmark,
Norway, Sweden), Australia, Japan and Canada. Generally, such obligations may
be subject to the additional risks described in paragraph (1) above in
connection with the purchase of non-U.S. bank obligations.

(3) Commercial paper or other short-term instruments rated Prime-1 by
Moody's Investors Service, Inc. ("Moody's") or A-1 by Standard & Poor's Ratings
Services ("Standard & Poor's") or, if not rated, determined to be of comparable
quality by the Investment Adviser, such as unrated commercial paper issued by
corporations having an outstanding unsecured debt issue currently rated Aaa by
Moody's or AAA by Standard & Poor's. For a description of these ratings see the
Appendix to this Prospectus.

(4) Obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities. These include issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an Act of Congress. Some
of the latter category of obligations are supported by the "full faith and
credit" of the United States, others are supported by the right of the issuer
to borrow from the U.S. Treasury, and still others are supported only by the
credit of the agency or instrumentality. Examples of each of the three types of
obligations described in the preceding sentence are (i) obligations guaranteed
by the Export-Import Bank of the United States, (ii) obligations of the Federal
Home Loan Mortgage Corporation, and (iii) obligations of the Student Loan
Marketing Association, respectively. Issues of the U.S. Treasury in which the
Portfolio may invest include Treasury Receipts, which are unmatured interest
coupons of U.S. Treasury bonds and notes which have been separated and resold
in a custodial receipt program administered by the U.S. Treasury.

(5) Repurchase agreements, providing for resale within 397 days or less,
covering obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities which may have maturities in excess of 397 days. A repurchase
agreement arises when a buyer purchases an obligation and simultaneously agrees
with the vendor to resell the obligation to the vendor at an agreed-upon price
and time, which is usually not more than seven days from the date of purchase.
The resale price of a repurchase

5
<PAGE>

agreement is greater than the purchase price, reflecting an agreed-upon market
rate which is effective for the period of time the buyer's funds are invested
in the obligation and which is not related to the coupon rate on the purchased
obligation. Obligations serving as collateral for each repurchase agreement are
delivered to the Portfolio's custodian either physically or in book entry form
and the collateral is marked to market daily to ensure that each repurchase
agreement is fully collateralized at all times. A buyer of a repurchase
agreement runs a risk of loss if, at the time of default by the vendor, the
value of the collateral securing the agreement is less than the price paid for
the repurchase agreement. If the vendor of a repurchase agreement becomes
bankrupt, the Portfolio might be delayed, or may incur costs or possible losses
of principal and income, in selling the collateral. The Portfolio may enter
into repurchase agreements only with a vendor which is a member bank of the
Federal Reserve System or which is a "primary dealer" (as designated by the
Federal Reserve Bank of New York) in U.S. Government obligations. The
restrictions and procedures described above which govern the Portfolio's
investment in repurchase obligations are designed to minimize the Portfolio's
risk of losses in making those investments.

(6) Asset-backed securities, which may include securities such as
Certificates for Automobile Receivables ("CARS") and Credit Card Receivable
Securities ("CARDS"), as well as other asset-backed securities that may be
developed in the future. CARS represent fractional interests in pools of car
installment loans, and CARDS represent fractional interests in pools of
revolving credit card receivables. The rate of return on asset-backed
securities may be affected by early prepayment of principal on the underlying
loans or receivables. Prepayment rates vary widely and may be affected by
changes in market interest rates. It is not possible to accurately predict the
average life of a particular pool of loans or receivables. Reinvestment of
principal may occur at higher or lower rates than the original yield.
Therefore, the actual maturity and realized yield on asset-backed securities
will vary based upon the prepayment experience of the underlying pool of loans
or receivables.

The Portfolio does not purchase securities which it believes, at the time
of purchase, will be subject to exchange controls or non-U.S. withholding
taxes; however, there can be no assurance that such laws may not become
applicable to certain of the Portfolio's investments. In the event exchange
controls or non-U.S. withholding taxes are imposed with respect to any of the
Portfolio's investments, the effect may be to reduce the income received by the
Portfolio on such investments.

Lending of Portfolio Securities. Consistent with applicable regulatory
requirements and in order to generate additional income, the Portfolio may lend
its portfolio securities to broker-dealers and other institutional borrowers.
Such loans must be callable at any time and continuously secured by collateral
(cash or U.S. Government securities) in an amount not less than the market
value, determined daily, of the securities loaned. It is intended that the
value of securities loaned by the Portfolio would not exceed 33 1/3% of the
Portfolio's net assets.

In the event of the bankruptcy of the other party to a securities loan,
the Portfolio could experience delays in recovering the securities loaned. To
the extent that, in the meantime, the value of the securities loaned has
increased, the Portfolio could experience a loss.

Private Placements and Illiquid Investments. The Portfolio may invest up
to 10% of its net assets in securities for which there is no readily available
market. These illiquid securities may include privately placed restricted
securities for which no institutional market exists. The absence of a trading
market can make it difficult to ascertain a market value for illiquid
investments. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for the
Portfolio to sell them promptly at an acceptable price.
* * *

6
<PAGE>

The Statement of Additional Information includes further discussion of
investment policies and a listing of investment restrictions which govern the
investment activities of the Fund and the Portfolio. Certain of these
investment restrictions may not be changed, in the case of the Fund, without
the approval of the Fund's shareholders or, in the case of the Portfolio,
without the approval of the investors in the Portfolio. If a percentage
restriction (other than a restriction as to borrowing) or a rating restriction
on investment or utilization of assets is adhered to at the time an investment
is made or assets are so utilized, a later change in percentage resulting from
changes in the value of the securities held by the Portfolio or a later change
in the rating of a security held by the Portfolio is not considered a violation
of the policy or restriction.

SPECIAL INFORMATION CONCERNING HUB AND SPOKE(R) STRUCTURE

Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Fund seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio, a separate registered
investment company with the same investment objective. 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 issue their shares at the same public
offering price as the Fund due to variations in sales commissions and other
operating expenses. 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 Signature Financial
Group (Cayman) Ltd. at (345) 945-1824. The Hub and Spoke investment fund
structure has been developed relatively recently, so shareholders should
carefully consider this investment approach.

The investment objective of the Fund may be changed without the approval
of the Fund's shareholders, but not without written notice thereof to the
Fund's shareholders thirty days prior to implementing the change. If there were
a change in the Fund's investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of their
then-current financial position and needs. The investment objective of the
Portfolio may be changed without the approval of the investors in the
Portfolio, but not without written notice thereof to the investors in the
Portfolio (and notice by the Trust to Fund shareholders) thirty days prior to
implementing the change. There can, of course, be no assurance that the
investment objective of either the Fund or the Portfolio will be achieved. See
"Investment Restrictions" in the Statement of Additional Information for a
description of the fundamental investment policies and restrictions 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. Except as stated otherwise, all investment objectives, policies and
restrictions described herein and in the Statement of Additional Information
are non-fundamental.

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. Additionally, the
Portfolio may become less diverse, resulting in increased portfolio risk.
(However, this possibility also exists for traditionally structured funds which
have large or institutional investors.) Also, funds with a greater pro rata
ownership in the Portfolio could have effective voting control of the
operations

7
<PAGE>

of the Portfolio. When the Fund is required to vote as an investor in the
Portfolio, current regulations provide that in those circumstances the Fund may
either seek instructions from its shareholders with regard to the voting of
such proxies and vote such proxies in accordance with such instructions, or the
Fund may vote its interests in the Portfolio in the same proportion of all
other investors in the Portfolio.

Certain changes in the Portfolio's investment objective, policies or
restrictions may require the Trust to withdraw the Fund's investment 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.

The Trust may withdraw the investment of the Fund from the Portfolio at
any time, if the Board of Trustees of the Trust determines that it is in the
best interests 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
investing all of the investable assets of the Fund in another pooled investment
entity having the same investment objective and policies as the Fund or
retaining an investment adviser to manage the Fund's assets in accordance with
the investment policies described above with respect to the Portfolio.

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

PRICING OF SHARES

The net asset value of the Fund is determined and the Shares of the Fund
are priced for purchases and redemptions normally as of 3:00 P.M. (Eastern
time) on each day the New York Stock Exchange is open for trading (a "Business
Day"). Currently, the days on which the Fund is closed (other than weekends)
are New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day (observed), Labor Day, Thanksgiving Day and
Christmas Day. Net asset value per Share for purposes of pricing sales and
redemptions is calculated by dividing the value of all securities and other
assets belonging to the Fund, less the liabilities charged to the Fund, by the
number of Shares of the Fund outstanding at the time the determination is made.
On days when the financial markets in which the Portfolio invests close early,
the Fund's net asset value is determined as of the close of these markets if
such time is earlier than the time at which the net asset value is normally
calculated.

The assets in the Portfolio are valued based upon the amortized cost
method. The Trust seeks to maintain a net asset value per Share of $1.00 for
the Fund, although there can be no assurance the net asset value will not vary.
See "Net Income, Dividends and Distributions" below.

8
<PAGE>

HOW TO PURCHASE AND REDEEM SHARES

Purchase of Shares

Shares of the Fund may be purchased without a sales charge on any Business
Day at the net asset value next determined after an order is transmitted to the
Trust's transfer agent, Chase Global Funds Services Company ("CGFSC"), or
another entity on behalf of the Trust, and received by the distributor,
Edgewood Services, Inc. (the "Distributor"), in good order. Except as provided
under "Investor Programs" below, the minimum initial investment is $1,000.
There is no minimum for subsequent investments. Purchases will be effected on
the same day provided the order is received by 3 P.M. (Eastern time). The
Distributor has established procedures for purchasing Shares in order to
accommodate different types of investors (see "Purchase Procedures" below).

Shares of the Fund may be purchased only in those states where they may be
lawfully sold. The Trust reserves the right to cease offering Shares for sale
at any time and the Distributor and the Trust each reserve the right to reject
any order for the purchase of Shares.

Purchase Procedures

Shares may be purchased directly only by institutional investors
("Institutional Investors"). An Institutional Investor (a "Shareholder
Organization") that has entered into an agreement with the Trust may elect to
hold of record Shares for its customers ("Customers") and to record beneficial
ownership of Shares on the account statements provided to its Customers. In
that case, it is each Shareholder Organization's responsibility to transmit to
the Distributor all purchase orders for its Customers and to transmit, on a
timely basis, payment for such orders to CGFSC in accordance with the
procedures agreed to by the Shareholder Organization and the Distributor.
Confirmations of all such purchases and redemptions by Shareholder
Organizations for the benefit of their Customers will be sent by CGFSC to the
particular Shareholder Organization. In the alternative, a Shareholder
Organization may elect to establish its Customers' accounts of record with
CGFSC. In this event, even if the Shareholder Organization continues to place
its Customers' purchase and redemption orders with the Fund, CGFSC will send
confirmations of such transactions and periodic account statements directly to
the shareholders of record. Shares in the Fund bear the expense of fees payable
to Shareholder Organizations for such services. See "Management of the Trust
and the Portfolio -- Shareholder Organizations." Certificates will not be
issued for Shares.

Customers may agree with a particular Shareholder Organization to make a
minimum purchase with respect to their accounts. Depending upon the terms of
the particular account, Shareholder Organizations may charge a Customer's
account fees for automatic investment and other cash management services
provided. Customers should contact their Shareholder Organization directly for
further information.

Purchases by Wire

Institutional Investors may purchase Shares by wiring federal funds to
CGFSC. Prior to making an initial investment by wire, an investor must
telephone CGFSC at (800) 909-1989 (from overseas, please call (617) 557-1755)
for instructions, including a Wire Control Number. Federal funds and
registration instructions should be wired through the Federal Reserve System
to:

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<PAGE>

The Chase Manhattan Bank
ABA #021000021
Excelsior Funds
Credit DDA #910-2-733046
[Account Registration]
[Account Number]
[Wire Control Number]

It is intended that the Fund and the Portfolio will be as fully invested
at all times as is reasonably practicable in order to enhance the yield on
their respective assets. Accordingly, in order to make investments which will
immediately generate income, the Fund must have federal funds available. Shares
purchased by federal funds wire will be effected at the net asset value per
share next determined after acceptance of the order. Orders for Shares received
and accepted no later than 3 P.M. (Eastern time) will be entitled to dividends
on that Business Day, provided the federal funds wire has been received by the
Fund's bank on that Business Day. Purchase orders received and accepted after 3
P.M. (Eastern time) will be effected at the net asset value next determined and
will not receive the dividend declared that day even if the Fund receives
federal funds on that day.

Investors making initial investments by wire must promptly complete the
application accompanying this Prospectus and forward it to CGFSC. No account
application is required for subsequent purchases. Completed applications should
be directed to:

Excelsior Funds
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798

The application may also be sent via facsimile. Please contact CGFSC at
(800) 909-1989 (from overseas, please call (617) 557-1755) for complete
instructions. Redemptions by investors will not be processed until the
completed application for purchase of Shares has been received and accepted by
CGFSC. Investors making subsequent investments by wire should follow the above
instructions.

Purchases by Telephone

Institutional Investors may place a purchase order by calling CGFSC at
(800) 909-1989 (from overseas, please call (617) 557-1755). The purchase by
telephone will be effected at the net asset value per Share next determined
after receipt of the purchase order in good order. Orders for Shares properly
received and accepted no later than 3 P.M. (Eastern time) will be entitled to
dividends on that Business Day provided that the Fund's bank has received
federal funds on that Business Day.

By utilizing the telephone purchase option, the Institutional Investor
authorizes CGFSC and the Distributor to act upon telephone instructions
believed to be genuine. Excelsior Funds, CGFSC and the Distributor will not be
held liable for any loss, liability, cost or expense for acting upon such
instructions. Accordingly, Institutional Investors bear the risk of loss. The
Trust will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, including, without limitation, recording
telephonic instructions and/or requiring the caller to provide some form of
personal identification.

This option may be modified or terminated at any time. The Trust currently
does not charge a fee for this service, although some Shareholder Organizations
may charge their Customers fees. Customers should contact their Shareholder
Organization directly for further information.

10
<PAGE>

Purchases by Mail

Institutional Investors may purchase Shares by completing the application
for purchase of Shares accompanying this Prospectus and mailing it, together
with a check payable to Excelsior Funds, to:

Excelsior Funds
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798

Subsequent investments in an existing account in the Fund may be made at
any time by sending to the above address a check payable to Excelsior Funds
along with: (a) the detachable form that regularly accompanies the confirmation
of a prior transaction; (b) a subsequent order form which may be obtained from
CGFSC; or (c) a letter stating the amount of the investment, the name of the
Fund and the account number in which the investment is to be made.

Shares purchased by check will be effected at the net asset value next
determined after receipt and acceptance of the order by the Distributor. Such
Shares are entitled to earn dividends on that Business Day. Shares paid for by
check cannot be redeemed until the funds have been collected, which may take up
to fifteen days. Redemption delays may be avoided by purchasing Shares by
federal funds wire.

Redemption of Shares

Institutional Investors may redeem all or any portion of the Shares in
their account at the net asset value per Share next determined after proper
receipt in good form of an order for redemption. Proceeds from redemption
orders received by 3 P.M. (Eastern time) will normally be sent the next
Business Day; proceeds are sent in any event within five Business Days. Shares
redeemed will be entitled to dividends up to and including the Business Day
prior to the day of redemption.

It is necessary for Institutional Investors and other entities to have on
file appropriate documentation authorizing redemptions by the institution or
entity before a redemption request is considered to be in proper form. In some
cases, additional documentation may be requested.

Redemption Procedures

Customers of Shareholder Organizations holding Shares of record may redeem
all or part of their investments in the Fund in accordance with the procedures
governing their accounts at their Shareholder Organization. It is the
responsibility of the Shareholder Organizations to transmit redemption orders
to CGFSC and credit such Customer accounts with the redemption proceeds on a
timely basis.

Customers redeeming Shares through certain Shareholder Organizations or
certified financial planners may incur transaction charges in connection with
such redemptions. Such Customers should contact their Shareholder Organizations
or certified financial planners for further information on transaction fees.

Institutional Investors may redeem all or part of their Shares in
accordance with any of the procedures described below. These procedures only
apply to Customers of Shareholders Organizations for whom individual accounts
have been established with CGFSC. Customers whose individual accounts are
maintained by Shareholder Organizations must contact their Shareholder
Organization directly to redeem Shares.

11
<PAGE>

If any portion of the Shares to be redeemed represents an investment made
by check, the Trust and CGFSC reserve the right not to honor the redemption
until CGFSC is reasonably satisfied that the check has been collected in
accordance with the applicable banking regulations; such collection process may
take up to fifteen days. An Institutional Investor who anticipates the need for
more immediate access to its investment should purchase Shares by federal funds
or bank wire or by certified or cashier's check. Banks normally impose a charge
in connection with the use of bank wires, as well as certified checks,
cashier's checks and federal funds. If a check is not collected, the purchase
will be cancelled and CGFSC will charge a fee of $25.00 to the Institutional
Investor's account.

Redemption by Wire or Telephone

Institutional Investors who maintain an account at CGFSC and have so
indicated on their application, or have subsequently arranged in writing to do
so, may redeem Shares by instructing CGFSC, by wire or telephone, to wire the
redemption proceeds directly to the investor's predesignated bank account at
any commercial bank in the United States. Institutional Investors may have
their Shares redeemed by wire by instructing CGFSC at (800) 909-1989 (from
overseas, please call (617) 557-1755). No charge is imposed by Excelsior Funds
for wiring redemption payments to Institutional Investors, although Shareholder
Organizations may charge their Customers for wiring or crediting such
redemption payments to their accounts. Information relating to such redemption
services and charges, if any, is available to Customers directly from their
Shareholder Organizations.

In order to arrange for redemption by wire or telephone after an account
has been opened or to change the bank account designated to receive redemption
proceeds, an Institutional Investor must send a written request to Excelsior
Funds at the address listed below under "Redemption by Mail." Such requests
must be signed by the investor, with signatures guaranteed (see "Redemption by
Mail" below for details regarding signature guarantees). Further documentation
may be requested.

CGFSC and the Distributor reserve the right to refuse a wire or telephone
redemption. Procedures for redeeming Shares by wire or telephone may be
modified or terminated at any time by the Trust or the Distributor. Excelsior
Funds, CGFSC and the Distributor will not be liable for any loss, liability,
cost or expense for acting upon telephone instructions believed to be genuine.
Accordingly, shareholders will bear the risk of loss. The Trust will employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine, including, without limitation, recording telephone instructions
and/or requiring the caller to provide some form of personal identification.

Redemption by Mail

Shares may be redeemed by an Institutional Investor by submitting a
written request for redemption to:

Excelsior Funds
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798

A written request to CGFSC must (i) state the number of Shares to be
redeemed, (ii) identify the shareholder account number and tax identification
number, and (iii) be signed for each registered owner by its authorized officer
exactly as the Shares are registered.

12
<PAGE>

A redemption request for an amount in excess of $50,000, or for any amount
if the proceeds are to be sent elsewhere than the address of record, must be
accompanied by signature guarantees from any eligible guarantor institution
approved by CGFSC in accordance with its Standards, Procedures and Guidelines
for the Acceptance of Signature Guarantees ("Signature Guarantee Guidelines").
Eligible guarantor institutions generally include banks, broker-dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. All eligible guarantor institutions
must participate in the Securities Transfer Agents Medallion Program ("STAMP")
in order to be approved by CGFSC pursuant to the Signature Guarantee
Guidelines. Copies of the Signature Guarantee Guidelines and information on
STAMP can be obtained from CGFSC at (800) 909-1989 (from overseas, please call
(617) 557-1755) or at the address given above. CGFSC may require additional
supporting documents. A redemption request will not be deemed to be properly
received in good form until CGFSC receives all required documents in proper
form.

Questions with respect to the proper form for redemption requests should
be directed to CGFSC at (800) 909-1989 (from overseas, please call (617)
557-1755).

Other Redemption Information

Institutional Investors may be required to redeem Shares in the Fund after
60 days written notice if due to investor redemptions the balance in the
particular account with respect to the Fund remains below $500. If a Customer
has agreed with a particular Shareholder Organization to maintain a minimum
balance with respect to Shares of the Fund and the balance in such account
falls below that minimum, the Customer may be required by the Shareholder
Organization to redeem all or part of its Shares to the extent necessary to
maintain the required minimum balance.

INVESTOR PROGRAMS

Exchange Privilege

Shares of the Fund may be exchanged without payment of any exchange fee
for Institutional Shares of any investment portfolio of Excelsior Institutional
Trust at their respective net asset values, provided that such other shares may
legally be sold in the state of the investor's residence.

Excelsior Institutional Trust currently offers Institutional Shares in
eight investment portfolios as follows:

Equity Fund, a fund seeking long-term capital appreciation through
investments in companies believed to represent good long-term values not
currently recognized in the market prices of their securities;

Optimum Growth Fund, a fund seeking superior, risk-adjusted total return
through investments in a diversified portfolio of equity securities whose
growth prospects, in the opinion of its investment adviser, appear to exceed
that of the overall market;

Value Equity Fund, a fund seeking long-term capital appreciation through
investments in a diversified portfolio of equity securities whose market value,
in the opinion of its investment adviser, appears to be undervalued relative to
the marketplace;

International Equity Fund, a fund seeking to provide long-term capital
appreciation through investment in a diversified portfolio of marketable
foreign securities;

13
<PAGE>

Balanced Fund, a fund seeking to provide a high total return from a
diversified portfolio of equity and fixed income securities;

Income Fund, a fund seeking to provide as high a level of current interest
income as is consistent with moderate risk of capital and maintenance of
liquidity through investments in a broad range of investment-grade fixed income
securities;

Total Return Bond Fund, a fund seeking to maximize the total rate of
return consistent with moderate risk of capital and maintenance of liquidity
through investments in a broad range of investment- grade fixed income
securities; and

Bond Index Fund, a fund seeking to provide investment results that
correspond to the investment performance of the Lehman Brothers Aggregate Bond
Index.

An exchange involves a redemption of all or a portion of the Shares in the
Fund and the investment of the redemption proceeds in Institutional Shares of
an investment portfolio of Excelsior Institutional Trust. The redemption will
be made at the per Share net asset value of the Shares being redeemed next
determined after the exchange request is received in good order. The shares of
the portfolio to be acquired will be purchased at the per share net asset value
of those shares next determined after receipt of the exchange request in good
order.

An exchange of shares is treated for Federal and state income tax purposes
as a redemption (sale) of shares given in exchange by the shareholder, and an
exchanging shareholder may, therefore, realize a taxable gain or loss in
connection with the exchange. Shareholders exchanging Shares of the Fund for
Institutional Shares of an investment portfolio of Excelsior Institutional
Trust should carefully review the prospectus for such shares prior to making an
exchange.

The exchange option may be changed, modified or terminated at any time.
The Trust currently does not charge a fee for this service, although some
Shareholder Organizations may charge their Customers fees. Customers should
contact their Shareholder Organizations directly for further information.

Exchanges by Telephone. For Institutional Investors who have previously
selected the telephone exchange option, an exchange order may be placed by
calling CGFSC at (800) 909-1989 (from overseas, please call (617) 557-1755). By
establishing the telephone exchange option, the Institutional Investor
authorizes CGFSC and the Distributor to act upon telephone instructions
believed to be genuine. Excelsior Funds, Excelsior Institutional Trust, CGFSC
and the Distributor are not responsible for the authenticity of exchange
requests received by telephone that are reasonably believed to be genuine. In
attempting to confirm that telephone instructions are genuine, Excelsior Funds
and Excelsior Institutional Trust will use such procedures as are considered
reasonable, including recording those instructions and requesting information
as to account registration.

During periods of substantial economic or market change, telephone
exchanges may be difficult to complete. If an Institutional Investor is unable
to contact CGFSC by telephone, the Institutional Investor may also deliver the
exchange request to CGFSC in writing at the address noted above under
"Redemption by Mail."

Retirement Plans

Shares are available for purchase by Institutional Investors in connection
with the following tax-deferred prototype retirement plans offered by United
States Trust Company of New York:

14
<PAGE>

IRAs (including "rollovers" from existing retirement plans) for individuals
and their spouses;

Profit Sharing and Money-Purchase Plans for corporations and self-employed
individuals and their partners to benefit themselves and their employees; and

Keogh Plans for self-employed individuals.

Institutional Investors or Customers of Shareholder Organizations investing
in Shares pursuant to a retirement plan are not subject to the minimum
investment and mandatory redemption provisions described above. Detailed
information concerning eligibility, service fees and other matters related to
these plans is available from the Trust by calling CGFSC at (800) 909-1989 (from
overseas, please call (617) 557-1755). Customers of Shareholder Organizations
may purchase Shares pursuant to retirement plans if such plans are offered by
their Shareholder Organizations.

NET INCOME, DIVIDENDS AND DISTRIBUTIONS

The net income of the Portfolio is determined each Business Day (and on
such other days as are deemed necessary in order to comply with Rule 22c-1
under the 1940 Act). This determination is made once during each such day as of
3 P.M. (Eastern time). All the net income of the Portfolio, as defined below,
so determined is allocated pro rata among the Fund and the other investors in
the Portfolio at the time of such determination.

For this purpose the net income of the Portfolio (from the time of the
immediately preceding determination thereof) consists of (i) all income
accrued, less the amortization of any premium, on the assets of the Portfolio,
less (ii) all actual and accrued expenses of the Portfolio determined in
accordance with generally accepted accounting principles. Interest income
includes discount earned (including both original issue and market discount)
accrued ratably to the date of maturity and any net realized gains or losses on
the assets of the Portfolio. Securities are valued at amortized cost, which the
trustees of the Portfolio have determined in good faith constitutes fair value
for the purpose of complying with the 1940 Act. This method provides certainty
in valuation, but may result in periods during which the stated value of a
security held by the Portfolio is higher or lower than the price the Portfolio
would receive if the security were sold. This valuation method will continue to
be used until such time as the Trustees of the Portfolio determine that it does
not constitute fair value for such purposes.

The net income of the Fund is determined at the same time and on the same
days as the net income of the Portfolio is determined. Substantially all of the
net income of the Fund, as defined below, so determined is declared in Shares
as a dividend to shareholders of record at the time of such determination.
Shares begin accruing dividends on the Business Day they are purchased.
Dividends are distributed monthly on or about the last Business Day of each
month. Unless a shareholder elects to receive dividends in cash, dividends are
distributed in the form of additional full and fractional Shares at the rate of
one Share for each one dollar of dividends.

For this purpose the net income of the Fund (from the time of the
immediately preceding determination thereof) consists of (i) all income accrued
on the assets of the Fund (i.e., the Fund's pro rata share of the net income of
the Portfolio), less (ii) all actual and accrued expenses of the Fund
determined in accordance with generally accepted accounting principles.

Since substantially all of the net income of the Fund is declared as a
dividend each time net income is determined, the net asset value per Share of
the Fund (i.e., the value of the net assets of the Fund

15
<PAGE>

divided by the number of Shares of the Fund outstanding) is expected to remain
at $1.00 per Share immediately after each such determination and dividend
declaration. Any increase in the value of a shareholder's investment in the
Fund, representing the reinvestment of dividends, is reflected by an increase
in the number of Shares of the Fund in its account.

It is expected that the Fund will have a positive net income at the time
of each determination thereof. If for any reason the net income of the Fund is
a negative amount, which could occur, for instance, upon default by an issuer
of a security held by the Portfolio, the Trust would first offset the negative
amount with respect to each shareholder account from the dividends declared
during the month with respect to each such account. If and to the extent that
such negative amount exceeds such declared dividends at the end of the month,
the Trust would reduce the number of outstanding Shares of the Fund by treating
each shareholder as having contributed to the capital of the Fund that number
of full and fractional Shares in the account of such shareholder which
represents such shareholder's proportion of the amount of such excess. Each
shareholder would be deemed to have agreed to such contribution in these
circumstances by its investment in the Fund. Thus, the net asset value per
Share of the Fund will, to the extent possible, be maintained at a constant
$1.00.

TAXES

Each year, the Trust intends to qualify the Fund as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). Because the Fund intends to distribute all of its net investment
income and net realized capital gains to its shareholders in accordance with
the timing requirements imposed by the Code, it is not expected that the Fund
will be required to pay any federal income or excise taxes, although the Fund's
non-U.S. source income may be subject to non-U.S. withholding taxes. If the
Fund fails to qualify as a "regulated investment company" in any year, the Fund
would incur a regular corporate federal income tax upon its taxable income and
the Fund's distributions would continue to be taxable as ordinary dividend
income to shareholders. The Portfolio believes that it will not be required to
pay any federal income or excise taxes.

Shareholders of the Fund normally will have to pay federal income taxes,
and any state or local taxes, on the dividends and realized net capital gains
distributions, if any, they receive from the Fund. Dividends from income and
any distributions from net short-term capital gains are taxable to shareholders
as ordinary income for federal income tax purposes. Distributions of net
capital gains, if any, are taxable to shareholders as long-term capital gains
without regard to the length of time the shareholders have held their shares.
Dividends declared in October, November or December of any year payable to
shareholders of record on a specified date in such month will be deemed to have
been received by shareholders and paid by the Fund on December 31 of such year
in the event such dividends are actually paid during January of the following
year. Dividends and capital gain distributions, if any, paid to shareholders
will be treated in the same manner for federal income tax purposes whether
received in cash or reinvested in additional shares of the Fund. After the end
of each calendar year, each shareholder will receive information for tax
purposes on the dividends and any realized net capital gains distributions
received during that calendar year including the portion taxable as ordinary
income and the portion taxable as capital gain.

Because all of the Fund's income is expected to be derived from earned
interest or short-term capital gain, it is anticipated that all of the Fund's
distributions will be taxable to shareholders as ordinary income (rather than
capital gain). For the same reason, it is also anticipated that no part of such
distributions will be eligible for the dividends-received deduction for
corporations.

16
<PAGE>

The Trust may be required to withhold federal income tax at the rate of
31% from all taxable distributions payable to shareholders who do not provide
the Trust with their correct taxpayer identification number or make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder's federal
income tax liability.

The foregoing summarizes some of the important tax considerations
generally affecting the Fund and its shareholders and is not intended as a
substitute for careful tax planning. Accordingly, potential investors in the
Fund should consult their tax advisers with specific reference to their own tax
situation.

Foreign Shareholders. The Fund will withhold tax payments at a rate of 30%
(or any lower applicable tax treaty rate) on taxable dividends and other
payments subject to withholding taxes that are made to persons who are not
citizens or residents of the United States. Distributions received from the
Fund by non-U.S. persons also may be subject to tax under the laws of their own
jurisdiction.

MANAGEMENT OF THE TRUST AND THE PORTFOLIO

The Trust has retained the services of U.S. Trust Company of Connecticut
("U.S. Trust CT"), CGFSC and Federated Administrative Services ("FAS")
(collectively, the "Trust Administrators") as administrators. Cash Reserves
Portfolio has retained the services of Signature Financial Group (Cayman) Ltd.
("SFG") as administrator. Citibank is the investment adviser for the Portfolio.
The Trust seeks to achieve the investment objective of the Fund by investing
all of the investable assets of the Fund in the Portfolio. Therefore, the Trust
relies primarily on the investment advice which Citibank provides to the
Portfolio. For biographical information relating to each of the Trustees and
officers of the Trust and the Portfolio, see "Management of the Trust and the
Portfolio" in the Statement of Additional Information.

Investment Adviser

The Investment Adviser manages the assets of the Portfolio pursuant to an
Investment Advisory Agreement with the Portfolio. Subject to such policies as
the Trustees of the Portfolio may determine, the Investment Adviser manages the
Portfolio, makes decisions with respect to and places orders for all purchases
and sales of portfolio securities, and maintains records relating to such
purchases and sales. The Investment Adviser maintains its principal offices at
153 East 53rd Street, New York, New York 10043, and is a wholly-owned
subsidiary of Citicorp, a registered bank holding company. The Investment
Adviser offers a wide range of banking and investment services to customers,
and together with its affiliates currently manages more than $88 billion in
assets.

For its services under the Investment Advisory Agreement, the Investment
Adviser is entitled to receive investment advisory fees, which are accrued
daily and paid monthly, of 0.15% of the Portfolio's average daily net assets on
an annualized basis for the Portfolio's then-current fiscal year. The
Investment Adviser may waive portions of this fee. The Portfolio paid advisory
fees to the Investment Adviser at the annual rate of 0.07% of the Portfolio's
average daily net assets, and the Investment Adviser voluntary waived fees at
the annual rate of 0.08% of the Portfolio's average daily net assets, during
the fiscal year ended August 31, 1997.

Administrators

The Portfolio has an Administrative Services Plan which provides that the
Portfolio may obtain the services of an administrator, a transfer agent, a
custodian and a fund accountant, and may enter into

17
<PAGE>

agreements providing for the payment of fees for such services. Under the
Portfolio's Administrative Services Plan, fees paid to the Portfolio's
administrator may not exceed 0.05% of the Portfolio's average daily net assets
on an annualized basis for the Portfolio's then-current fiscal year.

Pursuant to an Administration Agreement and an Administrative Services
Agreement, respectively, the Trust Administrators and SFG (collectively, the
"Administrators") provide the Trust and the Portfolio, respectively, with
general office facilities and supervise the overall administration of the Trust
and the Portfolio, respectively, including, among other responsibilities, the
negotiation of contracts and fees with, and the monitoring of performance and
billings of, the independent contractors and agents of the Trust and the
Portfolio; the preparation and filing of certain documents required for
compliance by the Trust and the Portfolio with applicable laws and regulations;
and arranging for the maintenance of books and records of the Trust and the
Portfolio. The Trust Administrators also assist in developing and monitoring
compliance procedures for the Fund, including procedures to monitor compliance
with the Fund's investment objective, policies and restrictions. SFG provides
persons satisfactory to the Board of Trustees of the Portfolio to serve as
Trustees and officers of the Portfolio. Such officers and Trustees of the
Portfolio may be directors, officers or employees of SFG or its affiliates.

As compensation for providing these services and facilities to the Trust
and the Portfolio: (i) the Trust Administrators are jointly entitled to an
annual fee from the Fund, computed daily and paid monthly, at the maximum
annual rate of 0.10% of the Fund's average daily net assets; and (ii) SFG is
entitled to fees from the Portfolio, accrued daily and paid monthly, of 0.05%
of the assets of the Portfolio on an annualized basis for the Portfolio's
then-current fiscal year. From time to time, the Administrators may voluntarily
waive all or a portion of the administration fees payable to them, which
waivers may be terminated at any time.

For the fiscal year ended August 31, 1997, SFG waived all administration
fees with respect to the Portfolio. From April 1, 1997 to May 15, 1997, CGFSC,
FAS and United States Trust Company of New York ("U.S. Trust NY") served as the
Trust's administrators pursuant to an administration agreement substantially
similar to the administration agreement currently in effect for the Trust. On
May 16, 1997, U.S. Trust CT replaced U.S. Trust NY as one of the Trust's
administrators. For the period from April 1, 1997 to August 31, 1997, CGFSC,
FAS, U.S. Trust CT and U.S. Trust NY collectively received an aggregate
administration fee at the effective annual rate of 0.01% of the Fund's average
daily net assets. For the same period, they collectively waived administration
fees at the effective annual rate of 0.09% of the Fund's average daily net
assets.

Prior to April 1, 1997, Signature Broker-Dealer Services, Inc. ("SBDS")
served as the Trust's administrator. For the period from September 1, 1996 to
March 31, 1997, SBDS received an administration fee at the effective annual
rate of 0.01% of the Fund's average daily net assets. SBDS and SFG are wholly-
owned subsidiaries of Signature Financial Group, Inc.

Sub-Administrator

Pursuant to a Sub-Administrative Services Agreement, Citibank performs
such sub-administrative duties for the Portfolio as are from time to time
agreed upon by Citibank and SFG. Citibank's sub-administrative duties may
include providing equipment and clerical personnel necessary for maintaining
the organization of the Portfolio, participation in the preparation of
documents required for compliance by the Portfolio with applicable laws and
regulations, preparation of certain documents in connection with meetings of
Trustees of, and investors in, the Portfolio, and other functions which

18
<PAGE>

would otherwise be performed by SFG as set forth above. For its services as
sub-administrator, Citibank receives such compensation as from time to time is
agreed upon by SFG and Citibank, but not more than 0.05% per annum of the
average daily net assets of the Portfolio. All such compensation is paid by
SFG.

Distributor

Pursuant to a Distribution Agreement, Edgewood Services, Inc. (the
"Distributor"), Clearing Operations, P.O. Box 897, Pittsburgh, Pennsylvania
15230-0897, acts as principal underwriter for the Shares. Edgewood Services,
Inc., a registered broker-dealer and a wholly-owned subsidiary of Federated
Investors, is unaffiliated with the Investment Adviser or any of its
affiliates.

At various times the Distributor may implement programs under which a
dealer's sales force may be eligible to win nominal awards for certain sales
efforts or under which the Distributor will make payments to any dealer that
sponsors sales contests or recognition programs conforming to criteria
established by the Distributor, or that participates in sales programs
sponsored by the Distributor. The Distributor in its discretion may also from
time to time, pursuant to objective criteria established by the Distributor,
pay fees to qualifying dealers for certain services or activities which are
primarily intended to result in sales of Shares of the Fund. If any such
program is made available to any dealer, it will be made available to all
dealers on the same terms and conditions. Payments made under such programs
will be made by the Distributor out of its own assets and not out of the assets
of the Fund.

In addition, the Distributor may offer to pay a fee from its own assets to
financial institutions for the continuing investment of customers' assets in
the Fund or for providing substantial marketing, sales and operational support.
The support may include initiating customer accounts, participating in sales,
educational and training seminars, providing sales literature, and engineering
computer software programs that emphasize the attributes of the Fund. Such
payments will be predicated upon the amount of Shares the financial institution
sells or may sell, and/or upon the type and nature of sales or marketing
support furnished by the financial institution.

Shareholder Organizations

As described above under "Purchase Procedures," the Trust may enter into
agreements with certain Shareholder Organizations--firms that provide services,
which may include acting as record shareholder, to their Customers who
beneficially own Shares. As a consideration for these services, the Fund will
pay the Shareholder Organization an administrative service fee up to the annual
rate of 0.40% of the average daily net asset value of its Shares held by the
Shareholder Organization's Customers. Such services may include assisting in
processing purchase, exchange and redemption requests; transmitting and
receiving funds in connection with Customer orders to purchase, exchange or
redeem Shares; and providing periodic statements. It is the responsibility of
Shareholder Organizations to advise Customers of any fees that they may charge
in connection with a Customer's investment. Until further notice, the Trust
Administrators have voluntarily agreed to waive fees payable by the Fund in an
aggregate amount equal to administrative service fees payable by the Fund.

Custodians and Transfer Agents

U.S. Trust NY serves as custodian of the Fund's assets. Communications to
the custodian should be directed to U.S. Trust NY, 114 West 47th Street, New
York, NY 10036. CGFSC provides transfer agency, dividend disbursement and
registrar services to the Fund. CGFSC has its principal offices at 73 Tremont
Street, Boston, MA 02108-3913.

19
<PAGE>

The Portfolio has entered into a Transfer Agency Agreement and a Custodian
Agreement with State Street Bank and Trust Company ("State Street"), pursuant
to which State Street acts as custodian and State Street Canada, Inc. ("State
Street Canada") acts as transfer agent and provides fund accounting services to
the Portfolio. State Street has its principal offices at 225 Franklin Street,
Boston, MA 02110. State Street Canada has its principal offices at 40 King
Street West, Suite 5700, Toronto, Ontario, Canada. See "Management of the Trust
and the Portfolio -- Transfer Agents and Custodians" in the Statement of
Additional Information.

Expenses

The respective expenses of the Trust and the Portfolio include the
compensation of their respective Trustees who are not affiliated with the
Investment Adviser or the Administrators; governmental fees; interest charges;
taxes; fees and expenses of independent auditors, of legal counsel and of any
transfer agent, custodian, registrar or dividend disbursing agent of the Trust
or the Portfolio; insurance premiums; and expenses of calculating the net asset
value of, and the net income on, interests in the Portfolio and Shares of the
Fund.

Expenses of the Trust also include all fees under its Administration
Agreement; expenses of distributing and redeeming Shares and servicing
shareholder accounts; expenses of preparing, printing and mailing prospectuses,
reports, notices, proxy statements and reports to shareholders and to
governmental officers and commissions; expenses of shareholder and Trustee
meetings; expenses relating to the issuance, registration and qualification of
Shares of the Fund and the preparation, printing and mailing of prospectuses
for such purposes; and membership dues in the Investment Company Institute
allocable to the Trust.

Expenses of the Portfolio also include all fees under the Portfolio's
Administrative Services Agreement; the expenses connected with the execution,
recording and settlement of security transactions; fees and expenses of the
Portfolio's custodian for all services to the Portfolio, including safekeeping
of funds and securities and maintaining required books and accounts; expenses
of preparing and mailing reports to investors and to governmental officers and
commissions; expenses of meetings of investors and Trustees; and the advisory
fees payable to the Investment Adviser under the Advisory Agreement.

Banking Laws

Banking laws and regulations currently prohibit a bank holding company
registered under the Federal Bank Holding Company Act of 1956 or any bank or
non-bank affiliate thereof from sponsoring, organizing or controlling a
registered open-end investment company continuously engaged in the issuance of
its shares, and prohibit banks generally from issuing, underwriting, selling or
distributing securities such as Shares of the Fund, but such banking laws and
regulations do not prohibit such a holding company or affiliate or banks
generally from acting as investment adviser, transfer agent, or custodian to
such an investment company, or from purchasing shares of such company for and
upon the order of customers. U.S. Trust CT, Citibank and certain Shareholder
Organizations may be subject to such banking laws and regulations. State
securities laws may differ from the interpretations of Federal law discussed in
this paragraph and banks and financial institutions may be required to register
as dealers pursuant to state law.

Should legislative, judicial, or administrative action prohibit or restrict
the activities of U.S. Trust CT, Citibank or other Shareholder Organizations in
connection with purchases of Fund Shares, U.S.

20
<PAGE>

Trust CT, Citibank and such Shareholder Organizations might be required to
alter materially or discontinue the investment services offered by them to
Customers. It is not anticipated, however, that any resulting change in the
Fund's method of operations would affect its net asset value per Share or
result in financial loss to any shareholder.

DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES

The Trust Instrument of the Trust permits its Trustees to issue an
unlimited number of full and fractional shares of beneficial interest (par
value $0.00001 per share) and to divide or combine the shares into a greater or
lesser number of shares without thereby changing the proportionate beneficial
interests in the Fund. The Trust reserves the right to create and issue any
number of series, in which case investments in each series would participate
equally in the earnings, dividends and assets of the particular series.
Currently, the Trust has one active series: Excelsior Institutional Money Fund.

Each Share of the Fund represents an interest in the Fund that is
proportionate with the interest represented by each other Share. Shares have no
preference, preemptive, conversion or similar rights. Shares are fully paid and
nonassessable when issued, except as set forth below. Shareholders are entitled
to one vote for each Share held on matters on which they are entitled to vote.
The Trust is not required to and has no current intention to hold annual
meetings of shareholders, although the Trust will hold special meetings of
shareholders when in the judgment of the Board of Trustees of the Trust it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have the right to remove one or more Trustees of the Trust at a shareholders
meeting by vote of two-thirds of the outstanding shares of the Trust.
Shareholders also have the right to remove one or more Trustees of the Trust
without a meeting by a declaration in writing by a specified number of
shareholders. Upon liquidation or dissolution of the Fund, shareholders of the
Fund would be entitled to share pro rata in the net assets of the Fund
available for distribution to shareholders.

Excelsior Funds is a business trust organized under the laws of the State
of Delaware. Under Delaware law, shareholders of Delaware business trusts are
entitled to the same limitation on personal liability extended to shareholders
of private for-profit corporations organized under the General Corporation Law
of the State of Delaware; the courts of other states may not apply Delaware
law, however, and shareholders may, under certain circumstances, be held
personally liable for the obligations of the Trust. The Trust Instrument
contains an express disclaimer of shareholder liability for acts or obligations
of the Trust and provides for indemnification and reimbursement of expenses out
of Fund property for any shareholder held personally liable for the obligations
of the Fund solely by reason of his being or having been a shareholder. The
Trust Instrument also provides for the maintenance, by or on behalf of the
Trust and the Fund, of appropriate insurance (for example, fidelity bond and
errors and omissions insurance) for the protection of the Trust and the Fund,
their shareholders, Trustees, officers, employees and agents, covering possible
tort and other liabilities. Thus, the risk of a shareholder incurring financial
loss as a result of shareholder liability is limited to circumstances in which
Delaware law did not apply, inadequate insurance existed and the Fund itself
was unable to meet its obligations.

Shareholders of all series of the Trust will vote together to elect
Trustees of the Trust and for certain other matters. Under certain
circumstances, the shareholders of one or more series of the Trust could
control the outcome of these votes.

The Portfolio 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

21
<PAGE>

each be liable for all obligations of the Portfolio. However, it is not
expected that the liabilities of the Portfolio would ever exceed its assets.
For more information regarding the Trustees of the Trust and the Portfolio, see
"Management of the Trust and the Portfolio" in the Statement of Additional
Information.

YIELD INFORMATION

From time to time, in advertisements or in reports to shareholders, the
yield of the Fund may be quoted and compared to those of other mutual funds
with similar investment objectives and to relevant indices or to rankings
prepared by independent services or other financial or industry publications
that monitor the performance of mutual funds. For example, the yield of the
Fund may be compared to the applicable averages compiled by Donaghue's Money
Fund Report, a widely recognized independent publication that monitors the
performance of money market funds. The yield of the Fund may also be compared
to the average yields 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 statistical areas.

Yield data as reported in national financial publications including, but
not limited to, Money Magazine, Forbes, Barron's, The Wall Street Journal and
The New York Times, or in publications of a local or regional nature, may also
be used in comparing the yield of the Fund.

The Fund may advertise a seven-day yield, which refers to the income
generated over a particular seven-day period identified in the advertisement by
an investment in the Fund. This income is annualized, i.e., the income during a
particular week is assumed to be generated each week over a fifty-two week
period, and is then shown as a percentage of the investment. The Fund may also
advertise its "effective yield," which is calculated similarly except that,
when annualized, income is assumed to be reinvested, thereby making the
effective yield slightly higher because of the compounding effect of the
assumed reinvestment. See "Yield Information" in the Statement of Additional
Information.

Yields will fluctuate and any quotation of yield should not be considered
as representative of the future performance of the Fund. Since yields
fluctuate, yield data cannot necessarily be used to compare an investment in
the Fund with bank deposits, savings accounts and similar investment
alternatives which often provide an agreed or guaranteed fixed yield for a
stated period of time. Shareholders should remember that yield is generally a
function of the kind and quality of the instruments held in a portfolio,
portfolio maturity, operating expenses, and market conditions. Any fees charged
by Shareholder Organizations with respect to accounts of Customers that have
invested in Shares will not be included in calculations of performance.

MISCELLANEOUS

Shareholders will receive unaudited semi-annual reports describing the
Fund's investment operations and annual financial statements audited by
independent accountants.

22
<PAGE>

APPENDIX - DESCRIPTION OF RATINGS

Description of the Highest Commercial Paper Ratings

A commercial paper rating by Moody's Investors Service, Inc. ("Moody's")
is an opinion of the ability of issuers to repay punctually senior debt
obligations not having an original maturity in excess of one year, unless
explicitly noted. Prime-1 is the highest commercial paper rating employed by
Moody's. Issuers rated Prime-1 (or related supporting institutions) have a
superior ability for repayment of senior short-term debt obligations. Prime-1
repayment ability will often be evidenced by many of the following
characteristics: (1) leading market positions in well-established industries;
(2) high rates of return on funds employed; (3) conservative capitalization
structures with moderate reliance on debt and ample asset protection; (4) broad
margins in earnings coverage of fixed financial charges and high internal cash
generation; and (5) well-established access to a range of financial markets and
assured sources of alternate liquidity.

A commercial paper rating by Standard & Poor's Ratings Services ("Standard
& Poor's") is a current assessment of the likelihood of timely payment of debt
having an original maturity of no more than 365 days. A-1 is the highest
commercial paper rating employed by Standard & Poor's. Issues assigned an "A"
rating are regarded as having the greatest capacity for timely payment, and an
issue designated with an A-1 rating is regarded as having a strong degree of
safety with regard to timely payment. Those issues determined to possess
extremely strong safety characteristics are rated A-1+.

Description of the Highest Corporate Bond Ratings

Bonds rated Aaa by Moody's are judged by Moody's to be of the best quality
by all standards. Together with bonds rated Aa (Moody's second highest rating)
they comprise what are generally known as high-grade bonds.

Debt rated AAA by Standard & Poor's represents the highest rating assigned
by Standard & Poor's. The obligor's capacity to meet its financial commitment
on the obligation is extremely strong.

A-1
<PAGE>
CHASE GLOBAL FUNDS SERVICES COMPANY NEW
CLIENT SERVICES ACCOUNT
P.O. BOX 2798 APPLICATION
BOSTON, MA 02208-2798
[GRAPHIC OMITTED] (800) 909-1989

Account Registration

[ ] Institutional [ ] Trust [ ] Other _________________________

Note: Trust registrations should specify name of the trust, trustee(s),
beneficiary(ies), and the date of the trust instrument.

<C>
- ------------------------------------------------------ ------------------------------------------------------------
Name(s) (please print) Social Security # or Taxpayer Identification #

( )
- ------------------------------------------------------ ------------------------------------------------------------
Name Telephone #

- ------------------------------------------------------
Address [ ] U.S. Citizen [ ] Other (specify)
----------------------
- ------------------------------------------------------
City/State/Zip Code
</TABLE>
Fund Selection (The minimum initial investment is $1,000. Make checks payable
to "Excelsior Funds.")

Initial Investment

[ ] Institutional Money Fund $__________________ 204

<TABLE>
<CAPTION>
<S> <C>
Note: If investing by wire, you must obtain a A. By Mail: Enclosed is a check in the amount of $_______ payable to "Excelsior
Bank Wire Control Number. To do so, please Funds."
call (800) 909-1989 and ask for the Wire Desk. B. By Wire: A bank wire in the amount of $________ has been sent to the Fund
from ____________________________________ ______________________________
Name of Bank Wire Control Number

Capital Gain and Dividend Distributions: All capital gain and dividend distributions will be reinvested in additional shares unless
appropriate boxes below are checked:
[ ] All dividends are to be [ ] reinvested [ ] paid in cash
[ ] All capital gains are to be [ ] reinvested [ ] paid in cash
</TABLE>
Account Privileges

Telephone exchange and redemption
[ ] I/We appoint CGFSC, as my/our agent to act upon instructions received by
telephone in order to effect the telephone exchange and redemption privileges.
I/We hereby ratify any instructions given pursuant to this authorization and
agree that Excelsior Funds, Excelsior Institutional Trust, CGFSC and their
directors, trustees, officers and employees will not be liable for any loss,
liability, cost or expense for acting upon instructions believed to be genuine
and in accordance with the procedures described in the then current Prospectus.
To the extent that Excelsior Funds and Excelsior Institutional Trust fail to use
reasonable procedures as a basis for their belief, they or their service
contractors may be liable for instructions that prove to be fraudulent or
unauthorized.
I/We further acknowledge that it my/our responsibility to read the Prospectus
of any fund of Excelsior Institutional Trust into which I/We exchange.
[ ] I/We do not wish to have the ability to exercise telephone redemption and
exchange privileges. I/We further understand that all exchange and redemption
requests must be in writing.

Authority to transmit redemption proceeds to pre-designated account.
I/We hereby authorize CGFSC to act upon instructions received by telephone to
withdraw $500 or more from my/our account in Excelsior Funds and to wire the
amount withdrawn to the following commercial bank account.

Title on Bank Account* ________________________________________________________

Name of Bank __________________________________________________________________

Bank A.B.A. Number _______________________ Account Number _____________________

Bank Address __________________________________________________________________

City/State/Zip Code____________________________________________________________
(attach voided check here)

A corporation, trust or partnership must also submit a "Corporate Resolution"
(or "Certificate of Partnership") indicating the names and titles of officers
authorized to act on its behalf.
*Title on bank and Fund account must be identical.
<PAGE>
Agreements and Signatures

By signing this application, I/we hereby certify under penalty of perjury that
the information on this application is complete and correct and that as required
by Federal law:

[ ] I/We certify that (1) the number(s) shown on this form is/are the correct
taxpayer identification number(s) and (2) I/we are not subject to backup
withholding either because I/we have not been notified by the Internal Revenue
Service that I/we are subject to backup withholding, or the IRS has notified
me/us that I am/we are no longer subject to backup withholding. (Note: If any or
all of Part 2 is not true, please strike out that part before signing.)

[ ] If no taxpayer identification number ("TIN") or SSN has been provided above,
I/we have applied, or intend to apply, to the IRS or the Social Security
Administration for a TIN or a SSN, and I/we understand that if I/we do not
provide this number to CGFSC within 60 days of the date of this application, or
if I/we fail to furnish my/our correct SSN or TIN, I/we may be subject to a
penalty and a 31% backup withholding on distributions and redemption proceeds.
(Please provide this number on Form W-9. You may request the form by calling
CGFSC at the number listed above).

I/We represent that I am/we are of legal age and capacity to purchase shares of
Excelsior Funds. I/We have received, read and carefully reviewed a copy of the
Fund's current Prospectus and agree to its terms and by signing below. I/we
acknowledge that neither the Fund nor the Distributor is a bank and that Fund
Shares are not deposits or obligations of, or guaranteed or endorsed by, any
bank and Fund Shares are not federally insured by, guaranteed by, obligations of
or otherwise supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency; that
while the Fund seeks to maintain its net asset value per share at $1.00 for
purposes of purchases and redemptions, there can be no assurance that it will be
able to do so on a continuous basis; and investment in the Fund involves
investment risk, including the possible loss of the principal amount invested.

The Internal Revenue Service does not require your consent to any provisions of
this form other than the certifications required to avoid backup withholding.

X ____________________________________ Date __________________________________
Owner Signature

X ____________________________________ Date __________________________________
Co-Owner Signature

Sign exactly as name(s) of registered owner(s) appear(s) above (including legal
title if signing for a corporation, trust custodial account, etc.)

For Use by Authorized Agent (Broker/Dealer) Only

We hereby submit this application for the purchase of shares in accordance with
the terms of our selling agreement with Edgewood Services, Inc. and with the
Prospectus and Statement of Additional Information of the Fund.

___________________________________________ __________________________________
Investment Dealer's Name Source of Business Code

___________________________________________ __________________________________
Main Office Address Branch Number

___________________________________________ __________________________________
Representative's Number Representative's Name

___________________________________________ __________________________________
Branch Address Telephone

___________________________________________ __________________________________
Investment Dealer's Authorized Signature Title
<PAGE>

TABLE OF CONTENTS

Page
------
SUMMARY OF EXPENSES ........................................ 1
FINANCIAL HIGHLIGHTS ..................................... 2
INVESTMENT OBJECTIVE AND POLICIES ......................... 3
SPECIAL INFORMATION CONCERNING HUB
AND SPOKE(R) STRUCTURE .................................. 7
PRICING OF SHARES ........................................ 8
HOW TO PURCHASE AND REDEEM SHARES .......................... 9
INVESTOR PROGRAMS ........................................ 13
NET INCOME, DIVIDENDS AND
DISTRIBUTIONS ........................................... 15
TAXES .................................................... 16
MANAGEMENT OF THE TRUST AND THE
PORTFOLIO .............................................. 17
DESCRIPTION OF SHARES, VOTING RIGHTS
AND LIABILITIES ........................................ 21
YIELD INFORMATION ........................................ 22
MISCELLANEOUS .............................................. 22
APPENDIX - DESCRIPTION OF RATINGS ......................... A-1

No person has been authorized to give any information or to make any
representations not contained in this Prospectus, or in Excelsior Funds'
Statement of Additional Information incorporated herein by reference, in
connection with the offering made by this Prospectus and, if given or made,
such information or representations must not be relied upon as having been
authorized by Excelsior Funds or its Distributor. This Prospectus does not
constitute an offer by Excelsior Funds or its Distributor in any jurisdiction
in which, or to any person to whom, such offer may not lawfully be made.

EIMFP 198
<PAGE>
===============================================================================

[GRAPHIC OMITTED]

INSTITUTIONAL

MONEY FUND

Prospectus
January 1, 1998

===============================================================================

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

Excelsior Funds January 1, 1998
73 Tremont Street
Boston, Massachusetts 02108
(617) 557-8000

Excelsior Institutional Money Fund

Excelsior Institutional Money Fund (the "Fund") is a series of
Excelsior Funds (the "Trust"). This Statement of Additional Information
describes the Fund only and no other series of the Trust.

TABLE OF CONTENTS

THE TRUST........................................................... 3
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS..................... 3
SECURITIES TRANSACTIONS............................................. 12
YIELD INFORMATION................................................... 12
DETERMINATION OF NET ASSET VALUE; VALUATION
OF SECURITIES; REDEMPTION IN KIND................................. 13
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...................... 15
MANAGEMENT OF THE TRUST AND THE PORTFOLIO........................... 16
INDEPENDENT ACCOUNTANTS............................................. 29
COUNSEL............................................................. 29
TAXATION............................................................ 29
DESCRIPTION OF THE TRUST; FUND SHARES............................... 32
MISCELLANEOUS....................................................... 33
FINANCIAL STATEMENTS................................................ 34

This Statement of Additional Information sets forth information which
may be of interest to investors but which is not necessarily included in the
Fund's Prospectus as it may be amended from time to time (the "Prospectus").
This Statement of Additional Information should be read only in conjunction with
the Prospectus, a copy of which may be obtained by an investor without charge by
contacting the Trust at the address and telephone number shown above. Terms used
but not defined herein, which are defined in the Prospectus, are used herein as
defined in the Prospectus.

SHARES OF THE FUND ("SHARES") ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK AND THE SHARES ARE NOT FEDERALLY INSURED BY
GUARANTEED BY OR OBLIGATIONS OF OR OTHERWISE SUPPORTED BY THE U.S. GOVERNMENT,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER GOVERNMENTAL AGENCY. THE FUND SEEKS TO MAINTAIN ITS NET ASSET VALUE PER
SHARE AT $1.00 FOR PURPOSES OF PURCHASES AND REDEMPTIONS, ALTHOUGH THERE CAN BE
NO ASSURANCE THAT IT WILL BE

<PAGE>

ABLE TO DO SO ON A CONTINUING BASIS. INVESTMENT IN THE FUND INVOLVES INVESTMENT
RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.

This Statement of Additional Information is NOT a prospectus and is
authorized for distribution to prospective investors only if preceded or
accompanied by an effective prospectus.

-2-

<PAGE>

THE TRUST

The Trust is an open-end diversified management investment company
which was organized as a business trust under the laws of the State of Delaware
on October 25, 1993. Shares of the Trust have been divided into separate series.
This Statement of Additional Information describes the Excelsior Institutional
Money Fund (the "Fund" or "Institutional Money Fund"). As of the date hereof,
there are no other active series of the Trust, although new series may be added
from time to time.

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS

The investment objective of the Institutional Money Fund is to provide
shareholders with liquidity and as high a level of current income as is
consistent with the preservation of capital. The Fund seeks to achieve its
investment objective by investing all of its investable assets in Cash Reserves
Portfolio (the "Portfolio"), a diversified open-end management investment
company with the same investment objective as the Fund. The Portfolio seeks to
achieve this investment objective by investing in U.S. dollar-denominated money
market obligations with maturities of 397 days or less issued by U.S. and
non-U.S.
issuers.

Citibank, N.A. ("Citibank") is the investment adviser (the "Adviser")
of the Portfolio. The Adviser manages the investments of the Portfolio from day
to day in accordance with the Portfolio's investment objective and policies. The
selection and management of investments for the Portfolio and the way it is
managed depend on the conditions and trends in the economy and the financial
marketplaces.

The following discussion supplements the information contained in the
Prospectus concerning the investment objective, policies and restrictions of the
Fund. Since the investment characteristics of the Fund correspond directly to
those of the Portfolio, references below to the Portfolio's investment
objective, strategies and techniques also include the Fund.

The Trust may withdraw the Fund's 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 Fund to do so. Upon any such withdrawal, the Fund's assets
would be invested in accordance with the investment objective, policies and
restrictions described below and in the Prospectus with respect to the
Portfolio. The approval of the Fund's shareholders is not required to change the
Fund's investment objective or any of its investment policies.

-3-

<PAGE>

Cash Reserves Portfolio

The approval of the investors in Cash Reserves Portfolio is not
required to change the Portfolio's investment objective or any of the
Portfolio's investment policies discussed below, including those concerning
security transactions, other than the Portfolio's concentration policy with
respect to bank obligations described in paragraph (1) below, which is
fundamental and may not be changed without investor approval.

The Portfolio seeks to achieve its investment objective through
investments limited to the following types of U.S. dollar-denominated money
market instruments. All investments by the Portfolio mature or are deemed to
mature within 397 days from the date of acquisition, and the average maturity of
the investments held by the Portfolio (on a dollar-weighted basis) is 90 days or
less. All investments by the Portfolio are in "high quality" securities (i.e.,
rated in the highest rating category for short-term obligations by at least two
nationally recognized statistical rating organizations (each, an "NRSRO")
assigning a rating to the security or issuer or, if only one NRSRO assigned a
rating, that NRSRO or, in the case of an investment which is not rated, of
comparable quality as determined by the Adviser) and are determined by the
Adviser to present minimal credit risks. Investments in high quality, short-term
instruments may, in many circumstances, result in a lower yield than would be
available from investments in instruments with a lower quality or a longer term.
Under the Investment Company Act of 1940, as amended (the "1940 Act"), the Fund
and the Portfolio are each classified as "diversified," although in the case of
the Fund, all of its investable assets are invested in the Portfolio. A
"diversified investment company" must invest at least 75% of its assets in cash
and cash items, U.S. Government securities, investment company securities and
other securities limited as to any one issuer to not more than 5% of the total
assets of the investment company and not more than 10% of the voting securities
of the issuer.

The Portfolio will limit its investments to the types of instruments
described below:

(1) Bank obligations. The Portfolio invests at least 25% of its investable
assets, and may invest up to 100% of its assets, in bank obligations. This
concentration policy is fundamental and may not be changed without the approval
of the investors in the Portfolio. Bank obligations include, but are not limited
to, negotiable certificates of deposit, bankers' acceptances and fixed time
deposits. Fixed time deposits are obligations which are payable at a stated
maturity date and bear a fixed rate of interest. Generally, fixed time deposits
may be withdrawn on demand by the Portfolio, but they may be subject to early
withdrawal penalties which vary depending upon market conditions

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<PAGE>

and the remaining maturity of the obligation. Although fixed time deposits do
not have a market, there are no contractual restrictions on the Portfolio's
right to transfer a beneficial interest in the deposit to a third party.

The Portfolio limits its investments in U.S. bank obligations
(including their non-U.S. branches) to banks having total assets in excess of $1
billion and which are subject to regulation by an agency of the U.S. Government.
The Portfolio may also invest in certificates of deposit issued by banks having
total assets of less than $1 billion, the deposits in which are insured by the
Federal Deposit Insurance Corporation ("FDIC"), through either the Bank
Insurance Fund or the Savings Association Insurance Fund, provided that the
Portfolio at no time owns more than $100,000 principal amount of certificates of
deposit (or any higher principal amount which in the future may be fully insured
by FDIC insurance) of any one of those issuers.

U.S. banks organized under federal law are supervised and examined by
the Comptroller of the Currency and are required to be members of the Federal
Reserve System and to be insured by the FDIC. U.S. banks organized under state
law are supervised and examined by state banking authorities and are members of
the Federal Reserve System only if they elect to join. However, state banks
which are insured by the FDIC are subject to federal examination and to a
substantial body of federal law and regulation. As a result of federal and state
laws and regulations, U.S. branches of U.S. banks, among other things, are
generally required to maintain specified levels of reserves, and are subject to
other supervision and regulation designed to promote financial soundness.

The Portfolio limits its investments in non-U.S. bank obligations
(i.e., obligations of non-U.S. branches and subsidiaries of U.S. banks, and U.S.
and non-U.S. branches of non-U.S. banks) to U.S. dollar-denominated obligations
of banks which at the time of investment are branches or subsidiaries of U.S.
banks which meet the criteria in the preceding paragraphs or are branches of
non-U.S. banks which (i) have more than $10 billion, or the equivalent in other
currencies, in total assets; (ii) in terms of assets are among the 75 largest
non-U.S. banks in the world; (iii) have branches or agencies in the United
States; and (iv) in the opinion of the Adviser, are of an investment quality
comparable with obligations of U.S. banks which may be purchased by the
Portfolio. These obligations may be general obligations of the parent bank, in
addition to the issuing branch or subsidiary, but the parent bank's obligations
may be limited by the terms of the specific obligation or by governmental
regulation. The Portfolio also limits its investments in non-U.S. bank
obligations to banks, branches and subsidiaries located in Western Europe
(United Kingdom, France, Germany, Belgium, the Netherlands, Italy, Switzerland),

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<PAGE>

Scandinavia (Denmark, Norway, Sweden), Australia, Japan, the Cayman Islands, the
Bahamas and Canada. The Portfolio does not purchase any bank obligation of the
Adviser or an affiliate of the Adviser.

Since the Portfolio may hold obligations of non-U.S. branches and
subsidiaries of U.S. banks, and U.S. and non-U.S. branches of non-U.S. banks, an
investment in the Fund involves certain additional risks. Such investment risks
include future political and economic developments, the possible imposition of
non-U.S. withholding taxes on interest income payable on such obligations held
by the Portfolio, the possible seizure or nationalization of non-U.S. deposits
and the possible establishment of exchange controls or other non-U.S.
governmental laws or restrictions applicable to the payment of the principal of
and interest on certificates of deposit or time deposits that might affect
adversely such payment on such obligations held by the Portfolio. In addition,
there may be less publicly-available information about a non-U.S. branch or
subsidiary of a U.S. bank or a U.S. or non-U.S. branch of a non-U.S. bank than
about a U.S. bank and such branches and subsidiaries may not be subject to the
same or similar regulatory requirements that apply to U.S. banks, such as
mandatory reserve requirements, loan limitations and accounting, auditing and
financial record-keeping standards and requirements.

The provisions of federal law governing the establishment and operation
of U.S. branches do not apply to non-U.S. branches of U.S. banks. However, the
Portfolio will purchase obligations only of those non-U.S. branches of U.S.
banks which were established with the approval of the Board of Governors of the
Federal Reserve System (the "Board of Governors"). As a result of such approval,
these branches are subject to examination by the Board of Governors and the
Comptroller of the Currency. In addition, such non-U.S. branches of U.S. banks
are subject to the supervision of the U.S. bank, and creditors of the non-U.S.
branch are considered general creditors of the U.S. bank subject to whatever
defenses may be available under the governing non-U.S. law and to the terms of
the specific obligation. Nonetheless, the Portfolio generally will be subject to
whatever risk may exist that the non-U.S. country may impose restrictions on
payment of certificates of deposit or time deposits.

U.S. branches of non-U.S. banks are subject to the laws of the state in
which the branch is located or to the laws of the United States. Such branches
are therefore subject to many of the regulations, including reserve
requirements, to which U.S. banks are subject. In addition, the Portfolio may
purchase obligations only of those U.S. branches of non-U.S. banks which are
located in states which impose the additional requirement

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<PAGE>
that the branch pledge to a designated bank within the state an amount of its
assets equal to 5% of its total liabilities.

Non-U.S. banks in whose obligations the Portfolio may invest may not be
subject to the laws and regulations referred to in the preceding two paragraphs.

(2) Obligations of, or guaranteed by, non-U.S. governments. The Portfolio limits
its investments in non-U.S. government obligations to obligations issued or
guaranteed by the governments of Western Europe (United Kingdom, France,
Germany, Belgium, the Netherlands, Italy, Switzerland), Scandinavia (Denmark,
Norway, Sweden), Australia, Japan and Canada. Generally, such obligations may be
subject to the additional risks described in paragraph (1) above in connection
with the purchase of non-U.S. bank obligations.

(3) Commercial Paper rated Prime-1 by Moody's Investors Service, Inc.
("Moody's") or A-1 by Standard & Poor's Ratings Services ("Standard & Poor's")
or, if not rated, determined to be of comparable quality by the Adviser (on
behalf of the Portfolio's Board of Trustees), such as unrated commercial paper
issued by corporations having an outstanding unsecured debt issue currently
rated Aaa by Moody's or AAA by Standard & Poor's. (For a description of these
ratings see the Appendix to the Prospectus.)

(4) Obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities. These include issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an Act of Congress. Some of
the latter category of obligations are supported by the full faith and credit of
the United States, others are supported by the right of the issuer to borrow
from the U.S. Treasury, and still others are supported only by the credit of the
agency or instrumentality. Examples of each of the three types of obligations
described in the preceding sentence are (i) obligations guaranteed by the
Export-Import Bank of the United States, (ii) obligations of the Federal
National Mortgage Association, and (iii) obligations of the Student Loan
Marketing Association, respectively.

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<PAGE>

related to the coupon rate on the purchased obligation. Obligations serving as
collateral for each repurchase agreement are delivered to the Portfolio's
custodian either physically orin book entry form and the collateral is marked to
the market daily to ensure that each repurchase agreement is fully
collateralized at all times. A buyer of a repurchase agreement runs a risk of
loss if, at the time of default by the issuer, the value of the collateral
securing the agreement is less than the price paid for the repurchase agreement.
If the vendor of a repurchase agreement becomes bankrupt, the Portfolio might be
delayed, or may incur costs or possible losses of principal and income, in
selling the collateral. The Portfolio may enter into repurchase agreements only
with a vendor which is a member bank of the Federal Reserve System or which is a
"primary dealer" (as designated by the Federal Reserve Bank of New York) in U.S.
Government obligations. The Portfolio will not enter into any repurchase
agreements with the Adviser or an affiliate of the Adviser. The restrictions and
procedures described above which govern the Portfolio's investment in repurchase
agreements are designed to minimize the Portfolio's risk of losses in making
those investments.

(6) Asset-backed securities, which may include securities such as Certificates
for Automobile Receivables ("CARS") and Credit Card Receivable Securities
("CARDS"), as well as other asset-backed securities that may be developed in the
future. CARS represent fractional interests in pools of car installment loans,
and CARDS represent fractional interests in pools of revolving credit card
receivables. The rate of return on asset-backed securities may be affected by
early prepayment of principal on the underlying loans or receivables. Prepayment
rates vary widely and may be affected by changes in market interest rates. It is
not possible to accurately predict the average life of a particular pool of
loans or receivables. Reinvestment of principal may occur at higher or lower
rates than the original yield. Therefore, the actual maturity and realized yield
on asset-backed securities will vary based upon the prepayment experience of the
underlying pool of loans or receivables.
(See "Asset-Backed Securities" below.)

The Portfolio does not purchase securities which the Portfolio
believes, at the time of purchase, will be subject to exchange controls or
non-U.S. withholding taxes; however, there can be no assurance that such laws
may not become applicable to certain of the Portfolio's investments. In the
event exchange controls or non-U.S. withholding taxes are imposed with respect
to any of the Portfolio's investments, the effect may be to reduce the income
received by the Portfolio on such investments.

Asset-Backed Securities. As set forth above, the Portfolio may purchase
asset-backed securities that represent fractional interests in pools of retail
installment loans, both

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<PAGE>

secured (such as CARS) and unsecured, or leases or revolving credit receivables,
both secured and unsecured (such as CARDS). These assets are generally held by a
trust and payments of principal and interest or interest only are passed through
monthly or quarterly to certificate holders and may be guaranteed up to certain
amounts by letters of credit issued by a financial institution affiliated or
unaffiliated with the trustee or originator of the trust.

Underlying automobile sales contracts, leases or credit card
receivables are subject to prepayment, which may reduce the overall return to
certificate holders. Nevertheless, principal repayment rates tend not to vary
much with interest rates and the short-term nature of the underlying loans,
leases or receivables tends to dampen the impact of any change in the prepayment
level. Certificate holders may also experience delays in payment on the
certificates if the full amounts due on underlying loans, leases or receivables
are not realized by the Portfolio because of unanticipated legal or
administrative costs of enforcing the contracts or because of depreciation or
damage to the collateral (usually automobiles) securing certain contracts, or
other factors. If consistent with its investment objective and policies, the
Portfolio may invest in other asset-backed securities that may be developed in
the future.

Lending of Portfolio Securities. Consistent with applicable regulatory
requirements and in order to generate income, the Portfolio may lend its
securities to broker-dealers and other institutional borrowers. Such loans will
usually be made only to member banks of the Federal Reserve System and to member
firms of the New York Stock Exchange (and subsidiaries thereof). Loans of
securities would be secured continuously by collateral in cash, cash equivalents
or U.S. Treasury obligations maintained on a current basis at an amount at least
equal to the market value of the securities loaned. The cash collateral would be
invested in high quality short-term instruments. Either party to a loan has the
right to terminate the loan at any time on customary industry settlement notice
(which will not usually exceed three business days). During the existence of a
loan, the Portfolio would continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities loaned and with respect to cash
collateral would also receive compensation based on investment of the cash
collateral (subject to a rebate payable to the borrower) or a fee from the
borrower in the event the collateral consists of securities. Where the borrower
provides the Portfolio with collateral consisting of U.S. Treasury obligations,
the borrower is also obligated to pay the Portfolio a fee for use of the
borrowed securities. The Portfolio would not, however, have the right to vote
any securities having voting rights during the existence of the loan, but would
call the loan in anticipation of an important vote to be taken among holders of
the securities or of the giving or

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<PAGE>

withholding of its consent on a material matter affecting the investment. As
with other extensions of credit, there are risks of delay in recovery or even
loss of rights in the collateral should the borrower fail financially. However,
the loans would be made only to entities deemed by the Adviser to be of good
standing, and when, in the judgment of the Adviser, the consideration which can
be earned currently from loans of this type justifies the attendant risk. In
addition, the Portfolio could suffer loss if the borrower terminates the loan
and the Portfolio is forced to liquidate investments in order to return the cash
collateral to the buyer. If the Adviser determines to make loans, it is intended
that the value of the securities loaned by the Portfolio would not exceed 33
1/3% of the value of its net assets.

Investment Restrictions

The Trust, on behalf of the Fund, and the Portfolio have each adopted
the following policies which may not be changed without approval by holders of a
"majority of the outstanding shares" of the Fund or the Portfolio, which as used
in this Statement of Additional Information means the vote of the lesser of (i)
67% or more of the outstanding "voting securities" of the Fund or the Portfolio,
respectively, present at a meeting, if the holders of more than 50% of the
outstanding "voting securities" of the Fund or the Portfolio, respectively, are
present or represented by proxy, or (ii) more than 50% of the outstanding
"voting securities" of the Fund or the Portfolio, respectively. The term "voting
securities" as used in this paragraph has the same meaning as in the 1940 Act.

The Trust, on behalf of the Fund, and the Portfolio may not:

(1) borrow money, except that as a temporary measure for extraordinary
or emergency purposes either the Trust or the Portfolio may borrow from
banks in an amount not to exceed one third of the value of the net
assets of the Fund or the Portfolio, respectively, including the amount
borrowed. Moreover, neither the Trust (on behalf of the Fund) nor the
Portfolio may purchase any securities at any time at which borrowings
exceed 5% of the total assets of the Fund or the Portfolio,
respectively (taken in each case at market value). It is intended that
the Portfolio would borrow money only from banks and only to
accommodate requests for the withdrawal of all or a portion of a
beneficial interest in the Portfolio while effecting an orderly
liquidation of securities);

(2) purchase any security or evidence of interest therein on margin,
except that either the Trust, on behalf of the Fund, or the Portfolio
may obtain such short-term credit as

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<PAGE>

may be necessary for the clearance of purchases and sales of
securities;

(3) underwrite securities issued by other persons, except that all the
assets of the Fund may be invested in the Portfolio and except insofar
as either the Trust or the Portfolio may technically be deemed an
underwriter under the Securities Act of 1933 in selling a security;

(4) make loans to other persons except (a) through the lending of
securities held by either the Fund or the Portfolio, but not in excess
of 33 1/3% of the Fund's or the Portfolio's net assets, as the case may
be, (b) through the use of fixed time deposits or repurchase agreements
or the purchase of short-term obligations, or (c) by purchasing all or
a portion of an issue of debt securities of types commonly distributed
privately to financial institutions; for purposes of this paragraph 4
the purchase of short-term commercial paper or a portion of an issue of
debt securities which are part of an issue to the public shall not be
considered the making of a loan;

(5) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests
therein), interests in oil, gas or mineral leases, commodities or
commodity contracts in the ordinary course of business (the Fund and
the Portfolio reserve the freedom of action to hold and to sell real
estate acquired as a result of the ownership of securities by the Fund
or the Portfolio);

(6) concentrate its investments in any particular industry, but if it
is deemed appropriate for the achievement of its investment objective,
up to 25% of the assets of the Fund or the Portfolio, respectively
(taken at market value at the time of each investment) may be invested
in any one industry, except that the Portfolio will invest at least 25%
of its assets and may invest up to 100% of its assets in bank
obligations; provided that, if the Trust withdraws the investment of
the Fund from the Portfolio, the Trust will invest the assets of the
Fund in bank obligations to the same extent and with the same
reservation as the Portfolio; and provided further, that nothing in
this investment restriction is intended to affect the Fund's ability to
invest 100% of its assets in the Portfolio; or

(7) issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the
rules and regulations promulgated thereunder, except as appropriate to
evidence a debt incurred without violating Investment Restriction (1)
above.

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<PAGE>

Percentage and Rating Restrictions. If a percentage restriction or a
rating restriction on investment or utilization of assets set forth above or
referred to in the Prospectus is adhered to at the time an investment is made or
assets are so utilized, a later change in percentage resulting from changes in
the value of the securities held by the Fund or the Portfolio or a later change
in the rating of a security held by the Fund or the Portfolio will not be
considered a violation of policy.

SECURITIES TRANSACTIONS

The Portfolio's purchases and sales of portfolio securities usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. The Portfolio does
not anticipate paying brokerage commissions. Any transaction for which the
Portfolio pays a brokerage commission will be effected at the best price and
execution available. Purchases from underwriters of portfolio securities include
a commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market makers include the spread between the bid and
asked price.

Allocation of transactions, including their frequency, to various
dealers is determined by the Adviser in its best judgment and in a manner deemed
to be in the best interest of investors in the Portfolio, rather than by any
formula. The primary consideration is prompt execution of orders in an effective
manner at the most favorable price.

Investment decisions for the Portfolio are made independently from
those for any other account or investment company that is or may in the future
become managed by the Adviser or its affiliates. If, however, the Portfolio and
other investment companies or accounts managed by the Adviser are
contemporaneously engaged in the purchase or sale of the same security, the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by the Portfolio or the size of the position obtainable for the
Portfolio. In addition, when purchases or sales of the same security for the
Portfolio and for other investment companies managed by the Adviser occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.

No transactions are executed with the Adviser, or with any affiliate of
the Adviser, acting either as principal or as broker.

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<PAGE>
YIELD INFORMATION

Yield is computed in accordance with a standardized method which
involves determining the net change in the value of a hypothetical pre-existing
Fund account having a balance of one share at the beginning of a seven calendar
day period for which yield is to be quoted, dividing the net change by the value
of the account at the beginning of the period to obtain the base period return,
and annualizing the results (i.e., multiplying the base period return by 365/7).
The net change in the value of the account reflects the value of additional
shares purchased with dividends declared on the original share and any such
additional shares and fees that may be charged to shareholder accounts, in
proportion to the length of the base period and the Fund's average account size,
but does not include realized gains and losses or unrealized appreciation and
depreciation. Effective annualized yield is computed by adding 1 to the base
period return (calculated as described above), raising that sum to a power equal
to 365 divided by 7, and subtracting 1 from the result.

Yields will fluctuate and are not necessarily representative of future
results. The investor should remember that yield is a function of the type and
quality of the instruments held by the Portfolio, portfolio maturity and
operating expenses. An investor's principal in the Fund is not guaranteed. See
"Determination of Net Asset Value" for a discussion of the manner in which the
Fund's price per share is determined.

From time to time, the Trust in its advertising and sales literature
for the Fund may refer to the growth of assets managed or administered by the
Adviser over certain time periods. Comparative performance information may be
used from time to time in advertising or marketing the Fund's shares, including
data from Lipper Analytical Services, Inc., IBC/Donoghue's Money Fund Report and
other publications.

The annualized current seven-day yield of the Institutional Money Fund
for the period ended August 31, 1997 was 5.55%. For the same period, the
annualized effective seven-day yield of the Fund, based upon dividends declared
daily and reinvested monthly, was 5.71%.

DETERMINATION OF NET ASSET VALUE; VALUATION
OF SECURITIES; REDEMPTION IN KIND

The Prospectus discusses when the net asset value of the Fund is
determined for purposes of sales and redemptions. The net asset value of the
Fund's investment in the Portfolio is equal to the Fund's pro rata share of the
total assets of the Portfolio less the Fund's pro rata share of the Portfolio's

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<PAGE>

liabilities. The following is a description of the procedures used by the
Portfolio in valuing its assets.

The valuation of the Portfolio's securities is based on their amortized
cost, which does not take into account unrealized capital gains or losses.
Amortized cost valuation involves initially valuing an instrument at its cost
and thereafter assuming a constant amortization to maturity of any discount or
premium, generally without regard to the impact of fluctuating interest rates on
the market value of the instrument. Although this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Portfolio would receive if
it sold the instrument.

The Portfolio's use of the amortized cost method of valuing its
securities is permitted by Rule 2a-7 under the 1940 Act ("Rule 2a-7"). The
Portfolio will also maintain a dollar-weighted average portfolio maturity of 90
days or less, purchase only instruments having or deemed to have remaining
maturities of 397 days or less (or instruments subject to a repurchase agreement
having a duration of 397 days or less), and invest only in securities determined
by the Adviser (under the supervision of the Board of Trustees) to be of high
quality and to present minimal credit risks. The Portfolio has informed the
Trust that the Portfolio has established procedures designed to ensure that
securities purchased by the Portfolio meet its high quality criteria.

Pursuant to Rule 2a-7, the Board of Trustees of the Portfolio also has
established procedures designed to allow the Fund (and other investors in the
Portfolio) to stabilize, to the extent reasonably possible, the Fund's price per
share at $1.00, as computed for the purpose of sales and redemptions. These
procedures include review of the Portfolio's holdings by its Board of Trustees,
at such intervals as the Board deems appropriate, to determine whether the value
of the Portfolio's assets calculated by using available market quotations or
market equivalents deviates from such valuation based on amortized cost.

Rule 2a-7 also provides that the extent of any deviation between the
value of the Portfolio's assets based on available market quotations or market
equivalents and such valuation based on amortized cost must be examined by the
Portfolio's Board of Trustees. In the event the Portfolio's Board of Trustees
determines that a deviation exists that may result in material dilution or other
unfair results to new or existing investors, pursuant to the rule, the
Portfolio's Board of Trustees must cause the Portfolio to take such corrective
action as the Board of Trustees regards as necessary and appropriate, including:
selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity;

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<PAGE>
or valuing the Portfolio's assets by using available market quotations.

The Trust, on behalf of the Fund, and the Portfolio reserve the right,
if conditions exist which make cash payments undesirable, to honor any request
for redemption or repurchase order by making payment in whole or in part in
readily marketable securities chosen by the Trust or the Portfolio, as the case
may be, and valued as they are for purposes of computing the Fund's or the
Portfolio's net asset value, as the case may be (a redemption in kind). If
payment is made in securities by the Portfolio or the Fund, an investor,
including the Fund, may incur transaction expenses in converting these
securities into cash. The Trust will redeem in kind Fund Shares only if it has
received a redemption in kind from the Portfolio and therefore shareholders of
the Fund that receive redemptions in kind will receive portfolio securities of
the Portfolio.

Each investor in the Portfolio, including the Fund, may add to or reduce
its investment in the Portfolio on each day that the New York Stock Exchange
(the "Exchange") is open for business. Normally, as of 3:00 P.M. (Eastern time)
on each such day, the value of each investor's interest in the Portfolio will be
determined by multiplying the net asset value of the Portfolio by the percentage
representing that investor's share of the aggregate beneficial interests in the
Portfolio effective for that day. Any additions or reductions which are to be
effected on that day will then be effected. The investor's percentage of the
aggregate beneficial interests in the Portfolio will then be recomputed as the
percentage equal to the fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of such time of valuation on such day
plus or minus, as the case may be, the amount of net additions to or reductions
in the investor's investment in the Portfolio effected on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of
such time of valuation on such day plus or minus, as the case may be, the amount
of the net additions to or reductions in the aggregate investments in the
Portfolio by all investors in the Portfolio. The percentage so determined will
then be applied to determine the value of the investor's interest in the
Portfolio as of the time of valuation on the following day the Exchange is open
for trading.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares are continuously offered for sale by Edgewood Services, Inc.
("Edgewood" or the "Distributor"), a wholly-owned subsidiary of Federated
Investors. As described in the Prospectus, Shares are offered to institutional
investors ("Institutional Investors"). Shares may be purchased directly from the
Distributor or through Shareholder Organizations. Different types of Customer
accounts at certain Shareholder

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<PAGE>

Organizations may be used to purchase Shares, including eligible agency and
trust accounts. In addition, a Shareholder Organization may automatically
"sweep" the accounts of its Customers not less frequently than weekly and invest
amounts in excess of a minimum balance agreed to by the Shareholder Organization
and its Customers in shares selected by its Customers. Investors purchasing
Shares may include officers, directors, or employees of the particular
Shareholder Organization. Check writing privileges are available to investors
upon request to the Trust.

As stated in the Prospectus, no sales charge is imposed by the Trust on
the purchase of Shares or reinvestment of dividends or distributions.
Additionally, the Trust does not currently charge any fees for the exchange of
Shares pursuant to the exchange program described in the Prospectus.

Shareholders should be aware, however, that certain Shareholder
Organizations may charge a Customer's account fees for exchange orders and other
cash management services provided. Customers should contact their Shareholder
Organization directly for further information.

The Trust may suspend the right of redemption or postpone the date of
payment for Shares for more than 7 days during any period when (a) trading on
the Exchange is restricted by applicable rules and regulations of the Securities
and Exchange Commission (the "SEC"); (b) the Exchange is closed for other than
customary weekend and holiday closings; (c) the SEC has by order permitted such
suspension; or (d) an emergency exists as determined by the SEC.

In the event that Shares are redeemed in cash at their net asset value,
a shareholder may receive in payment for such Shares an amount that is more or
less than the shareholder's original investment due to changes in the market
prices of the portfolio securities of the Fund or the Portfolio.

Other Investor Programs

As described in the Prospectus, Shares of the Fund may be exchanged for
Institutional Shares of any investment portfolio of Excelsior Institutional
Trust. Shares of the Fund may be purchased in connection with Unit Investment
Trust Automatic Dividend Reinvestment Plans, the Automatic Investment Program,
and certain Retirement Programs. Customers of Shareholder Organizations may
obtain information on the availability of, and the procedures and fees relating
to, such programs directly from their Shareholder Organizations.

MANAGEMENT OF THE TRUST AND THE PORTFOLIO

The Trustees and officers of the Trust and the Portfolio and their
principal occupations during the past five years are set forth below. Unless
otherwise indicated below, the address of each Trustee and officer of the Trust
is 73 Tremont Street, Boston, Massachusetts 02108, and the address of each
Trustee and officer of the Portfolio is 6 St. James Avenue, Boston,
Massachusetts 02116. The address of the Portfolio is Elizabethan Square, George
Town, Grand Cayman, Cayman Islands, British West Indies.

-16-

<PAGE>
Trustees and Officers of the Trust

Trustees and Officers

The Trustees and officers of the Trust, their addresses, ages,
principal occupations during the past five years, and other affiliations are as
follows:
<TABLE>
<CAPTION>

Position
with the Principal Occupation During Past 5
Name and Address Trust Years and Other Affiliations
- -------------------- ----------- ----------------------------------
<S> <C> <C>
Frederick S. Wonham* Chairman of Retired; Director of Excelsior
238 June Road the Board, Funds, Inc. and Excelsior Tax-
Stamford, CT 06903 President Exempt Funds, Inc. (since 1995);
Age: 66 and Trustee of Excelsior Institutional
Treasurer Trust (since 1995); Vice Chairman
of U.S. Trust Corporation and
United States Trust Company of New
York (from February 1990 until
September 1995); Chairman, U.S.
Trust Company of Connecticut (from
March 1993 to May 1997).

Rodman L. Drake Trustee Director, Excelsior Funds, Inc.
485 Park Avenue and Excelsior Tax-Exempt Funds,
New York, NY 10022 Inc. (since 1996); Trustee,
Age: 54 Excelsior Institutional Trust
(since 1994); Director, Parsons
Brinkerhoff Energy Services Inc.
(since 1996); Director, Parsons
Brinkerhoff, Inc. (engineering
firm) (since 1995); President,
Mandrake Group (investment and
consulting firm) (since 1994);
Director, Hyperion Total Return
Fund, Inc. and four other funds
for which Hyperion Capital
Management, Inc. serves as
investment adviser (since 1991);
Co-chairman, KMR Power Corporation
(power plants) (from 1993 to
1996); Director, The Latin
American Growth Fund (since 1993);
Member of Advisory Board,
Argentina Private Equity Fund L.P.
(from 1992 to 1996) and Garantia
L.P. (Brazil) (from 1993 to 1996);
and Director, Mueller Industries,
Inc. (from 1992 to 1994).
</TABLE>

- ----------
* This Trustee is considered to be an "interested person" of the Trust as
defined in the 1940 Act.

-17-

Position
with the Principal Occupation During Past 5
Name and Address Trust Years and Other Affiliations
- -------------------- ----------- ----------------------------------
<S> <C> <C>
W. Wallace McDowell, Jr. Trustee Director of Excelsior Funds, Inc.
c/o Prospect Capital Corp. and Excelsior Tax-Exempt Funds,
43 Arch Street Inc. (since 1996); Trustee of
Greenwich, CT 06830 Excelsior Institutional Trust
Age: 60 (since 1994); Private Investor
(since 1994); Managing Director,
Morgan Lewis Githens & Ahn (from
1991 to 1994); and Director, U.S.
Homecare Corporation (since 1992),
Grossmans, Inc. (from 1993 to
1996), Children's Discovery
Centers (since 1984), ITI
Technologies, Inc. (since 1992)
and Jack Morton Productions (since
1987).

Jonathan Piel Trustee Director of Excelsior Funds, Inc.
558 E. 87th Street and Excelsior Tax-Exempt Funds,
New York, NY 10128 Inc. (since 1996); Trustee of
Age: 58 Excelsior Institutional Trust
(since 1994); Vice President and
Editor, Scientific American, Inc.
(from 1986 to 1994); Director,
Group for The South Fork,
Bridgehampton, New York (since
1993); and Member, Advisory
Committee, Knight Journalism
Fellowships, Massachusetts
Institute of Technology (since
1984).

W. Bruce McConnel, III Secretary Partner of the law firm of Drinker
Philadelphia National Bank Biddle & Reath LLP.
Building
1345 Chestnut Street
Philadelphia, PA 19107
Age: 54

Gregory Sackos Assistant Second Vice President, Senior
Chase Global Funds Secretary Manager of Blue Sky Compliance and
Services Company Financial Reporting, Chase Global
73 Tremont Street Funds Services Company (March 1997
Boston, MA 02108-3913 to present); Second Vice
Age: 32 President, Senior Manager of
Financial Reporting, Chase Global Funds
Services Company (September 1996 to
March 1997); and Assistant Vice
President, Assistant Manager of
Financial Reporting, Scudder, Stevens &
Clark Inc. (October 1992 to September
1996).

</TABLE>

-18-
<PAGE>
<TABLE>
<CAPTION>

Position
with the Principal Occupation During Past 5
Name and Address Trust Years and Other Affiliations
- -------------------- ----------- ----------------------------------
<S> <C> <C>
John M. Corcoran Assistant Vice President, Director of
Chase Global Funds Treasurer Administration Client Group, Chase
Services Company Global Funds Services Company
73 Tremont Street (since July 1996); Second Vice
Boston, MA 02108-3913 President, Manager of
Age: 32 Administration, Chase Global Funds
Services Company (from October 1993 to
July 1996); and Audit Manager, Ernst &
Young LLP (from August 1987 to
September 1993).

</TABLE>

Each Trustee receives an annual fee of $4,000 plus a meeting fee of
$250 for each meeting attended and is reimbursed for expenses incurred in
attending meetings. Drinker Biddle & Reath LLP, of which Mr. McConnel is a
partner, receives legal fees as counsel to the Trust. The employees of Chase
Global Funds Services Company do not receive any compensation from the Trust for
acting as officers of the Trust. No person who is currently an officer, director
or employee of the Adviser serves as an officer, Trustee or employee of the
Trust.

The compensation paid to the Trustees of the Trust for the fiscal year
ended August 31, 1997 is set forth in the chart below.

-19-

PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM THE
AGGREGATE ACCRUED AS ANNUAL TRUST AND
COMPENSATION PART OF BENEFITS FUND COMPLEX*
FROM THE TRUST UPON PAID TO
TRUST EXPENSES RETIREMENT TRUSTEES
----- -------- ---------- --------
<S> <C> <C> <C> <C>
Frederick S. Wonham $5,000 None None (4)**$45,000

Rodman L. Drake*** $4,750 None None (4)**$29,000

W. Wallace McDowell*** $4,750 None None (4)**$29,000

Jonathan Piel*** $5,000 None None (4)**$32,500

</TABLE>

- -------------

* The "Fund Complex" consists of the Trust, Excelsior Funds, Inc.,
Excelsior Tax-Exempt Funds, Inc., Excelsior Institutional Trust and UST
Master Variable Series, Inc. The Trust has no pension plan.

** Number of investment companies in the Fund Complex for which Trustee
serves as director or trustee.

*** Messrs. Drake, McDowell and Piel were elected to the Board of Excelsior
Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. on December 9, 1996.

Trustees and Officers of the Portfolio

The Trustees and officers of Cash Reserves Portfolio, their ages and
principal occupations during the past five years are set forth below.

Trustees of the Portfolio

ELLIOTT J. BERV - Chairman and Director, Catalyst, Inc. (Management
Consultants) (since June 1992); President, Chief Operating Officer and Director,
Deven International, Inc. (International Consultants) (June 1991 to June 1992);
President and Director, Elliott J. Berv & Associates (Management Consultants)
(since May 1984). His address is 15 Stornoway Drive, Cumberland Foreside, Maine
04110. His age is 54.

-20-
<PAGE>

WALTER E. ROBB, III - President, Benchmark Consulting Group, Inc.
(since 1991); Principal, Robb Associates (Corporate Financial Advisors) (since
1978); President, Benchmark Advisors, Inc. (Corporate Financial Advisors) (since
1989); Trustee of certain registered investment companies in the MFS family of
funds. His address is 35 Farm Road, Sherborn, Massachusetts 01770. His age is
71.

MARK T. FINN - President and Director, Delta Financial, Inc. (since
June 1983); Chairman of the Board and Chief Executive Officer, FX 500 Ltd.
(Commodity Trading Advisory Firm) (since April 1990); Director, Vantage
Consulting Group, Inc. (since October 1988). His address is 3500 Pacific Avenue,
P.O. Box 539, Virginia Beach, Virginia 23451. His age is 54.

PHILIP W. COOLIDGE* - President of the Portfolio; Chief Executive
Officer and President, Signature Financial Group, Inc. and CFBDS, Inc. His age
is 46.

- --------------------------

* This Trustee is considered to be an "interested person" of the
Portfolio as defined in the 1940 Act.

Officers of the Portfolio

PHILIP W. COOLIDGE; 46 -- President of the Portfolio; Chief Executive
Officer and President, Signature Financial Group, Inc. and CFBDS, Inc.

CHRISTINE A. DRAPEAU; 27 -- Assistant Secretary and Assistant Treasurer
of the Portfolio; Assistant Vice President, Signature Financial Group, Inc.
(since January 1996); Paralegal and Compliance Officer, various financial
companies (July 1992 to January 1996); Graduate Student, Bentley College (prior
to December 1994).

JOHN R. ELDER; 49 -- Treasurer of the Portfolio; Vice President,
Signature Financial Group, Inc. (since April 1995); Treasurer, CFBDS, Inc.
(since April 1995); Treasurer, Phoenix Family of Mutual Funds (Phoenix Home Life
Mutual Insurance Company) (1983 to March 1995).

LINDA T. GIBSON; 32 -- Secretary of the Portfolio; Vice President,
Signature Financial Group, Inc. (since May 1992); Assistant Secretary, CFBDS,
Inc. (since October 1992).

JOAN R. GULINELLO; 42 -- Assistant Secretary and Assistant Treasurer of
the Portfolio; Vice President, Signature Financial Group, Inc. (since October
1993); Secretary, CFBDS, Inc. (since

-21-
<PAGE>

October 1995); Vice President and Assistant General Counsel, Massachusetts
Financial Services Company (prior to October 1993).

JAMES E. HOOLAHAN; 50 -- Vice President, Assistant Secretary and
Assistant Treasurer of the Portfolio; Senior Vice President, Signature Financial
Group, Inc.

SUSAN JAKUBOSKI; 33 -- Vice President, Assistant Treasurer and
Assistant Secretary of the Portfolio; Vice President, Signature Financial Group
(Cayman) Ltd. (since August 1994); Fund Compliance Administrator, Concord
Financial Group (November 1990 to August 1994). Her address is Suite 193, 12
Church Street, Hamilton HM 11, Bermuda.

MOLLY S. MUGLER; 46 -- Assistant Secretary and Assistant Treasurer of
the Portfolio; Vice President, Signature Financial Group, Inc.; Assistant
Secretary, CFBDS, Inc.

SHARON M. WHITSON; 49 -- Assistant Secretary and Assistant Treasurer of
the Portfolio; Assistant Vice President, Signature Financial Group, Inc.

JULIE J. WYETZNER; 38 -- Vice President, Assistant Secretary and
Assistant Treasurer of the Portfolio; Vice President, Signature Financial Group,
Inc.

The Trustees and officers of the Portfolio also hold comparable
positions with certain other investment companies for which Signature Financial
Group (Cayman) Ltd. or an affiliate serves as the distributor or administrator.
Mr. Coolidge is also a Trustee of Landmark Funds III, Landmark Premium Funds and
CitiFunds Institutional Trust, open-end investment companies, of which series of
each are investors in the Portfolio, and each officer of the Portfolio holds the
same position with those investment companies.

The compensation paid to the Trustees of the Portfolio for the year
ended August 31, 1997 is set forth in the table below.
<TABLE>
<CAPTION>

PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM THE
AGGREGATE ACCRUED AS ANNUAL PORTFOLIO AND
COMPENSATION PART OF THE BENEFITS FUND COMPLEX
FROM THE PORTFOLIO'S UPON PAID TO
PORTFOLIO EXPENSES RETIREMENT TRUSTEES*
------------ ----------- ---------- -------------
<S> <C> <C>
Elliott J. Berv $16,554.71 None None $55,000

</TABLE>

-22-
<PAGE>

PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS ESTIMATED FROM THE
AGGREGATE ACCRUED AS ANNUAL PORTFOLIO AND
COMPENSATION PART OF THE BENEFITS FUND COMPLEX
FROM THE PORTFOLIO'S UPON PAID TO
PORTFOLIO EXPENSES RETIREMENT TRUSTEES*
------------ ----------- ---------- --------------
<S> <C> <C>
Philip W. Coolidge None None None None

Mark T. Finn $12,580.22 None None $52,000

Walter E. Robb, III $14,359.40 None None $50,000

</TABLE>
- ------------------

* Messrs. Coolidge, Berv, Finn and Robb are trustees of 55, 31, 26 and 24
funds, respectively, in the family of open-end registered investment
companies advised or managed by Citibank.

* * * * *

The Trust's Trust Instrument provides that it will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust unless it is finally adjudicated that they engaged in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in
their offices, or unless it is finally adjudicated that they did not act in good
faith in the reasonable belief that their actions were in the best interests of
the Trust. In the case of settlement, such indemnification will not be provided
unless it has been determined by a court or other body approving the settlement
or other disposition, or by a reasonable determination, based upon a review of
readily available facts, by vote of a majority of disinterested Trustees, or in
a written opinion of independent counsel, that such officers or Trustees have
not engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties. The Declaration of Trust of the Portfolio provides
for similar indemnification of the Trustees and officers of the Portfolio.

As of December 18, 1997, the Trustees and officers of the Trust and the
Portfolio as a group owned beneficially less than 1% of the outstanding shares
of the Fund and the Portfolio.

-23-
<PAGE>

Investment Adviser

Citibank manages the assets of the Portfolio pursuant to an investment
advisory agreement (the "Advisory Agreement"). Subject to such policies as the
Portfolio's Board of Trustees may determine, the Adviser manages the securities
of the Portfolio and makes investment decisions for the Portfolio. The Adviser
furnishes at its own expense all services, facilities and personnel necessary in
connection with managing the Portfolio's investments and effecting securities
transactions for the Portfolio. The Advisory Agreement will continue in effect
as long as such continuance is specifically approved at least annually by the
Portfolio's Board of Trustees or by a vote of a majority of the outstanding
voting securities of the Portfolio, and, in either case, by a majority of the
Trustees of the Portfolio who are not parties to the Advisory Agreement or
interested persons of any such party, at a meeting called for the purpose of
voting on the Advisory Agreement.

The Advisory Agreement provides that the Adviser may render services to
others. The Advisory Agreement is terminable by the Portfolio without penalty on
not more than 60 days' nor less than 30 days' written notice when authorized
either by vote of a majority of the outstanding voting securities of the
Portfolio or by a vote of a majority of the Portfolio's Board of Trustees, or by
the Adviser on not more than 60 days' nor less than 30 days' written notice, and
will automatically terminate in the event of its assignment. The Advisory
Agreement provides that neither the Adviser nor its personnel shall be liable
for any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of security transactions
for the Portfolio, except for willful misfeasance, bad faith, gross negligence
or reckless disregard of its or their obligations and duties under the Advisory
Agreement.

Cash Reserves Portfolio commenced investment operations on May 3, 1990.
The Institutional Money Fund commenced investment operations (and its
investments in the Portfolio) on November 8, 1993.

The Prospectus contains a description of the fees payable to the
Adviser under the Advisory Agreement. For the fiscal years ended August 31,
1995, 1996 and 1997, the fees paid to the Adviser under the Advisory Agreement
were $4,097,854, $6,140,512 and $9,148,204, respectively (of which $2,306,161,
$3,426,821 and $4,752,918 was voluntarily waived for the fiscal years ended
August 31, 1995, 1996 and 1997, respectively).

The Glass-Steagall Act prohibits certain financial institutions, such
as Citibank or U.S. Trust Company of Connecticut ("U.S. Trust CT"), from
engaging in the business of underwriting securities of open-end investment
companies, such as

-24-
<PAGE>

the Trust or the Portfolio. Citibank believes that the investment advisory
services and the sub-administrative activities performed by it with respect to
the Portfolio do not constitute underwriting activities and are consistent with
the requirements of the Glass-Steagall Act. Citibank also believes that the
combination of individually permissible activities by it is consistent with the
Glass-Steagall Act and other relevant federal or state legal and regulatory
precedent. U.S. Trust CT believes that (a) the services performed by U.S. Trust
CT with respect to the Trust do not constitute underwriting activities and are
consistent with the requirements of the Glass-Steagall Act, and (b) the
combination of individually permissible activities by U.S. Trust CT is
consistent with the Glass-Steagall Act and other relevant federal or state legal
and regulatory precedent. There is presently no controlling precedent regarding
the performance of the combination of investment advisory and sub-administrative
activities by banks. State laws on this issue may differ from applicable federal
laws and banks and financial institutions may be required to register as dealers
pursuant to state securities laws. Future changes in either federal or state
statutes or regulations relating to the permissible activities of banks, as well
as future judicial or administrative decisions and interpretations of present
and future federal or state statutes and regulations, could prevent Citibank or
U.S. Trust CT from continuing to perform such services for the Trust or the
Portfolio. If Citibank were to be prevented from acting as the Adviser or
sub-administrator for the Portfolio, or if U.S. Trust CT were to be similarly
prevented from providing administrative services to the Trust with respect to
the Fund, the Trust and the Portfolio would seek alternative means for providing
such services. The Trust does not expect that the Fund's shareholders would
suffer any adverse financial consequences as a result of any such occurrence.

Administrators

The Portfolio has adopted an Administrative Services Plan (the
"Administrative Plan") which provides that the Portfolio may obtain the services
of an administrator, a transfer agent and a custodian, and may enter into
agreements providing for the payment of fees for such services. Under the
Administrative Plan, the administrative services fee payable to Signature
Financial Group (Cayman) Ltd. ("SFG") may not exceed 0.05% of the Portfolio's
average daily net assets on an annualized basis for its then-current fiscal
year. The Administrative Plan continues in effect if such continuance is
specifically approved at least annually by a vote of both a majority of the
Portfolio's Trustees and a majority of the Portfolio's Trustees who are not
"interested persons" of the Portfolio and who have no direct or indirect
financial interest in the operation of the Administrative Plan or in any
agreement related to such Plan ("Qualified Trustees"). The Administrative Plan
requires that

-25-
<PAGE>

the Portfolio provide to its Board of Trustees and the Board of Trustees review,
at least quarterly, a written report of the amounts expended (and the purposes
therefor) under the Administrative Plan. The Administrative Plan may be
terminated at any time by a vote of the Portfolio's Qualified Trustees or by a
vote of a majority of the outstanding voting securities of the Portfolio. The
Administrative Plan may not be amended to increase materially the amount of
permitted expenses thereunder without the approval of a majority of the
outstanding voting securities of the Portfolio and may not be materially amended
in any case without a vote of the majority of both the Trustees and the
Qualified Trustees.

U.S. Trust CT, Chase Global Funds Services Company ("CGFSC") and
Federated Administrative Services ("FAS") (collectively, the "Trust
Administrators") provide the Trust, and SFG (together with the Trust
Administrators, the "Administrators") provides the Portfolio, with general
office facilities, equipment and clerical personnel. The Administrators
supervise the overall administration of the Trust and the Portfolio. These
administrative services include, among other responsibilities, the negotiation
of contracts and fees with, and the monitoring of performance and billings of,
the independent contractors and agents of the Trust and the Portfolio; the
preparation and filing of certain documents required for compliance by the Trust
and the Portfolio with applicable laws and regulations; and arranging for the
maintenance of books and records of the Trust and the Portfolio. The Trust
Administrators also assist in developing and monitoring compliance procedures
for the Fund, including procedures to monitor compliance with the Fund's
investment objective, policies and restrictions. SFG provides persons
satisfactory to the Board of Trustees of the Portfolio to serve as Trustees and
officers of the Portfolio. Such Trustees and officers, as well as certain other
employees and Trustees of the Portfolio, may be directors, officers or employees
of SFG or its affiliates.

The Administration Agreement, with respect to the Trust, and the
Administrative Services Agreement, with respect to the Portfolio, provide that
the Administrators may render administrative services to others. Each Agreement
terminates automatically if it is assigned. The Administrative Services
Agreement may be terminated without penalty by vote of a majority of the
outstanding voting securities of the Portfolio or by either party on not more
than 60 days' nor less than 30 days' written notice. The Administration
Agreement may be terminated without penalty by any party on not less than 90
days' notice. The Agreements provide that neither the Administrators nor their
personnel shall be liable for any error of judgment or mistake of law or for any
act or omission in the administration or management of the Trust or the
Portfolio, except for willful misfeasance, bad faith or gross negligence in the
performance of

-26-
<PAGE>

their duties or by reason of reckless disregard of their obligations and duties
under said Agreements. The Trust's Administration Agreement also provides that
the Trust Administrators shall not be liable for any indirect, incidental,
special or consequential losses or indirect, incidental, special or
consequential damages, even if they had been advised of the likelihood of such
losses or damages.

The Prospectus contains a description of the fees payable to the
Administrators under their respective Agreements. From April 1, 1997 to May 15,
1997, CGFSC, FAS and United States Trust Company of New York ("U.S. Trust NY")
served as the Trust's administrators pursuant to an administration agreement
substantially similar to the Administration Agreement currently in effect for
the Trust. On May 16, 1997, U.S. Trust CT replaced U.S. Trust NY as one of the
Trust's administrators. For the period from April 1, 1997 to August 31, 1997,
CGFSC, FAS, U.S. Trust CT and U.S. Trust NY collectively received administration
fees of $18,965 with respect to the Fund. For the same period, they collectively
waived fees totalling $107,469 with respect to the Fund.

Prior to April 1, 1997, Signature Broker-Dealer Services, Inc. ("SBDS")
served as the Trust's administrator. For the period from September 1, 1996 to
March 31, 1997, the Fund accrued administration fees totalling $18,763. For the
fiscal years ended August 31, 1996 and 1995, the Fund accrued administration
fees totalling $44,937 and $47,453, respectively.

For the fiscal years ended August 31, 1997, 1996 and 1995, the
administration fees payable to SFG under the Portfolio's Administrative Services
Agreement were $3,049,401, $2,046,838 and $1,365,951, respectively. All such
administration fees payable by the Portfolio for the fiscal years ended August
31, 1997, 1996 and 1995 were voluntarily waived. SBDS and SFG are wholly-owned
subsidiaries of Signature Financial Group, Inc.

Sub-Administrator

Pursuant to a Sub-Administrative Services Agreement, Citibank performs
such sub-administrative duties for the Portfolio as are from time to time agreed
upon by Citibank and SFG.

-27-
<PAGE>

Shareholder Organizations

As stated in the Prospectus, the Trust may enter into agreements with
certain Shareholder Organizations. Such agreements require the Shareholder
Organizations to provide shareholder administrative services to their Customers
who beneficially own Shares in consideration for the Fund's payment of not more
than the annual rate of .40% of the average daily net assets of the Fund's
Shares beneficially owned by Customers of the Shareholder Organization. Such
services may include: (a) acting as recordholder of Shares; (b) assisting in
processing purchase, exchange and redemption transactions; (c) providing
periodic statements showing a Customer's account balances and confirmations of
transactions by the Customer; (d) providing tax and dividend information to
shareholders as appropriate; (e) transmitting proxy statements, annual reports,
updated prospectuses and other communications from the Trust to Customers; and
(f) providing or arranging for the provision of other related services.

The Trust's agreements with Shareholder Organizations are governed by
an Administrative Services Plan (the "Plan") adopted by the Trust. Pursuant to
the Plan, the Trust's Board of Trustees will review, at least quarterly, a
written report of the amounts expended under the Trust's agreements with
Shareholder Organizations and the purposes for which the expenditures were made.
In addition, the arrangements with Shareholder Organizations will be approved
annually by a majority of the Trust's Trustees, including a majority of the
Trustees who are not "interested persons" of the Trust (as defined in the 1940
Act) and have no direct or indirect financial interest in such arrangements (the
"Disinterested Trustees").

Any material amendment to the Trust's arrangements with Shareholder
Organizations must be approved by a majority of the Trust's Board of Trustees
(including a majority of the Disinterested Trustees). So long as the Trust's
arrangements with Shareholder Organizations are in effect, the selection and
nomination of the members of the Trust's Board of Trustees who are not
"interested persons" of the Trust (as defined in the 1940 Act) will be committed
to the discretion of such Disinterested Trustees.

For the fiscal years ended August 31, 1997, 1996 and 1995, payments to
Shareholder Organizations under the Plan and a predecessor administrative
services plan totalled $233,914, $421,706 and $444,522, respectively.

-28-
<PAGE>

Transfer Agents and Custodians

U.S. Trust NY serves as custodian of the Fund's assets. U.S. Trust NY
and U.S. Trust CT are subsidiaries of U.S. Trust Corporation, a registered bank
holding company. CGFSC serves as the Trust's transfer and dividend disbursing
agent. CGFSC is a wholly-owned subsidiary of The Chase Manhattan Bank.

Under such agreement and as the Fund's custodian, U.S. Trust NY has
agreed to (i) maintain a separate account or accounts for the Fund; (ii) make
receipts and disbursements of money on behalf of the Fund; (iii) collect and
receive income and other payments and distributions on account of the Fund's
portfolio securities; (iv) respond to correspondence from securities brokers and
others relating to its duties; (v) maintain certain financial accounts and
records; and (vi) make periodic reports to the Trust concerning the Fund's
operations. As the Fund's transfer agent and dividend disbursement agent, CGFSC
has agreed to (i) issue and redeem shares of the Fund; (ii) address and mail all
communications by the Fund to its shareholders, including reports to
shareholders, dividend and distribution notices, and proxy materials for their
meetings of shareholders; (iii) respond to correspondence by shareholders and
others relating to its duties; (iv) maintain shareholder accounts; and (v) make
periodic reports to the Trust concerning the Fund's operations. For their
custody, transfer agency and dividend disbursement services, U.S. Trust NY and
CGFSC are entitled to receive from the Trust such compensation as may be agreed
upon from time to time by the Trust, U.S. Trust NY and CGFSC. In addition, U.S.
Trust NY and CGFSC are entitled to be reimbursed for their out-of-pocket
expenses for the cost of forms, postage, processing purchase and redemption
orders, handling of proxies, and other similar expenses in connection with the
above services.

U.S. Trust NY may, at its own expense, open and maintain custody
accounts with respect to the Fund with other banks or trust companies, provided
that U.S. Trust NY shall remain liable for the performance of all of its
custodial duties under the Custody Agreement, notwithstanding any delegation.

The Portfolio has entered into a Transfer Agency Agreement and a
Custodian Agreement with State Street Bank and Trust Company ("State Street"),
pursuant to which State Street acts as custodian and State Street Canada, Inc.
("State Street Canada") acts as transfer agent and provides fund accounting
services to the Portfolio. The transfer agent maintains an account for each
investor in the Portfolio and performs other transfer agency functions. State
Street's responsibilities include safeguarding and controlling the Portfolio's
cash and securities, handling the receipt and delivery of securities,
determining income and collecting interest on the Portfolio's

-29-
<PAGE>

investments, and maintaining books of original entry for Portfolio accounting
and other required books and accounts. Securities held by the Portfolio may be
deposited into the Federal Reserve-Treasury Department Book Entry System or the
Depositary Trust Company and may be held by a sub-custodian bank if such
arrangements are reviewed and approved by the Trustees of the Portfolio. State
Street does not determine the investment policies of the Portfolio or decide
which securities the Portfolio will buy or sell. The Portfolio may, however,
invest in securities of State Street and may deal with State Street as principal
in securities transactions. For its services to the Portfolio, State Street
receives such compensation as may from time to time be agreed upon by State
Street and the Portfolio. The principal business address of State Street is 225
Franklin Street, Boston, Massachusetts 02110.

INDEPENDENT ACCOUNTANTS

Price Waterhouse LLP and Price Waterhouse are the independent
accountants and chartered accountants for the Fund and the Portfolio,
respectively. They provide audit services and assistance and consultation with
respect to the preparation of filings with the SEC. The principal business
address of Price Waterhouse LLP is 160 Federal Street, Boston, Massachusetts
02110. The principal business address of Price Waterhouse is Suite 3000, Box 82,
Royal Trust Towers, Toronto Dominion Center, Toronto, Ontario, Canada M5K 1G8.

COUNSEL

Drinker Biddle & Reath LLP (of which Mr. McConnel, Secretary of the
Trust, is a partner), Philadelphia National Bank Building, 1345 Chestnut Street,
Philadelphia, Pennsylvania 19107, is counsel to the Trust and will pass upon the
legality of the Shares offered by the Prospectus.

TAXATION

Taxation of the Fund

Each series of the Trust is treated as a separate entity for federal
income tax purposes under the Internal Revenue Code of 1986, as amended (the
"Code"). The Fund has elected to be treated and intends to qualify each year as
a "regulated investment company" under Subchapter M of the Code (a "RIC") by
meeting all applicable requirements of Subchapter M, including requirements as
to the nature of the Fund's gross income, the amount of the Fund's
distributions, and the composition of the Fund's portfolio assets. Because the
Fund intends to distribute all of its net investment income and net realized
capital gains to its shareholders in accordance with the timing requirements
imposed by the Code, it is not expected that the Fund will be

-30-
<PAGE>

required to pay any federal income or excise taxes. If the Fund fails to qualify
as a RIC in any year, the Fund would incur a regular corporate federal income
tax upon its taxable income, and the Fund's distributions would generally be
taxable as ordinary dividend income to shareholders.

Investment income received by the Fund from non-U.S. investments may be
subject to foreign income taxes withheld at the source; the Fund does not expect
to be able to pass through to shareholders any foreign tax credits with respect
to those foreign taxes. The United States has entered into tax treaties with
many foreign countries that may entitle the Fund to a reduced rate of tax or an
exemption from tax on these investments. It is not possible to determine the
Fund's effective rate of foreign tax in advance since that rate depends upon the
proportion of the Portfolio's assets ultimately invested within various
countries.

Under interpretations of the Internal Revenue Service, (1) the
Portfolio will be treated for federal income tax purposes as a partnership and
(2) for purposes of determining whether the Fund satisfies the income and
diversification requirements to maintain its status as a RIC, the Fund, as an
investor in the Portfolio, will be deemed to own a proportionate share of the
Portfolio's assets and will be deemed to be entitled to the Portfolio's income
attributable to that share. The Portfolio has advised the Trust that it intends
to conduct its operations so as to enable its investors, including the Fund, to
satisfy those requirements.

Taxation of the Portfolio

The Trust anticipates that the Portfolio will be treated as a
partnership for federal income tax purposes. As such, the Portfolio is not
subject to federal income taxation. Instead, the Fund must take into account, in
computing its federal income tax liability, its share of the Portfolio's income,
gains, losses, deductions, credits and tax preference items, without regard to
whether it has received any cash distributions from the Portfolio.

Taxation of Distributions

Dividends from income and any distributions from net short-term capital
gains are taxable to shareholders as ordinary income for federal income tax
purposes. Distributions of net capital gains (the excess of net long-term
capital gain over net short-term capital loss), if any, are taxable to
shareholders as long-term capital gains without regard to the length of time the
shareholders have held their shares. The Fund's distributions are not expected
to qualify for the dividends-received deduction available to corporations.
Distributions are taxable as

-31-
<PAGE>

described above whether paid in cash or reinvested in additional shares.
Shareholders will be notified annually as to the federal tax status of
distributions.

Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of the excise tax, the Fund must, and intends to, distribute
during each calendar year substantially all of its ordinary income for that year
and substantially all of its capital gain in excess of its capital losses for
the twelve months ended October 31, plus any undistributed ordinary income and
capital gains from previous periods. For this and other purposes, a distribution
will be treated as paid on December 31 if it is declared in December with a
record date in such a month and paid by the Fund during January of the following
calendar year. Accordingly, those distributions will be taxable to shareholders
for the taxable year in which that December 31 falls.

Withdrawals by the Fund from the Portfolio generally will not result in
the Fund recognizing any gain or loss for federal income tax purposes, except
that to the extent the cash proceeds of any withdrawal or distribution exceed
the Fund's adjusted tax basis in its interest in the Portfolio, the Fund will
generally realized gain for federal income tax purposes. In addition, if, upon a
complete withdrawal (i.e., a redemption of its entire interest in the
Portfolio), the Fund's adjusted tax basis in its interest in the Portfolio
exceeds the proceeds of the withdrawal, the Fund will generally realize a loss
for federal income tax purposes. The Fund's adjusted tax basis in its interest
in the Portfolio will generally be the aggregate price paid therefor, increased
by the amounts of its distributive share of items of realized net income
(including income, if any, exempt from Federal income tax) and gain, and
reduced, but not below zero, by the amounts of its distributive share of items
of net loss and the amounts of any distributions received by the Fund.

Other Taxation

The Trust is organized as a Delaware business trust and, under current
law, neither the Trust nor the Fund are liable for any income or franchise tax
in the State of Delaware, provided that the Fund continues to qualify as a RIC
for federal income tax purposes. The investment by the Fund in the Portfolio
does not cause the Fund to be liable for any income or franchise tax in the
State of New York.

The Portfolio is organized as a New York trust. The Portfolio is not
subject to any income or franchise tax in the State of New York or the State of
Delaware.

-32-
<PAGE>

Fund shareholders may be subject to state and local taxes on Fund
distributions to them by the Fund. Shareholders are advised to consult their own
tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.

DESCRIPTION OF THE TRUST; FUND SHARES

The Trust is a Delaware business trust established under a Trust
Instrument dated October 25, 1993. Its authorized capital consists of an
unlimited number of shares of beneficial interest of $0.00001 par value, which
may be issued in separate series. Currently, the Trust has one active series,
although additional series may be established from time to time. Each share of
each series represents an equal proportionate interest in that series with each
other share in that series.

The assets of the Trust received for the issue or sale of the shares of
each series and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are specifically allocated to such series and
constitute the underlying assets of such series. The underlying assets of each
series are segregated on the books of account, and are to be charged with the
liabilities in respect to such series and with such a share of the general
liabilities of the Trust. Expenses with respect to any two or more series are to
be allocated in proportion to the asset value of the respective series except
where allocations of direct expenses can otherwise be fairly made. The officers
of the Trust, subject to the general supervision of the Trustees, have the power
to determine which liabilities are allocable to a given series, or which are
general or allocable to two or more series. In the event of the dissolution or
liquidation of the Trust or any series, the holders of the shares of any series
are entitled to receive as a class the value of the underlying assets of such
shares available for distribution to shareholders.

The Trust's Trustees may amend the Trust Instrument without shareholder
approval, except shareholder approval is required for any amendment (a) which
affects the voting rights of shareholders under the Trust Instrument, (b) which
affects shareholders' rights to approve certain amendments to the Trust
Instrument, (c) required to be approved by shareholders by law or the
Registration Statement, or (d) submitted to shareholders for their approval by
the Trustees in their discretion. Pursuant to Delaware business trust law and
the Trust Instrument, the Trustees may, without shareholder approval, (x) cause
the Trust to merge or consolidate with one or more entities, if the surviving or
resulting entity is the Trust or another open-end management investment company
registered under the 1940 Act, or a series thereof, that will succeed to or
assume the Trust's registration under the 1940 Act, or (y) cause the Trust to
incorporate under the laws of the State of Delaware.

-33-
<PAGE>

Shares of the Fund entitle their holder to one vote per share; however,
separate votes are taken by each series on matters affecting an individual
series. For example, a change in investment policy for a series would be voted
upon only by shareholders of the series involved.

The Trust's Trust Instrument provides that obligations of the Trust are
not binding upon the Trustees individually but only upon the property of the
Trust, that the Trustees and officers will not be liable for errors of judgment
or mistakes of fact or law, and that the Trust will indemnify its Trustees and
officers against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the Trust unless it
is finally adjudicated that they engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in their offices,
or unless it is finally adjudicated that they did not act in good faith in the
reasonable belief that their actions were in the best interests of the Trust. In
the case of settlement, such indemnification will not be provided unless it has
been determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees, or in a
written opinion of independent counsel, that such officers or Trustees have not
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties.

Under Delaware law, shareholders of a Delaware business trust are
entitled to the same limitation on personal liability which is extended to
shareholders of private for profit corporations organized under the general
corporation law of the State of Delaware; the courts of other states may not
apply Delaware law, however, and shareholders may, under certain circumstances,
be held personally liable for the obligations of the Trust. The Trust Instrument
contains an express disclaimer of shareholder liability for acts or obligations
of the Trust and provides for indemnification and reimbursement of expenses out
of Fund property for any shareholder held personally liable for the obligations
of the Fund solely by reason of his being or having been a shareholder. The
Trust Instrument also permits the maintenance, by or on behalf of the Trust and
the Fund, of appropriate insurance (for example, fidelity bonding and errors and
omissions insurance) for the protection of the Trust and the Fund, their
shareholders, Trustees, officers, employees and agents, covering possible tort
and other liabilities.

MISCELLANEOUS

As of December 18, 1997, U.S. Trust NY and its affiliates held of
record 32% of the Trust's outstanding shares as agent or

-34-
<PAGE>

custodian for their customers, but did not own such shares beneficially because
they did not have voting or investment discretion with respect to such shares.

As of December 18, 1997, no person beneficially owned 5% or more of the
outstanding Shares of the Fund.

FINANCIAL STATEMENTS

The audited financial statements and notes thereto in the Trust's
Annual Report to Shareholders for the fiscal year ended August 31, 1997 (the
"1997 Annual Report") are incorporated into this Statement of Additional
Information by reference. No other parts of the 1997 Annual Report are
incorporated by reference herein. The financial statements included in the 1997
Annual Report have been audited by the Trust's independent accountants, Price
Waterhouse LLP, whose report thereon is also incorporated herein by reference.
Such financial statements have been incorporated herein in reliance upon such
report given upon their authority as experts in accounting and auditing.
Additional copies of the 1997 Annual Report may be obtained at no charge by
telephoning CGFSC at (800) 909-1989.

The audited financial statements and notes thereto relating to the
Portfolio and presented with the Trust's Annual Report to Shareholders for the
fiscal year ended August 31, 1997 are incorporated into this Statement of
Additional Information by reference. These financial statements have been
audited by the Portfolio's chartered accountants, Price Waterhouse, whose report
thereon is also incorporated herein by reference. Such financial statements have
been incorporated herein in reliance upon such report given upon their authority
as experts in accounting and auditing.

-35-
<PAGE>

Distributor of the Fund

Edgewood Services, Inc.
Clearing Operations
P.O. Box 897
Pittsburgh, PA 15230

Investment Adviser of the Portfolio EXCELSIOR FUNDS

Citibank, N.A. Excelsior Institutional
153 East 53rd Street Money Fund
New York, NY 10043

Custodian of the Portfolio

State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110

Transfer Agent and Fund
Accounting Agent of the Portfolio

State Street Canada, Inc.
40 King Street West
Suite 5700
Toronto, Ontario, Canada

Co-Administrator of the Fund

U.S Trust Company of Connecticut
114 West 47th Street
New York, NY 10036

Transfer Agent and Co-Administrator
of the Fund STATEMENT OF
ADDITIONAL INFORMATION
Chase Global Funds Services Company JANUARY 1, 1998
73 Tremont Street
Boston, MA 02108

Co-Administrator of the Fund

Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222

-36-
<PAGE>

Independent Accountants of the Fund

Price Waterhouse LLP
160 Federal Street
Boston, MA 02110

Independent Accountants of the Portfolio

Price Waterhouse
Suite 3000, Box 82
Royal Trust Towers
Toronto Dominion Center
Toronto, Ontario, Canada M5K 1G8

-37-
<PAGE>

PART C

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) Financial Statements.

(1) The financial statements included in Part A are as follows:

(i) Audited financial highlights for the Excelsior
Institutional Money Fund for the period November 8,
1993 (Commencement of Operations) to August 31, 1994
and for the Years Ended August 31, 1995, 1996 and
1997

(2) The financial statements included in Part B are as follows:

(i) Excelsior Institutional Money Fund:

o Statement of Assets and Liabilities at August 31,
1997
o Statement of Operations for the fiscal year ended
August 31, 1997
o Statement of Changes in Net Assets for the fiscal
years ended August 31, 1997 and 1996
o Financial Highlights for the Excelsior Institutional
Money Fund for the period November 8, 1993
(Commencement of Operations) to August 31, 1994 and
for the Years Ended August 31, 1995, 1996 and 1997
o Notes to Financial Statements
o Report of Independent Accountants

(ii) Cash Reserves Portfolio:

o Portfolio of Investments at August 31, 1997
o Statement of Assets and Liabilities at August 31,
1997
o Statement of Operations for the fiscal year ended
August 31, 1997
o Statement of Changes in Net Assets for the fiscal
years ended August 31, 1997 and 1996
o Financial Highlights for the fiscal years ended
August 31, 1997, 1996, 1995, 1994 and 1993
o Notes to Financial Statements
o Independent Auditors' Report

(b) Exhibits Notes
-------- -----
1. Trust Instrument of the Registrant. 3

2. By-laws of the Registrant. 3

4(a). Articles IV, V, VI and IX of Registrant's Trust
Instrument. 3

4(b). Articles IV, V, VI, IX and X of Registrant's By-Laws. 3

6. Distribution Contract dated April 1, 1997 between the
Registrant and Edgewood Services, Inc. ("Edgewood"). 5

8. Custodian Agreement dated July 1, 1994 between the
Registrant and United States Trust Company of
New York. 4

-1-

<PAGE>

9(a). Administration Agreement dated May 16, 1997 among
the Registrant, Chase Global Funds Services
Company, Federated Administrative Services and
U.S. Trust Company of Connecticut. 5

9(b). Administrative Services Plan and Related Form of
Shareholder Servicing Agreement. 5

9(c). Mutual Funds Transfer Agency Agreement dated as of
August 9, 1994 between Registrant and Chase Global
Funds Services Company. 4

10. Opinion of Counsel. 5

11(a). Consent of Counsel. 5

11(b). Consent of Price Waterhouse LLP. 5

11(c). Consent of Price Waterhouse. 5

13. Investor Representation Letter of
Initial Shareholder. 5

16. Schedule for Computation of Performance Information. 3

17(a). Financial Data Schedule-Cash Reserves Portfolio. 5

17(b). Financial Data Schedule-Institutional Money Fund. 5

24(a). Registrant's Annual Report dated August 31, 1997 is incorporated
herein by reference to Registrant's filing including such Annual
Report and filed with the SEC on November 12, 1997 (Accession
No. 0000950116-97-002037).

24(b). Cash Reserves Portfolio's Annual Report dated August 31, 1997 is
incorporated herein by reference to Cash Reserves Portfolio's filing
including such Annual Report and filed with the SEC on October 28,
1997 (Accession No. 0000850615-97-000006).

Notes:

1 Incorporated herein by reference to the Registrant's Registration
Statement on Form N-1A (the "Registration Statement") under the
Investment Company Act of 1940, as amended (the "1940 Act") (File
No. 811-8132), as filed with the Securities and Exchange Commission
(the "SEC") on November 4, 1993.

2 Incorporated herein by reference from Post-Effective Amendment No. 1
("Amendment No. 1") to the Registration Statement under the 1940 Act
and Registrant's initial filing under the Securities Act of 1933, as
amended (File No. 33-71306), as filed with the SEC on November 5,
1993.

3 Incorporated herein by reference to Post-Effective Amendment No. 4
("Amendment No. 4") to Registrant's Registration Statement on Form
N-1A, as filed with the SEC on December 21, 1995.

-2-

<PAGE>

4 Incorporated herein by reference to Post-Effective Amendment No. 5
("Amendment No. 5") to Registrant's Registration Statement on Form
N-1A, as filed with the SEC on December 30, 1996.

5 Filed herewith.

Item 25. Persons Controlled by or under Common Control with Registrant.

Registrant is controlled by its Board of Trustees.

Item 26. Number of Holders of Securities.

As of December 18, 1997:

Title of Class Number of Record Holders
- -------------- ------------------------

Shares of Beneficial
Interest (par value $.00001)

Excelsior Institutional Money Fund 586

Item 27. Indemnification.

Reference is hereby made to Article IX of the Registrant's
Trust Instrument, filed as an exhibit to the Registration Statement.

Indemnification of Registrant's principal underwriter against
certain losses is provided for in Section IV of the Distribution Contract filed
herein as Exhibit 6.

The trustees and officers of the Registrant and the personnel
of the Registrant's administrators are insured under an errors and omissions
liability insurance policy. The Registrant, its trustees and its officers are
also insured under the fidelity bond required by Rule 17g-1 under the Investment
Company Act of 1940, as amended (the "1940 Act").

Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be permitted to
directors, trustees, officers and controlling persons of the Registrant and the
principal underwriter pursuant to the foregoing provisions or otherwise, the
Registrant has been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, trustee, officer, or controlling person of the Registrant
and the principal underwriter in connection with the successful defense of any
action, suit or proceeding) is asserted against the Registrant by such director,
trustee, officer or controlling person or principal underwriter in connection
with the shares being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the 1933 Act and will be governed by
the final adjudication of such issue.

-3-

<PAGE>

Item 28. Business and Other Connections of Investment Adviser.

Inapplicable.

Item 29. Principal Underwriters.

(a) Edgewood currently serves as distributor for Excelsior
Institutional Money Fund. Edgewood also serves as the principal underwriter for
the following open-end investment companies: BT Advisor Funds, BT Pyramid Mutual
Funds, BT Investment Funds, BT Institutional Funds, Excelsior Institutional
Trust, Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc., FTI Funds,
FundManager Portfolios, Great Plains Funds, Marketvest Funds, Marketvest Funds,
Inc., Old Westbury Funds, Inc., Robertsons Stephens Investment Trust, WCT Funds
and WesMark Funds.

(b) Set forth below are the names, principal business addresses and
positions of each director and officer of Edgewood. Unless otherwise noted, the
principal business address of these individuals is Edgewood Services, Inc.,
Clearing Operations, P.O. Box 897, Pittsburgh, PA 15230. Unless otherwise
specified, none of the officers and directors of Edgewood serve as officers and
Trustees of the Registrant.
<TABLE>
<CAPTION>

Names and Principal Positions and Offices with Offices with
Business Addresses the Distributor Registrant
------------------- -------------------------- ------------
<S> <S> <C>
Lawrence Caracciolo Director and President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779

Arthur L. Cherry Director,
Federated Investors Tower Edgewood Services, Inc. --
Pittsburgh, PA 15222-3779

J. Christopher Donahue Director,
Federated Investors Tower Edgewood Services, Inc. --
Pittsburgh, PA 15222-3779

Ronald M. Petnuch Vice President,
Federated Investors Tower Edgewood Services, Inc. --
Pittsburgh, PA 15222-3779

Thomas P. Sholes Vice President,
Federated Investors Tower Edgewood Services, Inc. --
Pittsburgh, PA 15222-3779

Thomas P. Schmitt Vice President,
Federated Investors Tower Edgewood Services, Inc. --
Pittsburgh, PA 15222-3779

Ernest L. Linane Assistant Vice President,
Federated Investors Tower Edgewood Services, Inc. --
Pittsburgh, PA 15222-3779

S. Elliott Cohan Secretary,
Federated Investors Tower Edgewood Services, Inc. --
Pittsburgh, PA 15222-3779

</TABLE>

-4-

<PAGE>

<TABLE>
<CAPTION>
Names and Principal Positions and Offices with Offices with
Business Addresses the Distributor Registrant
------------------- -------------------------- ------------
<S> <C> <C>
Thomas J. Ward Assistant Secretary,
Federated Investors Tower Edgewood Services, Inc. --
Pittsburgh, PA 15222-3779

Kenneth W. Pegher, Jr. Treasurer,
Federated Investors Tower Edgewood Services, Inc. --
Pittsburgh, PA 15222-3779

</TABLE>

Item 30. Location of Accounts and Records.

All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules thereunder will be maintained at the
offices of:

(1) U.S. TRUST COMPANY OF CONNECTICUT, 225 High Ridge Road, Stamford, CT
06905 (records relating to its function as co-administrator).

(2) FEDERATED ADMINISTRATIVE SERVICES, Federated Investment Tower, 1001
Liberty Avenue, Pittsburgh, PA 15222 (records relating to its function
as co-administrator).

(3) CHASE GLOBAL FUNDS SERVICES COMPANY, 73 Tremont Street, Boston, MA
02108-3913; (records relating to its functions as co-administrator and
transfer agent).

(4) EDGEWOOD SERVICES, INC., Clearing Operations, P.O. Box 897, Pittsburgh,
PA 15230 (records relating to its function as distributor).

(5) DRINKER BIDDLE & REATH LLP, Philadelphia National Bank Building, 1345
Chestnut Street, Philadelphia, Pennsylvania 19107-3496 (Registrant's
Articles of Incorporation, Bylaws, and Minute Books).

Item 31. Management Services.

Inapplicable.

Item 32. Undertakings.

Registrant hereby undertakes to provide its Annual Report to
Shareholders upon request and without charge to any person to whom a Prospectus
for its Fund is delivered.

-5-

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, Excelsior Funds certifies that it meets all
the requirements for effectiveness of this Post-Effective Amendment No. 6 to its
Registration Statement on Form N-1A ("Amendment No. 6") pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Amendment No. 6 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Philadelphia and the Commonwealth of Pennsylvania on the 30th day of
December, 1997.

EXCELSIOR FUNDS

By: FREDERICK S. WONHAM*
-------------------
Frederick S. Wonham
Chairman, President
and Treasurer

Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 6 has been signed below by the following persons in the
capacities indicated and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>

FREDERICK S. WONHAM* Chairman, December 30, 1997
- -------------------- President and
Frederick S. Wonham Treasurer

W. WALLACE MCDOWELL* Trustee December 30, 1997
- --------------------
W. Wallace McDowell

JONATHAN PIEL* Trustee December 30, 1997
- --------------------
Jonathan Piel

RODMAN L. DRAKE* Trustee December 30, 1997
- --------------------
Rodman L. Drake
</TABLE>

*By: /s/ W. Bruce McConnel, III
--------------------------
W. Bruce McConnel, III
Attorney-in-fact

-6-

<PAGE>

EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS

POWER OF ATTORNEY
-----------------

KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
appoints W. Bruce McConnel, III his true and lawful attorney-in-fact and agent
with full power of substitution and resubstitution, for him and in his name,
place and stead, in his capacity as director/trustee or officer, or both, to
execute amendments to Excelsior Funds, Inc.'s, Excelsior Tax-Exempt Funds,
Inc.'s, Excelsior Institutional Trust's and Excelsior Funds' (collectively, the
"Companies") respective Registration Statements on Form N-1A pursuant to the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended (the "Acts") and all instruments necessary or incidental in connection
therewith pursuant to said Acts and any rules, regulations, or requirements of
the Securities and Exchange Commission in respect thereof, and to file the same
with the Securities and Exchange Commission, and said attorney shall have full
power and authority, to do and perform in the name and on behalf of the
undersigned in any and all capacities, every act whatsoever requisite or
necessary to be done, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney may
lawfully do or cause to be done by virtue hereof.

Dated: May 16, 1997 /s/ Frederick S. Wonham
-----------------------
Frederick S. Wonham

<PAGE>

EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS

POWER OF ATTORNEY
-----------------

KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
appoints Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, to execute amendments to Excelsior Funds, Inc,'s,
Excelsior Tax-Exempt Funds, Inc.'s, Excelsior Institutional Trust's and
Excelsior Funds' (collectively, the "Companies") respective Registration
Statements on Form N-1A pursuant to the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended (the "Acts") and all
instruments necessary or incidental in connection therewith pursuant to said
Acts and any rules, regulations, or requirements of the Securities and Exchange
Commission in respect thereof, and to file the same with the Securities and
Exchange Commission, and either of said attorneys shall have full power and
authority, to do and perform in the name and on behalf of the undersigned in any
and all capacities, every act whatsoever requisite or necessary to be done, as
fully and to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that either of said attorneys may lawfully do or
cause to be done by virtue hereof.

Dated: May 16, 1997 /s/ W. Wallace McDowell
------------------------
W. Wallace McDowell

<PAGE>

EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS

POWER OF ATTORNEY
-----------------

KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
appoints Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, to execute amendments to Excelsior Funds, Inc.'s,
Excelsior Tax-Exempt Funds, Inc.'s, Excelsior Institutional Trust's and
Excelsior Funds' (collectively, the "Companies") respective Registration
Statements on Form N-1A pursuant to the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended (the "Acts") and all
instruments necessary or incidental in connection therewith pursuant to said
Acts and any rules, regulations, or requirements of the Securities and Exchange
Commission in respect thereof, and to file the same with the Securities and
Exchange Commission, and either of said attorneys shall have full power and
authority, to do and perform in the name and on behalf of the undersigned in any
and all capacities, every act whatsoever requisite or necessary to be done, as
fully and to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that either of said attorneys may lawfully do or
cause to be done by virtue hereof.

Dated: May 17, 1997 /s/ Jonathan Piel
------------------
Jonathan Piel

<PAGE>

EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS

POWER OF ATTORNEY
-----------------

KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby
appoints Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, to execute amendments to Excelsior Funds, Inc.'s,
Excelsior Tax-Exempt Fund's, Excelsior Institutional Trust's and Excelsior
Funds' (collectively, the "Companies") respective Registration Statements on
Form N-1A pursuant to the Investment Company Act of 1940, as amended, and the
Securities Act of 1933, as amended (the "Acts") and all instruments necessary or
incidental in connection therewith pursuant to said Acts and any rules,
regulations, or requirements of the Securities and Exchange Commission in
respect thereof, and to file the same with the Securities and Exchange
Commission, and either of said attorneys shall have full power and authority, to
do and perform in the name and on behalf of the undersigned in any and all
capacities, every act whatsoever requisite or necessary to be done, as fully and
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that either of said attorneys may lawfully do or cause to be
done by virtue hereof.

Dated: May 16, 1997 /s/ Rodman L. Drake
--------------------
Rodman L. Drake

<PAGE>

SIGNATURES

Cash Reserves Portfolio (the "Portfolio") has duly caused the
Registration Statement on Form N-1A ("Registration Statement") of Excelsior
Funds (the "Trust") to be signed on its behalf by the undersigned, thereto duly
authorized in Hamilton, Bermuda on the 30th day of December, 1997.

Cash Reserves Portfolio

By /s/Susan Jakuboski
-----------------------
Susan Jakuboski
Assistant Secretary and Assistant
Treasurer

Pursuant to the requirements of the Securities Act of 1933, the
Trust's Registration Statement has been signed below by the following persons in
the capacities indicated on December 30, 1997.

Signature Title Date
- --------- ----- ----

PHILIP W. COOLIDGE* PRESIDENT, Principal December 30, 1997
- ------------------- Executive Officer and
Philip W. Coolidge Trustee of the Portfolio

JOHN R. ELDER* Principal Accounting and December 30, 1997
- ------------------- Financial Officer
John R. Elder

WALTER E. ROBB III* Trustee of the Portfolio December 30, 1997
- -------------------
Walter E. Robb III

MARK T. FINN* Trustee of the Portfolio December 30, 1997
- -------------------
Mark T. Finn

ELLIOT J. BERV* Trustee of the Portfolio December 30, 1997
- -------------------
Elliot J. Berv

*By /s/Susan Jakuboski
- -----------------------------
Susan Jakuboski

As attorney-in-fact pursuant to powers of attorney.

-7-

<PAGE>

Cash Reserves Portfolio

The undersigned hereby constitutes and appoints John R. Elder, Susan Jakuboski,
Molly S. Mugler and Linda T. Gibson, and each of them, with full powers of
substitution as his true and lawful attorneys and agents to execute in his name
and on his behalf in any and all capacities the Registration Statement on Form
N-1A, and any and all amendments thereto, filed by Cash Reserves Portfolio (the
"Registrant") with the Securities and Exchange Commission under the Investment
Company Act of 1940, as amended, and any and all other instruments which such
attorneys and agents, or any of them, deem necessary or advisable to enable the
Registrant to comply with the Investment Company Act of 1940, as amended, the
rules, regulations and requirements of the Securities and Exchange Commission,
and the securities or Blue Sky laws of any state or other jurisdiction; and the
undersigned hereby ratifies and confirms as his own act and deed any and all
that such attorneys and agents, or any of them, shall do or cause to be done by
virtue hereof. Any one of such attorneys and agents shall have, and may
exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th day of
November, 1997.

/s/ Philip W. Coolidge
- -------------------------
Philip W. Coolidge
At Southampton, Bermuda

<PAGE>

Cash Reserves Portfolio

The undersigned hereby constitutes and appoints Philip W. Coolidge, Susan
Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them, with full
powers of substitution as his true and lawful attorneys and agents to execute in
his name and on his behalf in any and all capacities the Registration Statement
on Form N-1A, and any and all amendments thereto, filed by Cash Reserves
Portfolio (the "Registrant") with the Securities and Exchange Commission under
the Investment Company Act of 1940, as amended, and any and all other
instruments which such attorneys and agents, or any of them, deem necessary or
advisable to enable the Registrant to comply with the Investment Company Act of
1940, as amended, the rules, regulations and requirements of the Securities and
Exchange Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 7th day of
February, 1997.

/s/ John R. Elder
- -------------------
John R. Elder
Hamilton, Bermuda

<PAGE>

Cash Reserves Portfolio

The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statement on Form N-1A, and any and all amendments thereto, filed by Cash
Reserves Portfolio (the "Registrant") with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Registrant to comply with the Investment
Company Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th day of
November, 1997.

/s/ Walter E. Robb, III
- -------------------------
Walter E. Robb, III
At Southampton, Bermuda

<PAGE>

Cash Reserves Portfolio

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th day of
November, 1997.

/s/ Mark T. Finn
- -----------------------
Mark T. Finn
At Southampton, Bermuda

<PAGE>

Cash Reserves Portfolio

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 8th day of
November, 1997.

/s/ Elliott J. Berv
- -----------------------
Elliott J. Berv
At Southampton, Bermuda

<PAGE>

EXHIBIT INDEX

Exhibit
No. Description of Exhibit
- ------- ----------------------

6 Distribution Contract dated April 1, 997 between the
Registrant and Edgewood Services, Inc. ("Edgewood").

9(a) Administration Agreement dated May 16, 1997 among the
Registrant, Chase Global Funds Services Company,
Federated Administrative Services and U.S. Trust
Company of Connecticut.

9(b) Administrative Services Plan and Related Form of
Shareholder Servicing Agreement.

10 Opinion of Counsel.

11(a) Consent of Counsel.

11(b) Consent of Price Waterhouse LLP.

11(c) Consent of Price Waterhouse.

13 Investor Representation Letter of Initial Shareholder.

27(a) Financial Data Schedule-Cash Reserves Portfolio.

27(b) Financial Data Schedule-Institutional Money Fund.

<PAGE>

DISTRIBUTION CONTRACT

Distribution Contract made as of April 1, 1997 between EXCELSIOR FUNDS,
a Delaware business trust having its principal office and place of business at
73 Tremont Street, Boston, Massachusetts 02108-3913 (herein called the "Trust"),
and EDGEWOOD SERVICES, INC., a New York corporation having its principal office
and place of business in Pittsburgh, Pennsylvania (herein called the
"Distributor").

WHEREAS, the Trust is an open-end, management investment company and is
so registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and

WHEREAS, the Trust desires to retain the Distributor as distributor for
the shares of beneficial interest, par value $0.00001 per share (the "Shares"),
of the series of the Trust listed on Schedule I hereto, as such Schedule may be
amended from time to time by written agreement of the parties hereto (each, a
"Series"), and the Distributor is willing to render such services;

NOW THEREFORE, in consideration of the premises and mutual covenants
set forth herein the parties hereto agree as follows:

I. DELIVERY OF DOCUMENTS
---------------------

The Trust has delivered to the Distributor copies of the following
documents and will deliver to the Distributor all future amendments and
supplements thereto, if any:

(a) The Trust's Trust Instrument and all amendments thereto (as
presently in effect and as from time to time amended, herein called the "Trust
Instrument");

(b) The Trust's By-laws (as presently in effect and as from time to
time amended, herein called the "By-laws");

(d) The Trust's Registration Statement under the Securities Act of
1933, as amended (the "1933 Act"), and the 1940 Act on Form N-1A most recently
filed with the Securities and Exchange Commission (the "Commission") relating to
the Shares, and all subsequent amendments or supplements thereto (the
"Registration Statement");

(e) The Trust's Notification of Registration under the 1940 Act on Form
N-8A as filed with the Commission; and
<PAGE>

(f) The Trust's current Prospectus and Statement of Additional
Information of the Series (as presently in effect and as from time to time
amended and supplemented herein called collectively the "Prospectus").

In addition, the Trust agrees to timely furnish from time to time, for
use in connection with the sale of Shares, such information with respect to the
Series and Shares as the Distributor may reasonably request; and the Trust
warrants that the statements contained in any such information shall fairly show
or represent what they purport to show or represent. The Trust also agrees to
furnish the Distributor upon request with: (a) audited annual and unaudited
semi-annual statements of the Trust's books and accounts with respect to each
Series, and (b) from time to time such additional information regarding the
Series' financial condition as the Distributor may reasonably request.

Furthermore, the Trust agrees to advise the Distributor as soon as
reasonably practical:

(a) of any request by the Commission for amendments to the
Registration Statement or Prospectus then in effect;

(b) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or
Prospectus then in effect or the initiation of any proceeding for that
purpose;

(c) of the happening of any event that makes untrue any
statement of a material fact made in the Registration Statement or
Prospectus then in effect or which requires the making of a change in
such Registration Statement or Prospectus in order to make the
statements therein not misleading; and

(d) of all actions of the Commission with respect to any
amendment to the Registration Statement or Prospectus which may from
time to time be filed with the Commission.

For purposes of this section, informal requests by or acts of the Staff of the
Commission shall not be deemed actions of or requests by the Commission.

2
<PAGE>

II. DISTRIBUTION
------------

1. Appointment of Distributor. The Trust hereby appoints the
Distributor as principal distributor of the Series' Shares and the Distributor
hereby accepts such appointment and agrees to render the services and duties set
forth in this Section II and on Schedule II attached hereto, as may be
supplemented or amended from time to time by a written agreement of the parties.

2. Services and Duties.

(a) The Trust agrees to sell through the Distributor, as agent, from
time to time during the term of this Contract, Shares of the Series (whether
authorized but unissued or treasury shares, in the Trust's sole discretion) upon
the terms and at the current offering price as described in the applicable
Prospectus. The Distributor will act only in its own behalf as principal in
making agreements with selected dealers or others for the sale and redemption of
Shares, and shall sell Shares only at the offering price thereof as set forth in
the applicable Prospectus. The Distributor shall devote its best efforts to
effect the sale of Shares of each Series, but shall not be obligated to sell any
certain number of Shares.

(b) In all matters relating to the sale and redemption of Shares, the
Distributor will act in conformity with the Trust's Trust Instrument, By-laws
and Prospectus and with the instructions and directions of the Trust's Board of
Trustees and will conform to and comply with the requirements of the 1933 Act,
the 1940 Act, the regulations of the National Association of Securities Dealers,
Inc. and all other applicable Federal or state laws and regulations. In
connection with the sale of Shares, the Distributor acknowledges and agrees that
it is not authorized to provide any information or make any representation other
than as contained in the Trust's Registration Statement or Prospectus and any
sales literature specifically approved by the Trust.

(c) Unless the Trust has adopted a plan pursuant to Rule 12b-l under
the 1940 Act which provides otherwise, the Distributor will finance at its own
expense such activities as it deems reasonable and which are primarily intended
to result in the sale of shares, including but not limited to: (i) printing and
distributing to prospective investors copies of any Prospectus (including any
supplement thereto) and annual and interim reports of the Series (after such
items have been prepared and set in type by the Trust) which are used in
connection with the offering of Shares of a Series; and (ii) preparing, printing
and distributing any other literature used by the Distributor in connection with
the sale of the Shares; provided, however, that the Distributor shall not be
obligated to bear the expenses incurred by the Trust in connection with the
preparation and printing of Prospectuses used for regulatory purposes and for
distribution to existing shareholders.

(d) All Shares of the Series offered for sale by the Distributor shall
be offered for sale to the public at a price per share (the "offering price")
equal to (i) their net asset value (determined in the manner set forth in the
Trust Instrument and then-current Prospectus) plus

<PAGE>

(ii) a sales charge (if any) which shall be the percentage of the offering price
of such Shares as set forth in the Trust's then-current Prospectus. If a sales
charge is in effect, the Distributor shall have the right to pay a portion of
the sales charge to broker-dealers and other persons who have sold shares of the
Series. Concessions by the Distributor to broker-dealers and other persons shall
be set forth in either the selling agreements between the Distributor and such
broker-dealers and persons or, if such concessions are described in the
then-current Prospectuses, shall be as so set forth. No broker-dealer or other
person who enters into a selling agreement with the Distributor shall be
authorized to act as agent for the Trust in connection with the offering or sale
of its Shares to the public or otherwise. The Trust reserves the right to reject
any order but will not do so without reasonable cause.

(e) If any Shares sold by the Distributor under the terms of this
Contract are redeemed or repurchased by the Trust or by the Distributor as agent
or are tendered for redemption within seven business days after the date of
confirmation of the original purchase of said Shares, the Distributor shall
forfeit the amount (if any) above the net asset value received by it in respect
of such Shares, provided that the portion, if any, of such amount (if any)
re-allowed by the Distributor to broker-dealers or other persons shall be
repayable to the Trust only to the extent recovered by the Distributor from the
broker-dealer or other person concerned. The Distributor shall include in the
forms of agreement with such broker-dealers and persons a corresponding
provision for the forfeiture by them of their concession with respect to Shares
sold by them or their principals and redeemed or repurchased by the Trust or by
the Distributor as agent (or tendered for redemption) within seven business days
after the date of confirmation of such initial purchases.

3. Sales and Redemptions.

(a) The Trust shall pay all costs and expenses in connection with the
registration of the Shares under the 1933 Act, and all expenses in connection
with maintaining facilities for the issue and transfer of the Shares and for
supplying information, prices and other data to be furnished by the Trust
hereunder, and all expenses in connection with preparing, printing and
distributing any Prospectus, except as set forth in subsection 2(c) hereof.

(b) The Trust shall execute all documents, furnish all information and
otherwise take all actions which may be reasonably necessary in the discretion
of the Trust's officers in connection with the qualification of the Shares for
sale in such states as the Trust may approve, and the Trust shall pay all fees
which may be incurred in connection with such qualification. The Distributor
shall pay all expenses connected with its qualification as a dealer under state
or Federal laws and, except as otherwise specifically provided in this Contract,
all other expenses incurred by the Distributor in connection with the sale of
the Shares as contemplated in this Contract. It is understood that certain
advertising, marketing, shareholder servicing, administration and/or
distribution expenses to be incurred in connection with the Shares may be paid
as provided in any plan which may be adopted by the Trust in accordance with
Rule 12b-l under the 1940 Act.

<PAGE>

(c) The Trust shall have the right to suspend the sale of Shares of any
Series at any time in response to conditions in the securities markets or
otherwise, and to suspend the redemption of Shares of any Series at any time
permitted by the 1940 Act or the rules of the Commission.

(d) The Trust reserves the right to reject any order for Shares.

(e) No Shares shall be offered by either the Trust or the Distributor
under any of the provisions of this Contract and no orders for the purchase or
sale of Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the Registration Statement shall be suspended under any of the
provisions of the 1933 Act, or if and so long as a Prospectus as required by
Section 10 of the 1933 Act is not on file with the Commission; provided,
however, that nothing contained in this sub-paragraph shall in any way restrict
or have any application to or bearing upon the Trust's obligation to repurchase
any Shares from any shareholder in accordance with the provisions of the Trust
Instrument or Prospectus.

III. LIMITATION OF LIABILITY
-----------------------

The Distributor shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust or any Series in connection
with the matters to which this Contract relates, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the Distributor's part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Contract. Any person, even though also an
officer, director, partner, employee or agent of the Distributor, who may be or
become an officer, director, employee or agent of the Trust, shall be deemed,
when rendering services to the Trust or to any Series, or acting on any business
of the Trust or of any Series (other than services or business in connection
with the Distributor's duties as distributor hereunder), to be rendering such
services to or acting solely for the Trust or a Series and not as an officer,
director, partner, employee or agent or one under the control or direction of
the Distributor even though paid by the Distributor.

<PAGE>

IV. INDEMNIFICATION
---------------

1. Trust Representations. The Trust represents and warrants to the
Distributor that at all times the Registration Statement and Prospectus will in
all material respects conform to the applicable requirements of the 1933 Act and
the rules and regulations thereunder and will not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty in this subsection shall apply to statements or
omissions made in reliance upon and in conformity with written information
furnished to the Trust by, or on behalf of, and with respect to, the Distributor
expressly for use in the Registration Statement or Prospectus.

2. Distributor's Representations. The Distributor represents and
warrants to the Trust that it is duly organized as a New York corporation and is
and at all times will remain duly authorized and licensed to carry out its
services as contemplated herein.

3. Trust Indemnification. The Trust will indemnify, defend and hold
harmless the Distributor, its several officers and directors, and any person who
controls the Distributor within the meaning of Section 15 of the 1933 Act, from
and against any losses, claims, damages or liabilities, joint or several, to
which any of them may become subject under the 1933 Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, the Prospectus or in an application or other document executed by or
on behalf of the Trust, or arise out of, or are based upon, information
furnished by or on behalf of the Trust filed in any state in order to qualify
the Shares under the securities or blue sky laws thereof ("Blue Sky
Application") or arise out of or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Distributor, its several officers and directors, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, for any legal or
other expenses reasonably incurred by any of them in investigating, defending or
preparing to defend any such action, proceeding or claim; provided, however,
that the Trust shall not be liable in any case to the extent that such loss,
claim, damage or liability arises out of, or is based upon, any untrue
statement, alleged untrue statement or omission or alleged omission made in the
Registration Statement, the Prospectus, any Blue Sky Application or any
application or other document executed by or on behalf or the Trust in reliance
upon and in conformity with written information furnished to the Trust by or on
behalf of and with respect to the Distributor specifically for inclusion
therein.

Notwithstanding the foregoing, the Trust shall not indemnify any person
pursuant to this subsection 3 unless the court or other body before which the
proceeding was brought has rendered a final decision on the merits that such
person was not liable by reason of his willful misfeasance, bad faith or gross
negligence in the performance of his duties, or his

<PAGE>

reckless disregard of obligations and duties, under this Contract ("disabling
conduct") or, in the absence of such a decision, a reasonable determination
(based upon a review of the facts) that such person was not liable by reason of
disabling conduct has been made by the vote of a majority of a quorum of
Trustees of the Trust who are neither "interested persons" of the Trust (as
defined in the 1940 Act) nor parties to the proceeding, or by an independent
legal counsel for the Trust in a written opinion.

The Trust shall advance attorneys' fees and other expenses incurred by
any person in defending any claim, demand, action or suit which is the subject
of a claim for indemnification pursuant to this subsection 3, so long as such
person shall: (i) undertake to repay all such advances unless it is ultimately
determined that he is entitled to indemnification hereunder; and (ii) provide
security for such undertaking, or the Series shall be insured against losses
arising by reason of any lawful advances, or a majority of a quorum of the
disinterested, non-party Trustees of the Trust (or an independent legal counsel
for the Trust in a written opinion) shall determine based on a review of readily
available facts (as opposed to a full trial-type inquiry) that there is reason
to believe that such person ultimately will be found entitled to indemnification
hereunder.

4. Distributor's Indemnification. The Distributor will indemnify,
defend and hold harmless the Trust, each Series, the Trust's several officers
and Trustees and any person who controls the Trust or any Series within the
meaning of Section 15 of the 1933 Act, from and against any losses, claims,
damages or liabilities, joint or several, to which any of them may become
subject under the 1933 Act or otherwise, insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect hereof) arise out of, or
are based upon, any breach of its representations and warranties in subsection 2
hereof or its agreements in subsection 2 of Section II of this Contract, or
which arise out of, or are based upon, any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, the
Prospectus, any Blue Sky Application or any application or other document
executed by or on behalf of the Trust, or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, which statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Trust or any of its several officers and Trustees by or on behalf of and with
respect to the Distributor specifically for inclusion therein, and will
reimburse the Trust, each Series, the Trust's several officers and Directors,
and any person who controls the Trust or any Series within the meaning of
Section 15 of the 1933 Act, for any legal or other expenses reasonably incurred
by any of them in investigating, defending or preparing to defend any such
action, proceeding or claim.

5. General Indemnity Provision. The indemnified party under the
indemnity agreement contained in subsection 3 or 4 shall notify the indemnifying
party in writing promptly after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
indemnified party (or after the indemnified party shall have received notice of
such service on any designated agent), but failure to notify the indemnifying
party of any such claim shall not relieve it from any liability under such

<PAGE>

subsection 3 or 4 except to the extent, if at all, that it shall have been
prejudiced by such failure or from any other liability which it may otherwise
have to the indemnified party. The indemnifying party will be entitled to
participate at its own expense in the defense or, if it so elects, to assume the
defense of any suit brought to enforce any such liability, and if the
indemnifying party elects to assume the defense, such defense shall be conducted
by counsel chosen by it and reasonably satisfactory to the indemnified party. In
the event the indemnifying party elects to assume the defense of any such suit
and retain such counsel, the indemnified party shall bear the fees and expenses
of any additional counsel retained by the indemnified party. If the indemnifying
party does not elect to assume the defense of any such suit, or if the
indemnified party reasonably does not approve of counsel chosen by the
indemnifying party, the indemnifying party will reimburse the indemnified party,
its officers and directors/trustees, or the controlling person or persons named
as defendant or defendants in such suit, for the reasonable fees and expenses of
any counsel retained by the indemnified party or them. The indemnifying party
shall not be liable for any settlement of any such claim of action effected
without its written consent.

6. Successors. The indemnification agreement contained in this Section
IV will inure exclusively to the parties' benefit, to the benefit of its several
officers and directors/trustees, and their respective estates, and to the
benefit of the controlling persons and their successors.

V. TERM
----

This Contract shall continue until July 31, 1997, and thereafter shall
continue automatically for successive annual periods ending on July 31 of each
year, provided such continuance is specifically approved at least annually by
(a) the Trust's Board of Trustees or (b) vote of a majority (as defined in the
1940 Act) of the Trust's outstanding voting securities, provided that in either
event its continuance also is approved by a majority of the Trust's Trustees who
are not "interested persons" (as defined in the 1940 Act) of any party to this
Contract, cast in person at a meeting called for the purpose of voting on such
approval. This Contract is terminable without penalty, on 60 days' written
notice to the Distributor, by vote of a majority of the Trust's outstanding
voting securities or, as to each Series, by the Trust's Board of Trustees or, on
90 days' written notice to the Trust, by the Distributor. This Contract will
automatically terminate, as to the relevant Series, in the event of its
assignment (as defined in the 1940 Act).

VI. MISCELLANEOUS
-------------

1. Amendments. No provision of this Contract may be changed, waived,
discharged or terminated except by an instrument in writing signed by the party
against which all enforcement of the change, waiver, discharge or termination is
sought. This Contract may be executed in one or more counterparts and all such
counterparts will constitute one and the same instrument.

<PAGE>

2. Construction. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. Subject to the provisions of Section IV hereof, this Contract shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Massachusetts law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the 1940 Act or any rule or regulation thereunder.

3. Notice. Any notice or other instrument in writing, authorized or
required by this Contract to be given to the Trust shall be sufficiently given
if addressed to the Trust and mailed or delivered to it at its office at the
address first above written, or at such other place as the Trust may from time
to time designate in writing. Any notice or other instrument in writing,
authorized or required by this Contract to be given to the Distributor shall be
sufficiently given if addressed to the Distributor and mailed or delivered to it
at its office at the address written below, or at such other place as the
Distributor may from time to time designate in writing.

4. Limitation of Liability. This Contract has been executed by the
undersigned officer of the Trust not individually but solely as such officer.
Pursuant to the Trust Instrument, all persons contracting with or having any
claim against the Trust or a particular Series shall look only to the assets of
the Trust or such Series for payment under such contract or claim, and neither
the Trustees of the Trust nor any of the Trust's officers, employees or agents,
whether past, present or future, shall be personally liable therefor. To the
extent any of the obligations of the Trust hereunder relate to or are allocated
to any particular Series in accordance with the Trust Instrument, such
obligations shall be enforceable against the assets of such Series only, and not
against the assets of the Trust generally or of any other series of the Trust.

IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their officers designated below as of the day and year first above
written.

EXCELSIOR FUNDS

By: /s/ Frederick S. Wonham
-----------------------
Title: President

Attest:

/s/ W. Bruce McConnel, III
- --------------------------
9
<PAGE>

Title: Secretary

EDGEWOOD SERVICES, INC.
Clearing Operations
P.O. Box 897
Pittsburgh, Pennsylvania 15230-0897

By: /s/ Ronald M. Petnuch
----------------------------
Title: Vice President

Attest:

/s/ S. Elliott Cohan
- --------------------
Title: Secretary

<PAGE>

SCHEDULE I

Name of Series
- --------------

Excelsior Institutional Money Fund

Dated: April 1, 1997

<PAGE>

SCHEDULE II

The following provisions are hereby incorporated and made part of the
Distribution Contract dated as of April 1, 1997, between Excelsior Funds and
Edgewood Services, Inc.

Pursuant to Section II, subsection 1 of the Contract, the Distributor
agrees to provide facilities, equipment, and personnel to carry out the
following additional services to the Trust:

(a) perform a due diligence review of reports required by the
Commission and notices to shareholders of record and the Commission
including, without limitation, Semi-Annual and Annual Reports to
Shareholders, Semi-Annual Reports on Form N-SAR, Proxy Statements and
share registration notices under the Securities Act of 1933;

(b) review the Trust's Registration Statement on Form N-1A or
any replacement therefor;

(c) review and file with NASD all sales literature
(advertisements, brochures and shareholder communications) for each of
the Series and any class of Shares thereof;

(d) prepare distributor's reports, if any, to the Trust's
Board of Trustees;

(e) perform internal audit examinations in accordance with the
Trust Instrument;

(f) consult with the Trust and the Trust's Board of Trustees,
as appropriate, on matters concerning the distribution of the Shares;
and

(g) consult with the Trust and its agents regarding the
jurisdictions in which the Shares shall be registered or qualified for
sale and, in connection therewith, review and monitor the actions of
the Trust and its agents in maintaining the registration or
qualification of Shares for sale under the securities laws of any
state. Payment of share registration fees and any fees for qualifying
or continuing the qualification of the Trust or any of its Series as a
dealer or broker, if applicable, shall be made by the Trust.

<PAGE>

Witness the due execution hereof as of the 1st day of April, 1997.

ATTEST: EXCELSIOR FUNDS

/s/ W. Bruce McConnel, III /s/ Frederick S. Wonham
- -------------------------- ---------------------------
Title: Secretary Secretary Title: President

ATTEST: EDGEWOOD SERVICES, INC.

/S/ S. Elliott Cohan /s/ Ronald M. Petnuch
- -------------------------- ---------------------------
Title: Secretary Title: Vice President

<PAGE>

ADMINISTRATION AGREEMENT

This AGREEMENT made as of May 16, 1997 by and among EXCELSIOR
FUNDS, a Delaware business trust (the "Company"), CHASE GLOBAL FUNDS SERVICES
COMPANY, a Delaware corporation ("CGFSC"), FEDERATED ADMINISTRATIVE SERVICES
("FAS"), a Delaware trust, and U.S. TRUST COMPANY OF CONNECTICUT ("U.S. Trust"),
a Connecticut state bank and trust company (CGFSC, FAS and U.S. Trust are
collectively referred to as the "Administrators").

WITNESSETH:

WHEREAS, the Company is registered as an open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and

WHEREAS, the Company wishes to retain the Administrators to
provide, as co-administrators, certain administration services with respect to
one or more of the Company's investment portfolios (individually, a "Fund," and
collectively, the "Funds"), as described and set forth on one or more exhibits
to this Agreement, and the Administrators are willing to furnish such services;

NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:

1. Appointment. The Company hereby appoints the Administrators
to provide administration services to the Funds for the period and on the terms
set forth in this Agreement. The Administrators accept such appointment and
agree to furnish the services herein set forth in return for the compensation as
provided in Section 4 of this Agreement. In the event that the Company
establishes one or more investment portfolios other than the Funds with respect
to which it decides to retain the Administrators to act as co-administrators
hereunder, the Company shall notify the Administrators in writing. If the
Administrators are willing to render such services to a new investment
portfolio, they shall so notify the Company in writing whereupon such investment
portfolio shall become a Fund hereunder and shall be subject to the provisions
of this Agreement to the same extent as the Funds, except to the extent that
said provisions (including those relating to the compensation payable by the
Company) may be modified with respect to such investment portfolio in writing by
the Company and the Administrators at the time of the addition of such new
investment portfolio.

2. Delivery of Documents. The Company has furnished each of
the Administrators with copies, properly certified or authenticated, of each of
the following:

<PAGE>

(a) Resolutions of the Company's Board of Trustees
authorizing the appointment of the Administrators to provide certain
administration services to the Company and approving this Agreement;

(b) The Company's Trust Instrument ("Charter");

(d) The Company's Notification of Registration on
Form N-8A under the 1940 Act as filed with the Securities and Exchange
Commission ("SEC");

(e) The Company's most recent Post-Effective
Amendment to its Registration Statement on Form N-1A (File Nos. 33-71306,
811-8132) (the "Registration Statement") under the Securities Act of 1933 and
the 1940 Act, as filed with the SEC;

(f) The Company's Administrative Services Plan; and

(g) The Company's most recent Prospectuses and
Statements of Additional Information and all amendments and supplements thereto
(such Prospectuses and Statements of Additional Information and supplements
thereto, as presently in effect and as from time to time amended and
supplemented, herein called the "Prospectus").

The Company will timely furnish each of the Administrators
from time to time with copies, properly certified or authenticated, of all
amendments of or supplements to the foregoing, if any.

3. Services and Duties. Subject to the supervision and control
of the Company's Board of Trustees, and as delineated on one or more Exhibits to
the Agreement, the Administrators agree to assist in supervising various aspects
of each Fund's administrative operations, including the performance of the
following specific services for each Fund:

(a) Providing office facilities (which may be in the
offices of any of the Administrators or a corporate affiliate of any of them,
but shall be in such location as the Company shall reasonably approve);

(b) Furnishing statistical and research data,
clerical services, and stationery and office supplies;

(c) Keeping and maintaining all financial accounts
and records (other than those required to be maintained by the Company's
Custodian and Transfer Agent);

-2-

<PAGE>

(d) Computing each Fund's net asset value, net income
and net capital gain (loss) in accordance with the Company's Prospectus and
resolutions of its Board of Trustees;

(e) Compiling data for and preparing for execution
and filing with the SEC required reports and notices to shareholders of record
and the SEC including, without limitation, Semi-Annual and Annual Reports to
Shareholders, Semi-Annual Reports on Form N-SAR and timely Rule 24f-2 Notices;

(f) Compiling data for, and preparing for execution
and filing, all reports or other documents required by Federal, state and other
applicable laws and regulations, including those required by applicable Federal
and state tax laws (other than those required to be filed by the Company's
Custodian or Transfer Agent);

(g) Reviewing and providing advice with respect to
all sales literature (advertisements, brochures and shareholder communications)
for each of the Funds and any class or series thereof;

(h) Assisting in developing and monitoring compliance
procedures for each Fund and any class or series thereof, including, without
limitation, procedures to monitor compliance with applicable law and
regulations, each Fund's investment objectives, policies and restrictions, its
continued qualification as a regulated investment company under the Internal
Revenue Code of 1986, as amended, and other tax matters;

(i) Monitoring the Company's arrangements with
respect to services provided by certain organizations ("Service Organizations")
under its Administrative Services Plan, provided that each Administrator will
only be responsible for monitoring arrangements with Service Organizations with
whom the Administrator has established the servicing relationship on behalf of
the Company. With respect to such Service Organizations, the Administrators
shall specifically monitor and review the services rendered by Service
Organizations to their customers who are the beneficial owners of shares,
pursuant to agreements between the Company and such Service Organizations
("Servicing Agreements"), including, without limitation, reviewing the
qualifications of financial institutions wishing to be Service Organizations,
assisting in the execution and delivery of Servicing Agreements, reporting to
the Company's Board of Trustees with respect to the amounts paid or payable by
the Company from time to time under the Servicing Agreements and the nature of
the services provided by Service Organizations, and maintaining appropriate
records in connection with such duties;

(j) Determining, together with the Company's Board of
Trustees, the jurisdictions in which the Company's shares shall be registered or
qualified for sale and, in connection therewith, maintaining the registration or
qualification of shares for sale under the securities laws of any state. Payment
of share registration fees and any fees for qualifying or continuing the
qualification of any Fund as a dealer or broker, if applicable, shall be made by
that Fund;

-3-
<PAGE>

(k) Assisting to the extent requested by the Company
and its outside counsel with the preparation of the Company's Registration
Statement on Form N-1A or any replacement therefor; and

(l) Assisting in the monitoring of regulatory and
legislative developments which may affect the Company and, in response to such
developments, counseling and assisting the Company in routine regulatory
examinations or investigations of the Company, and working with outside counsel
to the Company in connection with regulatory matters or litigation.

In performing their duties as co-administrators of the
Company, the Administrators (a) will act in accordance with the Company's
Charter, Bylaws, Prospectus and the instructions and directions of the Company's
Board of Trustees and will conform to, and comply with, the requirements of the
1940 Act and all other applicable Federal or state laws and regulations, and (b)
will consult with outside legal counsel to the Company, as necessary or
appropriate.

The Administrators will preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act the records required to be maintained by Rule
31a-1 under said Act in connection with the services required to be performed
hereunder. The Administrators further agree that all such records which they
maintain for the Company are the property of the Company and further agree to
surrender promptly to the Company any of such records upon the Company's
request.

4. Fees; Expenses; Expense Reimbursement.

For the services rendered pursuant to this Agreement for the
Trust, the Administrators shall be entitled jointly to a fee at the annual rate
of .10% of each Fund's average daily net assets. The fee attributable to each
Fund shall be the several (and not joint or joint and several) obligation of
each Fund. Such fees are to be computed daily and paid monthly on the first
business day of the following month. Upon any termination of this Agreement
before the end of any month, the fee for such part of the month shall be
pro-rated according to the proportion which such period bears to the full
monthly period and shall be payable upon the date of termination of this
Agreement.

-4-

<PAGE>

For purposes of determining fees payable to the
Administrators, the value of each Fund's net assets shall be computed as
required by its Prospectus, generally accepted accounting principles, and
resolutions of the Company's Board of Trustees.

The Administrators will from time to time employ or associate
with themselves such person or persons as they may believe to be fitted to
assist them in the performance of this Agreement. Such person or persons may be
officers and employees who are employed by both the Administrators and the
Company. The compensation of such person or persons for such employment shall be
paid by the Administrators and no obligation may be incurred on behalf of the
Company in such respect.

The Administrators will bear all expenses in connection with
the performance of their services under this Agreement except as otherwise
expressly provided herein. Other expenses to be incurred in the operation of the
Funds, including taxes, interest, brokerage fees and commissions, if any,
salaries and fees of officers and trustees who are not officers, directors,
shareholders or employees of the Administrators, or the Company's investment
adviser or distributor for the Funds, SEC fees and state Blue Sky qualification
fees, advisory and administration fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, outside auditing
and legal expenses, payments to Service Organizations, costs of maintenance of
corporate existence, typesetting and printing of prospectuses for regulatory
purposes and for distribution to current shareholders of the Funds, costs of
shareholders' reports and corporate meetings and any extraordinary expenses,
will be borne by the Company, provided, however, that the Company will not bear,
directly or indirectly, the cost of any activity which is primarily intended to
result in the distribution of shares of the Funds, and further provided that the
Administrators may utilize one or more independent pricing services, approved
from time to time by the Board of Trustees of the Company, to obtain securities
prices in connection with determining the net asset value of each Fund and that
each Fund will reimburse the Administrators for its share of the cost of such
services based upon its actual use of the services.

If in any fiscal year any Fund's aggregate expenses
(as defined under the securities regulations of any state having jurisdiction
over the Fund) exceed the expense limitations of any such state, the
Administrators agree to reimburse such Fund for a portion of any such excess
expenses in an amount equal to the proportion that the fees otherwise payable to
the Administrators bears to the total amount of investment advisory and
administration fees otherwise payable by the Fund. The expense reimbursement
obligation of the Administrators is limited to the amount of their fees
hereunder for such fiscal year, provided, however, that notwithstanding the

-5-
<PAGE>

foregoing, the Administrators shall reimburse such Fund for a portion of any
such excess expenses in an amount equal to the proportion that the fee otherwise
payable to the Administrators bears to the total amount of investment advisory
and administration fees otherwise payable by the Fund regardless of the amount
of fees paid to the Administrators during such fiscal year to the extent that
the securities regulations of any state having jurisdiction over the Funds so
require. Such expense reimbursement, if any, will be estimated, reconciled and
paid on a monthly basis. With respect to the amounts required to be reimbursed
under this Section 4 in any fiscal year, the parties to this Agreement agree
that U.S. Trust alone shall reimburse such amounts up to the amount of fees
received by CGFSC and U.S. Trust under this Agreement for such year. FAS shall
only be obligated to reimburse expenses to the extent that the amounts required
to be reimbursed under this Section 4 in any fiscal year exceed the amount of
fees received by CGFSC and U.S. Trust under this Agreement for such year and to
the extent that U.S. Trust makes reimbursements equalling the amount of all such
fees received by CGFSC and U.S. Trust, provided that the reimbursement
obligation of FAS shall be limited to the amount of fees received by it under
this Agreement for such year.

5. Proprietary and Confidential Information. The
Administrators agree on behalf of themselves and their employees to treat
confidentially and as proprietary information of the Company all records and
other information relative to the Funds and prior, present or potential
shareholders, and not to use such records and information for any purpose other
than performance of their responsibilities and duties hereunder, except after
prior notification to and approval in writing by the Company, which approval
shall not be unreasonably withheld and may not be withheld where the
Administrators may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company.

6. Limitation of Liability. Each Administrator shall not be
liable for any error of judgment or mistake of law or for any loss or expense
suffered by the Company in connection with the matters to which this Agreement
relates, except for a loss or expense resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement. In
no event shall an Administrator be liable for any indirect, incidental, special
or consequential losses or indirect, incidental, special or consequential
damages of any kind whatsoever (including, but not limited to lost profits),
even if such Administrator has been advised of the likelihood of such losses or
damages and regardless of the form of action. Any person, even though also an

-6-
<PAGE>

officer, partner, employee or agent of any of the Administrators, who may be or
become an officer, trustee, employee or agent of the Company shall be deemed
when rendering services to the Company or acting on any business of the Company
(other than services or business in connection with the Administrators' duties
hereunder) to be rendering such services to or acting solely for the Company and
not as an officer, partner, employee or agent or one under the control or
direction of the Administrators even though paid by any of them. The
Administrators agree that this Agreement shall not create any joint and/or
several liability among the Administrators with respect to services provided by
any particular Administrator as set forth herein.

7. Term. This Agreement shall become effective on May 16, 1997
and, unless sooner terminated as provided herein, shall continue until July 31,
1997, and thereafter shall continue automatically with respect to each Fund for
successive annual periods ending on July 31 of each year, provided such
continuance is specifically approved at least annually by the Company's Board of
Trustees. This Agreement is terminable with respect to each Fund, without
penalty, on not less than ninety days' notice by the Company's Board of Trustees
or by CGFSC, FAS or U.S. Trust. This Agreement will terminate automatically in
the event of its "assignment" (as defined in the 1940 Act). The parties agree
that an assignment includes the transfer of "control" of more than 25% of the
outstanding voting securities of FAS to a company that is not a subsidiary of
Federated Investors.

8. Governing Law. This Agreement shall be governed by New York
law.

9. Notices. All notices required or permitted herein shall be
in writing and shall be deemed to be properly given when delivered personally or
by telecopier to the party entitled to receive the notice or when sent by
certified or registered mail, postage prepaid, or delivered to an
internationally recognized overnight courier service, in each case properly
addressed to the party entitled to receive such notice at the address or
telecopier number stated below or to such other address or telecopier number as
may hereafter be furnished in writing by notice similarly given by one party to
the other party hereto:

If to the Company:

Excelsior Funds
73 Tremont Street
Boston, Massachusetts 02108-3913
Telecopier Number: (617) 557-8617

With copies to:

W. Bruce McConnel, III, Esq.

<PAGE>

Drinker Biddle & Reath
1345 Chestnut Street, Suite 1100
Philadelphia, Pennsylvania 19107
Telecopier Number: (215) 988-2757

If to CGFSC:

Chase Global Funds Services Company
73 Tremont Street
Boston, Massachusetts 02108-3913
Telecopier Number: (617) 557-8617

If to FAS:

Federated Administrative Services
Federated Investors Tower
1001 Liberty Avenue
Pittsburgh, Pennsylvania 15222-3779
Telecopier Number: (412) 288-8141

If to U.S. Trust:

U.S. Trust Company of Connecticut
225 High Ridge Road
East Tower
Stamford, CT 06905
Telecopier Number: (203) 352-4488

-8-

<PAGE>

10. Miscellaneous. No provisions of this Agreement may be
changed, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought. If a change or discharge is sought against the Company,
the instrument must be signed by each Administrator. This Agreement may be
executed in one or more counterparts and all such counterparts will constitute
one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below as of the date
indicated above.

ATTEST: EXCELSIOR FUNDS

By: /s/ W. Bruce McConnel, III By: /s/ F.S. Wonham
----------------------------------- --------------------------------
Title: President
(SEAL)

ATTEST: CHASE GLOBAL FUNDS SERVICES COMPANY

By: /s/ Daniel A. Moonay By: /s/ Donald P. Hearn
----------------------------------- --------------------------------
Title: Chairman and CEO
(SEAL)

ATTEST: FEDERATED ADMINISTRATIVE SERVICES

By: /s/ Victor R. Siclari By: /s/ Joseph A. Machi
----------------------------------- --------------------------------
Title: Vice President Title: Vice President

(SEAL)

ATTEST: U.S. TRUST COMPANY
OF CONNECTICUT

By: /s/ Francis J. Hearn, Jr. By: /s/ W. Michael Funck
----------------------------------- --------------------------------
Title: President and CEO

-9-

<PAGE>

Exhibit A
to the
Administration Agreement

EXCELSIOR FUNDS
---------------
Institutional Money Fund

In consideration of the mutual covenants set forth in the
Administration Agreement dated as of May 16, 1997 among Excelsior Funds (the
"Company"), Chase Global Funds Services Company ("CGFSC"), Federated
Administrative Services ("FAS") and U.S. Trust Company of Connecticut ("U.S.
Trust"), the Company executes and delivers this Exhibit on behalf of the Funds,
and with respect to any class or series thereof, first set forth in this
Exhibit.

Pursuant to Section 3 of the Agreement, FAS agrees to provide
facilities, equipment, and personnel to carry out the following administrative
services to the Funds, with the understanding that CGFSC will provide all other
services and duties set forth in said Section 3 but not otherwise listed below:

(a) Performing a due diligence review of SEC required reports and
notices to shareholders of record and to the SEC including, without limitation,
Semi-Annual and Annual Reports to Shareholders, Semi-Annual Reports on Form
N-SAR, Proxy Statements and SEC share registration notices;

(b) Reviewing the Company's Registration Statement on Form N-1A or any
replacement therefor;

(c) Reviewing and filing with the National Association of Securities
Dealers, Inc. all sales literature (advertisements, brochures and shareholder
communications) for each of the Funds and any class or series thereof;

(d) Preparing distributor's reports to the Company's Board of Trustees;

(e) Performing internal audit examinations in accordance with a charter
to be adopted by FAS and the Company;

(f) Upon request, providing individuals reasonably acceptable to the
Company's Board of Trustees for nomination, appointment, or election as officers
of the Company, who will be responsible for the management of certain of the
Funds' affairs as determined by the Company;

<PAGE>

(g) Consulting with the Funds and the Company's Board of Trustees, as
appropriate, on matters concerning the distribution of Funds;

(h) Monitoring the Company's arrangements with respect to services
provided by certain organizations ("Service Organizations") under its
Administrative Services Plan, provided that FAS will only be responsible for
monitoring arrangements with Service Organizations with whom FAS has established
the servicing relationship on behalf of the Company. With respect to such
Service Organizations, FAS shall specifically monitor and review the services
rendered by Service Organizations to their customers who are the beneficial
owners of shares, pursuant to agreements between the Company and such Service
Organizations ("Servicing Agreements"), including, without limitation, reviewing
the qualifications of financial institutions wishing to be Service
Organizations, assisting in the execution and delivery of Servicing Agreements,
reporting to the Company's Board of Trustees with respect to the amounts paid or
payable by the Company from time to time under the Servicing Agreements and the
nature of the services provided by Service Organizations, and maintaining
appropriate records in connection with such duties; and

(i) Consulting with CGFSC and the Company regarding the jurisdictions
in which the Company's shares shall be registered or qualified for sale and, in
connection therewith, reviewing and monitoring the actions of CGFSC in
maintaining the registration or qualification of shares for sale under the
securities laws of any state. Payment of share registration fees and any fees
for qualifying or continuing the qualification of any Fund as a dealer or
broker, if applicable, shall be made by that Fund.

-2-
<PAGE>

Witness the due execution hereof this 16th day of May, 1997.

ATTEST: EXCELSIOR FUNDS

/s/ W. Bruce McConnel, III By: /s/ F.S. Wonham
- --------------------------------------- --------------------------------
Title: Secretary Title: President

(SEAL)

ATTEST: FEDERATED ADMINISTRATIVE SERVICES

/s/ Victor R. Siclari By: /s/ Joseph A. Machi
- --------------------------------------- --------------------------------
Title: Vice President Title: Vice President

(SEAL)

ATTEST: CHASE GLOBAL FUNDS SERVICES COMPANY

/s/ Daniel A. Moonay By: /s/ Donald P. Hearn
- --------------------------------------- --------------------------------
Title: Chairman and CEO
(SEAL)

-3-

<PAGE>

Exhibit B
to the
Administration Agreement

EXCELSIOR FUNDS
---------------
Institutional Money Fund

Pursuant to Section 3 of the Agreement, U.S. Trust agrees to provide
facilities, equipment, and personnel to carry out the following administrative
services to the Funds:

(a) Providing guidance and assistance in the preparation of SEC
required reports and notices to shareholders of record and to the SEC including,
without limitation, Semi-Annual and Annual Reports to Shareholders, Semi-Annual
Reports on Form N-SAR, Proxy Statements and SEC share registration notices;

(b) Reviewing the Company's Registration Statement on Form N-1A or any
replacement therefor;

(c) Consulting with the Funds and the Company's Board of Trustees, as
appropriate, on matters concerning the administration and operation of the
Funds;

(d) Monitoring the Company's arrangements with respect to services
provided by certain organizations ("Service Organizations") under its
Administrative Services Plan, provided that U.S. Trust will only be responsible
for monitoring arrangements with Service Organizations with whom U.S. Trust has
established the servicing relationship on behalf of the Company. With respect to
such Service Organizations, U.S. Trust shall specifically monitor and review the
services rendered by Service Organizations to their customers who are the
beneficial owners of shares, pursuant to agreements between the Company and such
Service Organizations ("Servicing Agreements"), including, without limitation,
reviewing the qualifications of financial institutions wishing to be Service
Organizations, assisting in the execution and delivery of Servicing Agreements,
reporting to the Company's Board of Trustees with respect to the amounts paid or
payable by the Company from time to time under the Servicing Agreements and the
nature of the services provided by Service Organizations, and maintaining
appropriate records in connection with such duties.

<PAGE>

Witness the due execution hereof this 16th day of May, 1997.

ATTEST: EXCELSIOR FUNDS

/s/ W. Bruce McConnel, III By: /s/ F.S. Wonham
- --------------------------------------- --------------------------------
Title: Secretary Title: President

(SEAL)

ATTEST: U.S. TRUST COMPANY
OF CONNECTICUT

/s/ Francis J. Hearn, Jr. By: /s/ W. Michael Funck
- --------------------------------------- --------------------------------
Title: President & CEO

-2-

<PAGE>

EXCELSIOR FUNDS
---------------

AMENDED AND RESTATED ADMINISTRATIVE SERVICES PLAN

Section 1. Upon the recommendation of Chase Global Funds
Services Company, Federated Administrative Services or U.S. Trust Company of
Connecticut (each a "Co-Administrator") as Co-Administrator of Excelsior Funds
(the "Company"), any officer of the Company (or any other person authorized by
the Company's Board) is authorized to execute and deliver, in the name and on
behalf of the Company, written agreements in substantially the form attached
hereto or in any other form duly approved by the Board of Trustees ("Servicing
Agreements") with institutions that are shareholders of record or that have
clients that are shareholders of record or beneficial owners of any of the Funds
of the Company, including without limitation the Company's service providers and
their affiliates ("Service Organizations"). Such Servicing Agreements shall
require the Service Organizations to provide or arrange for the provision of
support services as set forth therein to their clients who beneficially own
Shares of any Fund offered by the Company in consideration of a fee, computed
and paid in the manner set forth in the Servicing Agreements, at the annual rate
of up to .40% of the applicable net asset value of Shares beneficially owned by
such clients. Among other institutions, any bank, trust company, thrift
institution or broker-dealer is eligible to become a Service Organization and to
receive fees under this Plan. All expenses incurred by the Company with respect
to a particular class or series of Shares of a particular Fund in connection
with Servicing Agreements and the implementation of this Plan shall be borne
entirely by the holders of that class or series.

Section 2. The Co-Administrators shall monitor the
arrangements pertaining to the Company's Servicing Agreements with Service
Organizations in accordance with the terms of the Administration Agreement by
and between the Administrator and the Company. The Co-Administrators shall not,
however, be obliged by this Plan to recommend, and the Company shall not be
obliged to execute, any Servicing Agreement with any qualifying Service
Organization.

Section 3. So long as this Plan is in effect, the
Co-Administrators shall provide to the Company's Board of Trustees, and the
Trustees shall review, at least quarterly, a written report of the amounts
expended pursuant to this Plan and the purposes for which such expenditures were
made.

<PAGE>

Section 4. This Plan shall become effective immediately upon
the approval of the Plan (and the form of Servicing Agreement attached hereto)
by a majority of the Board of Trustees, including a majority of the trustees who
are not "interested persons" as defined in the Investment Company Act of 1940
(the "Act") of the Company and have no direct or indirect financial interest in
the operation of this Plan or in any Servicing Agreement or other agreements
related to this Plan (the "Disinterested Trustees"), pursuant to a vote cast in
person at a meeting called for the purpose of voting on the approval of this
Plan (or form of Servicing Agreement).

Section 5. Unless sooner terminated, this Plan shall continue
until July 31, 1997 and thereafter shall continue automatically for successive
annual periods provided such continuance is approved at least annually in the
manner set forth in Section 4.

Section 6. This Plan may be amended at any time by the Board
of Trustees, provided that any material amendments of the terms of this Plan
shall become effective only upon the approvals set forth in Section 4.

Section 7. This Plan is terminable at any time by vote of a
majority of the Disinterested Trustees.

Section 8. While this Plan is in effect, the selection and
nomination of the new trustees of the Company who are not "interested persons"
(as defined in the Act) of the Company shall be committed to the discretion of
the existing Disinterested Trustees.

Section 9. The Company initially adopted this Plan as of
February 9, 1996 and amended it effective February 13, 1997 and May 16, 1997.

-2-

<PAGE>

SHAREHOLDER SERVICING AGREEMENT

THIS AGREEMENT, by and between Excelsior Funds (the "Trust")
and the shareholder service organization (the "Organization") listed on the
signature page hereof;

WITNESSETH:

WHEREAS, certain transactions in shares of beneficial
interest, $0.00001 par value, of the Trust or of any series now existing or
later created of the Trust ("Shares") may be made by investors who are customers
of, and using the services of or arranged by, an Organization, including without
limitation the Company's service providers and their affiliates, that has
entered into a shareholder servicing agreement with the Trust; and

WHEREAS, the Organization wishes to make it possible for its
customers (the "Customers") to purchase Shares and wishes to act as the
Customers' agent in performing or arranging for the performance of certain
administrative functions in connection with purchases, exchanges and redemptions
of Shares from time to time upon the order and for the account of Customers and
to provide related services to its Customers in connection with their
investments in the Trust; and

WHEREAS, it is in the interest of the Trust to make the
services of the Organization available to Customers who are or may become
beneficial owners of Shares of the Trust;

NOW, THEREFORE, the Trust and the Organization hereby agree as
follows:

1. Appointment. The Organization, as an independent contractor, hereby
agrees to perform or to have performed certain services for Customers as
hereinafter set forth. The Organization's appointment hereunder is
non-exclusive, and the parties recognize and agree that, from time to time, the
Trust may enter into other shareholder servicing agreements with others without
the Organization's consent. For the purposes of this Agreement, the Organization
is deemed an independent contractor and will have no authority to act as the
Trust's agent in any respect.

<PAGE>

2. Service to be Performed.

2.1 Type of Service. The Organization shall be responsible for
performing or having performed shareholder account administrative and servicing
functions, which shall include without limitation(1): (a) assisting Customers in
designating and changing dividend options, account designations and addresses;
(b) providing necessary personnel and facilities to establish and maintain
certain shareholder accounts and records, as may reasonably be requested from
time to time by the Trust; (c) assisting in processing purchases, exchange and
redemption transactions; (d) arranging for the wiring of funds; (e) transmitting
and receiving funds in connection with Customer orders to purchase, exchange or
redeem Shares; (f) verifying and guaranteeing Customer signatures in connection
with redemption orders, transfers among and changes in Customer-designated
accounts; (g) providing periodic statements showing a Customer's account
balances and, to the extent practicable, integration of such information with
information concerning other client transactions otherwise effected with or
through the Organization; (h) furnishing on behalf of the Trust's distributor
(either separately or on an integrated basis with other reports sent to a
Customer by the Organization) periodic statements and confirmations of all
purchases, exchanges and redemptions of Shares in a Customer's account required
by applicable federal or state law, all such confirmations and statements to
conform to Rule 10b-10 under the Securities Exchange Act of 1934 and other
applicable federal or state law; (i) transmitting proxy statements, annual
reports, updating prospectuses and other communications from the Trust to
Customers; (j) receiving, tabulating and transmitting to the Trust proxies
executed by Customers with respect to annual and special meetings of
shareholders of the Trust; (k) providing reports (at least monthly, but more
frequently if so requested by the Trust's distributor) containing state-by-state
listings of the principal residences of the beneficial owners of the Shares; and
(l) providing or arranging for the provision of such other related services as
the Trust or a Customer may reasonably request. The Organization shall provide
or arrange for all personnel and facilities to perform the functions described
in this paragraph with respect to its Customers.

- --------
1. Services may be modified or omitted in a particular case and items
relettered or renumbered.

-2-

<PAGE>

2.2 Standard of Services. All services to be rendered or arranged for
by the Organization hereunder shall be performed in a professional, competent
and timely manner. The details of the operating standards and procedures to be
followed in performance of the services described above shall be determined from
time to time by agreement between the Organization and the Trust. The Trust
acknowledges that the Organization's ability to perform on a timely basis
certain of its obligations under this Agreement depends upon the Trust's timely
delivery of certain materials and/or information to the Organization. The Trust
agrees to use its best efforts to provide such materials to the Organization in
a timely manner.

3. Fees.

3.1 Fees from the Trust. In consideration for the services described in
Section 2 hereof and the incurring of expenses in connection therewith, the
Organization shall receive fees set forth in Appendix A hereto, such fees to be
paid in arrears periodically (but in no event less frequently than
semi-annually) at annual rates of up to .40% of the average daily net assets of
the Trust's Shares owned during the period for which payment has been made by
Customers for whom the Organization is the holder or agent of record or with
whom it maintains a servicing relationship. For purposes of determining the fees
payable to the Organization hereunder, the value of the Trust's net assets shall
be computed in the manner specified in the Trust's then-current prospectus for
computation of the net asset value of the Trust's Shares. The above fees
constitute all fees to be paid to the Organization by the Trust with respect to
the transactions contemplated hereby. The Trust may at any time in its
discretion suspend or withdraw the sale of its Shares.

3.2 Fees from Customers. It is agreed that the Organization may impose
certain conditions on Customers, in addition to or different from those imposed
by the Trust, such as requiring a minimum initial investment or charging
Customers direct fees for the same or similar services as are provided hereunder
by the Organization (which fees may either relate specifically to the
Organization's services with respect to the Trust or generally cover services
not limited to those with respect to the Trust). The Organization shall bill
Customers directly for such fees. In the event the Organization charges
Customers such fees, it shall notify the Trust in advance and make appropriate
prior written disclosure (such disclosure to be in accordance with all
applicable laws) to Customers of any such fees charged to the Customer. To the
extent required by applicable rules and regulations of the Securities and
Exchange Commission, the Trust shall make written disclosure of the fees paid or
to be paid to the Organization pursuant to Section 3.1 of

-3-

<PAGE>

this Agreement. It is understood, however, that in no event shall the
Organization have recourse or access to the account of any shareholder of the
Trust except to the extent expressly authorized by law or by such shareholder,
or to any assets of the Trust, for payment of any direct fees referred to in
this Section 3.2.

4. Information Pertaining to the Shares. The Organization and its
officers, employees and agents are not authorized to make any representations
concerning the Trust or the Shares to Customers or prospective Customers,
excepting only accurate communication of any information provided by or on
behalf of any administrator or distributor of the Trust or any factual
information contained in the then-current prospectus relating to the Trust or to
any series of the Trust. In furnishing such information regarding the Trust or
the Shares, the Organization shall act as agent for the Customer only and shall
have no authority to act as agent for the Trust. Advance copies or proofs of all
materials which are generally circulated or disseminated by the Organization to
Customers or prospective Customers which identify or describe the Trust shall be
provided to the Trust at least 10 days prior to such circulation or
dissemination (unless the Trust consents in writing to a shorter period), and
such materials shall not be circulated or disseminated or further circulated or
disseminated at any time after the Trust shall have given written notice within
such 10 day period to the Organization of any objection thereto.

Nothing in this Section 4 shall be construed to make the Trust
liable for the use (or accuracy unless prepared by the Trust for the specific
use) of any information about the Trust which is disseminated by the
Organization.

5. Use of the Organization's Name. The Trust shall not use the name of
the Organization (or any of its affiliates or subsidiaries) in any prospectus,
sales literature or other material relating to the Trust in a manner not
approved by the Organization prior thereto in writing; provided, however, that
the approval of the Organization shall not be required for any use of its name
which merely refers in accurate and factual terms to its appointment hereunder
and the terms hereof or which is required by law, including without limitation,
by the Securities and Exchange Commission or any state securities authority or
any other appropriate regulatory, governmental or judicial authority; provided,
further, that in no event shall such approval be unreasonably withheld or
delayed.

6. Use of the Trust's Name. The Organization shall not use the name of
the Trust on any checks, bank drafts, bank statements or forms for other than
internal use in a manner not

-4-

<PAGE>

approved by the Trust prior thereto in writing; provided, however, that the
approval of the Trust shall not be required for the use of the Trust's name in
connection with communications permitted by Section 4 hereof or (subject to
Section 4, to the extent the same may be applicable) for any use of the Trust's
name which merely refers in accurate and factual terms to the Trust in
connection with the Organization's role hereunder or which is required by law,
including without limitations, by the Securities and Exchange Commission or any
state securities authority or any other appropriate regulatory, governmental or
judicial authority; provided, further, that in no event shall such approval be
unreasonably withheld or delayed.

7. Security. The Organization represents and warrants that to the best
of its knowledge, the various procedures and systems which it has implemented
(including provision for twenty-four hours a day restricted access) with regard
to safeguarding from loss or damage attributable to fire, theft or any other
cause the Trust's records and other data and the Organization's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and procedures
on a periodic basis, and the Trust shall from time to time specify the types of
records and other data of the Trust to be safeguarded in accordance with this
Section 7.

8. Compliance with Laws. The Organization shall comply with all
applicable federal and state laws and regulations, including without limitation
securities laws. The Organization represents and warrants to the Trust that the
performance of all its obligations hereunder will comply with all applicable
laws and regulations, the provisions of its charter documents and by-laws and
all material contractual obligations binding upon the Organization. The
Organization furthermore undertakes that it will promptly, after the
Organization becomes so aware, inform the Trust of any change in applicable laws
or regulations (or interpretations thereof) or in its charter or by-laws or
material contracts which would prevent or impair full performance of any of its
obligations hereunder.

9. Reports. Quarterly, and more frequently to the extent requested by
the Trust from time to time, the Organization agrees that it will provide the
administrator of the Trust with a written report of the amounts expended by the
Organization pursuant to this Agreement and the purposes for which such
expenditures were made. Such written reports shall be in a form satisfactory to
the Trust and shall supply all information

-5-

<PAGE>

necessary for the Trust to discharge its responsibilities under
applicable laws and regulations.

10. Record Keeping.

10.1 Section 31. The Organization shall maintain records in a form
reasonably acceptable to the Trust and in compliance with applicable laws and
the rules and regulations of the Securities and Exchange Commission, including
but not limited to the record-keeping requirements of Section 31 of the
Investment Company Act of 1940, as amended (the "1940 Act") and the rules
thereunder. Such records shall be deemed to be the property of the Trust and
will be made available at the Trust's request for inspection and use by the
Trust, representatives of the Trust and governmental authorities. The
Organization agrees that, for so long as it retains any records of the Trust, it
will meet all reporting requirements pursuant to the 1940 Act and applicable to
the Organization with respect to such records. Upon termination of this
Agreement, the Organization shall deliver to the administrator of the Trust all
books and records maintained by the Organization and deemed to be the Trust's
property hereunder.

10.2 Rules 17a-3 and 17a-4. The Organization shall maintain accurate
and complete records with respect to services performed by the Organization in
connection with the purchase and redemption of Shares. Such records shall be
maintained in form reasonably acceptable to the Trust and in compliance with the
requirements of all applicable laws, rules and regulations, including without
limitation, Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934, as
amended, pursuant to which any dealer of the Shares must maintain certain
records. All such records maintained by the Organization shall be the property
of such dealer and will be made available for inspection and use by the Trust or
such dealer upon the request of either. The Organization shall file with the
Securities and Exchange Commission and other appropriate governmental
authorities, and furnish to the Trust and any such dealer copies of, all reports
and undertakings as may be reasonably requested by the Trust or such dealer in
order to comply with the said rules. If so requested by any such dealer, the
Organization shall confirm to such dealer its obligations under this Section
10.2 by a writing reasonably satisfactory to such dealer.

10.3 Transfer of Customer Data. In the event this Agreement is
terminated or a successor to the Organization is appointed, the Organization
shall transfer to such designee as the Trust may direct a certified list of the
shareholders of the Trust serviced by the Organization (with name, address and
tax identification or Social Security number, if any), a complete record of the
account of each such shareholder and the status thereof, and all other

-6-

<PAGE>

relevant books, records, correspondence, and other data established or
maintained by the Organization under this Agreement. In the event this Agreement
is terminated, the Organization will use its best efforts to cooperate in the
orderly transfer of such duties and responsibilities, including assistance in
the establishment of books, records and other data by the successor.

10.4 Survival of Record-Keeping Obligations. The record-keeping
obligations imposed in this Section 10 shall survive the termination of this
Agreement for a period of three years.

10.5 Obligations Pursuant to Agreement Only. Nothing in this Section 10
shall be construed so that the Organization would, by virtue of its role
hereunder, be required under applicable law to maintain the records required to
be maintained by it under this Section 10, but is understood that the
Organization has agreed to do so in order to enable the Trust and its dealer or
dealers to comply with laws and regulations applicable to them.

10.6 Organization's Rights to Copy Records. Anything in this Section 10
to the contrary notwithstanding, except to the extent otherwise prohibited by
law, the Organization shall have the right to copy, maintain and use any records
maintained by the Organization pursuant to this Section 10, except as otherwise
prohibited by Sections 4 and 6 hereof.

11. Force Majeure. The Organization shall not be liable or responsible
for delays or errors by reason of circumstances beyond its reasonable control,
including, but not limited to, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdown, flood or
catastrophe, Acts of God, insurrection, war, riots or failure of communication
or power supply.

12. Indemnification.

12.1 Indemnification of the Organization. The Trust will indemnify and
hold the Organization harmless from all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) from any claim,
demand, action or suit (collectively, "Claims") arising in connection with
material misstatements or omissions in the Trust's Prospectus. Notwithstanding
anything herein to the contrary, the Trust will indemnify and hold the
Organization harmless from any and all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) resulting from any
Claim as a result of its acting in accordance with any written instructions
reasonably believed by the Organization to have been

-7-

<PAGE>

executed by any person duly authorized by the Trust, or as a result of acting in
reliance upon any instrument or stock certificate reasonably believed by the
Organization to have been genuine and signed, countersigned or executed by a
person duly authorized by the Trust, excepting only the negligence or bad faith
of the Organization.

In any case in which the Trust may be asked to indemnify or
hold the Organization harmless, the Trust shall be advised of all pertinent
facts concerning the situation in question and the Organization shall use
reasonable care to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present a claim for
indemnification against the Trust. The Trust shall have the option to defend the
Organization against any Claim which may be the subject of indemnification
hereunder. In the event that the Trust elects to defend against such Claim, the
defense shall be conducted by counsel chosen by the Trust and satisfactory to
the Organization. The Organization may retain additional counsel at its expense.
Except with the prior written consent of the Trust, the Organization shall not
confess any Claim or make any compromise in any case in which the Trust will be
asked to indemnify the Organization.

12.2 Indemnification of the Trust. Without limiting the rights of the
Trust under applicable law, the Organization will indemnify and hold the Trust
harmless from all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) from any Claim (a) arising from (i) the
bad faith or negligence of the Organization, its officers, employees or agents,
(ii) any breach of applicable law by the Organization, its officers, employees
or agents, (iii) any action of the Organization, its officers, employees or
agents which exceeds the legal authority of the Organization or its authority
hereunder, or (iv) any actions, inactions, errors or omissions of the
Organization, its officers, employees or agents with respect to the purchase,
redemption, transfer and registration of Customers' Shares or the Trust's
verification or guarantee of any Customer signature.

In any case in which the Organization may be asked to
indemnify or hold the Trust harmless, the Organization shall be advised of all
pertinent facts concerning the situation in question and the Trust shall use
reasonable care to identify and notify the Organization promptly concerning any
situation which presents or appears likely to present a claim for
indemnification against the Organization. The Organization shall have the option
to defend the Trust against any Claim which may be the subject of
indemnification hereunder. In the event that the Organization elects to defend
against such Claim, the defense shall be

-8-
<PAGE>

conducted by counsel chosen by the Organization and satisfactory to the Trust.
The Trust may retain additional counsel at its expense. Except with the prior
written consent of the Organization, the Trust shall not confess any Claim or
make any compromise in any case in which the Organization will be asked to
indemnify the Trust.

12.3 Survival of Indemnities. The indemnities granted by the parties in
this Section 12 shall survive the termination of this Agreement.

13. Notices. All notices or other communications hereunder to either
party shall be in writing and shall be deemed sufficient if mailed to such party
at the address of such party set forth on the signature page of this Agreement
or at such other address as such party may have designated by written notice to
the other.

14. Further Assurances. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.

15. Termination. Unless sooner terminated, this Agreement will continue
until February 9, 1997 and thereafter will continue automatically for successive
annual periods provided such continuance is specifically approved at least
annually by vote of a majority of (i) the Board of Trustees of the Trust and
(ii) those Trustees who are not "interested persons" (as defined in the 1940
Act) of the Trust and have no direct or indirect financial interest in the
operation of the Trust's Administrative Services Plan or in any agreement
related thereto cast in person at a meeting called for the purpose of voting on
such approval ("Disinterested Trustees"). This Agreement is terminable, without
penalty, at any time by the Trust (which termination may be by a vote of a
majority of the Disinterested Trustees) or by you upon notice to the Trust.

16. Changes; Amendments. This Agreement may be changed or amended only
by written instrument signed by both parties hereto.

17. Subcontracting By Organization. The Organization may, with the
written approval of the Trust (such approval not to be unreasonably withheld),
subcontract for the performance of the Organization's obligations hereunder with
any one or more persons, including but not limited to any one or more persons
which is an affiliate of the Organization; provided, however, that the
Organization shall be as fully responsible to the Trust for the acts and
omissions of any subcontractor as it would be for its own acts or omissions.

-9-
<PAGE>

18. Compliance with Laws and Policies; Cooperation. The Trust hereby
agrees that it will comply with all laws and regulations applicable to its
operations and the Organization agrees that it will comply with all laws and
regulations applicable to its operations hereunder. Each party understands that
the other may from time to time adopt or modify policies relating to the subject
matter of this Agreement, in which case the party adopting or modifying such a
policy shall notify the other thereof and the parties shall consider the
applicability thereof and endeavor to comply therewith to the extent not
impracticable or unreasonably burdensome. Each of the parties agrees to
cooperate with the other in connection with the performance of this Agreement
and the resolution of any problems, questions or disagreements in connection
herewith.

18.1 Annual Financial Reports. At least once a year, the Trust shall
send to the record owners of its Shares the Trust's audited financial
statements.

18.2 Annual Certification. At least once a year, the Organization shall
certify to the Trust that it is conducting its business in accordance with the
terms and conditions of the Agreement.

19. Single Portfolio. Notwithstanding anything in this Agreement to the
contrary, any amount owed by the Trust to the Organization under this Agreement
or otherwise with respect to any matter hereunder shall be paid only from and
shall be limited to the assets and property of the particular investment
portfolio of the Trust to which the matter relates.

20. Miscellaneous. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware. The captions
in this Agreement are included for convenience of reference only and in no way
define or limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument. The terms of this
Agreement shall become effective as of the date set forth below.

-10-
<PAGE>

IN WITNESS WHEREOF, intending to be legally bound hereby, the
parties hereto have caused this Agreement to be executed and delivered in their
names and on their behalf by the undersigned, thereunto duly authorized, all as
of the day and year set forth below.

Dated as of: ___________________

Address for Notices:
Excelsior Funds _________________________
_________________________
_________________________
By: ___________________________ _________________________
(Authorized Officer)

Address for Notices:
_________________________________ ________________________
[Service Organization] ________________________
________________________
________________________

By: _____________________________
(Authorized Officer)

-11-

<PAGE>

APPENDIX A
----------

EXCELSIOR FUNDS

Pursuant to the terms and conditions set forth in the attached
Shareholder Servicing Agreement, the Organization will receive the fees set
forth below in consideration for the services described in Section 2 of said
Agreement and the incurring of expenses in connection therewith, such fees
(calculated pursuant to Section 3.1 of said Agreement) to be paid in arrears
periodically (but in no event less frequently than semi-annually):

================================================================
FUND Shareholder
Servicing
Fee
================================================================
Institutional Money Fund __ BP
================================================================

-12-

<PAGE>

Law Offices

DRINKER BIDDLE & REATH LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Telephone: (215) 988-2700
TELEX: 834684
FAX: (215) 988-2757

December 29, 1997

Excelsior Funds
73 Tremont Street
Boston, MA 02108

Re: Post-Effective Amendment No. 6 to Registration
Statement on Form N-1A of Excelsior Funds
----------------------------------------------

Ladies and Gentlemen:

We have acted as counsel for Excelsior Funds, a Delaware business trust
(the "Trust"), in connection with the registration under the Securities Act of
1933 of shares representing interests in the Trust's Institutional Money Fund
(the "Shares"). The Trust is authorized to issue an unlimited number of the
Shares. The Board of Trustees of the Trust has previously authorized the
issuance of the Shares to the public.

We have reviewed the Trust's Declaration of Trust, its by-laws,
resolutions adopted by its Board of Trustees and holders of its outstanding
Shares, and such other legal and factual matters as we have deemed appropriate.
We assume that the Shares have been or will be issued against payment therefor
as described in the Trust's applicable prospectus relating thereto.

This opinion is based exclusively on the Delaware Business Trust Act
and the federal law of the United States of America.

Based on the foregoing, we are of the opinion that the Shares have been
and will be legally issued, fully paid and non-assessable by the Trust.

<PAGE>

-2-

We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as part of Post-Effective Amendment No. 6 to the Trust's
Registration Statement on Form N-1A.

Very truly yours,

/s/ Drinker Biddle & Reath LLP
-------------------------------
DRINKER BIDDLE & REATH LLP

<PAGE>

CONSENT OF COUNSEL

We hereby consent to the use of our name and to
the reference to our Firm under the caption "Counsel" in the Statement of
Additional Information that is included in Post-Effective Amendment No. 6 to
Excelsior Funds' Registration Statement (No. 33-71306) on Form N-1A under the
Securities Act of 1933, as amended (the "1933 Act"), and the Investment Company
Act of 1940, as amended. This consent does not constitute a consent under
Section 7 of the 1933 Act, and in consenting to the use of our name and the
reference to our Firm under such caption we have not certified any part of the
Registration Statement and do not otherwise come within the categories of
persons whose consent is required under said Section 7 or the rules and
regulations of the Securities and Exchange Commission thereunder.

/s/ Drinker Biddle & Reath LLP
----------------------------
DRINKER BIDDLE & REATH LLP

Philadelphia, Pennsylvania
December 30, 1997

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 6 to the registration statement on Form N-1A (the "Registration
Statement") of Excelsior Funds of our report dated October 28, 1997, relating to
the financial statements and financial highlights of Excelsior Institutional
Money Fund appearing in the August 31, 1997 Annual Report of Excelsior
Institutional Money Fund, which are also incorporated by reference into the
Registration Statement. We also consent to the references to us under the
heading "Financial Highlights" in the Prospectus and under the headings
"Independent Accountants" and "Financial Statements" in the Statement of
Additional Information.

/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Boston, Massachusetts
December 23, 1997

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this Post-Effective Amendment No. 6
to the registration statement on Form N-1A (the "Registration Statement") of
Excelsior Funds of our report dated October 6, 1997, relating to the financial
statements and financial highlights of the Cash Reserves Portfolio appearing in
the August 31, 1997 Annual Report of Excelsior Institutional Money Fund, which
are also incorporated by reference into the Registration Statement. We also
consent to the reference to us under the headings "Independent Accountants" and
"Financial Statements" in the Statement of Additional Information.

/s/ Price Waterhouse
- --------------------
Chartered Accountants
Toronto, Ontario
December 23, 1997

<PAGE>
November 3, 1993

Excelsior Funds
6 St. James Avenue
Boston, Massachusetts 02116

Ladies and Gentlemen:

With respect to our purchase from you of 50,000 shares of
beneficial interest of Excelsior Institutional Money Fund and 50,000 shares of
beneficial interest of Excelsior Institutional Treasury Money Fund (the "Initial
Shares"), each a series of Excelsior Funds (the Excelsior Institutional Money
Fund and the Excelsior Institutional Treasury Money Fund are collectively
referred to herein as the "Funds"), we hereby advise you that we are purchasing
such Initial Shares with no intention to dispose of them either through resale
to others or redemption by the Funds.

The amount paid by each Fund on any redemption by us of any
such Initial Shares will be reduced by the pro rata portion of any unamortized
organization expenses which the number of Initial Shares redeemed bears to the
total number of Initial Shares outstanding immediately prior to such redemption.

Very truly yours,
Concord Financial Group, Inc.

By: /s/Richard A. Fabietti
---------------------------
Name: Richard A. Fabietti
Title: Treasurer

<ARTICLE> 6
<CIK> 0000914535
<NAME> CASH RESERVES PORTFOLIO
<SERIES>
<NUMBER> 01
<NAME> EXCELSIOR FUNDS

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-END> AUG-31-1997
<INVESTMENTS-AT-COST> 7,587,132,207
<INVESTMENTS-AT-VALUE> 7,587,132,207
<RECEIVABLES> 70,969,862
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 188
<TOTAL-ASSETS> 7,658,102,257
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 702,317
<TOTAL-LIABILITIES> 702,317
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 7,657,399,940
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 7,657,399,940
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 345,707,841
<OTHER-INCOME> 0
<EXPENSES-NET> 6,103,715
<NET-INVESTMENT-INCOME> 339,604,126
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 339,604,126
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 33,685,999,190
<NUMBER-OF-SHARES-REDEEMED> (30,810,390,668)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3,215,212,648
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 9,148,204
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 13,906,693
<AVERAGE-NET-ASSETS> 6,107,647,562
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from the August
31, 1997 Excelsior Institutional Money Fund Annual Report in its entirety by
reference to such report.
</LEGEND>
<CIK> 0000914535
<NAME> EXCELSIOR FUNDS
<SERIES>
<NUMBER> 02
<NAME> EXCELSIOR FUNDS

<S> <C>
<PERIOD-TYPE> 12-MOS
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