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EXCELSIOR INSTITUTIONAL MONEY FUND
LOGO
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Excelsior Funds
6 St. James Avenue, Boston, Massachusetts 02116
For initial purchase or existing account information, call (800) 909-1989
(from overseas, call (617) 557-1755)
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This Prospectus describes Excelsior Institutional Money Fund (the "Fund"),
a mutual fund offered to institutional investors. The Fund is a separate
series of Excelsior Funds (the "Trust"), an open-end diversified management
investment company.
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 Trust seeks to achieve the investment objective
of the Fund by investing all of the investable assets of the Fund in Cash
Reserves Portfolio (the "Portfolio"), a diversified open-end management
investment company with the same investment objective as the Fund. Cash
Reserves 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.
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 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 Trust seeks to achieve the Fund's investment
objective by investing all of the Fund's 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" on page 7.
The Fund is distributed by Signature Broker-Dealer Services, Inc.
("SBDS"). The Portfolio is advised by Citibank, N.A. (the "Investment
Adviser"). The Fund receives supplemental investment management services from
United States Trust Company of New York ("U.S. Trust").
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 (617) 423-0800. The Statement of Additional
Information bears the same date as this Prospectus and is incorporated by
reference in its entirety into this Prospectus.
Prospectus dated January 1, 1997
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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,
1996, 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(1) (after fee waivers) .............................. .07%
12b-1 Fees ........................................................ None
Other Expenses
Administration Fees ............................................. .01%
Administrative Servicing Fees ................................... .09%
Other Operating Expenses (after expense reimbursements)(2)....... .08%
---
Total Fund Operating Expenses (after fee waivers and expense
reimbursements) ................................................. .25%
===
</TABLE>
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(1)Reflects fees incurred by the Portfolio for advisory services rendered by
the Investment Adviser. U.S. Trust receives no additional fee for
providing supplemental investment management services to the Fund. See
"Management of the Trust and the Portfolio" below.
(2)Includes the other operating 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:
<TABLE>
<CAPTION>
<S> <C>
1 Year ............................................................. $ 3
3 Years ............................................................ $ 8
5 Years ............................................................ $14
10 Years ........................................................... $32
</TABLE>
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 administrator has voluntarily
agreed to 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 be equal to
.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, "Other operating expenses" of the Fund would be
equal on an annual basis to 0.13% of the average daily net assets of the
Fund, and "Total Fund Operating Expenses," including the Fund's share of
Portfolio expenses, would be equal on an annual basis to 0.69% of the average
daily net assets of the Fund. For more information about the expenses of the
Fund and the Portfolio, see "Management of the Trust and the Portfolio."
1
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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.
<TABLE>
<CAPTION>
For the period
November 8, 1993
For the Year (Commencement of
For the Year Ended Ended Operations) to
August 31, 1996 August 31, 1995 August 31, 1994
------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period .......... $ 1.00 $ 1.00 $ 1.00
Net investment income from operations ......... 0.0547 0.0579 0.0308
Dividends from net investment income .......... (0.0547) (0.0579) (0.0308)
-------- -------- --------
Net asset value, end of period ................ $ 1.00 $ 1.00 $ 1.00
======== ======== ========
Total return .................................. 5.61% 5.95% 3.87%(2)
Ratios:
Net investment income to average net
assets(1) ................................ 5.55% 5.59% 4.39%(2)
Expenses to average net assets(1) ........... 0.25% 0.25% 0.19%(2)
Total net assets, end of period (000's omitted) $293,290 $638,111 $770,658
</TABLE>
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(1)Reflects the Fund's proportionate share of the Portfolio's expenses as
well as voluntary fee waivers. 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>
<CAPTION>
<S> <C> <C> <C>
Net investment income to average net assets 5.11% 5.16% 4.28%(2)
Expenses to average net assets ............ 0.69% 0.68% 0.31%(2)
</TABLE>
(2)Annualized.
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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 Trust seeks to achieve the investment objective
of the Fund by investing all of the investable assets of the Fund in Cash
Reserves Portfolio, a diversified open-end management investment company with
the same investment objective as the Fund. Cash Reserves 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 investment objectives and 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.
Cash Reserves 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 Cash Reserves Portfolio mature or are
deemed to mature within 397 days from the date of acquisition, and the
average maturity of the investments held by Cash Reserves Portfolio (on a
dollar-weighted basis) is 90 days or less. All investments by Cash Reserves
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 1940 Act, the Fund and Cash Reserves
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,
Cash Reserves Portfolio must
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invest all 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. Cash Reserves 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 Cash Reserves Portfolio. These obligations
include, but are not limited to, negotiable certificates of deposit, banker's
acceptances and fixed time deposits. Cash Reserves 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. Cash Reserves 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 Cash Reserves
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 Cash Reserves 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 Cash Reserves Portfolio's
right to transfer a beneficial interest in the deposit to a third party.
Cash Reserves 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 Cash Reserves 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. Cash Reserves 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. Cash Reserves Portfolio does not
purchase any bank obligation issued by the Investment Adviser or any of its
affiliates.
Since Cash Reserves 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 eco-
4
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nomic conditions play an important part in the operation of this industry,
and exposure to credit losses arising from possible financial difficulties of
borrowing might affect a bank's ability to meet its obligations.
Since Cash Reserves 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 Cash Reserves 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 Cash Reserves 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. Cash Reserves
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 Group ("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
5
<PAGE>
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
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 Cash Reserves 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, Cash Reserves Portfolio might be
delayed, or may incur costs or possible losses of principal and income, in
selling the collateral. Cash Reserves 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 Cash Reserves Portfolio's investment
in repurchase obligations are designed to minimize Cash Reserves 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.
Cash Reserves 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 Cash Reserves Portfolio's investments. In the
event exchange controls or non-U.S. withholding taxes are imposed with
respect to any of Cash Reserves Portfolio's investments, the effect may be to
reduce the income received by Cash Reserves Portfolio on such investments.
Lending of Portfolio Securities. Consistent with applicable regulatory
requirements and in order to generate additional income, Cash Reserves
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 Cash Reserves
Portfolio would not exceed 33 1/3 % of the Portfolio's assets.
In the event of the bankruptcy of the other party to a securities loan,
Cash Reserves Portfolio could experience delays in recovering the securities
loaned. To the extent that, in the meantime, the value of the securities
loaned has increased, Cash Reserves 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
6
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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.
* * *
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 Trust seeks to achieve the investment objective of
the Fund by investing all of the investable assets of the Fund 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 SBDS at (617) 423-0800. 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
7
<PAGE>
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 of the Portfolio. Subject to
exceptions that are not inconsistent with applicable rules or policies of the
Securities and Exchange Commission, whenever the Trust is requested to vote
on matters pertaining to the Portfolio, the Trust will hold a meeting of
shareholders of the Fund and will cast all of its votes in the same
proportion as the votes of the Fund's shareholders. Fund shareholders who do
not vote will not affect the Trust's votes at the Portfolio meeting. The
percentage of the Trust's votes representing Fund shareholders not voting
will be voted by the trustees or officers of the Trust in the same proportion
as Fund shareholders who do, in fact, vote. 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. Notwithstanding the above, there are other means for meeting
shareholder redemption requests, such as borrowing.
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 interest of the Fund to do so. Upon any such withdrawal, the Board of
Trustees of the Trust would consider what action might be taken, including
the investment of all the assets of the Fund in another pooled investment
entity having the same investment objective as the Fund or the retaining of
an investment adviser to manage the Fund's assets in accordance with the
investment policies described 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 description of the expenses of
the Portfolio, see "Management of the Trust and the Portfolio" 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 as of 3 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, Presidents' Day, Good Friday, Memorial Day, Independence Day,
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.
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.
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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
and accepted by the Distributor. 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, Signature
Broker-Dealer Services, Inc. ("SBDS"), 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"). Certain Institutional Investors (each a
"Shareholder Organization") may elect to hold of record Shares for their
customers ("Customers") and to record beneficial ownership of Shares on the
account statements provided to their 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 Chase Global Funds Services Company ("CGFSC"), the
sub-transfer agent, 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 Customers.
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.
The Trust enters into shareholder servicing agreements with Shareholder
Organizations which agree to provide their Customers various shareholder
administrative services with respect to their Shares (hereinafter referred to
as "Service Organizations"). Shares in the Fund bear the expense of fees
payable to Service Organizations for such services. See "Management of the
Trust and the Portfolio -- Service Organizations."
PURCHASES BY WIRE
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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The Chase Manhattan Bank, N.A.
ABA #021000021
Excelsior Funds
Credit DDA #910-2-733046
[Account Registration]
[Account Number]
[Wire Control Number] *See Above*
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 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
For investors who have previously selected the telephone purchase option,
a purchase order may be placed 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 acceptance of
the 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 establishing the telephone purchase option, the 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, investors 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 telephonic instructions
and/or requiring the caller to provide some form of personal identification.
This service 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 additional fees. Customers should
contact their Shareholder Organization directly for further information.
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PURCHASES BY MAIL
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 PROCEDURES
Investors may redeem all or any portion of the Shares in their account at
the net asset value next determined after prior receipt in good form and
acceptance of an order for redemption. Proceeds from redemption orders
received and accepted 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 investors to have on file appropriate documentation
authorizing redemptions by the institution or entity before a redemption
request is considered in proper form.
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.
An investor redeeming Shares through a registered investment adviser or
certified financial planner may incur transaction charges in connection with
such redemptions. Such investors should contact their registered investment
adviser or certified financial planner for further information on transaction
fees.
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.
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
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<PAGE>
take up to fifteen days. An 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 purchase check is not collected, the
purchase will be cancelled and CGFSC will charge a fee of $25.00 to the
investor's account.
REDEMPTION BY WIRE OR TELEPHONE
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. 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 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 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. See "Purchases by Telephone" above.
REDEMPTION BY MAIL
Shares may be redeemed 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 owned by its authorized
officer exactly as the Shares are registered.
A redemption request for an amount in excess of $5,000, 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
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<PAGE>
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 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
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
nine 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;
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
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
by investing principally in a broad range of investment grade fixed income
securities;
Bond Index Fund, a fund that seeks to provide investment results that
correspond to the investment performance of the Lehman Brothers Aggregate
Bond Index;
Balanced Fund, a fund that seeks to provide a high total return from a
diversified portfolio of equity and fixed income securities;
Equity Growth Fund, a fund seeking to provide a high level of capital
appreciation through investment in a diversified portfolio of common stocks
of primarily medium and large capitalization companies which are believed to
have potential for above-average growth in earnings and dividends;
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<PAGE>
International Equity Fund, a fund seeking to provide long-term capital
appreciation through investment in a diversified portfolio of marketable
foreign 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; and
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.
An exchange involves a redemption of all or a portion of the Shares in the
Fund and the investment of the redemption proceeds in 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. The shares of the portfolio to be
acquired will be purchased at the per share net asset value of those shares
next determined after acceptance of the exchange request.
Investors may find the exchange privilege useful if their investment
objectives or market outlook should change after they invest in the Fund. For
further information regarding exchange privileges, shareholders should call
(800) 909-1989 (from overseas, please call (617) 557-1755). Excelsior Funds,
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 will use such procedures as are considered reasonable,
including recording those instructions and requesting information as to
account registration.
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
the 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.
RETIREMENT PLANS
Shares are available for purchase by investors in connection with the
following tax-deferred prototype retirement plans offered by U.S. Trust:
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 forced redemption provisions described above. Detailed
information concerning eligibility, service fees and other matters related to
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<PAGE>
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 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
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<PAGE>
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.
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 Funds 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
Funds by non-U.S. persons also may be subject to tax under the laws of their
own jurisdiction.
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MANAGEMENT OF THE TRUST AND THE PORTFOLIO
The Trust has retained the services of SBDS as administrator. Cash
Reserves Portfolio has retained the services of Signature Financial Group
(Cayman), Ltd. as administrator. Citibank is the investment adviser for the
Portfolio. The Trust seeks to achieve the investment objectives 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. The Trust has retained the services of U.S. Trust
at no additional fee to perform certain investment management functions. 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 $83
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 0.06% of the
Portfolio's average daily net assets, and the Investment Adviser voluntary
waived fees at the annual rate of 0.09% of the Portfolio's average daily net
assets, during the fiscal year ended August 31, 1996.
SUPPLEMENTAL INVESTMENT MANAGEMENT SERVICES
The Fund receives supplemental investment management services from U.S.
Trust pursuant to an investment advisory agreement between the Trust and U.S.
Trust (the "Supplemental Advisory Agreement"). U.S. Trust receives no
additional fee or other compensation for its services under the Supplemental
Advisory Agreement. U.S. Trust makes no investment decisions with respect to
the Fund or the Portfolio. Under the Supplemental Advisory Agreement, U.S.
Trust reviews certain investment management and custody processes.
U.S. Trust is a state-chartered bank and trust company which provides
trust and banking services to individuals, corporations and institutions,
both nationally and internationally, including investment management, estate
and trust administration, financial planning, corporate trust and agency, and
personal and corporate banking. U.S. Trust is a member bank of the Federal
Reserve System and the Federal Deposit Insurance Corporation and is one of
the twelve members of the New York Clearing House Association. On November
30, 1996, U.S. Trust's Asset Management Group had approximately $51 billion
in assets under management. U.S. Trust, which has its principal offices at
114 W. 47th Street, New York, New York 10036-1532, is a subsidiary of U.S.
Trust Corporation, a registered bank holding company.
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<PAGE>
U.S. Trust also serves an investment adviser to Excelsior Funds, Inc. and
Excelsior Tax-Exempt Funds, Inc., which are registered investment companies
consisting of the following funds: Equity Fund; Income and Growth Fund;
Long-Term Supply of Energy Fund; Productivity Enhancers Fund;
Environmentally-Related Products and Services Fund; Aging of America Fund;
Communication and Entertainment Fund; Business and Industrial Restructuring
Fund; Global Competitors Fund; Early Life Cycle Fund; International Fund;
Emerging Americas Fund; Pan European Fund; Pacific/Asia Fund; Money Fund;
Government Money Fund; Treasury Money Fund; Short-Term Government Securities
Fund; Intermediate-Term Managed Income Fund; Managed Income Fund; Tax-Exempt
Money Fund; Short-Term Tax-Exempt Securities Fund; New York Intermediate-Term
Tax-Exempt Fund; California Tax-Exempt Income Fund; Intermediate-Term
Tax-Exempt Fund and Long-Term Tax-Exempt Fund. U.S. Trust also serves as
investment adviser to the Excelsior Institutional Trust family of funds.
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 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 Administrative Services Agreements, SBDS and Signature
Financial Group (Cayman), Ltd. (together with SBDS, the "Administrators")
provide the Trust and Cash Reserves 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 all documents required for
compliance by the Trust and the Portfolio with applicable laws and
regulations; the preparation and distribution of materials in connection with
meetings of trustees and investors; and arranging for the maintenance of
books and records of the Trust and the Portfolio. The Administrators provide
persons satisfactory to the Board of Trustees of the Trust and the Portfolio
to serve as trustees and officers of the Trust and the Portfolio. Such
officers and trustees of the Trust or the Portfolio may be directors,
officers or employees of the Administrators or their affiliates. For its
services and facilities, SBDS receives from the Trust a fee accrued daily and
paid monthly at an annual rate equal to 0.01% of the average daily net assets
of the Fund, with an annual minimum payment of $20,000, and Signature
Financial Group (Cayman), Ltd. receives from Cash Reserves Portfolio a fee
accrued daily and paid monthly at an annual rate equal to 0.05% of the
aggregate average daily net assets of the Portfolio. However, the
Administrator for the Portfolio has voluntarily agreed to waive the fee
payable from the Portfolio on a month-to-month basis, and the Administrator
for the Fund has voluntarily agreed to reimburse the Fund for certain
expenses. SBDS is a registered broker-dealer. Each of the Administrators is a
subsidiary of Signature Financial Group, Inc. For the year ended August 31,
1996, the Fund paid SBDS administration fees at the annual rate of 0.01% of
the Fund's average daily net assets, and Signature Financial Group (Cayman),
Ltd. waived all administration fees with respect to the Portfolio.
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 Signature Financial Group (Cayman), Ltd.
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
18
<PAGE>
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 would
otherwise be performed by Signature Financial Group (Cayman), Ltd. as set
forth above. For its services as sub-administrator, Citibank receives such
compensation as from time to time is agreed upon by Signature Financial Group
(Cayman), Ltd. 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 Signature
Financial Group (Cayman), Ltd.
SERVICE ORGANIZATIONS
The Trust enters into an agreement ("Servicing Agreement") with each
Service Organization requiring it to provide administrative support services
to its Customers beneficially owning Shares. As a consideration for the
administrative services provided to Customers, the Fund will pay the Service
Organization an administrative service fee at an annual rate of up to .40% of
the average daily net asset value of its Shares held by the Service
Organization's Customers. Such services may include assisting in processing
purchase, exchange and redemption requests; transmitting and receiving funds
in connection with Customer orders to purchase, exchange or redeem Shares;
and providing periodic statements. Under the terms of the Servicing
Agreement, Service Organizations will be required to provide to Customers a
schedule of any fees that they may charge in connection with a Customer's
investment.
CUSTODIANS AND TRANSFER AGENTS
U.S. Trust serves as custodian of the Fund's assets. Communications to the
custodian should be directed to United States Trust Company of New York, 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.
Cash Reserves Portfolio has entered into a Transfer Agency and Service
Agreement with State Street Bank & Trust Company ("State Street"), pursuant
to which State Street (or its affiliate, State Street Canada, Inc.) acts as
transfer agent for Cash Reserves Portfolio. The transfer agent maintains an
account for each investor in the Portfolio and performs other transfer agency
functions. Pursuant to a Custodian Contract, State Street also acts as
custodian of the Portfolio's assets. See "Management of the Trust and the
Portfolio -- Transfer Agents and Custodians" in the Statement of Additional
Information.
DISTRIBUTOR
Pursuant to a Distribution Agreement, SBDS acts as principal underwriter
for the Shares. SBDS and its affiliated entities serve as underwriters and
administrators to other mutual funds. SBDS receives no compensation for its
services under the Distribution Agreement.
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.
19
<PAGE>
Expenses of the Trust also include all fees under its Administrative
Services 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, 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, Citibank or other Shareholder
Organizations in connection with purchases of Fund Shares, U.S. Trust,
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
20
<PAGE>
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 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.
21
<PAGE>
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.
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<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 promissory
obligations not having an original maturity in excess of nine months. Prime-1
is the highest commercial paper rating employed by Moody's. Issuers rated
Prime-1 (or related supporting institutions) have a superior capacity for
repayment of short-term promissory obligations. Prime-1 repayment capacity
will normally be evidenced by 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 Group ("Standard &
Poor's") is a current assessment of the likelihood of timely payment of debt
considered short-term in the relevant market. 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 to be the highest grade obligation and to have an
extremely strong capacity to pay interest and repay principal.
A-1
<PAGE>
LOGO CHASE GLOBAL FUNDS SERVICES COMPANY NEW
CLIENT SERVICES ACCOUNT
P.O. BOX 2798 APPLICATION
BOSTON, MA 02208-2798
ACCOUNT REGISTRATION (800) 909-1989
|_| Individual |_| Joint Tenants |_| Trust |_| Gift/Transfer to Minor
|_| Other __________________________
Note: Joint tenant registration will be as "joint tenants with right of
survivorship" unless otherwise specified. Trust registrations should specify
name of the trust, trustee(s), beneficiary(ies), and the date of the trust
instrument. Registration for Uniform Gifts/Transfers to Minors should be in the
name of one custodian and one minor and include the state under which the
custodianship is created (using the minor's Social Security Number ("SSN"). For
IRA accounts a different application is required.
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------------------- --------------------------------------------------
Name(s) (please print) Social Security # or Taxpayer Identification #
( )
- ------------------------------------------------- --------------------------------------------------
Name Telephone #
|_| U.S. Citizen |_| Other (specify)_____________
- -------------------------------------------------
Address
- -------------------------------------------------
City/State/Zip Code
</TABLE>
Fund Selection (The minimum initial investment is $1,000. Make checks payable
to "Excelsior Funds.")
<TABLE>
<S> <C>
Initial Investment
|_| Institutional Money Fund $___________ 803
Note: If investing by wire, A. By Mail: Enclosed is a check in the amount of
you must obtain a Bank Wire $___________ payable to "Excelsior Funds."
Control Number. To do so, B. By Wire: A bank wire in the amount of $__________ has been
please call (800) 909-1989 sent to the Fund from___________________ ___________________
and ask for the Wire Desk. Name of Bank Wire Control Number
</TABLE>
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
<PAGE>
Account Privileges
<TABLE>
<S> <C>
Telephone exchange and redemption Authority to transmit redemption proceeds to
|_| I/We appoint CGFSC as my/our agent to pre-designated account.
act upon instructions received by I/We hereby authorize CGFSC to act upon
telephone in order to effect the telephone instructions received by telephone to
exchange and redemption privileges. I/We withdraw $500 or more from my/our account in
hereby ratify any instructions given Excelsior Funds and to wire the amount
pursuant to this authorization and agree withdrawn to the following commercial bank
that Excelsior Funds, Excelsior account. I/We understand that CGFSC charges
Institutional Trust, CGFSC and their an $8.00 fee for each wire redemption, which
directors, trustees, officers and will be deducted from the proceeds of the
employees will not be liable for any loss, redemption.
liability, cost or expense for acting upon Title on Bank Account*
instructions believed to be genuine and in --------------------------------------------
accordance with the procedures described Name of Bank
in the then current Prospectus. To the --------------------------------------------
extent that Excelsior Funds and Excelsior
Institutional Trust fail to use reasonable Bank A.B.A. Number ------ Account Number
procedures as a basis for their belief, --------------------------------------------
they or their service contractors may be Bank Address
liable for instructions that prove to be --------------------------------------------
fraudulent or unauthorized. City/State/Zip Code
I/We further acknowledge that it is my/our --------------------------------------------
responsibility to read the Prospectus of (attach voided check here)
any fund of Excelsior Institutional Trust
into which I/we exchange. A corporation, trust or partnership must
|_| I/We do not wish to have the ability to also submit a "Corporate Resolution" (or
exercise telephone redemption and exchange "Certificate of Partnership") indicating the
privileges. I/We further understand that names and titles of officers authorized to
all exchange and redemption requests must act on its behalf.
be in writing. * Title on bank and Fund account must be
identical.
</TABLE>
<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 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; 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 Signature Broker-Dealer 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 ........................... 20
YIELD INFORMATION ...................... 21
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 197
LOGO
INSTITUTIONAL
MONEY FUND
PROSPECTUS
JANUARY 1, 1997