EXCELSIOR FUNDS, 485BPOS, 1998-11-24

EXCELSIOR FUNDS
485BPOS, 1998-11-24

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<PAGE>

As filed with the Securities and Exchange Commission on November 24, 1998

File Nos. 33-71306, 811-8132

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

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 7
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 8

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

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

Registrant's Telephone Number, including Area Code: 800-909-1989

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

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

[ ] Immediately upon filing pursuant to paragraph (b)
[X] on December 24, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.

If appropriate, check the following box:

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

Title of Securities Being Registered: Shares of Beneficial Interest

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

<PAGE>

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

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

1. COVER PAGE Cover Page.

2. SYNOPSIS Summary of Expenses.

3. CONDENSED FINANCIAL INFORMATION Financial Highlights.

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

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

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

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

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

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

9. PENDING LEGAL PROCEEDINGS Not applicable.

<PAGE>

[GRAPHIC OMITTED]

Excelsior Institutional Money Fund

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

Excelsior Funds For initial purchase or existing account
73 Tremont Street information, call (800) 909-1989. (From
Boston, Massachusetts 02108-3913 overseas, call (617) 557-1755.)

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

This Prospectus describes the Excelsior Institutional Money Fund (the "Fund"),
a diversified mutual fund offered to institutional investors. The Fund is a
separate series of Excelsior Funds (the "Trust"), an open-end management
investment company.

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

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

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

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

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

Prospectus dated December 24, 1998

<PAGE>

SUMMARY OF EXPENSES

The following tables provide (i) a summary of expenses relating to
purchases and sales of Shares of the Fund and the aggregate annual operating
expenses for the Fund and the Portfolio based on the fiscal year ended August
31, 1998, 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>
<S> <C>
Shareholder Transaction Expenses ............................................ None
Advisory Fees (after fee waivers)(1) ........................................ 0.08%
12b-1 Fees .................................................................. None
Other Expenses
Administration Fees (after fee waivers)(2) ................................. 0.03%
Administrative Servicing Fees .............................................. 0.01%
Other Operating Expenses2 .................................................. 0.13%
----
Total Fund Operating Expenses (after fee waivers and expense reimbursements) 0.25%
====
</TABLE>

- ---------------------
(1) Reflects fees incurred by the Portfolio for advisory services rendered by
the Investment Adviser. See "Management of the Trust and the Portfolio"
below.
(2) Includes the expenses of the Portfolio that are allocable to the Fund. See
"Management of the Trust and the Portfolio" below.

Example

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

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

The purpose of the foregoing tables is to assist investors in
understanding the various costs and expenses that shareholders of the Fund will
bear directly or indirectly. The Fund's administrators have voluntarily agreed
to waive fees and/or reimburse the Fund for certain expenses, and the
Investment Adviser and the Portfolio's administrator have each voluntarily
agreed to waive a portion of their fees such that, following such waivers and
reimbursements, the total operating expenses for the current fiscal year
(including amortization of organization costs and the Fund's allocated portion
of the Portfolio's expenses, but exclusive of taxes, interest, brokerage
commissions and extraordinary expenses) of the Fund on an annual basis would
not exceed 0.25% of the average daily net assets of the Fund. These fee waivers
and expense reimbursements are reflected in the expense table and example.
These fee waivers and expense reimbursements may be modified or terminated at
any time. Without such waivers and reimbursements, the advisory fee of the
Portfolio would be equal on an annual basis to 0.15% of the Portfolio's average
daily net assets, "Administration Fees" of the Fund, including the Fund's share
of Portfolio administration fees, would be equal on an annual basis to 0.15% of
the Fund's average daily net assets, and "Total Fund Operating Expenses,"
including the Fund's share of Portfolio expenses, would be equal on an annual
basis to 0.83% of the Fund's average daily net assets. For more information
about the expenses of the Fund and the Portfolio, see "Management of the Trust
and the Portfolio."

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.

1
<PAGE>

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
PricewaterhouseCoopers 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
(Commencement of
For the Year Ended August 31, Operations) to
1998 1997 1996 1995 August 31, 1994
------------ ------------ ------------ ------------- -----------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period .............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Net investment income from
operations .......................... 0.0551 0.0543 0.0547 0.0579 0.0308
Dividends from net investment
income .............................. (0.0551) (0.0543) (0.0547) ( 0.0579) (0.0308)
--------- --------- --------- --------- ---------
Net Asset Value, End of Period ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ========= ========= ========= =========
Total Return ......................... 5.65% 5.57% 5.61% 5.95% 3.87%(2)
Ratios:
Net investment income to
average net assets(1) ............. 5.52% 5.40% 5.55% 5.59% 4.39%(2)
Expenses to average net assets(1) ... 0.25% 0.25% 0.25% 0.25% 0.19%(2)
Total net assets, end of period
(000's omitted) ..................... $171,819 $315,761 $293,290 $638,111 $770,658
</TABLE>

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

<TABLE>
<S> <C> <C> <C> <C> <C>
Net investment income to average
net assets ............................ 4.94% 4.92% 5.11% 5.16% 4.28%(2)
Expenses to average net assets ......... 0.83% 0.74% 0.69% 0.68% 0.31%(2)
</TABLE>

(2) Annualized.

2
<PAGE>

INVESTMENT OBJECTIVE AND POLICIES

Introduction

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

Investment Objective

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

Investment Policies and Strategies

Since the investment characteristics of the Fund are the same as those of
the Portfolio, the following is a discussion of the various investment policies
and strategies employed by the Portfolio. The Portfolio uses the amortized cost
method to value its securities.

The Portfolio seeks to achieve its investment objective through
investments limited to the following types of U.S. dollar-denominated money
market instruments. All investments by the Portfolio mature or are deemed to
mature within 397 days from the date of acquisition, and the average maturity
of the investments held by the Portfolio (on a dollar-weighted basis) is 90
days or less. All investments by the Portfolio are in securities of high
quality (i.e., rated or subject to a guarantee 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 guarantee or the issuer of the security or guarantee or, if only
one NRSRO assigns a rating, that NRSRO, or, in the case of an investment which
is not rated, of comparable quality as determined by the Investment Adviser)
and are determined by the Investment Adviser to present minimal credit risks.
Investments in high quality, short-term instruments may, in many circumstances,
result in lower yield than would be available from investments in instruments
with a lower quality or a longer term. Under the Investment Company Act of
1940, as amended (the "1940 Act"), the Fund and the Portfolio are each
classified as "diversified," although in the case of the Fund, all of its
investable assets are invested in the Portfolio. In accordance with the
portfolio diversification requirements of Rule 2a-7 under the 1940 Act, the
Portfolio must be diversified with respect to issuers of securities it
acquires, other than government securities and securities with guarantees
issued by a "non-controlled person" (as defined in Rule 2a-7), so that,
generally, immediately after acquiring a security, the Portfolio will not have
invested more than 5% of its total assets in securities issued by the issuer of
the security.

3
<PAGE>

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

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

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

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

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

4
<PAGE>

regulatory requirements that apply to U.S. banks, such as mandatory reserve
requirements, loan limitations, and accounting, auditing and financial record
keeping standards and requirements. The Statement of Additional Information
includes more detailed information concerning U.S. and non-U.S. bank
obligations under the caption "Investment Objective, Policies and
Restrictions--Cash Reserves Portfolio."

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

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

(4) Obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities. These include issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an Act of Congress.
Obligations of certain agencies and instrumentalities, such as the Government
National Mortgage Association, are supported by the "full faith and credit" of
the U.S. Treasury; others, such as those of the Federal Home Loan Banks, are
supported by the right of the issuer to borrow from the U.S. Treasury; others,
such as those of the Federal National Mortgage Association, are supported by
the discretionary authority of the U.S. Government to purchase the agency's
obligations; and others are supported only by the credit of the agency or
instrumentality. Issues of the U.S. Treasury in which the Portfolio may invest
include Treasury Receipts, which are unmatured interest coupons of U.S.
Treasury bonds and notes which have been separated and resold in a custodial
receipt program administered by the U.S. Treasury.

(5) Repurchase agreements providing for resale within 397 days or less,
covering obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities which may have maturities in excess of 397 days. A repurchase
agreement arises when a buyer purchases an obligation and simultaneously agrees
with the vendor to resell the obligation to the vendor at an agreed-upon price
and time, which is usually not more than seven days from the date of purchase.
The resale price of a repurchase agreement is greater than the purchase price,
reflecting an agreed-upon market rate which is effective for the period of time
the buyer's funds are invested in the obligation and which is not related to
the coupon rate on the purchased obligation. Obligations serving as collateral
for each repurchase agreement are delivered to the Portfolio's custodian either
physically or in book entry form and the collateral is marked to market daily
to ensure that each repurchase agreement is fully collateralized at all times.
A buyer of a repurchase agreement runs a risk of loss if, at the time of
default by the vendor, the value of the collateral securing the agreement is
less than the price paid for the repurchase agreement. If the vendor of a
repurchase agreement becomes bankrupt, the Portfolio might be delayed, or may
incur costs or possible losses of principal and income, in selling the
collateral. The Portfolio may enter into repurchase agreements only with a
vendor which is a member bank of the Federal Reserve System or which is a
"primary dealer" (as designated by the Federal Reserve Bank of New York) in
U.S. Government obligations. The restrictions and procedures described above
which govern the Portfolio's investment in repurchase obligations are designed
to minimize the Portfolio's risk of losses in making those investments.

5
<PAGE>

may be developed in the future. CARS represent fractional interests in pools of
car installment loans, and CARDS represent fractional interests in pools of
revolving credit card receivables. The rate of return on asset-backed
securities may be affected by early prepayment of principal on the underlying
loans or receivables. Prepayment rates vary widely and may be affected by
changes in market interest rates. It is not possible to accurately predict the
average life of a particular pool of loans or receivables. Reinvestment of
principal may occur at higher or lower rates than the original yield.
Therefore, the actual maturity and realized yield on asset-backed securities
will vary based upon the prepayment experience of the underlying pool of loans
or receivables.

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

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

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

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

Year 2000. Like other investment companies, financial and business
organizations and individuals around the world, the Portfolio and the Fund
could be affected adversely if the computer systems used by the Investment
Adviser and the other service providers do not properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000 Problem." The Investment Adviser has informed
the Trust that it and the other service providers are taking steps to address
the Year 2000 Problem with respect to the computer systems that they use. At
this time, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact on the Portfolio or the Fund as a result
of the Year 2000 Problem.

* * *

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 Portfolio's shareholders. 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.

6
<PAGE>

SPECIAL INFORMATION CONCERNING HUB AND SPOKE(R) STRUCTURE

Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Fund seeks to achieve its investment objective by
investing all of its investable assets in the Portfolio, a separate registered
investment company with the same investment objective. In addition to selling a
beneficial interest to the Fund, the Portfolio may sell beneficial interests to
other mutual funds or institutional investors. Such investors will invest in
the Portfolio on the same terms and conditions and will pay a proportionate
share of the Portfolio's expenses. However, the other investors investing in
the Portfolio are not required to issue their shares at the same public
offering price as the Fund due to variations in sales commissions and other
operating expenses. Investors in the Fund should be aware that these
differences may result in differences in returns experienced by investors in
the different funds that invest in the Portfolio. Such differences in returns
are also present in other mutual fund structures. Information concerning other
holders of interests in the Portfolio is available from Signature Financial
Group (Cayman) Ltd. at (345) 945-1824. The Hub and Spoke investment fund
structure has been developed relatively recently, so shareholders should
carefully consider this investment approach.

The investment objective of the Fund may be changed without the approval
of the Fund's shareholders, but not without written notice thereof to the
Fund's shareholders thirty days prior to implementing the change. If there were
a change in the Fund's investment objective, shareholders should consider
whether the Fund remains an appropriate investment in light of their
then-current financial position and needs. The investment objective of the
Portfolio may be changed without the approval of the investors in the
Portfolio, but not without written notice thereof to the investors in the
Portfolio (and notice by the Trust to Fund shareholders) thirty days prior to
implementing the change. There can, of course, be no assurance that the
investment objective of either the Fund or the Portfolio will be achieved. See
"Investment Restrictions" in the Statement of Additional Information for a
description of the fundamental investment policies and restrictions of the
Portfolio that cannot be changed without approval by the holders of a "majority
of the outstanding voting securities" (as defined in the 1940 Act) of the
Portfolio. Except as stated otherwise, all investment objectives, policies and
restrictions described herein and in the Statement of Additional Information
are non-fundamental.

Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large
fund withdraws from the Portfolio, the remaining funds may experience higher
pro rata operating expenses, thereby producing lower returns. Additionally, the
Portfolio may become less diverse, resulting in increased portfolio risk.
(However, this possibility also exists for traditionally structured funds which
have large or institutional investors.) Also, funds with a greater pro rata
ownership in the Portfolio could have effective voting control of the
operations of the Portfolio. When the Fund is required to vote as an investor
in the Portfolio, current regulations provide that in those circumstances the
Fund may either seek instructions from its shareholders with regard to the
voting of such proxies and vote such proxies in accordance with such
instructions, or the Fund may vote its interests in the Portfolio in the same
proportion of all other investors in the Portfolio.

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

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

7
<PAGE>

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

PRICING OF SHARES

The net asset value of the Fund is determined and the Shares of the Fund
are priced for purchases and redemptions normally as of 3:00 P.M. (Eastern
time) on each day the New York Stock Exchange and U.S. Trust Company of
Connecticut are open for trading (a "Business Day"). Currently, the days on
which the Fund is closed (other than weekends) are New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day (observed), Labor Day, Columbus Day, Veterans 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 (including its interest in the Portfolio), less
the liabilities charged to the Fund, by the number of Shares of the Fund
outstanding at the time the determination is made. On days when the financial
markets in which the Portfolio invests close early, the Fund's net asset value
is determined as of the close of these markets if such time is earlier than the
time at which the net asset value is normally calculated.

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

HOW TO PURCHASE AND REDEEM SHARES

Purchase of Shares

Shares of the Fund may be purchased without a sales charge on any Business
Day at the net asset value next determined after an order is transmitted to the
Trust's transfer agent, Chase Global Funds Services Company ("CGFSC"), or
another entity on behalf of the Trust, and received by the distributor,
Edgewood Services, Inc. (the "Distributor"), in good order. Except as provided
under "Investor Programs" below, the minimum initial investment is $1,000.
There is no minimum for subsequent investments. Purchases will be effected on
the same day provided the order is received by 3:00 P.M. (Eastern time). The
Distributor has established procedures for purchasing Shares in order to
accommodate different types of investors (see "Purchase Procedures" below).

Shares of the Fund may be purchased only in those states where they may be
lawfully sold. The Trust reserves the right to cease offering Shares for sale
at any time and the Distributor and the Trust each reserve the right to reject
any order for the purchase of Shares. Third party checks will not be accepted
as payment for Fund Shares.

Purchase Procedures

Shares may be purchased directly only by institutional investors
("Institutional Investors"). An Institutional Investor (a "Shareholder
Organization") that has entered into an agreement with the Trust may elect to
hold of record Shares for its customers ("Customers") and to record beneficial
ownership of Shares on the account statements provided to its Customers. In
that case, it is each Shareholder Organization's responsibility to transmit to
the Distributor all purchase orders for its Customers and to transmit, on a
timely basis, payment for such orders to CGFSC in accordance with the
procedures agreed to

8
<PAGE>

by the Shareholder Organization and the Distributor. Confirmations of all such
purchases and redemptions by Shareholder Organizations for the benefit of their
Customers will be sent by CGFSC to the particular Shareholder Organization. In
the alternative, a Shareholder Organization may elect to establish its
Customers' accounts of record with CGFSC. In this event, even if the
Shareholder Organization continues to place its Customers' purchase and
redemption orders with the Fund, CGFSC will send confirmations of such
transactions and periodic account statements directly to the shareholders of
record. Shares in the Fund bear the expense of fees payable to Shareholder
Organizations for such services. See "Management of the Trust and the
Portfolio--Shareholder Organizations." Certificates will not be issued for
Shares.

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

Purchases by Wire

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

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

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 3:00 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 3:00 P.M. (Eastern time) will be effected at the net asset value
next determined and will not receive the dividend declared that day even if the
Fund receives federal funds on that day.

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

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

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

9
<PAGE>

Purchases by Telephone

Institutional Investors may place a purchase order by calling CGFSC at
(800) 909-1989 (from overseas, please call (617) 557-1755). The purchase by
telephone will be effected at the net asset value per Share next determined
after receipt of the purchase order in good order. Orders for Shares properly
received and accepted no later than 3:00 P.M. (Eastern time) will be entitled
to dividends on that Business Day provided that the Fund's bank has received
federal funds on that Business Day.

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

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

Purchases by Mail

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

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

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

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

Redemption of Shares

Institutional Investors may redeem all or any portion of the Shares in
their account at the net asset value per Share next determined after proper
receipt in good form of an order for redemption. Proceeds from redemption
orders received by 3:00 P.M. (Eastern time) will normally be sent the next
Business Day; proceeds are sent in any event within five Business Days. Shares
redeemed will be entitled to dividends up to and including the Business Day
prior to the day of redemption.

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

10
<PAGE>

Redemption Procedures

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

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

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

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

Redemption by Wire or Telephone

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

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

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

11
<PAGE>

Redemption by Mail

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

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

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

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

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

Other Redemption Information

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

INVESTOR PROGRAMS

Exchange Privilege

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

Excelsior Institutional Trust currently offers Institutional Shares in
seven 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;

12
<PAGE>

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

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

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

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

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

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

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

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

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

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

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

13
<PAGE>

Retirement Plans

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

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

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

Keogh Plans for self-employed individuals.

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

NET INCOME, DIVIDENDS AND DISTRIBUTIONS

The net income of the Portfolio is determined each Business Day (and on
such other days as are deemed necessary in order to comply with Rule 22c-1
under the 1940 Act). This determination is made once during each such day as of
3:00 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

14
<PAGE>

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

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

TAXES

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

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

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

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.

15
<PAGE>

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

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

MANAGEMENT OF THE TRUST AND THE PORTFOLIO

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

Investment Adviser

The Investment Adviser manages the assets of the Portfolio pursuant to an
Investment Advisory Agreement with the Portfolio. Subject to such policies as
the Trustees of the Portfolio may determine, the Investment Adviser manages the
Portfolio, makes decisions with respect to and places orders for all purchases
and sales of portfolio securities, and maintains records relating to such
purchases and sales. The Investment Adviser maintains its principal offices at
153 East 53rd Street, New York, New York 10043, and is a wholly-owned
subsidiary of Citicorp, a registered bank holding company, which is a
wholly-owned subsidiary of Citigroup Inc. The Investment Adviser offers a wide
range of banking and investment services to customers, and together with its
affiliates currently manages more than $290 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 0.08% of the Portfolio's
average daily net assets, and the Investment Adviser voluntary waived fees at
the annual rate of 0.07% of the Portfolio's average daily net assets, during
the fiscal year ended August 31, 1998.

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 an Administration Agreement and an Administrative Services
Agreement, respectively, the Trust Administrators and SFG (collectively, the
"Administrators") provide the Trust and the Portfolio, respectively, with
general office facilities and supervise the overall administration of the Trust
and the Portfolio, respectively, including, among other responsibilities, the
negotiation of contracts and fees

16
<PAGE>

with, and the monitoring of performance and billings of, the independent
contractors and agents of the Trust and the Portfolio; the preparation and
filing of certain documents required for compliance by the Trust and the
Portfolio with applicable laws and regulations; and arranging for the
maintenance of books and records of the Trust and the Portfolio. The Trust
Administrators also assist in developing and monitoring compliance procedures
for the Fund, including procedures to monitor compliance with the Fund's
investment objective, policies and restrictions. SFG provides persons
satisfactory to the Board of Trustees of the Portfolio to serve as Trustees and
officers of the Portfolio. Such officers and Trustees of the Portfolio may be
directors, officers or employees of SFG or its affiliates.

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

For the fiscal year ended August 31, 1998, SFG waived all administration
fees with respect to the Portfolio. For the fiscal year ended August 31, 1998,
CGFSC, FAS and U.S. Trust CT collectively received an aggregate administration
fee at the effective annual rate of 0.03% of the Fund's average daily net
assets. For the same period, they collectively waived administration fees at
the effective annual rate of 0.07% of the Fund's average daily net assets.

Sub-Administrator

Pursuant to a Sub-Administrative Services Agreement, Citibank performs
such sub-administrative duties for the Portfolio as are from time to time
agreed upon by Citibank and SFG. Citibank's sub-administrative duties may
include providing equipment and clerical personnel necessary for maintaining
the organization of the Portfolio, participation in the preparation of
documents required for compliance by the Portfolio with applicable laws and
regulations, preparation of certain documents in connection with meetings of
Trustees of, and investors in, the Portfolio, and other functions which would
otherwise be performed by SFG as set forth above. For its services as
sub-administrator, Citibank receives such compensation as from time to time is
agreed upon by SFG and Citibank, but not more than 0.05% per annum of the
average daily net assets of the Portfolio. All such compensation is paid by
SFG.

Distributor

Pursuant to a Distribution Agreement, Edgewood Services, Inc. (the
"Distributor"), Clearing Operations, 5800 Corporate Drive, Pittsburgh,
Pennsylvania 15237-5829, acts as principal underwriter for the Shares. Edgewood
Services, Inc., a registered broker-dealer and a wholly-owned subsidiary of
Federated Investors, Inc., is unaffiliated with the Investment Adviser or any
of its affiliates.

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

17
<PAGE>

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

Shareholder Organizations

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

Custodians and Transfer Agents

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

Expenses

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

Expenses of the Trust also include all fees under its Administration
Agreement; expenses of distributing and redeeming Shares and servicing
shareholder accounts; expenses of preparing, printing and

18
<PAGE>

mailing prospectuses, reports, notices, proxy statements and reports to
shareholders and to governmental officers and commissions; expenses of
shareholder and Trustee meetings; expenses relating to the issuance,
registration and qualification of Shares of the Fund and the preparation,
printing and mailing of prospectuses for such purposes; and membership dues in
the Investment Company Institute allocable to the Trust.

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

Banking Laws

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

Should legislative, judicial, or administrative action prohibit or
restrict the activities of U.S. Trust CT, Citibank or other Shareholder
Organizations in connection with purchases of Fund Shares, U.S. Trust CT,
Citibank and such Shareholder Organizations might be required to alter
materially or discontinue the investment services offered by them to Customers.
It is not anticipated, however, that any resulting change in the Fund's method
of operations would affect its net asset value per Share or result in financial
loss to any shareholder.

DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES

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

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

19
<PAGE>

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.

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. For more information
regarding the Trustees of the Trust and the Portfolio, see "Management of the
Trust and the Portfolio" in the Statement of Additional Information.

YIELD INFORMATION

From time to time, in advertisements or in reports to shareholders, the
yield of the Fund may be quoted and compared to those of other mutual funds
with similar investment objectives and to relevant indices or to rankings
prepared by independent services or other financial or industry publications
that monitor the performance of mutual funds. For example, the yield of the
Fund may be compared to the applicable averages compiled by Donaghue's Money
Fund Report, a widely recognized independent publication that monitors the
performance of money market funds. The yield of the Fund may also be compared
to the average yields reported by the Bank Rate Monitor for money market
deposit accounts offered by the 50 leading banks and thrift institutions in the
top five standard metropolitan statistical areas.

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

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

Yields will fluctuate and any quotation of yield should not be considered
as representative of the future performance of the Fund. Since yields
fluctuate, yield data cannot necessarily be used to compare an investment in
the Fund with bank deposits, savings accounts and similar investment
alternatives which often provide an agreed or guaranteed fixed yield for a
stated period of time. Shareholders

20
<PAGE>

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.

21
<PAGE>

APPENDIX - DESCRIPTION OF RATINGS

Description of the Highest Commercial Paper Ratings

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

A commercial paper rating by Standard & Poor's Ratings Services ("Standard
& Poor's") is a current assessment of the likelihood of timely payment of debt
having an original maturity of no more than 365 days. A-1 is the highest
commercial paper rating employed by Standard & Poor's. An obligation designated
with an A-1 rating indicates that the obligor's capacity to meet its financial
commitment is strong. Obligations designated as A-1+ indicate that the
obligor's capacity to meet its financial commitment is extremely strong.

Description of the Highest Corporate Bond Ratings

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

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

A-1
<PAGE>

Prospectus December 24, 1998

[GRAPHIC OMITTED]

INSTITUTIONAL MONEY FUND
- --------------------------------------------------------------------------------
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
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 .............................. 8
INVESTOR PROGRAMS .............................................. 12
NET INCOME, DIVIDENDS AND DISTRIBUTIONS ........................ 14
TAXES .......................................................... 15
MANAGEMENT OF THE TRUST AND THE PORTFOLIO ...................... 16
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES ........... 19
YIELD INFORMATION .............................................. 20
MISCELLANEOUS .................................................. 21
APPENDIX - DESCRIPTION OF RATINGS .............................. A-1
</TABLE>

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 1298

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

Excelsior Funds December 24, 1998
73 Tremont Street
Boston, Massachusetts 02108
(617) 557-8000

Excelsior Institutional Money Fund

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

TABLE OF CONTENTS

THE TRUST.....................................................................3
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS...............................3
SECURITIES TRANSACTIONS......................................................10
YIELD INFORMATION............................................................11
DETERMINATION OF NET ASSET VALUE; VALUATION
OF SECURITIES; REDEMPTION IN KIND...................................11
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION...............................13
MANAGEMENT OF THE TRUST AND THE PORTFOLIO....................................14
INDEPENDENT ACCOUNTANTS......................................................26
COUNSEL .....................................................................26
TAXATION ....................................................................26
DESCRIPTION OF THE TRUST; FUND SHARES........................................28
MISCELLANEOUS................................................................29
FINANCIAL STATEMENTS.........................................................29

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

-1-
<PAGE>

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.

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

-2-
<PAGE>

THE TRUST

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

INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS

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

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

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

The Trust may withdraw the Fund's investment from the Portfolio at any
time, if the Board of Trustees of the Trust determines that it is in the best
interests of the Fund to do so. Upon any such withdrawal, the Fund's assets
would be invested in accordance with the investment objective, policies and
restrictions described below and in the Prospectus with respect to the
Portfolio. The approval of the Fund's shareholders is not required to change the
Fund's investment objective or any of its investment policies.

Cash Reserves Portfolio

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

-3-
<PAGE>

The Portfolio seeks to achieve its investment objective through
investments limited to the following types of U.S. dollar-denominated money
market instruments. All investments by the Portfolio mature or are deemed to
mature within 397 days from the date of acquisition, and the average maturity of
the investments held by the Portfolio (on a dollar-weighted basis) is 90 days or
less. All investments by the Portfolio are in "high quality" securities (i.e.,
rated or subject to a guarantee 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, guarantee
or the issuer of the security or guarantee, or, if only one NRSRO assigned a
rating, that NRSRO or, in the case of an investment which is not rated, of
comparable quality as determined by the Adviser) and are determined by the
Adviser to present minimal credit risks. Investments in high quality, short-term
instruments may, in many circumstances, result in a lower yield than would be
available from investments in instruments with a lower quality or a longer term.
Under the Investment Company Act of 1940, as amended (the "1940 Act"), the Fund
and the Portfolio are each classified as "diversified," although in the case of
the Fund, all of its investable assets are invested in the Portfolio. In
accordance with the portfolio diversification requirements of Rule 2a-7 under
the 1940 Act, the Portfolio must be diversified with respect to issuers of
securities it acquires, other than government securities and securities with
guarantees issued by a "non-controlled person" (as defined in Rule 2a-7), so
that, generally, immediately after acquiring a security, the Portfolio will not
have invested more than 5% of its total assets in securities issued by the
issuer of the security.

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

(1) Bank obligations. The Portfolio invests at least 25% of its investable
assets, and may invest up to 100% of its assets, in bank obligations. This
concentration policy is fundamental and may not be changed without the approval
of the investors in the Portfolio. Bank obligations include, but are not limited
to, negotiable certificates of deposit, bankers' acceptances and fixed time
deposits. Fixed time deposits are obligations which are payable at a stated
maturity date and bear a fixed rate of interest. Generally, fixed time deposits
may be withdrawn on demand by the Portfolio, but they may be subject to early
withdrawal penalties which vary depending upon market conditions and the
remaining maturity of the obligation. Although fixed time deposits do not have a
market, there are no contractual restrictions on the Portfolio's right to
transfer a beneficial interest in the deposit to a third party.

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

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

-4-
<PAGE>

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

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

The provisions of federal law governing the establishment and operation
of U.S. branches do not apply to non-U.S. branches of U.S. banks. However, the
Portfolio may purchase obligations only of those non-U.S. branches of U.S. banks
which were established with the approval of the Board of Governors of the
Federal Reserve System (the "Board of Governors").

As a result of such approval, these branches are subject to examination
by the Board of Governors and the Comptroller of the Currency. In addition, such
non-U.S. branches of U.S. banks are subject to the supervision of the U.S. bank,
and creditors of the non-U.S. branch are considered general creditors of the
U.S. bank subject to whatever defenses may be available under the governing
non-U.S. law and to the terms of the specific obligation. Nonetheless, the
Portfolio generally will be subject to whatever risk may exist that the non-U.S.
country may impose restrictions on payment of certificates of deposit or time
deposits.
-5-

<PAGE>
U.S. branches of non-U.S. banks are subject to the laws of the state in
which the branch is located or to the laws of the United States. Such branches
are therefore subject to many of the regulations, including reserve
requirements, to which U.S. banks are subject. In addition, the Portfolio may
purchase obligations only of those U.S. branches of non-U.S. banks which are
located in states which impose the additional requirement that the branch pledge
to a designated bank within the state an amount of its assets equal to 5% of its
total liabilities.

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

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

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

(4) Obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities. These include issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an Act of Congress.
Obligations of certain agencies and instrumentalities, such as the Government
National Mortgage Association, are supported by the full faith and credit of the
U.S. Treasury; others, such as those of the Federal Home Loan Banks of the
United States, are supported by the right of the issuer to borrow from the U. S.
Treasury; others, such as those of the Federal National Mortgage Association,
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; and others are supported only by the credit of the
agency or instrumentality.

(5) Repurchase agreements providing for resale within 397 days or less, covering
obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities which may have maturities in excess of 397 days. A repurchase
agreement arises when a buyer purchases an obligation and simultaneously agrees
with the vendor to resell the obligation to the vendor at an agreed-upon price
and time, which is usually not more than seven days from the date of purchase.
The resale price of a repurchase agreement is greater than the purchase price,
reflecting an agreed-upon market rate which is effective for the period of time
the buyer's funds are invested in the obligation and which is not related to the
coupon rate on the purchased obligation. Obligations serving as collateral for
each repurchase agreement are delivered to the Portfolio's custodian either
physically or in book entry form and the collateral is marked to the market
daily to ensure that each repurchase agreement is fully collateralized at all
times. A buyer of a repurchase agreement runs a risk of loss if, at the time of
default by the issuer, the value of the collateral securing the agreement is
less than the price paid for the repurchase agreement. If the vendor of a
repurchase agreement becomes bankrupt, the Portfolio might be delayed, or may
incur costs or possible losses of principal and income, in selling the
collateral. The Portfolio may enter into repurchase agreements only with a
vendor which is a member bank of the Federal Reserve System or which is a
"primary dealer" (as designated by the Federal Reserve Bank of New York) in U.S.
Government obligations. The Portfolio will not enter into any repurchase
agreements with the Adviser or an affiliate of the Adviser.

-6-
<PAGE>

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

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

Asset-Backed Securities. As set forth above, the Portfolio may purchase
asset-backed securities that represent fractional interests in pools of retail
installment loans, both secured (such as CARS) and unsecured, or leases or
revolving credit receivables, both secured and unsecured (such as CARDS). These
assets are generally held by a trust and payments of principal and interest or
interest only are passed through monthly or quarterly to certificate holders and
may be guaranteed up to certain amounts by letters of credit issued by a
financial institution affiliated or unaffiliated with the trustee or originator
of the trust.

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

-7-
<PAGE>

Lending of Portfolio Securities. Consistent with applicable regulatory
requirements and in order to generate income, the Portfolio may lend its
securities to broker-dealers and other institutional borrowers. Such loans will
usually be made only to member banks of the Federal Reserve System and to member
firms of the New York Stock Exchange (and subsidiaries thereof). Loans of
securities would be secured continuously by collateral in cash, cash equivalents
or U.S. Treasury obligations maintained on a current basis at an amount at least
equal to the market value of the securities loaned. The cash collateral would be
invested in high quality short-term instruments. Either party to a loan has the
right to terminate the loan at any time on customary industry settlement notice
(which will not usually exceed three business days). During the existence of a
loan, the Portfolio would continue to receive the equivalent of the interest or
dividends paid by the issuer on the securities loaned and with respect to cash
collateral would also receive compensation based on investment of the cash
collateral (subject to a rebate payable to the borrower) or a fee from the
borrower in the event the collateral consists of securities. Where the borrower
provides the Portfolio with collateral consisting of U.S. Treasury obligations,
the borrower is also obligated to pay the Portfolio a fee for use of the
borrowed securities. The Portfolio would not, however, have the right to vote
any securities having voting rights during the existence of the loan, but would
call the loan in anticipation of an important vote to be taken among holders of
the securities or of the giving or withholding of its consent on a material
matter affecting the investment. As with other extensions of credit, there are
risks of delay in recovery or even loss of rights in the collateral should the
borrower fail financially. However, the loans would be made only to entities
deemed by the Adviser to be of good standing, and when, in the judgment of the
Adviser, the consideration which can be earned currently from loans of this type
justifies the attendant risk. In addition, the Portfolio could suffer loss if
the borrower terminates the loan and the Portfolio is forced to liquidate
investments in order to return the cash collateral to the buyer. If the Adviser
determines to make loans, it is intended that the value of the securities loaned
by the Portfolio would not exceed 33 1/3% of the value of its net assets.

Investment Restrictions

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

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

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

-8-
<PAGE>

(2) purchase any security or evidence of interest therein on margin, except
that either the Trust, on behalf of the Fund, or the Portfolio may
obtain such short-term credit as may be necessary for the clearance of
purchases and sales of securities;

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

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

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

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

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

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

-9-
<PAGE>

SECURITIES TRANSACTIONS

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

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

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

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

-10-
<PAGE>

YIELD INFORMATION

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

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

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

The annualized current seven-day yield of the Institutional Money Fund
for the period ended August 31, 1998 was 5.47%. For the same period, the
annualized effective seven-day yield of the Fund, based upon dividends declared
daily and reinvested monthly, was 5.62%.

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

The Prospectus discusses when the net asset value of the Fund is
determined for purposes of sales and redemptions. The net asset value of the
Fund's investment in the Portfolio is equal to the Fund's pro rata share of the
total assets of the Portfolio less the Fund's pro rata share of the Portfolio's
liabilities. The following is a description of the procedures used by the
Portfolio in valuing its assets.

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

-11-
<PAGE>

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

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

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

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

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

-12-
<PAGE>

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares are continuously offered for sale by Edgewood Services, Inc.
("Edgewood" or the "Distributor"), a wholly-owned subsidiary of Federated
Investors, Inc. As described in the Prospectus, Shares are offered to
institutional investors ("Institutional Investors"). Shares may be purchased
directly from the Distributor or through Shareholder Organizations. Different
types of Customer accounts at certain Shareholder Organizations may be used to
purchase Shares, including eligible agency and trust accounts. In addition, a
Shareholder Organization may automatically "sweep" the accounts of its Customers
not less frequently than weekly and invest amounts in excess of a minimum
balance agreed to by the Shareholder Organization and its Customers in shares
selected by its Customers. Investors purchasing Shares may include officers,
directors, or employees of the particular Shareholder Organization. Check
writing privileges are available to investors upon request to the Trust.

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

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

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

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

-13-
<PAGE>

Other Investor Programs

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

MANAGEMENT OF THE TRUST AND THE PORTFOLIO

The Trustees and officers of the Trust and the Portfolio and their
principal occupations during the past five years are set forth below. Unless
otherwise indicated below, the address of each Trustee and officer of the Trust
is 73 Tremont Street, Boston, Massachusetts 02108, and the address of each
Trustee and officer of the Portfolio is 21 Milk Street, 5th Floor, Boston,
Massachusetts 02109. The address of the Portfolio is Elizabethan Square, George
Town, Grand Cayman, Cayman Islands, British West Indies.

-14-
<PAGE>

Trustees and Officers of the Trust

Trustees and Officers

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

Position with the Principal Occupation During Past 5 Years and Other
Name and Address Trust Affiliations
---------------- ---------------- --------------------------------------------------
<S> <C> <C>
Frederick S. Wonham* Chairman of the Retired; Director of Excelsior Funds, Inc. and
238 June Road Board, President Excelsior Tax-Exempt Funds, Inc. (since 1995);
Stamford, CT 06903 and Treasurer Trustee of Excelsior Institutional Trust (since
Age: 67 1995); Vice Chairman of U.S. Trust Corporation and
United States Trust Company of New York (from
February 1990 until September 1995); and Chairman,
U.S. Trust Company of Connecticut (from March 1993
to May 1997).

Rodman L. Drake Trustee Director, Excelsior Funds, Inc. and Excelsior
Continuation Investments Tax-Exempt Funds, Inc. (since 1996); Trustee of
Group, Inc. Excelsior Institutional Trust (since 1994);
1251 Avenue of the Americas Director, Parsons Brinkerhoff Energy Services Inc.
9th Floor (since 1996); Director, Parsons Brinkerhoff, Inc.
New York, NY 10020 (engineering firm) (since 1995); President,
Age: 55 Continuation Investments Group, Inc. (since 1997);
President, Mandrake Group (investment and
consulting firm) (1994-1997); Director, Hyperion
Total Return Fund, Inc. and four other funds for
which Hyperion Capital Management, Inc. serves as
investment adviser (since 1991); Co-Chairman, KMR
Power Corporation (power plants) (from 1993 to
1996); Director, The Latin America Smaller
Companies Fund, Inc. (since 1993); Member of
Advisory Board, Argentina Private Equity Fund L.P.
(from 1992 to 1996) and Garantia L.P. (Brazil)
(from 1993 to 1996); and Director, Mueller
Industries, Inc. (from 1992 to 1994).

</TABLE>

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

-15-
<PAGE>

W. Wallace McDowell, Jr. Trustee Director of Excelsior Funds, Inc. and Excelsior
c/o Prospect Capital Corp. Tax-Exempt Funds, Inc. (since 1996); Trustee of
43 Arch Street Excelsior Institutional Trust (since 1994); Private
Greenwich, CT 06830 Investor (since 1994); Managing Director, Morgan
Age: 61 Lewis Githens & Ahn (from 1991 to 1994); and
Director, U.S. Homecare Corporation (since 1992),
Grossmans, Inc. (from 1993 to 1996), Children's
Discovery Centers (since 1984), ITI Technologies,
Inc. (since 1992) and Jack Morton Productions
(since 1987).

Jonathan Piel Trustee Director of Excelsior Funds, Inc. and Excelsior
558 E. 87th Street Tax-Exempt Funds, Inc. (since 1996); Trustee of
New York, NY 10128 Excelsior Institutional Trust (since 1994); Vice
Age: 59 President and Editor, Scientific American, Inc.
(from 1986 to 1994); Director, Group for The
South Fork, Bridgehampton, New York (since 1993);
and Member, Advisory Committee, Knight Journalism
Fellowships, Massachusetts Institute of
Technology (since 1984).

W. Bruce McConnel, III Secretary Partner of the law firm of Drinker Biddle & Reath
Philadelphia National Bank LLP.
Building
1345 Chestnut Street
Philadelphia, PA 19107
Age: 55

Michael P. Malloy Assistant Secretary Partner of the law firm of Drinker Biddle & Reath
Philadelphia National Bank LLP.
Building
1345 Chestnut Street
Philadelphia, PA 19107
Age: 39

Edward Wang Assistant Secretary Manager of Blue Sky Compliance, Chase Global Funds
Chase Global Funds Services Company (November 1996 to present); and
Services Company Officer and Manager of Financial Reporting,
73 Tremont Street Investors Bank & Trust Company
Boston, MA 02108-3913 (January 1991 to November 1996).
Age: 37

John M. Corcoran Assistant Treasurer Vice President, Director of Fund Administration,
Chase Global Funds Chase Global Funds Services Company (since April
Services Company 1998); Vice President, Senior Manager of Fund
73 Tremont Street Administration, Chase Global Funds Services Company
Boston, MA 02108-3913 (from July 1996 to April 1998); Second Vice
Age: 33 President, Manager of Fund Administration, Chase
Global Funds Services Company (from October 1993
to July 1996); and Audit Manager, Ernst & Young
LLP (from August 1987 to September 1993).
</TABLE>

-16-
<PAGE>

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

The compensation paid to the Trustees of the Trust for the fiscal year
ended August 31, 1998 is set forth in the chart below.

PENSION OR
RETIREMENT
BENEFITS TOTAL COMPENSATION
AGGREGATE ACCRUED AS PART ESTIMATED ANNUAL FROM THE TRUST AND
COMPENSATION OF TRUST BENEFITS UPON FUND COMPLEX* PAID
FROM THE TRUST EXPENSES RETIREMENT TO TRUSTEES
-------------- -------------- --------------- ------------------
<S> <C> <C> <C> <C>
Frederick S. Wonham $5,000 None None (4)**$53,000
Rodman L. Drake $5,000 None None (4)**$43,000
W. Wallace McDowell $4,500 None None (4)**$39,000
Jonathan Piel $5,000 None None (4)**$43,000

</TABLE>

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

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

Trustees and Officers of the Portfolio

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

-17-
<PAGE>

Trustees of the Portfolio

ELLIOTT J. BERV - Chairman and Director, Catalyst, Inc. (Management
Consultants) (since June 1992); President, Chief Operating Officer and Director,
Deven International, Inc. (International Consultants) (June 1991 to June 1992);
President and Director, Elliott J. Berv & Associates (Management Consultants)
(since May 1984). His address is 15 Stornoway Drive, Cumberland Foreside, Maine
04110. His age is 55.

WALTER E. ROBB, III - President, Benchmark Consulting Group, Inc.
(since 1991); Principal, Robb Associates (Corporate Financial Advisors) (since
1978); President, Benchmark Advisors, Inc. (Corporate Financial Advisors) (since
1989); Trustee of certain registered investment companies in the MFS family of
funds. His address is 35 Farm Road, Sherborn, Massachusetts 01770. His age is
72.

RILEY C. GILLEY - Vice President and General Counsel, Corporate
Property Investors (November 1988 to December 1991); Partner, Breed, Abbott &
Morgan (Attorneys) (Retired, December 1987). His address is 4041 Gulf Shore
Boulevard North, Naples, Florida. His age is 72.

PHILIP W. COOLIDGE* - President of the Portfolio; Chief Executive
Officer and President, Signature Financial Group, Inc. and CFBDS, Inc. His age
is 47.

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

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

Officers of the Portfolio

PHILIP W. COOLIDGE; 47 -- President of the Portfolio; Chief Executive
Officer and President, Signature Financial Group, Inc. and CFBDS, Inc.

CHRISTINE A. DRAPEAU; 28 -- Assistant Secretary and Assistant Treasurer
of the Portfolio; Assistant Vice President, Signature Financial Group, Inc.
(since January 1996); Paralegal and Compliance Officer, various financial
companies (July 1992 to January 1996); Graduate Student, Bentley College (prior
to December 1994).

TAMIE EBANKS-CUNNINGHAM; 26 -- Assistant Secretary of the Portfolio;
Office Manager, Signature Financial Group (Cayman) Ltd. (since April 1995);
Administrator, Cayman Islands Primary School (prior to April 1995).

JOHN R. ELDER; 50 -- Treasurer of the Portfolio; Vice President,
Signature Financial Group, Inc. (since April 1995); Treasurer, CFBDS, Inc.
(since April 1995); Treasurer, Phoenix Family of Mutual Funds (Phoenix Home Life
Mutual Insurance Company) (1983 to March 1995).

-18-
<PAGE>

LINDA T. GIBSON; 33 -- Secretary of the Portfolio; Vice President,
Signature Financial Group, Inc. (since May 1992); Assistant Secretary, CFBDS,
Inc. (since October 1992).

JOAN R. GULINELLO; 43 -- Assistant Secretary and Assistant Treasurer of
the Portfolio; Vice President, Signature Financial Group, Inc. (since October
1993); Secretary, CFBDS, Inc. (since October 1995); Vice President and Assistant
General Counsel, Massachusetts Financial Services Company (prior to October
1993).

JAMES E. HOOLAHAN; 51 -- Vice President, Assistant Secretary and
Assistant Treasurer of the Portfolio; Senior Vice President, Signature Financial
Group, Inc.

SUSAN JAKUBOSKI; 34 -- Vice President, Assistant Treasurer and
Assistant Secretary of the Portfolio; Vice President, Signature Financial Group
(Cayman) Ltd. (since August 1994); Fund Compliance Administrator, Concord
Financial Group (November 1990 to August 1994). Her address is Suite 193, 12
Church Street, Hamilton HM 11, Bermuda.

MOLLY S. MUGLER; 47 -- Assistant Secretary and Assistant Treasurer of
the Portfolio; Vice President, Signature Financial Group, Inc.; Assistant
Secretary, CFBDS, Inc.

CLAIR TOMALIN; 30 -- Assistant Secretary of the Portfolio; Office
Manager, Signature Financial Group (Europe) Limited (since 1993).

SHARON M. WHITSON; 50 -- Assistant Secretary and Assistant Treasurer of
the Portfolio; Assistant Vice President, Signature Financial Group, Inc.

JULIE J. WYETZNER; 39 -- Vice President, Assistant Secretary and
Assistant Treasurer of the Portfolio; Vice President, Signature Financial Group,
Inc.

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

The compensation paid to the Trustees of the Portfolio for the year
ended August 31, 1998 is set forth in the table below.

-19-
<PAGE>

PENSION OR
RETIREMENT
AGGREGATE BENEFITS ACCRUED TOTAL COMPENSATION
COMPENSATION AS PART OF THE ESTIMATED ANNUAL FROM THE PORTFOLIO
FROM THE PORTFOLIO'S BENEFITS UPON AND FUND COMPLEX
PORTFOLIO EXPENSES RETIREMENT PAID TO TRUSTEES*
------------ ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Elliott J. Berv $19,675 None None $59,000
Philip W. Coolidge None None None None
Mark T. Finn $15,553 None None $54,000
Walter E. Robb, III $19,375 None None $56,000
</TABLE>

- ------------------
* Messrs. Coolidge, Berv, Finn and Robb are trustees of 49, 27, 26 and 30
funds, respectively, in the family of open-end registered investment
companies advised or managed by Citibank. Mr. Riley Gilley became a trustee
of Cash Reserves Portfolio as of September 1, 1998. Mr. Finn resigned as a
trustee of Cash Reserves Portfolio as of September 1, 1998.

* * * * *

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

As of November 5, 1998, the Trustees and officers of the Trust and the
Portfolio as a group owned beneficially less than 1% of the outstanding Shares
of the Fund and the Portfolio.

-20-
<PAGE>

Investment Adviser

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

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

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

The Prospectus contains a description of the fees payable to the
Adviser under the Advisory Agreement. For the fiscal years ended August 31,
1998, 1997 and 1996, the fees paid to the Adviser under the Advisory Agreement
were $13,394,307, $9,148,204 and $6,140,512, respectively (of which $6,655,101,
$4,752,918 and $3,426,821 was voluntarily waived for the fiscal years ended
August 31, 1998, 1997 and 1996, respectively).

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

-21-
<PAGE>

Administrators

The Portfolio has adopted an Administrative Services Plan (the
"Administrative Plan") which provides that the Portfolio may obtain the services
of an administrator, a transfer agent and a custodian, and may enter into
agreements providing for the payment of fees for such services. Under the
Administrative Plan, the administrative services fee payable to Signature
Financial Group (Cayman) Ltd. ("SFG") may not exceed 0.05% of the Portfolio's
average daily net assets on an annualized basis for its then-current fiscal
year. The Administrative Plan continues in effect if such continuance is
specifically approved at least annually by a vote of both a majority of the
Portfolio's Trustees and a majority of the Portfolio's Trustees who are not
"interested persons" of the Portfolio and who have no direct or indirect
financial interest in the operation of the Administrative Plan or in any
agreement related to such Plan ("Qualified Trustees"). The Administrative Plan
requires that the Portfolio provide to its Board of Trustees and the Board of
Trustees review, at least quarterly, a written report of the amounts expended
(and the purposes therefor) under the Administrative Plan. The Administrative
Plan may be terminated at any time by a vote of the Portfolio's Qualified
Trustees or by a vote of a majority of the outstanding voting securities of the
Portfolio. The Administrative Plan may not be amended to increase materially the
amount of permitted expenses thereunder without the approval of a majority of
the outstanding voting securities of the Portfolio and may not be materially
amended in any case without a vote of the majority of both the Trustees and the
Qualified Trustees.

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

-22-
<PAGE>

The Administration Agreement, with respect to the Trust, and the
Administrative Services Agreement, with respect to the Portfolio, provide that
the Administrators may render administrative services to others. Each Agreement
terminates automatically if it is assigned. The Administrative Services
Agreement may be terminated without penalty by vote of a majority of the
outstanding voting securities of the Portfolio or by either party on not more
than 60 days' nor less than 30 days' written notice. The Administration
Agreement may be terminated without penalty by any party on not less than 45
days' notice. The Agreements provide that neither the Administrators nor their
personnel shall be liable for any error of judgment or mistake of law or for any
act or omission in the administration or management of the Trust or the
Portfolio, except for willful misfeasance, bad faith or gross negligence in the
performance of their duties or by reason of reckless disregard of their
obligations and duties under said Agreements. The Trust's Administration
Agreement also provides that the Trust Administrators shall not be liable for
any indirect, incidental, special or consequential losses or indirect,
incidental, special or consequential damages, even if they had been advised of
the likelihood of such losses or damages.

The Prospectus contains a description of the fees payable to the
Administrators under their respective Agreements. For the fiscal year ended
August 31, 1998, CGFSC, FAS and U.S. Trust CT collectively received
administration fees of $52,769 with respect to the Fund. For the same period,
they collectively waived fees totaling $128,164 with respect to the Fund.

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

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

For the fiscal years ended August 31, 1998, 1997 and 1996, the
administration fees payable to SFG under the Portfolio's Administrative Services
Agreement were $4,464,769, $3,049,401 and $2,046,838, respectively. All such
administration fees payable by the Portfolio for the fiscal years ended August
31, 1998, 1997 and 1996 were voluntarily waived. SBDS and SFG are wholly-owned
subsidiaries of Signature Financial Group, Inc.

-23-
<PAGE>

Sub-Administrator

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

Shareholder Organizations

As stated in the Prospectus, the Trust may enter into agreements with
certain Shareholder Organizations. Such agreements require the Shareholder
Organizations to provide shareholder administrative services to their Customers
who beneficially own Shares in consideration for the Fund's payment of not more
than the annual rate of 0.40% of the average daily net assets of the Fund's
Shares beneficially owned by Customers of the Shareholder Organization. Such
services may include: (a) acting as recordholder of Shares; (b) assisting in
processing purchase, exchange and redemption transactions; (c) providing
periodic statements showing a Customer's account balances and confirmations of
transactions by the Customer; (d) providing tax and dividend information to
shareholders as appropriate; (e) transmitting proxy statements, annual reports,
updated prospectuses and other communications from the Trust to Customers; and
(f) providing or arranging for the provision of other related services.

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

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

For the fiscal years ended August 31, 1998, 1997 and 1996, payments to
Shareholder Organizations under the Plan totaled $22,271, $233,914 and $421,706,
respectively.

Transfer Agents and Custodians

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

-24-
<PAGE>

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

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

The Portfolio has entered into a Transfer Agency Agreement and a
Custodian Agreement with State Street Bank and Trust Company ("State Street"),
pursuant to which State Street acts as custodian and State Street Canada, Inc.
("State Street Canada") acts as transfer agent and provides fund accounting
services to the Portfolio. The transfer agent maintains an account for each
investor in the Portfolio and performs other transfer agency functions. State
Street's responsibilities include safeguarding and controlling the Portfolio's
cash and securities, handling the receipt and delivery of securities,
determining income and collecting interest on the Portfolio's investments, and
maintaining books of original entry for Portfolio accounting and other required
books and accounts. Securities held by the Portfolio may be deposited into the
Federal Reserve-Treasury Department Book Entry System or the Depositary Trust
Company and may be held by a sub-custodian bank if such arrangements are
reviewed and approved by the Trustees of the Portfolio. State Street does not
determine the investment policies of the Portfolio or decide which securities
the Portfolio will buy or sell. The Portfolio may, however, invest in securities
of State Street and may deal with State Street as principal in securities
transactions. For its services to the Portfolio, State Street receives such
compensation as may from time to time be agreed upon by State Street and the
Portfolio. The principal business address of State Street is 225 Franklin
Street, Boston, Massachusetts 02110.

-25-
<PAGE>

INDEPENDENT ACCOUNTANTS

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

COUNSEL

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

TAXATION

Taxation of the Fund

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

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

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

-26-
<PAGE>

Taxation of the Portfolio

The Trust anticipates that the Portfolio will be treated as a
partnership for federal income tax purposes. As such, the Portfolio is not
subject to federal income taxation. Instead, the Fund must take into account, in
computing its federal income tax liability, its share of the Portfolio's income,
gains, losses, deductions and other tax items. Withdrawal by the Fund from the
Portfolio generally will not result in the Fund recognizing any gain or loss for
federal income tax purposes except under very unusual circumstances.

Taxation of Distributions

Dividends from income and any distributions from net short-term capital
gains are taxable to shareholders as ordinary income for federal income tax
purposes. Distributions of net capital gains (the excess of net long-term
capital gain over net short-term capital loss), if any, are taxable to
shareholders as long-term capital gains without regard to the length of time the
shareholders have held their shares. The Fund's distributions are not expected
to qualify for the dividends-received deduction available to corporations.
Distributions are taxable as described above whether paid in cash or reinvested
in additional shares. Shareholders will be notified annually as to the federal
tax status of distributions.

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

Other Taxation

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

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

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

-27-
<PAGE>

DESCRIPTION OF THE TRUST; FUND SHARES

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

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

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

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

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

Under Delaware law, shareholders of a Delaware business trust are
entitled to the same limitation on personal liability which is extended to
shareholders of private for profit corporations organized under the general
corporation law of the State of Delaware; the courts of other states may not
apply Delaware law, however, and shareholders may, under certain circumstances,
be held personally liable for the obligations of the Trust. The Trust Instrument
contains an express disclaimer of shareholder liability for acts or obligations
of the Trust and provides for indemnification and reimbursement of expenses out
of Fund property for any shareholder held personally liable for the obligations
of the Fund solely by reason of his being or having been a shareholder.

-28-
<PAGE>

MISCELLANEOUS

As of November 10, 1998, U.S. Trust NY and its affiliates held of
record a majority of the Trust's outstanding shares as agent or custodian
for their customers, but did not own such shares beneficially because they did
not have voting or investment discretion with respect to such shares.

As of November 10, 1998, the name, address and percentage ownership of
each person that beneficially owned 5% or more of the outstanding Shares of the
Fund were as follows: Evercore Partners Inc., 65 E. 55th Street, New York, NY
10022, 7.41%; Sunrider, 1625 Abalone Ave., Torrance, CA 90501, 6.19%; and Estate
of Juan Young, 1200 SW Main, Portland, OR 97205, 5.55%.

FINANCIAL STATEMENTS

The audited financial statements and notes thereto in the Trust's
Annual Report to Shareholders for the fiscal year ended August 31, 1998 (the
"1998 Annual Report") are incorporated into this Statement of Additional
Information by reference. No other parts of the 1998 Annual Report are
incorporated by reference herein. The financial statements included in the 1998
Annual Report have been audited by the Trust's independent accountants,
PricewaterhouseCoopers LLP, whose report thereon is also incorporated herein by
reference. Such financial statements have been incorporated herein in reliance
upon such report given upon their authority as experts in accounting and
auditing. Additional copies of the 1998 Annual Report may be obtained at no
charge by telephoning CGFSC at (800) 909-1989.

The audited financial statements and notes thereto relating to the
Portfolio and presented with the Trust's Annual Report to Shareholders for the
fiscal year ended August 31, 1998 are incorporated into this Statement of
Additional Information by reference. These financial statements have been
audited by the Portfolio's chartered accountants, PricewaterhouseCoopers, whose
report thereon is also incorporated herein by reference. Such financial
statements have been incorporated herein in reliance upon such report given upon
their authority as experts in accounting and auditing.

-29-

<PAGE>

Distributor of the Fund

Edgewood Services, Inc.
5800 Corporate Drive
Pittsburgh, PA 15237

Investment Adviser of the Portfolio EXCELSIOR FUNDS

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

Custodian of the Portfolio

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

Transfer Agent and Fund
Accounting Agent of the Portfolio

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

Co-Administrator of the Fund

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

Transfer Agent and Co-Administrator
of the Fund STATEMENT OF
ADDITIONAL INFORMATION
Chase Global Funds Services Company
73 Tremont Street DECEMBER 24, 1998
Boston, MA 02108

Co-Administrator of the Fund

Federated Administrative Services
Federated Investors Tower
Pittsburgh, PA 15222

Independent Accountants of the Fund

PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110

Independent Accountants of the Portfolio

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

-30-
<PAGE>
PART C

Item 24. Financial Statements and Exhibits.

(a) Financial Statements.

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

(i) Audited financial highlights for the Excelsior Institutional
Money Fund for the period November 8, 1993 (Commencement of
Operations) to August 31, 1994 and for the Years Ended August 31,
1995, 1996, 1997 and 1998

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

(i) Excelsior Institutional Money Fund:

o Statement of Assets and Liabilities at August 31, 1998
o Statement of Operations for the fiscal year ended August 31,
1998
o Statement of Changes in Net Assets for the fiscal years
ended August 31, 1998 and 1997
o Financial Highlights for the period November 8, 1993
(Commencement of Operations) to August 31, 1994 and for the
Years Ended August 31, 1995, 1996, 1997 and 1998
o Notes to Financial Statements
o Report of Independent Accountants

(ii) Cash Reserves Portfolio:

o Portfolio of Investments at August 31, 1998
o Statement of Assets and Liabilities at August 31, 1998
o Statement of Operations for the fiscal year ended August 31,
1998
o Statement of Changes in Net Assets for the fiscal years
ended August 31, 1998 and 1997
o Financial Highlights for the fiscal years ended August 31,
1998, 1997, 1996, 1995, 1994 and 1993
o Notes to Financial Statements
o Independent Auditors' Report

(b) Exhibits Notes
-------- -----

1. Trust Instrument of the Registrant. 1

2. By-laws of the Registrant. 1

C-1
<PAGE>

4(a). Articles IV, V, VI and IX of Registrant's Trust
Instrument. 1

4(b). Articles IV, V, VI, IX and X of Registrant's By-Laws. 1

6. Distribution Contract dated April 1, 1997, as amended
and restated on July 31, 1998, between the Registrant
and Edgewood Services, Inc. ("Edgewood"). 4

8. Custodian Agreement dated July 1, 1994 between the
Registrant and United States Trust Company of
New York. 2

9(a). Amended and Restated Administration Agreement
dated as of July 31, 1998 among the Registrant,
Chase Global Funds Services Company, Federated
Administrative Services and U.S. Trust Company
of Connecticut. 4

9(b). Administrative Services Plan and Related Form of
Shareholder Servicing Agreement. 3

9(c). Amended and Restated Mutual Funds Transfer Agency
Agreement dated as of July 31, 1998, between
Registrant and Chase Global Funds Services Company. 4

10. Opinion of Counsel. 3

11(a). Consent of Counsel. 4

11(b). Consent of PricewaterhouseCoopers LLP. 4

11(c). Consent of PricewaterhouseCoopers. 4

13. Investor Representation Letter of
Initial Shareholder. 3

16. Schedule for Computation of Performance Information. 1

17(a). Financial Data Schedule-Cash Reserves Portfolio. 4

17(b). Financial Data Schedule-Institutional Money Fund. 4

C-2
<PAGE>

24(a). Registrant's Annual Report dated August 31, 1998 is incorporated
herein by reference to Registrant's filing including such Annual
Report and filed with the SEC on November 10, 1998 (Accession
No. 0000950116-98-002157).

24(b). Cash Reserves Portfolio's Annual Report dated August 31, 1998 is
incorporated herein by reference to Cash Reserves Portfolio's filing
including such Annual Report and filed with the SEC on October 27,
1998 (Accession No. 0000950156-98-000652).

Notes:
- ------

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

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

3. Incorporated herein by reference to Post-Effective Amendment No. 6
("Amendment No. 6") to Registrant's Registration Statement on
Form N-1A, as filed with the SEC on December 30, 1997.

4. Filed herewith.

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

Registrant is controlled by its Board of Trustees.

Item 26. Number of Holders of Securities.

As of October 30, 1998:

C-3
<PAGE>

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

Shares of Beneficial
Interest (par value $.00001)

Excelsior Institutional Money Fund 554

Item 27. Indemnification.

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

Indemnification of Registrant's principal underwriter against
certain losses is provided for in Section IV of the Distribution Contract
incorporated herein by reference to Exhibit 6 hereto.

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

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

Item 28. Business and Other Connections of Investment Adviser.

Inapplicable.

C-4
<PAGE>

Item 29. Principal Underwriters.

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

(b) Set forth below are the names, principal business addresses and
positions of each director and officer of Edgewood. Unless otherwise noted, the
principal business address of these individuals is Edgewood Services, Inc., 5800
Corporate Drive, Pittsburgh, PA 15237-5829. Unless otherwise specified, none of
the officers and directors of Edgewood serve as officers and Trustees of the
Registrant.

Names and Principal Positions and Offices with Offices with
Business Addresses the Distributor Registrant
------------------ --------------------------- -------------
<S> <C> <C>

Lawrence Caracciolo Director and President, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-5829

Arthur L. Cherry Director, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-5829

J. Christopher Donahue Director, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-5829

Ronald M. Petnuch Vice President, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-5829

Thomas P. Schmitt Vice President, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-5829

Thomas P. Sholes Vice President, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-5829
</TABLE>

C-5
<PAGE>
<TABLE>
<CAPTION>

<S> <C>
Ernest L. Linane Assistant Vice President, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-5829

Thomas J. Ward Assistant Secretary, --
5800 Corporate Drive Edgewood Services, Inc.
Pittsburgh, PA 15237-5829
</TABLE>

Item 30. Location of Accounts and Records.

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

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

(2) FEDERATED ADMINISTRATIVE SERVICES, Federated Investment Tower,
Pittsburgh, PA 15222-3799 (records relating to its function as
co-administrator).

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

(4) EDGEWOOD SERVICES, INC., Clearing Operations, 5800 Corporate Drive,
Pittsburgh, PA 15237-5829 (records relating to its function as
distributor).

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

Item 31. Management Services.

Inapplicable.

Item 32. Undertakings.

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

C-6
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, Excelsior Funds certifies that it meets all
the requirements for effectiveness of this Post-Effective Amendment No. 7 to its
Registration Statement on Form N-1A ("Amendment No. 7") pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Amendment No. 7 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Philadelphia and the Commonwealth of Pennsylvania on the 24th day of
November, 1998.

EXCELSIOR FUNDS

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

Pursuant to the requirements of the Securities Act of 1933,
this Amendment No. 7 has been signed below by the following persons in the
capacities indicated and on the dates indicated.

SIGNATURE TITLE DATE
- --------- ----- ----

FREDERICK S. WONHAM* Chairman, November 24, 1998
- -------------------- President and
Frederick S. Wonham Treasurer

W. WALLACE MCDOWELL, JR.* Trustee November 24, 1998
- -------------------------
W. Wallace McDowell, Jr.

JONATHAN PIEL* Trustee November 24, 1998
- --------------
Jonathan Piel

RODMAN L. DRAKE* Trustee November 24, 1998
- ----------------
Rodman L. Drake

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

C-7
<PAGE>

SIGNATURES

Cash Reserves Portfolio (the "Portfolio") has duly caused the
Registration Statement on Form N-1A ("Registration Statement") of Excelsior
Funds (the "Trust") to be signed on its behalf by the undersigned, thereto duly
authorized in Grand Cayman, Cayman Islands on the 24th day of November, 1998.

CASH RESERVES PORTFOLIO

By /s/ Tamie Ebanks-Cunningham
------------------------------
Tamie Ebanks-Cunningham
Assistant Secretary

Pursuant to the requirements of the Securities Act of 1933,
the Trust's Registration Statement has been signed below by the following
persons in the capacities indicated on November __, 1998.

SIGNATURE TITLE DATE
- --------- ----- ----

PHILIP W. COOLIDGE* President, Principal November 24, 1998
- ------------------------- Executive Officer, and
Philip W. Coolidge Trustee of the Portfolio

JOHN R. ELDER* Principal Accounting and November 24, 1998
- ------------------------- Financial Officer
John R. Elder

WALTER E. ROBB III* Trustee of November 24, 1998
- ------------------------- the Portfolio
Walter E. Robb III

ELLIOTT J. BERV* Trustee of November 24, 1998
- ------------------------- the Portfolio
Elliott J. Berv

*By /s/ Tamie Ebanks-Cunningham
-------------------------------
Tamie Ebanks-Cunningham
As attorney-in-fact pursuant to powers of attorney.

C-8
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS

POWER OF ATTORNEY

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

Dated: May 22, 1998 /s/ Frederick S. Wonham
------------------------
Frederick S. Wonham

<PAGE>

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

POWER OF ATTORNEY

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

Dated: May 22, 1998 /s/ Rodman L. Drake
---------------------
Rodman L. Drake

<PAGE>

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

POWER OF ATTORNEY

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

Dated: May 22, 1998 /s/ W. Wallace McDowell, Jr.
----------------------------
W. Wallace McDowell, Jr.

<PAGE>

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

POWER OF ATTORNEY

Dated: May 22, 1998 /s/ Jonathan Piel
-------------------
Jonathan Piel

<PAGE>

Cash Reserves Portfolio

The undersigned hereby constitutes and appoints Philip W. Coolidge, John R.
Elder, Susan Jakuboski, Tamie Ebanks-Cunningham, Molly S. Mugler and Linda T.
Gibson, and each of them, with full powers of substitution as his true and
lawful attorneys and agents to execute in his name and on his behalf in any and
all capacities the Registration Statements on Form N-1A, and any and all
amendments thereto, filed by Cash Reserves Portfolio (the "Registrant") with the
Securities and Exchange Commission under the Investment Company Act of 1940, as
amended, the Registration Statements on Form N-1A, and any and all amendments
thereto, to be executed by the Registrant and filed by another registrant with
the Securities and Exchange Commission under the Investment Company Act of 1940,
as amended, or under the Securities Act of 1933, as amended, and any and all
other instruments which such attorneys and agents, or any of them, deem
necessary or advisable to enable the Registrant to comply with the Investment
Company Act of 1940, as amended, the rules, regulations and requirements of the
Securities and Exchange Commission, and the securities or Blue Sky laws of any
state or other jurisdiction; and the undersigned hereby ratifies and confirms as
his own act and deed any and all that such attorneys and agents, or any of them,
shall do or cause to be done by virtue hereof. Any one of such attorneys and
agents shall have, and may exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 7th day of
August, 1998.

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

<PAGE>
Cash Reserves Portfolio

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 7th day of
August, 1998.

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

<PAGE>

Cash Reserves Portfolio

The undersigned hereby constitutes and appoints John R. Elder, Susan Jakuboski,
Tamie Ebanks-Cunningham, Molly S. Mugler and Linda T. Gibson, and each of them,
with full powers of substitution as his true and lawful attorneys and agents to
execute in his name and on his behalf in any and all capacities the Registration
Statements on Form N-1A, and any and all amendments thereto, filed by Cash
Reserves Portfolio (the "Registrant") with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended, the
Registration Statements on Form N-1A, and any and all amendments thereto, to be
executed by the Registrant and filed by another registrant with the Securities
and Exchange Commission under the Investment Company Act of 1940, as amended, or
under the Securities Act of 1933, as amended, and any and all other instruments
which such attorneys and agents, or any of them, deem necessary or advisable to
enable the Registrant to comply with the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 7th day of
August, 1998.

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

<PAGE>

Cash Reserves Portfolio

The undersigned hereby constitutes and appoints Philip W. Coolidge, Susan
Jakuboski, Tamie Ebanks-Cunningham, Molly S. Mugler and Linda T. Gibson, and
each of them, with full powers of substitution as his true and lawful attorneys
and agents to execute in his name and on his behalf in any and all capacities
the Registration Statements on Form N-1A, and any and all amendments thereto,
filed by Cash Reserves Portfolio (the "Registrant") with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended, the
Registration Statements on Form N-1A, and any and all amendments thereto, to be
executed by the Registrant and filed by another registrant with the Securities
and Exchange Commission under the Investment Company Act of 1940, as amended, or
under the Securities Act of 1933, as amended, and any and all other instruments
which such attorneys and agents, or any of them, deem necessary or advisable to
enable the Registrant to comply with the Investment Company Act of 1940, as
amended, the rules, regulations and requirements of the Securities and Exchange
Commission, and the securities or Blue Sky laws of any state or other
jurisdiction; and the undersigned hereby ratifies and confirms as his own act
and deed any and all that such attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. Any one of such attorneys and agents shall
have, and may exercise, all of the powers hereby conferred.

IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 7th day of
August, 1998.

/s/ John R. Elder
- ----------------------
John R. Elder
At Paget, Bermuda

<PAGE>

EXHIBIT INDEX

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

6 Distribution contract dated April 1, 1997, as amended and restated on
July 31, 1998, between the Registrant and Edgewood Services, Inc.
("Edgewood").

9(a) Amended and Restated Administration Agreement dated as of July 31, 1998
among the Registrant, Chase Global Funds Services Company, Federated
Administrative Services and U.S. Trust Company of Connecticut.

9(c) Amended and Restated Mutual Funds Transfer Agency Agreement dated as of
July 31, 1998, between Registrant and Chase Global Funds Services
Company.

11(a) Consent of Counsel.

11(b) Consent of PricewaterhouseCoopers LLP.

11(c) Consent of PricewaterhouseCoopers.

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

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

<PAGE>

AMENDED AND RESTATED
DISTRIBUTION CONTRACT

Distribution Contract made as of April 1, 1997, as amended and restated
on July 31, 1998, between EXCELSIOR FUNDS, a Delaware business trust having its
principal office and place of business at 73 Tremont Street, Boston,
Massachusetts 02108-3913 (herein called the "Trust"), and EDGEWOOD SERVICES,
INC., a New York corporation having its principal office and place of business
in Pittsburgh, Pennsylvania (herein called the "Distributor").

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

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

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

I. DELIVERY OF DOCUMENTS
---------------------
The Trust has delivered to the Distributor copies of the following
documents and will deliver to the Distributor all future amendments and
supplements thereto, if any:

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

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

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

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

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<PAGE>

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

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

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

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

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

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

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

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

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<PAGE>

II. DISTRIBUTION

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

2. Services and Duties.

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

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

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

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

3
<PAGE>

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

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

3. Sales and Redemptions.

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

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

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

4
<PAGE>

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

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

III. LIMITATION OF LIABILITY

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

5
<PAGE>

IV. INDEMNIFICATION

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

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

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

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

6
<PAGE>

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

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

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

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

7
<PAGE>

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

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

V. TERM

This Contract shall continue until July 31, 1999, and thereafter shall
continue automatically for successive annual periods ending on July 31 of each
year, provided such continuance is specifically approved at least annually by
(a) the Trust's Board of Trustees or (b) vote of a majority (as defined in the
1940 Act) of the Trust's outstanding voting securities, provided that in either
event its continuance also is approved by a majority of the Trust's Trustees who
are not "interested persons" (as defined in the 1940 Act) of any party to this
Contract, cast in person at a meeting called for the purpose of voting on such
approval. This Contract is terminable without penalty, on 45 days' written
notice to the Distributor, by vote of a majority of the Trust's outstanding
voting securities or, as to each Series, by the Trust's Board of Trustees or, on
90 days' written notice to the Trust, by the Distributor. This Contract will
automatically terminate, as to the relevant Series, in the event of its
assignment (as defined in the 1940 Act).

VI. MISCELLANEOUS

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

2. Construction. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any

8
<PAGE>

provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. Subject to the provisions of Section IV hereof, this Contract shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Massachusetts law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the 1940 Act or any rule or regulation thereunder.

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

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

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

EXCELSIOR FUNDS

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

9
<PAGE>

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

By: /s/ Kenneth W. Pegher, Jr.
----------------------------
Name: Kenneth W. Pegher, Jr.
Title: Treasurer

10
<PAGE>

SCHEDULE I

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

Excelsior Institutional Money Fund

Dated: July 31, 1998

11
<PAGE>

SCHEDULE II

The following provisions are hereby incorporated and made part of the
Distribution Contract dated as of April 1, 1997, as amended and restated on July
31, 1998, between Excelsior Funds and Edgewood Services, Inc.

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

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

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

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

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

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

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

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

12
<PAGE>

Witness the due execution hereof as of the 31st day of July, 1998.

EXCELSIOR FUNDS

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

EDGEWOOD SERVICES, INC.

By: /s/ Kenneth W. Pegher, Jr.
-------------------------------
Name: Kenneth W. Pegher, Jr.
Title: Treasurer

<PAGE>

AMENDED AND RESTATED
ADMINISTRATION AGREEMENT

This AGREEMENT made as of July 31, 1998 by and among EXCELSIOR
FUNDS, a Delaware business trust (the "Company"), CHASE GLOBAL FUNDS SERVICES
COMPANY, a Delaware corporation ("CGFSC"), FEDERATED ADMINISTRATIVE SERVICES
("FAS"), a Delaware trust, and U.S. TRUST COMPANY OF CONNECTICUT ("U.S. Trust"),
a Connecticut state bank and trust company (CGFSC, FAS and U.S. Trust are
collectively referred to as the "Administrators").

WITNESSETH:

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

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

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

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

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

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

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

(f) Compiling data for, and preparing for execution
and filing, all reports or other documents required by Federal, state and other
applicable laws and regulations, including those required by applicable Federal

-2-
<PAGE>

and state tax laws (other than those required to be filed by the Company's
Custodian or Transfer Agent);

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

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

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

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

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

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

In performing their duties as co-administrators of the
Company, the Administrators (a) will act in accordance with the Company's
Charter, Bylaws, Prospectus and the instructions and directions of the Company's
Board of Trustees and will conform to, and comply with, the requirements of the

-3-
<PAGE>

1940 Act and all other applicable Federal or state laws and regulations, and (b)
will consult with outside legal counsel to the Company, as necessary or
appropriate.

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

4. Fees; Expenses; Expense Reimbursement.

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

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

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

The Administrators will bear all expenses in connection with
the performance of their services under this Agreement except as otherwise
expressly provided herein. Other expenses to be incurred in the operation of the
Funds, including taxes, interest, brokerage fees and commissions, if any,
salaries and fees of officers and trustees who are not officers, directors,
shareholders or employees of the Administrators, or the Company's investment
adviser or distributor for the Funds, SEC fees and state Blue Sky qualification
fees, advisory and administration fees, charges of custodians, transfer and
dividend disbursing agents' fees, certain insurance premiums, outside auditing
and legal expenses, payments to Service Organizations, costs of maintenance of
corporate existence, typesetting and printing of prospectuses for regulatory
purposes and for distribution to current shareholders of the Funds, costs of
shareholders' reports and corporate meetings and any extraordinary expenses,
will be borne by the Company, provided, however, that the Company will not bear,
directly or indirectly, the cost of any activity which is primarily intended to

-4-
<PAGE>

result in the distribution of shares of the Funds, and further provided that the
Administrators may utilize one or more independent pricing services, approved
from time to time by the Board of Trustees of the Company, to obtain securities
prices in connection with determining the net asset value of each Fund and that
each Fund will reimburse the Administrators for its share of the cost of such
services based upon its actual use of the services.

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

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

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

-5-
<PAGE>

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

7. Term. This Agreement shall become effective on July 31,
1998 and, unless sooner terminated as provided herein, shall continue until July
31, 1999, and thereafter shall continue automatically with respect to each Fund
for successive annual periods ending on July 31 of each year, provided such
continuance is specifically approved at least annually by the Company's Board of
Trustees. This Agreement is terminable with respect to each Fund, without
penalty, on not less than forty-five (45) days' notice by the Company's Board of
Trustees or by CGFSC, FAS or U.S. Trust. This Agreement will terminate
automatically in the event of its "assignment" (as defined in the 1940 Act). The
parties agree that an assignment includes the transfer of "control" of more than
25% of the outstanding voting securities of FAS to a company that is not a
subsidiary of Federated Investors, Inc.

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

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

If to the Company:

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

With copies to:

W. Bruce McConnel, III, Esq.
Drinker Biddle & Reath LLP
1345 Chestnut Street, Suite 1100
Philadelphia, Pennsylvania 19107
Telecopier Number: (215) 988-2757

-6-
<PAGE>

If to CGFSC:

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

If to FAS:

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

If to U.S. Trust:

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

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

-7-
<PAGE>

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

EXCELSIOR FUNDS

/s/ Frederick S. Wonham
---------------------------
Name: Frederick S. Wonham
Title: President and Treasurer

CHASE GLOBAL FUNDS SERVICES COMPANY

/s/ Donald P. Hearn
---------------------------
Name: Donald P. Hearn
Title: Vice Chairman

FEDERATED ADMINISTRATIVE SERVICES

/s/ Joseph A. Machi
---------------------------
Name: Joseph A. Machi
Title:

U.S. TRUST COMPANY OF CONNECTICUT

/s/ W. Michael Funck
---------------------------
Name: W. Michael Funck
Title: President and CEO

-8-
<PAGE>

Exhibit A
to the
Amended and Restated Administration Agreement

EXCELSIOR FUNDS
Institutional Money Fund

In consideration of the mutual covenants set forth in the Amended and
Restated Administration Agreement dated as of July 31, 1998 among Excelsior
Funds (the "Company"), Chase Global Funds Services Company ("CGFSC"), Federated
Administrative Services ("FAS") and U.S. Trust Company of Connecticut ("U.S.
Trust"), the Company executes and delivers this Exhibit on behalf of the Funds,
and with respect to any class or series thereof, first set forth in this
Exhibit.

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

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

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

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

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

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

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

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

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

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

-2-
<PAGE>

Witness the due execution hereof this 31st day of July, 1998.

EXCELSIOR FUNDS

/s/Frederick S. Wonham
------------------------------------
Name: Frederick S. Wonham
Title: President and Treasurer

FEDERATED ADMINISTRATIVE SERVICES

/s/ Joseph A. Machi
------------------------------------
Name: Joseph A. Machi
Title:

CHASE GLOBAL FUNDS SERVICES COMPANY

/s/ Donald P. Hearn
------------------------------------
Name: Donald P. Hearn
Title: Vice Chairman

-3-
<PAGE>

Exhibit B
to the
Amended and Restated Administration Agreement

EXCELSIOR FUNDS
Institutional Money Fund

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

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

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

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

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

<PAGE>

Witness the due execution hereof this 31st day of July, 1998.

EXCELSIOR FUNDS

/s/ Frederick S. Wonham
------------------------------
Name: Frederick S. Wonham
Title: President and Treasurer

U.S. TRUST COMPANY OF CONNECTICUT

/s/ W. Michael Funck
------------------------------
Name: W. Michael Funck
Title: President and CEO

<PAGE>

AMENDED AND RESTATED MUTUAL FUNDS
TRANSFER AGENCY AGREEMENT

AGREEMENT made as of July 31, 1998 by and between Excelsior Funds (the
"Fund"), a Delaware business trust, and Chase Global Funds Services Company (the
"Transfer Agent"), a Delaware corporation.

WITNESSETH:

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

WHEREAS, the Fund wishes to retain the Transfer Agent to provide
certain transfer agent services with respect to the Fund, and the Transfer Agent
is willing to furnish such services:

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

1. APPOINTMENT. The Fund hereby appoints the Transfer Agent to provide
transfer agent services for the Fund, subject to the supervision of the Board of
Trustees of the Fund (the "Board"), for the period and on the terms set forth in
this Agreement. The Transfer Agent accepts such appointment and agrees to
furnish the services set forth herein in return for the compensation as provided
in Schedule A to this Agreement. The Fund will initially consist of the
portfolios, funds and/or classes of shares (each an "Investment Fund";
collectively the "Investment Funds") listed in Schedule B, attached hereto. The
Fund shall notify the Transfer Agent in writing of each additional Investment
Fund established by the Fund. Each new Investment Fund shall be subject to the

<PAGE>

provisions of this Agreement, except to the extent that the provisions
(including those relating to the compensation and expenses payable by the Fund
and its Investment Funds) may be modified with respect to each new Investment
Fund in writing by the Fund and the Transfer Agent at the time of the addition
of the new Investment Fund.

2. REPRESENTATIONS AND WARRANTIES.

(a) The Transfer Agent represents and warrants to the Fund that:

(i) the Transfer Agent is a corporation organized and
existing and in good standing under the laws of the
State of Delaware;

(ii) the Transfer Agent is duly qualified to carry on its
business in the State of New York;

(iii) the Transfer Agent is empowered under applicable laws
and by its Charter Document and By-Laws to enter into
and perform this Agreement;

(iv) all requisite corporate proceedings have been taken
to authorize the Transfer Agent to enter into and
perform this Agreement;

(v) the Transfer Agent has, and will continue to have,
access to the facilities, personnel and equipment
required to fully perform its duties and obligations
hereunder;

(vi) no legal or administrative proceedings have been
instituted or threatened which would impair the

-2-
<PAGE>

Transfer Agent's ability to perform its duties and
obligations under this Agreement; and

(vii) the Transfer Agent's entrance into this Agreement
shall not cause a material breach or be in material
conflict with any other agreement or obligation of
the Transfer Agent or any law or regulation
applicable to the Transfer Agent;

(b) The Fund represents and warrants to the Transfer Agent that:

(i) the Fund is an open-end diversified management
investment company duly organized is a business trust
under the laws of the State of Delaware;

(ii) the Fund is empowered under applicable laws and by
its Charter Document and By-Laws to enter into and
perform this Agreement;

(iii) all requisite proceedings have been taken to
authorize the Fund to enter into and perform this
Agreement;

(iv) the Fund is an investment company properly registered
under the 1940 Act;

(v) a registration statement under the Securities Act of
1933, as amended ("1933 Act") and the 1940 Act on
Form N-1A has been filed and will be effective and
will remain effective during the term of this
Agreement, and all necessary filings under the laws
of the states will have been made and will be current
during the term of this Agreement;

-3-
<PAGE>

(vi) no legal or administrative proceedings have been
instituted or threatened which would impair the
Fund's ability to perform its duties and obligations
under this Agreement; and

(vii) the Fund's entrance into this Agreement shall not
cause a material breach or be in material conflict
with any other agreement or obligation of the Fund or
any law or regulation applicable to it.

3. DELIVERY OF DOCUMENTS. The Fund will promptly furnish to the
Transfer Agent such copies, properly certified or authenticated, of contracts,
documents and other related information that the Transfer Agent may request or
requires to properly discharge its duties. Such documents may include but are
not limited to the following:

(a) Resolutions of the Board authorizing the appointment of the
Transfer Agent to provide certain transfer agency services to
the Fund and approving this Agreement;

(b) The Fund's Charter Document;

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

(e) The Fund's registration statement including exhibits, as
amended, on Form N-1A (the "Registration Statement") under the
1933 Act and the 1940 Act, as filed with the SEC;

-4-
<PAGE>

(f) Copies of the Investment Advisory Agreement between the Fund
and its investment adviser (the "Advisory Agreement");

(g) Opinions of counsel and auditors' reports;

(h) The Fund's Prospectus(es) and Statement(s) of Additional
Information relating to all Investment Funds and all
amendments and supplements thereto (such Prospectus(es) and
Statement(s) of Additional Information and supplements
thereto, as presently in effect and as from time to time
hereafter amended and supplemented, herein called the
"Prospectuses"); and

(i) Such other agreements as the Fund may enter into from time to
time including securities lending agreements, futures and
commodities account agreements, brokerage agreements, and
options agreements.

4. SERVICES PROVIDED BY THE TRANSFER AGENT.

(a) The Transfer Agent will provide the following services
subject to the control, direction and supervision of the Board and in compliance
with the objectives, policies and limitations set forth in the Fund's
Registration Statement, Charter Document and By-Laws; applicable laws and
regulations; and all resolutions and policies implemented by the Board;

(i) Transfer Agency. A detailed description of the
above service is contained in Schedule C to this Agreement.

(ii) Dividend Disbursing. The Transfer Agent will
serve as the Fund's dividend disbursing agent. The Transfer Agent will prepare
and mail checks, place wire transfers of credit income and capital gain payments

-5-
<PAGE>

to shareholders. The Fund will advise the Transfer Agent of the declaration of
any dividend or distribution and the record and payable date thereof at least
five (5) days prior to the record date. The Transfer Agent will, on or before
the payment date of any such dividend or distribution, notify the Fund's
Custodian of the estimated amount required to pay any portion of such dividend
or distribution payable in cash, and on or before the payment date of such
distribution, the Fund will instruct its Custodian to make available to the
Transfer Agent sufficient funds for the cash amount to be paid out. If a
shareholder is entitled to receive additional shares by virtue of any such
distribution or dividend, appropriate credits will be made to each shareholder's
account and/or certificates delivered where requested. A shareholder not
electing issuance of certificates will receive a confirmation from the Transfer
Agent indicating the number of shares credited to his/her account.

(b) The Transfer Agent will also:

(i) provide office facilities with respect to the
provision of the services contemplated herein (which
may be in the offices of the Transfer Agent or a
corporate affiliate of the Transfer Agent);

(ii) provide the services of individuals to serve as
officers of the Fund who will be designated by the
Transfer Agent and elected by the Board subject to
reasonable Board approval;

(iii) provide or otherwise obtain personnel sufficient in
the Transfer Agent's sole discretion, for provision
of the services contemplated herein;

-6-
<PAGE>

(iv) furnish equipment and other materials, which the
Transfer Agent, in its sole discretion, believes are
necessary or desirable for provision of the services
contemplated herein; and

(v) keep records relating to the services provided
hereunder in such form and manner as set forth in
Schedule C, and as the Transfer Agent may otherwise
deem appropriate or advisable, all in accordance with
the 1940 Act. To the extent required by Section 31 of
the 1940 Act and the rules thereunder, the Transfer
Agent agrees that all such records prepared or
maintained by the Transfer Agent relating to the
services provided hereunder are the property of the
Fund and will be preserved for the periods prescribed
under Rule 31a-2 under the 1940 Act, maintained at
the Fund's expense, and made available in accordance
with such Section and rules. The Transfer Agent
further agrees to surrender promptly to the Fund upon
its request and cease to retain in its records and
files those records and documents created and
maintained by the Transfer Agent pursuant to this
Agreement.

5. FEES; EXPENSES; EXPENSE REIMBURSEMENT.

(a) As compensation for the services rendered to the Fund
pursuant to this Agreement, the Fund shall pay the Transfer Agent monthly fees
determined as set forth in Schedule A to this Agreement. Such fees are to be
billed monthly and shall be due and payable upon receipt of the invoice. Upon

-7-
<PAGE>

any termination of this Agreement before the end of any month, the fee for the
part of the month before such termination shall be prorated according to the
proportion which such part bears to the full monthly period and shall be payable
upon the date of termination of this Agreement.

(b) For the purpose of determining fees calculated as a
function of the Fund's assets, the value of the Fund's assets and net assets
shall be computed as required by its Prospectuses, generally accepted accounting
principles and resolutions of the Board.

(c) The Transfer Agent will from time to time employ or
associate with such person or persons as may be appropriate to assist the
Transfer Agent in the performance of this Agreement. Such person or persons may
be officers and employees who are employed or designated as officers by both the
Transfer Agent and the Fund. The compensation of such person or persons for such
employment shall be paid by the Transfer Agent and no obligation will be
incurred by or on behalf of the Fund in such respect.

(d) The Transfer Agent will bear all of its own expenses in
connection with the performance of the services under this Agreement except as
otherwise expressly provided herein. The Fund agrees to promptly reimburse the
Transfer Agent for any equipment and supplies specially ordered by or for the
Fund through the Transfer Agent and for any other expenses not contemplated by
this Agreement that the Transfer Agent may incur on the Fund's behalf at the
Fund's request or as consented to by the Fund. Such other expenses to be
incurred in the operation of the Fund and to be borne by the Fund, include, but
are not limited to: taxes; interest; brokerage fees and commissions; salaries
and fees of officers and directors who are not officers, directors, shareholders
or employees of the Service Agent, or the Fund's investment adviser or
distributor; SEC and state Blue Sky registration and qualification fees, levies,
fines and other charges; advisory and administration fees; charges and expenses

-8-
<PAGE>

of custodians; insurance premiums including fidelity bond premiums; auditing and
legal expenses; costs of maintenance of corporate existence; expenses of
typesetting and printing of prospectuses for regulatory purposes and for
distribution to current shareholders of the Fund (the Fund's distributor to bear
the expense of all other printing, production, and distribution of prospectuses,
statements of additional information, and marketing materials); expenses of
printing and production costs of shareholders' reports and proxy statements and
materials; cost, and expenses of Fund stationery and forms; costs and expenses
of special telephone and data lines and devices, costs associated with
corporate, shareholder, and Board meetings; and any extraordinary expenses and
other customary Fund expenses. In addition, the Service Agent may utilize one or
more independent pricing services, approved from time to time by the Board, to
obtain securities prices and to act as backup to the primary pricing services,
in connection with determining the net asset values of the Fund, and the Fund
will reimburse the Service Agent for the Fund's share of the cost of such
services based upon the actual usage, or a pro-rata estimate of the use, of the
services for the benefit of the Fund.

(e) The Fund may request additional services, additional
processing, or special reports. Such requests may be provided by the Transfer
Agent at additional charges. In this event, the Fund shall submit such requests
in writing together with such specifications as may be reasonably required by
the Transfer Agent, and the Transfer Agent shall respond to such requests in the
form of a price quotation. The Fund's written acceptance of the quotation must
be received prior to implementation of such request. Additional services will be
charged at the Transfer Agent's standard rates.

-9-
<PAGE>

(f) All fees, out-of-pocket expenses, or additional charges of
the Transfer Agent shall be billed on a monthly basis and shall be due and
payable upon receipt of the invoice.

The Transfer Agent will render, after the close of each month in which
services have been furnished, a statement reflecting all of the charges for such
month. Charges remaining unpaid after thirty (30) days shall bear interest in
finance charges equivalent to, in the aggregate, the Prime Rate (as determined
by U.S. Trust Company of New York) plus two (2) points per year and all costs
and expenses of effecting collection of any such sums, including reasonable
attorneys' fees, shall be paid by the Fund to the Transfer Agent.

In the event that the Fund is more than sixty (60) days delinquent in
its payments of monthly billings in connection with this Agreement (with the
exception of specific amounts which may be contested in good faith by the Fund),
this Agreement may be terminated upon thirty days' written notice to the Fund by
the Transfer Agent. The Fund must notify the Transfer Agent in writing of any
contested amounts within thirty (30) days of receipt of a billing for such
amounts. Disputed amounts are not due and payable while they are being
investigated.

6. PROPRIETARY AND CONFIDENTIAL INFORMATION. The Transfer Agent agrees
on behalf of itself and its employees to treat confidentially and as proprietary
information of the Fund, all records and other information relative to the
Fund's prior, present or potential shareholders, and to not use such records and
information for any purpose other than performance of the Transfer Agent's
responsibilities and duties hereunder. The Transfer Agent may seek a waiver of
such confidentiality provisions by furnishing reasonable prior notice to the
Fund and obtaining approval in writing from the Fund, which approval shall not
be unreasonably withheld and may not be withheld where the Transfer Agent may be
exposed to civil or criminal contempt proceedings for failure to comply, when

-10-
<PAGE>

requested to divulge such information by duly constituted authorities. Waivers
of confidentiality are automatically effective without further action by the
Transfer Agent with respect to Internal Revenue Service levies, subpoenas and
other similar actions, or with respect to any request by the Fund.

7. DUTIES, RESPONSIBILITIES, AND LIMITATION OF LIABILITY.

(a) In the performance of its duties hereunder, the Transfer
Agent shall be obligated to exercise due care and diligence, and to act in good
faith in performing the services provided for under this Agreement. In
performing its services hereunder, the Transfer Agent shall be entitled to rely
on any oral or written instructions, notices or other communications from the
Fund and its custodians, officers and directors, investors, agents and other
service providers which the Transfer Agent reasonably believes to be genuine,
valid and authorized. The Transfer Agent shall also be entitled to consult with
and rely on the advice and opinions of outside legal counsel retained by the
Fund, as necessary or appropriate.

(b) The Transfer Agent shall not be liable for any error of
judgment or mistake of law or for any loss or expense suffered by the Fund, in
connection with the matters to which this Agreement relates, except for a loss
or expense solely caused by or resulting from willful misfeasance, bad faith or
gross negligence of the Transfer Agent's part in the performance of its duties
or from reckless disregard by the Transfer Agent of its obligations and duties
under this Agreement. The Transfer Agent's liability under this Agreement for
any cause whatsoever shall be limited to the total amount of fees paid to the
Transfer Agent under this Agreement for the prior year. Any person, even though
also an officer, director, partner, employee or agent of the Transfer Agent, who
may be or become an officer, director, partner, employee, or agent of the Fund,
shall be deemed when rendering services to the Fund or acting on any business of

-11-
<PAGE>

the Fund (other than services or business in connection with the Transfer
Agent's duties hereunder) to be rendering such services to or acting solely for
the Fund and not as an officer, director, partner, employee or agent or person
under the control or direction of the Transfer Agent even though paid by the
Transfer Agent.

(c) Subject to Paragraph 7(b) above, the Transfer Agent shall
not be responsible for, and the Fund shall indemnify and hold the Transfer Agent
harmless from and against, any and all losses, damages, costs, reasonable
attorneys' fees and expenses, payments, expenses and liabilities arising out of
or attributable to:

(i) all actions of the Transfer Agent or its officers or
agents required to be taken pursuant to this
Agreement;

(ii) the reliance on or use by the Transfer Agent or its
officers or agents of information, records, or
documents which are received by the Transfer Agent or
its officers or agents and furnished to it or them by
or on behalf of the Fund, and which have been
prepared or maintained by the Fund or any third party
on behalf of the Fund;

(iii) the Fund's refusal or failure to comply with the
terms of this Agreement or the Fund's lack of good
faith, or its actions, or lack thereof, involving
negligence or willful misfeasance;

(iv) the breach of any representation or warranty of the
Fund hereunder;

-12-
<PAGE>

(v) the taping or other form of recording of telephone
conversations or other forms of electronic
communications with investors and shareholders, or
reliance by the Transfer Agent on telephone or other
electronic instructions of any person acting on
behalf of a shareholder or shareholder account for
which telephone or other electronic services have
been authorized;

(vi) the reliance on or the carrying out by the Transfer
Agent or its officers or agents of any proper
instructions reasonably believed to be duly
authorized, or requests of the Fund or recognition by
the Transfer Agent of any share certificates which
are reasonably believed to bear the proper signatures
of the officers of the Fund and the proper
countersignature of any transfer agent or registrar
of the Fund;

(vii) any delays, inaccuracies, errors in or omissions from
data provided to the Transfer Agent by data and
pricing services;

(viii) the offer or sale of shares by the Fund in violation
of any requirement under the Federal securities laws
or regulations or the Securities laws or regulations
of any state, or in violation of any stop order or
other determination or ruling by any Federal agency
or any state agency with respect to the offer or sale
of such shares in such state resulting from

-13-
<PAGE>

activities, actions, or omissions by the Fund's
distributor or existing or arising out of activities,
actions or omissions by or on behalf of the Fund
prior to the effective date of this Agreement; and

(ix) the compliance by the Fund, its investment adviser,
and its distributor with applicable securities, tax,
commodities and other laws, rules and regulations.

8. TERM. This Agreement shall become effective on the date first
herein above written. This Agreement may be modified or amended from time to
time by mutual agreement between the parties hereto. This Agreement shall
continue in effect unless terminated by either party on forty-five (45) days'
prior notice. Upon termination of this Agreement, the Fund shall pay to the
Transfer Agent such compensation and any reimbursable expenses as may be due
under the terms hereof as of the date of termination or the date that the
provision of services ceases, whichever is later.

9. HIRING OF EMPLOYEES. The Fund and the Transfer Agent agree that
they will not enter into discussions of employment or make offers of employment
to each others' employees without written approval from the other.

10. NOTICES. Any notice required or permitted hereunder shall be in
writing and shall be deemed to have been given when delivered in person or by
certified mail, return receipt requested, to the parties at the following
address (or such other address as a party may specify by notice to the other):

-14-
<PAGE>

If to the Fund:

Excelsior Funds
73 Tremont Street
Boston, MA 02108-3913
Attn: Assistant Treasurer
Fax: (617) 557-8816

With a copy to:

Drinker Biddle & Reath LLP
1345 Chestnut Street, Suite 1100
Philadelphia, PA 19107
Attn: W. Bruce McConnel, III
Fax: (215) 988-2757

If to the Transfer Agent:

Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108-3913
Attn: President
Fax: (617) 557-8816

Notice shall be effective upon receipt if by mail, on the date of personal
delivery (by private messenger, courier service or otherwise) or upon confirmed
receipt of telex or facsimile, whichever occurs first.

11. ASSIGNABILITY. This Agreement shall not be assigned by any of the
parties hereto without the prior consent in writing of the other party;
provided, however, that the Transfer Agent may in its own discretion and without
limitation or prior consent of the Fund, whenever and on such terms and
conditions as the Transfer Agent deems necessary or appropriate, subcontract,
delegate or assign its rights, duties, obligations and liabilities to
subsidiaries or affiliates of the Transfer Agent; provided, further, that any
such subcontract, agreement or understanding shall not discharge the Transfer

-15-
<PAGE>

Agent or its affiliates or subsidiaries, as the case may be, from its
obligations hereunder. Similarly, the Transfer Agent or its affiliated
subcontractor, designee, or assignee may at its discretion, without notice to
the Fund, enter into such subcontracts, agreements and understandings, whenever
and on such terms and conditions as the Transfer Agent or they deem necessary or
appropriate to perform services hereunder, with non-affiliated third parties;
provided, that such subcontract, agreement or understanding shall not discharge
the Transfer Agent, or its subcontractor, designee, or assignee, as the case may
be, from the Transfer Agent's obligations hereunder. The Transfer Agent or its
affiliated subcontractor, designee, or assignee shall, however, be discharged
from the Transfer Agent's obligations hereunder, if the Fund or its sponsor,
investment adviser or distributor require the Transfer Agent or its affiliated
subcontract, designee, or assignee to enter into any subcontract, agreement or
understanding to perform services hereunder with any nonaffiliated third party;
and the Fund shall indemnify and hold harmless the Transfer Agent and its
affiliated subcontractor, designee, or assignee from and against, any and all
losses, damages, costs, reasonable attorneys' fees and expenses, payments,
expenses and liabilities arising out of or attributable to such subcontract,
agreement or understanding.

12. WAIVER. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.

13. FORCE MAJEURE. The Transfer Agent shall not be responsible or
liable for any failure or delay in performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond its control, including without limitation, acts of God, earthquakes,

-16-
<PAGE>

fires, floods, wars, acts of civil or military authorities, or governmental
actions, nor shall say such failure or delay give the Fund the right to
terminate this Agreement.

14. USE OF NAME. The Fund and the Transfer Agent agree not to use the
other's name nor the names of such other's affiliates, designees, or assignees
in any prospectus, sales literature, or other printed material written in a
manner not previously, expressly approved in writing by the other or such
other's affiliates, designees, or assignees except where required by the SEC or
any state agency responsible for securities regulation.

15. AMENDMENTS. This Agreement may be modified or amended from time to
time by mutual written agreement between the parties. No provision of this
Agreement may be changed, discharged, or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, discharge or termination is sought.

16. SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable, the balance of the Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance it shall nevertheless
remain applicable to all other persons and circumstances.

17. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of New York.

-17-
<PAGE>

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

/s/ Frederick S. Wonham
-----------------------
Frederick S. Wonham
President and Treasurer

CHASE GLOBAL FUNDS SERVICES COMPANY

/s/ Donald P. Hearn
-----------------------
Name: Donald P. Hearn
Title: Vice Chairman

-18-
<PAGE>

AMENDED AND RESTATED MUTUAL FUNDS
TRANSFER AGENCY AGREEMENT
EXCELSIOR FUNDS

SCHEDULE A

FEES AND EXPENSES

$18,000 per annum/per Fund.

<PAGE>

AMENDED AND RESTATED MUTUAL FUNDS
TRANSFER AGENCY AGREEMENT
EXCELSIOR FUNDS

SCHEDULE B

LISTING OF INVESTMENT FUNDS SUBJECT TO THIS AGREEMENT

Institutional Money Fund

<PAGE>

AMENDED AND RESTATED MUTUAL FUNDS
TRANSFER AGENCY AGREEMENT
EXCELSIOR FUNDS

SCHEDULE C

DESCRIPTION OF TRANSFER AGENCY SERVICES

The following is a general description of the transfer agency
services the Transfer Agent shall provide to the Fund.

A. Shareholder Recordkeeping. Maintain records showing for each Fund
shareholder the following: (i) name, address and tax identifying number; (ii)
number of shares of each Investment Fund; (iii) historical information
including, but not limited to, dividends paid and date and price of all
transactions including individual purchases and redemptions; and (iv) any
dividend reinvestment order, application, dividend address and correspondence
relating to the current maintenance of the account.

B. Shareholder Issuance. Record the issuance of shares of each Investment
Fund. Except as specifically agreed in writing between the Transfer Agent and
the Fund, the Transfer Agent shall have no obligation when countersigning and
issuing and/or crediting shares to take cognizance of any other laws relating to
the issue and sale of such shares except insofar is policies and procedures of
the Stock Transfer Association recognize such laws.

C. Purchase Orders. Process all orders for the purchase of shares of the Fund
in accordance with the Fund's current registration statement. Upon receipt of
any check or other payment for purchase of shares of the Fund from an investor,
the Transfer Agent will (i) stamp the envelope with the date of receipt; (ii)
forthwith process the same for collection, (iii) determine the amounts thereof

<PAGE>

due the Fund, and notify the Fund of such determination and deposit, such
notification to be given on a daily basis of the total amounts determined and
deposited to the Fund's custodian bank account during such day. The Transfer
Agent shall then credit the share account of the investor with the number of
Investment Fund shares to be purchased made on the date such payment is received
by the Transfer Agent, as set forth in the Fund's current prospectus and shall
promptly mail a confirmation of said purchase to the investor, all subject to
any instructions which the Fund may give to the Transfer Agent with respect to
the timing or manner of acceptance of orders for shares relating to payments so
received by it.

D. Redemption Orders. Receive and stamp with the date of receipt all requests
for redemptions or repurchase of shares held in certificate or non-certificate
form, and process redemptions and repurchase requests as follows: (i) if such
certificate or redemption request complies with the applicable standards
approved by the Fund, the Transfer Agent shall on each business day notify the
Fund of the total number of shares presented and covered by such requests
received by the Transfer Agent on such day; (ii) on or prior to the seventh
calendar day succeeding any such requests received by the Transfer Agent shall
notify the Custodian, subject to instructions from the Fund, to transfer moneys
to such account as designated by the Transfer Agent for such payment to the
redeeming shareholder of the applicable redemption or repurchase price; (iii) if
any such certificate or request for redemption or repurchase does not comply
with applicable standards, the Transfer Agent shall promptly notify the investor
of such fact, together with the reason therefor, and shall effect such
redemption at the Fund's price next determined after receipt of documents
complying with said standards of, at such other time as the Fund shall so
direct.

-2-
<PAGE>

E. Telephone Orders. Process redemptions, exchanges and transfers of Fund
shares upon telephone instructions from qualified shareholders in accordance
with the procedures set forth in the Fund's current prospectus. The Transfer
Agent shall be permitted to redeem, exchange and/or transfer Fund shares from
any account for which such services have been authorized.

F. Transfer for Shares. Upon receipt by the Transfer Agent of documentation in
proper form to effect a transfer of shares, including in the case of shares for
which certificates have been issued the share certificates in proper form for
transfer, the Transfer Agent will register such transfer on the Fund's
shareholder record maintained by the Transfer Agent pursuant to instructions
received from the transferor, cancel the certificates representing such shares,
if any, and if so requested, countersign, register, issue and mail by first
class mail new certificates for the same or a smaller whole number of shares.

G. Shareholder Communications and Meeting. Address and mail all
communications by the Fund to its shareholders promptly following the delivery
by the Fund of the material to be mailed. Prepare shareholder lists, mail and
certify as to the mailing of proxy materials, receive the tabulated proxy cards,
render periodic reports to the Fund on the progress of such tabulation, and
provide the Fund with inspectors of election at any meeting of shareholders.

H. Share Certificates. If a shareholder of the Fund requests a certificate
representing his shares, the Transfer Agent will countersign and mail by first
class mail with receipt confirmed, a share certificate to the investor at
his/her address as it appears on the Fund's transfer books. The Transfer Agent
shall supply, at the expense of the Fund, a supply of blank share certificates.
The certificates shall be properly signed, manually or by facsimile, as
authorized by the Fund, and shall bear the Fund's seal or facsimile; and
notwithstanding the death, resignation or removal of any officers of the Fund

-3-
<PAGE>

authorized to sign certificates, the Transfer Agent may, until otherwise
directed by the Fund, continue to countersign certificates which bear the manual
or facsimile signature of such officer.

I. Returned Checks. In the event that any check or other order for the payment
of money is returned unpaid for any reason, the Transfer Agent will take such
steps, including redepositing the check for collection or returning the check to
the investor, as the Transfer Agent may, at its discretion, deem appropriate and
notify the Fund of such action, or as the Fund may instruct.

J.Shareholder Correspondence. Acknowledge all correspondence from shareholders
relating to their share accounts and undertake such other shareholder
correspondence as may from time to time be mutually agreed upon.

-4-

<PAGE>
CONSENT OF COUNSEL

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

/s/ DRINKER BIDDLE & REATH LLP
------------------------------
DRINKER BIDDLE & REATH LLP

Philadelphia, Pennsylvania
November 24, 1998

<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 8 to the registration statement on Form N-1A (the "Registration
Statement") of Excelsior Funds of our report dated October 27, 1998, relating
to the financial statements and financial highlights of Excelsior Institutional
Money Fund appearing in the August 31, 1998 Annual Report to Shareholders of
Excelsior Institutional Money Fund, which are also incorporated by reference
into the Registration Statement. We also consent to the references to us under
the heading "Financial Highlights" in the Prospectus and under the headings
"Independent Accountants" and "Financial Statements" in the Statement of
Additional Information.

/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 24, 1998

<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting parts of this Post-Effective Amendment No. 8
to the registration statement on Form N-1A (the "Registration Statement") of
Excelsior Funds of our report dated October 6, 1998, relating to the financial
statements and financial highlights of the Cash Reserves Portfolio appearing in
the August 31, 1998 Annual Report to Shareholders of Excelsior Institutional
Money Fund, which are also incorporated by reference into the Registration
Statement. We also consent to the references to us under the headings
"Independent Accountants" and "Financial Statements" in the Statement of
Additional Information.

/s/ PricewaterhouseCoopers
------------------------------
PricewaterhouseCoopers
Chartered Accountants
Toronto, Ontario
November 24, 1998

<ARTICLE> 6
<CIK> 0000914535
<NAME> EXCELSIOR FUNDS

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-START> SEP-01-1997
<PERIOD-END> AUG-31-1998
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<ARTICLE> 6

<S> <C>
<PERIOD-TYPE> YEAR
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<PERIOD-END> AUG-31-1998
<INVESTMENTS-AT-COST> 8,784,208,333
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