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As filed with the SEC on October 8, 1997
Excelsior Funds, Inc. - Registration Nos. 2-92665; 811-4088
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [x]
Excelsior Funds, Inc.: Post-Effective Amendment No. 30 [x]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY [x]
ACT OF 1940
Excelsior Funds, Inc.: Amendment No. 32 [x]
(Exact Name of Registrant as Specified in Charter)
73 Tremont Street
Boston, Massachusetts 02108-3913
(Address of Principal Executive Offices)
Registrant's Telephone Number: (800) 446-1012
W. Bruce McConnel, III
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 post-effective amendment will become effective (check
appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[X] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) 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.
--------------------------
The Registrant has registered an indefinite number of securities under the
Securities Act of 1933 pursuant to Rule 24f-2. The Rule 24f-2 Notice for the
Registrant's fiscal year ended March 31, 1997 was filed on May 29, 1997.
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CROSS-REFERENCE SHEET
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EXCELSIOR FUNDS, INC.
(Emerging Markets Fund)
Form N-1A, Part A, Item Prospectus Caption
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1. Cover Page........................... Cover Page
2. Synopsis............................. Prospectus Summary;
Expense Summary
3. Condensed Financial Information...... Performance Information
4. General Description of Registrant.... Prospectus Summary; Investment
Objective and Policies; Portfolio
Instruments and Other Investment
Information; Investment
Limitations
5. Management of the Fund............... Management of the Fund; Custodian
and Transfer Agent; Expenses
5A. Management's Discussion of Fund
Performance......................... Not Applicable
6. Capital Stock and
Other Securities.................... How to Purchase and Redeem Shares;
Dividends and Distributions;
Taxes; Description of Capital
Stock; Miscellaneous
7. Purchase of Securities
Being Offered....................... Pricing of Shares; How to Purchase
and Redeem Shares; Investor
Programs
8. Redemption or Repurchase............. How to Purchase and Redeem Shares
9. Pending Legal Proceedings............ Inapplicable
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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED OCTOBER 8, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
EXCELSIOR FUNDS, INC.
PROSPECTUS FOR THE
EMERGING MARKETS FUND
73 TREMONT STREET
BOSTON, MA 02108-3913
For initial purchase information, current prices, performance information and
existing account information, call (800) 446-1012. (From overseas, call (617)
557-8280.)
This Prospectus describes the Emerging Markets Fund (the "Fund"), a diversified
portfolio offered to investors by Excelsior Funds, Inc. ("Excelsior Fund"), an
open-end, management investment company. The Fund's investment objective and
policies are as follows:
EMERGING MARKETS FUND seeks long-term capital appreciation through
investments primarily in equity and equity-related securities of emerging
country issues.
The Fund is sponsored and distributed by Edgewood Services, Inc. and
advised by United States Trust Company of New York and U.S. Trust Company of
Connecticut (collectively, the "Investment Adviser" or "U.S. Trust").
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should consider before investing. Investors should read
this Prospectus and retain it for future reference. A Statement of Additional
Information dated December ___, 1997 and containing additional information about
the Fund has been filed with the Securities and Exchange
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Commission. The current Statement of Additional Information is available to
investors without charge by writing to Excelsior Fund at its address shown above
or by calling (800) 446-1012. The Statement of Additional Information, as it
may be supplemented from time to time, 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 Excelsior Fund.
SHARES IN THE FUND ("SHARES") ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED
OR ENDORSED BY, U.S. TRUST, ITS PARENT OR AFFILIATES 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.
AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
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.
December ___, 1997
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PROSPECTUS SUMMARY
EXCELSIOR FUNDS, INC. is an investment company offering various diversified
and non-diversified investment portfolios with differing objectives and
policies. Founded in 1984, Excelsior Fund currently offers 18 Funds with
combined assets of approximately $3 billion. See "Description of Capital
Stock."
INVESTMENT ADVISER: United States Trust Company of New York ("U.S. Trust
New York") and U.S. Trust Company of Connecticut ("U.S. Trust Connecticut" and,
collectively with U.S. Trust New York, "U.S. Trust" or the "Investment Adviser")
serve as the Fund's investment adviser. U.S. Trust offers a variety of
specialized financial and fiduciary services to high-net worth individuals,
institutions and corporations. Excelsior Fund offers investors access to U.S.
Trust's services. See "Management of the Fund -- Investment Adviser."
INVESTMENT OBJECTIVE AND POLICIES: Generally, the Fund is a diversified
investment portfolio which invests primarily in equity and equity-related
securities of emerging country issues. The Fund's investment objective and
policies are summarized on the cover and explained in greater detail later in
this Prospectus. See "Investment Objective and Policies," "Portfolio
Instruments and Other Investment Information" and "Investment Limitations."
HOW TO INVEST: The Fund's Shares are offered at their net asset value.
Excelsior Fund does not impose a sales load on purchases of Shares. See "How to
Purchase and Redeem Shares."
The minimum to start an account in the Fund is $500, with a minimum of $50
for subsequent investments. The easiest way to invest is to complete the
account application which accompanies this Prospectus and to send it with a
check to the address noted on the application. Investors may also invest by
wire and through investment dealers or institutional investors with appropriate
sales agreements with Excelsior Fund. See "How to Purchase and Redeem Shares."
HOW TO REDEEM: Redemptions may be requested directly from Excelsior Fund
by mail, wire or telephone. Investors investing through another institution
should request redemptions through their Shareholder Organization. See "How to
Purchase and Redeem Shares."
INVESTMENT RISKS AND CHARACTERISTICS: Generally, the Fund is subject to
market risk. Market risk is the possibility that stock prices will decline over
short or even extended periods. The stock markets tend to be cyclical, with
periods of generally rising prices and periods of generally declining prices.
These cycles will affect the values of the Fund. In addition, because
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the Fund will invest in securities of foreign issuers, it is subject to the
risks of fluctuations of the value of foreign currency relative to the U.S.
dollar and other risks associated with such investments. Investing in
securities of issuers located in developing or emerging countries may impose
greater risks not typically associated with investing in more established
markets. Although the Fund generally seeks to invest for the long term, the
Fund may engage in short-term trading of portfolio securities. A high rate of
portfolio turnover may involve correspondingly greater transaction costs which
must be borne directly by the Fund and ultimately by its shareholders.
Investment in the Fund should not be considered a complete investment program.
See "Investment Objective and Policies."
EXPENSE SUMMARY
EMERGING
MARKETS
FUND
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SHAREHOLDER TRANSACTION EXPENSES
Front-End Sales Load................................... None
Sales Load on Reinvested Dividends..................... None
Deferred Sales Load.................................... None
Redemption Fees........................................ None
Exchange Fees.......................................... None
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Advisory Fees (after fee waivers)/1/................... 1.00%
12b-1 Fees............................................. None
Other Operating Expenses
Administrative Servicing Fee.......................... 0.08%
Other Expenses........................................ 0.57%
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Total Operating Expenses (after fee waivers)/1/........ 1.65%
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____________________
1. The Investment Adviser and Administrators may, from time to time,
voluntarily waive part of their respective fees, which waivers may be
terminated at any time. Without such fee waivers, "Advisory Fees" would be
1.25%, and "Total Operating Expenses" would be 1.90%.
Example: You would pay the following estimated expenses on a $1,000 investment,
assuming (1) 5% annual returns and (2) redemption of your investment at the end
of the following periods:
1 YEAR 3 YEARS
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Emerging Markets Fund...................... $17 $52
The foregoing expense summary and example are intended to assist
investors in understanding the costs and expenses that an investor in Shares of
the Fund will bear directly or indirectly. The expense summary sets forth
estimated advisory and other
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expenses payable with respect to Shares of the Fund for the current fiscal year.
For more complete descriptions of the Fund's operating expenses, see "Management
of the Fund" and "Description of Capital Stock" in this Prospectus.
THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES OR RATE OF RETURN. ACTUAL EXPENSES AND RATE OF RETURN
MAY BE GREATER OR LOWER THAN THOSE SHOWN IN THE EXPENSE SUMMARY AND EXAMPLE.
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INVESTMENT OBJECTIVE AND POLICIES
The Investment Adviser will use its best efforts to achieve the
investment objective of the Fund, although its achievement cannot be assured.
The Fund's investment objective and policies may be changed by Excelsior Fund's
Board of Directors without shareholder approval. The Fund has also adopted
certain "fundamental" investment limitations that may not be changed without a
vote of the holders of a majority of the Fund's outstanding Shares (as defined
under "Miscellaneous"). The Fund's fundamental limitations are set forth below
under "Investment Limitations" and in the Statement of Additional Information.
The Fund's investment objective is to provide long-term capital
appreciation by investing primarily in equity and equity-related securities of
emerging country issuers. Under normal conditions, at least 65% of the Fund's
total assets will be invested in emerging country equity and equity-related
securities. While there are no prescribed limits on its geographic
distribution, the Fund will normally invest in securities of issuers from at
least three different emerging countries. With respect to the Fund, equity
securities include common and preferred stocks, convertible securities, and
rights and warrants to purchase common stocks, and equity-related securities
including sponsored and unsponsored depository receipts and other similar
instruments. As used in this Prospectus, the term "emerging country" applies to
any country which, in the opinion of U.S. Trust, is generally considered to be
an emerging or developing country by the international financial community,
including the International Bank for Reconstruction and Development (more
commonly known as The World Bank) and the International Finance Corporation.
There are currently over 130 countries which, in the opinion of U.S. Trust, are
generally considered to be emerging or developing countries by the international
financial community, approximately 40 of which currently have stock markets.
These countries generally include every nation in the world except the United
States, Canada, Japan, Australia, New Zealand and most nations located in
Western Europe. Currently, investing in many emerging countries is not feasible
or may involve unacceptable political risks. The countries in which the Fund
may invest include, but are not limited to: Argentina; Botswana; Brazil; Chile;
China; Colombia; Ghana; Greece; Hong Kong; Hungary; India; Indonesia; Israel;
Jamaica; Jordan; Kenya; Malaysia; Mexico; Morocco; Nigeria; Pakistan; Peru;
Philippines; Poland; Portugal; Russia; South Africa; South Korea; Sri Lanka;
Taiwan; Thailand; Turkey; Venezuela; and Zimbabwe.
As markets in other countries develop, the Fund may expand and further
diversify the emerging countries in which it invests. The Fund generally
intends to invest only in securities in
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countries where the currency is freely convertible to U.S. dollars.
An emerging country security is one issued by a company that, in the
opinion of U.S. Trust, has one or more of the following characteristics: (i)
its principal securities trading market is in an emerging country; (ii) alone or
on a consolidated basis it derives 50% or more of its annual revenue from either
goods produced, sales made or services performed in emerging countries; or (iii)
it is organized under the laws of, and has a principal office in, an emerging
country. U.S. Trust will base determinations as to eligibility on publicly
available information and inquiries made to the companies.
To the extent that the Fund's assets are not invested in emerging
country equity and equity-related securities, the remainder of the assets may be
invested in (i) debt securities denominated in the currency of an emerging
country or issued or guaranteed by an emerging country company or the government
of an emerging country; (ii) equity, equity-related or debt securities of
corporate or governmental issuers located in industrialized countries; (iii)
short-term and medium-term debt securities; and (iv) other securities described
below under "Portfolio Instruments and Other Investment Information." The
Fund's assets may be invested in debt securities when U.S. Trust believes that,
based upon factors such as relative interest rate levels and foreign exchange
rates, such debt securities offer opportunities for long-term capital
appreciation. It is likely that many of the debt securities in which the Fund
will invest will be unrated, and whether or not rated, such securities may have
speculative characteristics. When deemed appropriate by U.S. Trust, the Fund
may invest up to 10% of its total assets in lower quality debt securities.
Lower quality debt securities, also known as "junk bonds," are often considered
to be speculative and involve greater risk of default or price changes due to
changes in the issuer's creditworthiness. The market prices of these securities
may fluctuate more than those of higher quality securities and may decline
significantly in periods of general economic difficulty, which may follow
periods of rising interest rates. Securities in the lowest quality category may
present the risk of default, or may be in default.
Debt securities in which the Fund may invest include, without
limitation, Brady Bonds, which are securities issued in various currencies
(primarily the dollar) that have been created through the exchange of existing
commercial bank loans to Latin American public and private entities for new
bonds in connection with debt restructurings under a debt restructuring plan
announced by former U.S. Secretary of the Treasury Nicholas F. Brady (the "Brady
Plan"). Brady Bonds have been issued only recently and for that reason do not
have a long payment history. Brady Bonds may be collateralized or
uncollateralized, are issued
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in various currencies (primarily the U.S. dollar) and are actively traded in the
over-the-counter secondary market for Latin American debt instruments. Brady
Bonds are neither issued nor guaranteed by the U.S. Government. Additional
information on Brady Bonds is included in the Statement of Additional
Information.
The Fund may invest in illiquid securities, non-publicly traded
securities, private placements and restricted securities. The Fund also may
invest up to 5% of its total assets in gold bullion. Investments in gold will
not produce dividends or interest income, and the Fund can look only to price
appreciation for a return on such investments.
Under unusual economic and market conditions, the Fund may restrict
the securities markets in which its assets are invested and may invest all or a
major portion of its assets in U.S. Government obligations or in U.S. dollar-
denominated securities of U.S. companies. During normal market conditions, up
to 25% of the Fund's assets may also be held on a continuous basis in cash or
invested in U.S. money market instruments (see below under "Money Market
Instruments") to meet redemption requests or to take advantage of emerging
investment opportunities.
RISK FACTORS
The Fund is subject to market risk and interest rate risk. Market
risk is the possibility that stock prices will decline over short or even
extended periods. The stock markets tend to be cyclical, with periods of
generally rising prices and periods of generally declining prices. These cycles
will affect the values of the Fund. In addition, to the extent the Fund invests
in debt instruments, the prices of debt instruments generally fluctuate
inversely with interest rate changes.
Investments in foreign securities involve certain risks not ordinarily
associated with investments in domestic securities. Such risks include
fluctuations in foreign exchange rates, future political and economic
developments, and the possible imposition of exchange controls or other foreign
governmental laws or restrictions. Because the Fund will invest heavily in
securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates will, to the extent the Fund does not
adequately hedge against such fluctuations, affect the value of securities in
the portfolio and the unrealized appreciation or depreciation of investments so
far as U.S. investors are concerned. In addition, with respect to certain
countries there is the possibility of expropriation of assets, confiscatory
taxation, political or social instability or diplomatic developments which could
adversely affect investments in those countries. There may be less publicly
available information about a foreign company than about a U.S. company,
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and foreign companies may not be subject to accounting, auditing and financial
reporting standards and requirements comparable to or as uniform as those of
U.S.-based companies. Foreign securities markets, while growing in volume,
have, for the most part, substantially less volume than U.S. markets, and
securities of many foreign companies are less liquid and their prices more
volatile than securities of comparable U.S.-based companies. Transaction costs
on foreign securities markets are generally higher than in the United States.
There is generally less government supervision and regulation of foreign
exchanges, brokers and issuers than there is in the United States and the Fund
might have greater difficulty voting proxies, exercising shareholder rights or
taking appropriate legal action in a foreign court.
From time to time, the Fund may invest a significant portion of its
total assets in the securities of issuers located in the same country or
geographic region. Investment in a particular country or region of a
significant portion of the Fund's total assets will make the Fund's performance
more dependent upon the political and economic circumstances of a particular
country or region than a mutual fund that is more geographically diversified.
Dividends and interest payable on the Fund's foreign port folio
securities may be subject to foreign withholding taxes. To the extent such
taxes are not offset by credits or deductions allowed to investors under the
Federal income tax provisions, they may reduce the net return to the
shareholders. Investors should also understand that the expense ratio of the
Fund can be expected to be higher than those of funds investing in domestic
securities. The costs attributable to investing abroad are usually higher for
several reasons, such as the higher cost of investment research, higher cost of
custody of foreign securities, higher commissions paid on comparable
transactions on foreign markets, and additional costs arising from delays in
settlements of transactions involving foreign securities.
Investing in securities of issuers located in developing or emerging
market countries may impose greater risks not typically associated with
investing in more established markets. For example, in many emerging markets
there is less government supervision and regulation of business and industry
practices, stock exchanges, brokers and listed companies than in more
established markets. The foreign securities markets of many of the countries in
which the Fund may invest are likely to be smaller, less liquid, and subject to
greater price volatility than those in more established markets. Securities
traded in certain emerging markets may also be subject to risks due to the
inexperience of financial intermediaries, the lack of modern technology, and the
lack of a sufficient capital base to expand business operations. Developing
countries may also impose
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restrictions on the Fund's ability to repatriate investment income or capital.
Even where there is no outright restriction on repatriation of investment income
or capital, the mechanics of repatriation may affect certain aspects of the
operations of the Fund. Additionally, some of the currencies in emerging
markets have experienced devaluations relative to the U.S. dollar, and major
adjustments have been made periodically in certain of such currencies. Certain
developing countries also face serious exchange restraints.
Governments of some developing countries exercise substantial
influence over many aspects of the private sector. In some countries, the
government owns or controls many companies, including the largest in the
country. As such, government actions in the future could have a significant
effect on economic conditions in developing countries, which could affect
private sector companies, the Fund and the value of its securities. The
leadership or policies of emerging market countries may also halt the expansion
of or reverse the liberalization of foreign investment policies and adversely
affect existing investment opportunities. Certain developing countries are also
among the largest debtors to commercial banks and foreign governments. Trading
in debt obligations issued or guaranteed by such governments or their agencies
and instrumentalities involves a high degree of risk. Countries such as certain
Eastern European countries also involve the risk of reverting to a centrally
planned economy.
Foreign securities markets also have different registration, clearance
and settlement procedures. Registration, clearance and settlement of securities
in developing countries involve risks not associated with securities
transactions in the United States and other more developed markets. In certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Delays in registration, clearance or settlement could result in
temporary periods when assets of the Fund are uninvested and no return is earned
thereon. The inability of the Fund to make intended security purchases due to
registration, clearance or settlement problems could cause the Fund to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to registration, clearance or settlement problems could result
either in losses to the Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser. As an example,
the registration, clearing and settlement of securities transactions in Russia
are subject to significant risks not normally associated with securities
transactions in the United States and other more developed markets. Ownership
of shares in Russian companies is evidenced by entries in a company's share
register (except where shares are held through depositories that
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meet the requirements of the Investment Company Act of 1940, as amended (the
"1940 Act")), and the issuance of extracts from the register or, in certain
limited cases, by formal share certificates. However, Russian share registers
are frequently unreliable and the Fund could possibly lose its registration
through oversight, negligence or fraud. Russia also lacks a centralized
registry to record securities transactions and registrars located throughout
Russia or the companies themselves maintain share registers. Registrars are
under no obligation to provide extracts to potential purchasers in a timely
manner or at all and are not necessarily subject to effective state supervision.
In addition, while registrars are liable under law for losses resulting from
their errors, it may be difficult for the Fund to enforce any rights it may have
against the registrar or issuer of the securities in the event of loss of share
registration. Although Russian companies with more than 1,000 shareholders are
required by law to employ an independent company to maintain share registers, in
practice, such companies have not always followed this law. Because of this
lack of independence of registrars, management of a Russian company may be able
to exert considerable influence over who can purchase and sell the company's
shares by illegally instructing the registrar to refuse to record transactions
on the share register. These practices may also prevent the Fund from investing
in the securities of certain Russian companies deemed suitable by U.S. Trust and
could cause a delay in the sale of Russian securities by the Fund if the company
deems a purchaser unsuitable, which may expose the Fund to potential loss on its
investment.
The Fund may invest in lower quality securities, also known as junk
bonds. Lower quality securities have different risks than investments in
securities that are rated "investment grade." Risk of loss upon default by the
borrower is significantly greater because lower-rated securities are generally
unsecured and are often subordinated to other creditors of the issuer, and
because the issuers frequently have high levels of indebtedness and are more
sensitive to adverse economic conditions, such as recessions, individual
corporate developments and increasing interest rates than are investment grade
issuers. As a result, the market price of such securities, and the net asset
value of the Fund's Shares, may be particularly volatile.
Additional risks associated with lower-rated fixed income securities
are (a) the relative youth and growth of the market for such securities, (b) the
relatively low trading market liquidity for the securities, (c) the impact that
legislation may have on the high-yield bond market (and, in turn, on the Fund's
net asset value and investment practices), (d) the operation of mandatory
sinking fund or call/redemption provisions during periods of declining interest
rates whereby the Fund may be required to reinvest premature redemption proceeds
in lower yielding portfolio securities, and (e) the creditworthiness of
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the issuers of such securities. During an economic downturn or substantial
period of rising interest rates, highly-leveraged issuers may experience
financial stress which would adversely affect their ability to service their
principal and interest payment obligations, to meet projected business goals and
to obtain additional financing. An economic downturn could also disrupt the
market for lower-rated bonds generally and adversely affect the value of
outstanding bonds and the ability of the issuers to repay principal and
interest. If the issuer of a lower-rated security held by the Fund defaulted,
the Fund could incur additional expenses to seek recovery. Adverse publicity
and investor perceptions, whether or not based on fundamental analysis, may also
decrease the values and liquidity of lower-rated securities held by the Fund,
especially in a thinly traded market.
The Fund should not be considered a complete investment program. In
view of the specialized nature of its investment activities, investment in the
Fund's Shares may be suitable only for those investors who can invest without
concern for current income and are financially able to assume risk in search of
long-term capital gains.
Securities of companies held by the Fund are likely to be more
volatile than the overall market.
PORTFOLIO INSTRUMENTS AND OTHER INVESTMENT INFORMATION
MONEY MARKET INSTRUMENTS
The Fund may invest in "money market instruments," which include,
among other things, bank obligations, commercial paper and corporate bonds with
remaining maturities of 13 months or less. Bank obligations include bankers'
acceptances, negotiable certificates of deposit, and non-negotiable time
deposits earning a specified return and issued by a U.S. bank which is a member
of the Federal Reserve System or insured by the Bank Insurance Fund of the
Federal Deposit Insurance Corporation ("FDIC"), or by a savings and loan
association or savings bank which is insured by the Savings Association
Insurance Fund of the FDIC. Bank obligations also include U.S. dollar-
denominated obligations of foreign branches of U.S. banks and obligations of
domestic branches of foreign banks. Investments in time deposits are limited to
no more than 5% of the value of the Fund's total assets at the time of purchase.
Investments by the Fund in commercial paper will consist of issues
that are rated "A-2" or better by Standard & Poor's Ratings Group ("S&P") or
"Prime-2" or better by Moody's Investors Service, Inc. ("Moody's"). In
addition, the Fund may acquire unrated commercial paper that is determined by
the Investment
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Adviser at the time of purchase to be of comparable quality to rated instruments
that may be acquired by the Fund.
Commercial paper may include variable and floating rate instruments.
While there may be no active secondary market with respect to a particular
instrument purchased by the Fund, the Fund may, from time to time as specified
in the instrument, demand payment of the principal of the instrument or may
resell the instrument to a third party. The absence of an active secondary
market, however, could make it difficult for the Fund to dispose of the
instrument if the issuer defaulted on its payment obligation or during periods
that the Fund is not entitled to exercise its demand rights, and the Fund could,
for this or other reasons, suffer a loss with respect to such instrument. Any
security which cannot be disposed of within seven days without taking a reduced
price will be considered an illiquid security subject to the 15% limitation
discussed below under "Illiquid Securities, Non-Publicly Traded Securities,
Private Placements and Restricted Securities."
ADRS, EDRS AND GDRS
The Fund may invest indirectly in the securities of foreign issuers
through sponsored and unsponsored depository receipts such as American
Depository Receipts ("ADRs"), European Depository Receipts ("EDRs), Global
Depository Receipts ("GDRs") and through other similar instruments. ADRs
typically are issued by an American bank or trust company and evidence ownership
of underlying securities issued by a foreign corporation. EDRs, which are
sometimes referred to as Continental Depository Receipts, are receipts issued in
Europe, typically by foreign banks and trust companies, that evidence ownership
of either foreign or domestic underlying securities. GDRs are depository
receipts structured like global debt issues to facilitate trading on an
international basis. Unsponsored ADR, EDR, and GDR programs are organized
independently and without the cooperation of the issuer of the underlying
securities. As a result, available information concerning the issuer may not be
as current as for sponsored ADRs, EDRs and GDRs, and the prices of unsponsored
ADRs, EDRs and GDRs may be more volatile than if such instruments were sponsored
by the issuer.
REPURCHASE AGREEMENTS
The Fund may agree to purchase portfolio securities subject to the
seller's agreement to repurchase them at a mutually agreed upon date and price
("repurchase agreements"). The Fund will enter into repurchase agreements only
with financial institutions that are deemed to be creditworthy by the Investment
Adviser, pursuant to guidelines established by Excelsior Fund's Board of
Directors. The Fund will not enter into repurchase agreements with the
Investment Adviser or any of its affiliates. Repurchase
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agreements with remaining maturities in excess of seven days will be considered
illiquid securities and will be subject to the 15% limit described below under
"Illiquid Securities, Non-Publicly Traded Securities, Private Placements and
Restricted Securities."
The seller under a repurchase agreement will be required to maintain
the value of the securities which are subject to the agreement and held by the
Fund at not less than the repurchase price. Default or bankruptcy of the seller
would, however, expose the Fund to possible delay in connection with the
disposition of the underlying securities or loss to the extent that proceeds
from a sale of the underlying securities were less than the repurchase price
under the agreement.
SECURITIES LENDING
To increase return on its portfolio securities, the Fund may lend its
portfolio securities to broker/dealers pursuant to agreements requiring the
loans to be continuously secured by collateral equal at all times in value to at
least the market value of the securities loaned. Collateral for such loans may
include cash, securities of the U.S. Government, its agencies or
instrumentalities, or an irrevocable letter of credit issued by a bank, or any
combination thereof. Such loans will not be made if, as a result, the aggregate
of all outstanding loans of the Fund exceeds 30% of the value of its total
assets. There may be risks of delay in receiving additional collateral or in
recovering the securities loaned or even a loss of rights in the collateral
should the borrower of the securities fail financially. However, loans are made
only to borrowers deemed by the Investment Adviser to be of good standing and
when, in the Investment Adviser's judgment, the income to be earned from the
loan justifies the attendant risks.
FORWARD CURRENCY TRANSACTIONS
The Fund will conduct its currency exchange transactions either on a
spot (i.e. cash) basis at the rate prevailing in the currency exchange markets,
or by entering into forward currency contracts. A forward foreign currency
contract involves an obligation to purchase or sell a specific currency for a
set price at a future date. Forward currency contracts are traded in the
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. Also, forward currency contracts usually
involve delivery of the currency involved instead of cash payment as in the case
of futures contracts.
The Fund's participation in forward currency contracts will be limited
to hedging involving either specific transactions or portfolio positions. The
Fund's Investment Adviser does not expect to hedge positions as a routine
investment technique, but
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anticipates hedging principally with respect to specific transactions.
Transaction hedging involves the purchase or sale of foreign currency with
respect to specific receivables or payables of the Fund generally arising in
connection with the purchase or sale of its portfolio securities. The purpose
of transaction hedging is to "lock in" the U.S. dollar equivalent price of such
specific securities. Position hedging is the sale of foreign currency with
respect to portfolio security positions denominated or quoted in that currency.
The Fund will not speculate in foreign currency exchange transactions.
Transaction and position hedging will not be limited to an overall percentage of
the Fund's assets, but will be employed as necessary to correspond to particular
transactions or positions. The Fund may not hedge its currency positions to an
extent greater than the aggregate market value (at the time of entering into the
forward contract) of the securities held in its portfolio denominated, quoted
in, or currently convertible into that particular currency. When the Fund
engages in forward currency transactions, certain asset segregation requirements
must be satisfied. When the Fund takes a long position in a forward currency
contract, it must maintain a segregated account containing liquid assets equal
to the purchase price of the contract, less any margin or deposit. When the
Fund takes a short position in a forward currency contract, the Fund must
maintain a segregated account containing liquid assets in an amount equal to the
market value of the currency underlying such contract (less any margin or
deposit), which amount must be at least equal to the market price at which the
short position was established. Asset segregation requirements are not
applicable when the Fund "covers" a forward currency position generally by
entering into an offsetting position. Additional information on forward
currency transactions, including a discussion of risks involved in such
transactions (which are similar to those described below under "Futures
Contracts"), is included in the Statement of Additional Information.
OPTIONS
The Fund may enter into option transactions in accordance with its
investment objective and policies for the purpose of hedging or for speculative
purposes (i.e. to increase total return).
The Fund may purchase put and call options in an amount not exceeding
5% of the Fund's net assets, as described further in the Statement of Additional
Information. Such options may relate to particular securities, various stock or
bond indices or foreign currencies. These options may or may not be listed on a
U.S. or foreign exchange and may or may not be issued by the Options Clearing
Corporation. Purchasing options is a specialized investment technique which
entails a substantial risk of a complete loss of the amounts paid as premiums to
the writer of
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<PAGE>
the options. In addition, unlisted options are not subject to the protections
afforded purchasers of listed options issued by the Options Clearing
Corporation, which performs the obligations of its members if they default.
In addition, the Fund may engage in writing covered call options
(options on securities owned by the Fund) and enter into closing purchase
transactions with respect to such options. Such options must be listed on a
U.S. or foreign exchange and may or may not be issued by the Options Clearing
Corporation. The aggregate value of the securities subject to options written
by the Fund may not exceed 25% of the value of its net assets. By writing a
covered call option, the Fund forgoes the opportunity to profit from an increase
in the market price of the underlying security above the exercise price except
insofar as the premium represents such a profit, and it will not be able to sell
the underlying security until the option expires or is exercised or the Fund
effects a closing purchase transaction by purchasing an option of the same
series. The use of covered call options is not a primary investment technique
of the Fund and such options will normally be written on underlying securities
as to which the Investment Adviser does not anticipate significant short-term
capital appreciation. Additional information on option practices is provided in
the Fund's Statement of Additional Information.
FUTURES CONTRACTS
The Fund may also enter into interest rate futures contracts, foreign
currency futures contracts, other types of financial futures contracts and
related futures options, as well as any index or foreign market futures which
are available on recognized exchanges or in other established financial markets.
The Fund will not engage in futures transactions for speculation, but
only as a hedge against changes in market values of securities which the Fund
holds or intends to purchase. In addition, the Fund may enter into futures
transactions in order to offset an expected decrease in the value of its
portfolio positions that might otherwise result from a currency exchange
fluctuation. The Fund will engage in futures transactions only to the extent
permitted by the Commodity Futures Trading Commission ("CFTC") and the
Securities and Exchange Commission ("SEC"). When investing in futures
contracts, the Fund must satisfy certain asset segregation requirements to
ensure that the use of futures is unleveraged. When the Fund takes a long
position in a futures contract, it must maintain a segregated account containing
liquid assets equal to the purchase price of the contract, less any margin or
deposit. When the Fund takes a short position in a futures contract, the Fund
must maintain a segregated account containing liquid assets in an amount equal
to the market value of the securities or foreign currency underlying such
contract (less any margin or deposit), which amount must be
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<PAGE>
at least equal to the market price at which the short position was established.
Asset segregation requirements are not applicable when the Fund "covers" an
options or futures position generally by entering into an offsetting position.
The Fund will limit its hedging transactions in futures contracts and related
options so that, immediately after any such transaction, the aggregate initial
margin that is required to be posted by the Fund under the rules of the exchange
on which the futures contract (or futures option) is traded, plus any premiums
paid by the Fund on its open futures options positions, does not exceed 5% of
the Fund's total assets, after taking into account any unrealized profits and
unrealized losses on the Fund's open contracts (and excluding the amount that a
futures option is "in-the-money" at the time of purchase). An option to buy a
futures contract is "in-the-money" if the then-current purchase price of the
underlying futures contract exceeds the exercise or strike price; an option to
sell a futures contract is "in-the-money" if the exercise or strike price
exceeds the then-current purchase price of the contract that is the subject of
the option. In addition, the use of futures contracts is further restricted to
the extent that no more than 10% of the Fund's total assets may be hedged.
Transactions in futures as a hedging device may subject the Fund to a
number of risks. Successful use of futures by the Fund is subject to the
ability of the Investment Adviser to correctly anticipate movements in the
direction of the market, currency exchange rates and other economic factors.
There may be an imperfect correlation, or no correlation at all, between
movements in the price of the futures contracts (or options) and movements in
the price of the instruments being hedged. In addition, investments in futures
may subject the Fund to losses due to unanticipated market movements which are
potentially unlimited. Further, there is no assurance that a liquid market will
exist for any particular futures contract (or option) at any particular time.
Consequently, the Fund may realize a loss on a futures transaction that is not
offset by a favorable movement in the price of securities which it holds or
intends to purchase or may be unable to close a futures position in the event of
adverse price movements.
INVESTMENT COMPANY SECURITIES
The Fund may invest in securities issued by other investment
companies, including so called "country funds" and funds that invest in
securities included in foreign security indices, such as World Equity Benchmark
Shares(SM) ("WEBS"). In addition to the advisory fees and other expenses the
Fund bears directly in connection with its own operations, as a shareholder of
another investment company, the Fund would bear its pro rata portion of the
other investment company's advisory fees and other expenses. As such, the Fund's
shareholders would indirectly bear the
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<PAGE>
expenses of the Fund and the other investment company, some or all of which
would be duplicative. Such securities will be acquired by the Fund within the
limits prescribed by the 1940 Act which include, subject to certain exceptions,
a prohibition against the Fund investing more than 10% of the value of its total
assets in such securities.
WHEN-ISSUED AND FORWARD TRANSACTIONS
The Fund may purchase eligible securities on a "when-issued" basis and
may purchase or sell securities on a "forward commitment" basis. These
transactions involve a commitment by the Fund to purchase or sell particular
securities with payment and delivery taking place in the future, beyond the
normal settlement date, at a stated price and yield. Securities purchased on a
"forward commitment" or "when-issued" basis are recorded as an asset and are
subject to changes in value based upon changes in the general level of interest
rates. It is expected that "forward commitments" and "when-issued" purchases
will not exceed 25% of the value of the Fund's total assets absent unusual
market conditions, and that the length of such commitments will not exceed 45
days. The Fund does not intend to engage in "when-issued" purchases and
"forward commitments" for speculative purposes, but only in furtherance of its
investment objective.
BORROWING AND REVERSE REPURCHASE AGREEMENTS
The Fund may borrow funds, in an amount up to 10% of the value of its
total assets, for temporary or emergency purposes, such as meeting larger than
anticipated redemption requests, and not for leverage. The Fund may also agree
to sell portfolio securities to financial institutions such as banks and broker-
dealers and to repurchase them at a mutually agreed date and price (a "reverse
repurchase agreement"). The SEC views reverse repurchase agreements as a form
of borrowing. At the time the Fund enters into a reverse repurchase agreement,
it will place in a segregated custodial account liquid assets having a value
equal to the repurchase price, including accrued interest. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the repurchase price of those securities.
ILLIQUID SECURITIES, NON-PUBLICLY TRADED SECURITIES, PRIVATE PLACEMENTS AND
RESTRICTED SECURITIES
The Fund will not knowingly invest more than 15% of the value of its
net assets in securities that are illiquid. The Fund may purchase securities
which are not registered under the Securities Act of 1933, as amended (the
"Act"), but which can be sold to "qualified institutional buyers" in accordance
with Rule 144A under the Act. Any such security will not be considered
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<PAGE>
illiquid so long as it is determined by the Investment Adviser, acting under
guidelines approved and monitored by the Board, that an adequate trading market
exists for that security. This investment practice could have the effect of
increasing the level of illiquidity in the Fund during any period that qualified
institutional buyers become uninterested in purchasing these restricted
securities.
The Fund may also purchase non-publicly traded securities, private
placements and other restricted securities. These securities may involve a
higher degree of business and financial risk that can result in substantial
losses. As a result of the absence of a public trading market for these
securities, they may be less liquid than publicly traded securities. Although
these securities may be resold in privately negotiated transactions, the prices
realized from these sales could be less than those originally paid by the Fund
or less than what may be considered the fair value of such securities.
Furthermore, companies whose securities are not publicly traded may not be
subject to the disclosure and other investor protection requirements which might
be applicable if their securities were publicly traded. If such securities are
required to be registered under the securities laws of one or more jurisdictions
before being resold, the Fund may be required to bear the expenses of
registration.
PORTFOLIO TURNOVER
The Fund may sell a portfolio investment immediately after its
acquisition if the Investment Adviser believes that such a disposition is
consistent with the investment objective of the Fund. Portfolio investments may
be sold for a variety of reasons, such as a more favorable investment
opportunity or other circumstances bearing on the desirability of continuing to
hold such investments.
The annual portfolio turnover rate for the Fund is not expected to
exceed 100%. A rate of 100% indicates that the equivalent of all of the Fund's
assets have been sold and reinvested in a calendar year. A high rate of
portfolio turnover may involve correspondingly greater brokerage commission
expenses and other transaction costs, which must be borne directly by the Fund
and ultimately by its shareholders. High portfolio turnover may result in the
realization of substantial net capital gains. To the extent net short-term
capital gains are realized, any distributions resulting from such gains are
considered ordinary income for Federal income tax purposes. (See "Taxes --
Federal" below.)
INVESTMENT LIMITATIONS
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The investment limitations enumerated below are matters of fundamental
policy and may not be changed with respect to the Fund without the vote of the
holders of a majority of the Fund's outstanding Shares (as defined under
"Miscellaneous").
The Fund may not:
1. Borrow money or mortgage, pledge or hypothecate its assets except
to the extent permitted under the 1940 Act;
2. Purchase securities of any one issuer, other than U.S. Government
obligations, if immediately after such purchase more than 5% of the value
of its total assets would be invested in the securities of such issuer,
except that up to 25% of the value of its total assets may be invested
without regard to this 5% limitation;
3. Purchase any securities which would cause more than 25% of the
value of its total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business
activities in the same industry, provided that (a) there is no limitation
with respect to securities issued or guaranteed by the U.S. Government, and
(b) neither all finance companies, as a group, nor all utility companies,
as a group, are considered a single industry for purposes of this policy;
and
4. Make loans, except that (i) the Fund may purchase or hold debt
securities in accordance with its investment objective and policies, and
may enter into repurchase agreements with respect to obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, and
(ii) the Fund may lend portfolio securities in accordance with its
investment objective and policies.
In addition to the investment limitations described above, the Fund may not
invest in the securities of any single issuer if, as a result, the Fund holds
more than 10% of the outstanding voting securities of such issuer.
With respect to all investment policies, if a percentage limitation is
satisfied at the time of investment, a later increase or decrease in such
percentage resulting from a change in value of the Fund's portfolio securities
will not constitute a violation of such limitation.
PRICING OF SHARES
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The net asset value of the Fund is determined and the Shares of the Fund
are priced at the close of regular trading hours on the New York Stock Exchange
(the "Exchange"), currently 4:00 p.m. (Eastern Time). Net asset value and
pricing for the Fund are determined on each day the Exchange and the Investment
Adviser are open for trading ("Business Day"). Currently, the holidays which
the Fund observes are New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas. The Fund's net asset value per Share for purposes of pricing
sales and redemptions is calculated by dividing the value of all securities and
other assets allocable to the Fund, less the liabilities allocable to the Fund,
by the number of its outstanding Shares.
The Fund's portfolio securities which are primarily traded on a domestic
exchange are valued at the last sale price on that exchange or, if there is no
recent sale, at the last current bid quotation. Portfolio securities which are
primarily traded on foreign securities exchanges are generally valued at the
preceding closing values of such securities on their respective exchanges,
except that when an event subsequent to the time when value was so established
is likely to have changed such value, then the fair value of those securities
will be determined by consideration of other factors under the direction of the
Board of Directors. A security which is listed or traded on more than one
exchange is valued at the quotation on the exchange determined to be the primary
market for such security. Investments in debt securities having a maturity of
60 days or less are valued based upon the amortized cost method. An option,
futures or foreign currency futures contract is valued at the last sales price
quoted on the principal exchange or board of trade on which such option or
contract is traded, or in the absence of a sale, the mean between the last bid
and asked prices. A forward currency contract is valued based on the last
published forward currency rate which reflects the duration of the contract and
the value of the underlying currency. All other foreign securities are valued
at the last current bid quotation if market quotations are available, or at fair
value as determined in accordance with guidelines adopted by the Board of
Directors. For valuation purposes, quotations of foreign securities in foreign
currency are converted to U.S. dollars equivalent at the prevailing market rate
on the day of conversion. Some of the securities acquired by the Fund may be
traded on foreign exchanges or over-the-counter markets on days which are not
Business Days. In such cases, the net asset value of the Shares may be
significantly affected on days when investors can neither purchase nor redeem
the Fund's Shares. Excelsior Fund's administrators have undertaken to price the
securities in the Fund's portfolios, and may use one or more independent pricing
services in connection with this service.
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HOW TO PURCHASE AND REDEEM SHARES
DISTRIBUTOR
Shares in the Fund are continuously offered for sale by Excelsior
Fund's sponsor and distributor, Edgewood Services, Inc. (the "Distributor"), a
wholly-owned subsidiary of Federated Investors. The Distributor is a registered
broker/dealer. Its principal business address is Clearing Operations, P.O. Box
897, Pittsburgh, PA 15230-0897.
At various times the Distributor may implement programs under which a
dealer's sales force may be eligible to win nominal awards for certain sales
efforts or under which the Distributor will make payments to any dealer that
sponsors sales contests or recognition programs conforming to criteria
established by the Distributor, or that participates in sales programs sponsored
by the Distributor. The Distributor in its discretion may also from time to
time, pursuant to objective criteria established by the Distributor, pay fees to
qualifying dealers for certain services or activities which are primarily
intended to result in sales of Shares of the Fund. If any such program is made
available to any dealer, it will be made available to all dealers on the same
terms and conditions. Payments made under such programs will be made by the
Distributor out of its own assets and not out of the assets of the Fund.
In addition, the Distributor may offer to pay a fee from its own
assets to financial institutions as financial assistance 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 assistance 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.
PURCHASE OF SHARES
Shares in the Fund are sold at their net asset value per Share next
computed after a purchase order is received in good order by the sub-transfer
agent or another entity on behalf of Excelsior Fund. The Distributor has
established several procedures for purchasing Shares in order to accommodate
different types of investors.
Shares may be purchased directly by individuals ("Direct Investors")
or by institutions ("Institutional Investors" and,
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collectively with Direct Investors, "Investors"). Shares may also be purchased
by customers ("Customers") of the Investment Adviser, its affiliates and
correspondent banks, and other institutions ("Shareholder Organizations") that
have entered into agreements with Excelsior Fund. A Shareholder Organization
may elect to hold of record Shares for its Customers and to record beneficial
ownership of Shares on the account statements provided by it to its Customers.
If it does so, it is the Shareholder Organization's responsibility to transmit
to the Distributor all purchase orders for its Customers and to transmit, on a
timely basis, payment for such orders to Chase Global Funds Services Company
("CGFSC"), the Fund's sub-transfer agent, in accordance with the procedures
agreed to by the Shareholder Organization and the Distributor. Confirmations of
all such Customer purchases and redemptions will be sent by CGFSC to the
particular Shareholder Organization. As an 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 shareholder of record. Shares in the Fund bear the expense of fees payable
to Shareholder Organizations for such services. See "Management of the Fund --
Shareholder Organizations."
Customers wishing to purchase Shares through their Shareholder
Organization should contact such entity directly for appropriate instructions.
(For a list of Shareholder Organizations in your area, call (800) 446-1012.) An
Investor purchasing Shares through a registered investment adviser or certified
financial planner may incur transaction charges in connection with such
purchases. Such Investors should contact their registered investment adviser or
certified financial planner for further information on transaction fees.
Investors may also purchase Shares directly from the Distributor in accordance
with procedures described below under "Purchase Procedures."
PURCHASE PROCEDURES
General
Direct 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
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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.
Institutional Investors may purchase Shares by transmitting their purchase
orders to CGFSC by telephone at (800) 446-1012 or by terminal access.
Institutional Investors must pay for Shares with Federal funds or funds
immediately available to CGFSC.
Purchases by Wire
Investors may also purchase Shares by wiring Federal funds to CGFSC.
Prior to making an initial investment by wire, an Investor must telephone CGFSC
at (800) 446-1012 (from overseas, call (617) 557-8280) for instructions.
Federal funds and registration instructions should be wired through the Federal
Reserve System to:
The Chase Manhattan Bank
ARA #021000021
Excelsior Funds, Account No. 9102732915
For further credit to:
Excelsior Funds
Wire Control Number
Account Registration
(including account number)
Investors making initial investments by wire must promptly complete the
Application accompanying this Prospectus and forward it to CGFSC. Redemptions
by Investors will not be processed until the completed Application for purchase
of Shares has been received by CGFSC and accepted by the Distributor. Investors
making subsequent investments by wire should follow the above instructions.
OTHER PURCHASE INFORMATION
Except as provided in "Investor Programs" below, the minimum initial
investment by an Investor or initial aggregate investment by a Shareholder
Organization investing on behalf of its Customers is $500 for the Fund. The
minimum subsequent investment for both types of investors is $50 for the Fund.
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.
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<PAGE>
Excelsior Fund reserves the right to reject any purchase order, in whole or in
part, or to waive any minimum investment requirements.
REDEMPTION PROCEDURES
Customers of Shareholder Organizations holding Shares of record may redeem
all or part of their investments in the Fund in accordance with procedures
governing their accounts at the Shareholder Organizations. 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. Redemption orders for Institutional Investors must be transmitted to
CGFSC by telephone at (800) 446-1012 or by terminal access. No charge for
wiring redemption payments to Shareholder Organizations or Institutional
Investors is imposed by Excelsior Fund, although Shareholder Organizations may
charge a Customer's account for wiring redemption proceeds. Information
relating to such redemption services and charges, if any, is available from the
Shareholder Organizations. An Investor redeeming Shares through a registered
investment adviser or certified financial planner may incur transaction charges
in connection with such redemptions. Such Investors should contact their
registered investment adviser or certified financial planner for further
information on transaction fees. Investors may redeem all or part of their
Shares in accordance with any of the procedures described below (these
procedures also apply to Customers of Shareholder Organizations for whom
individual accounts have been established with CGFSC).
REDEMPTION BY MAIL
Shares may be redeemed by a Direct 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 redemption 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 by each registered owner exactly as
the Shares are registered. If the Shares to be redeemed were issued in
certificate form, the certificates must be endorsed for transfer (or accompanied
by a duly executed stock power) and must be submitted to CGFSC together with the
redemption request. A redemption request for an amount in excess of $50,000 per
account, 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
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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) 446-1012
or at the address given above. CGFSC may require additional supporting
documents for redemptions made by corporations, executors, administrators,
trustees and guardians. A redemption request will not be deemed to be properly
received until CGFSC receives all required documents in proper form. Payment
for Shares redeemed will ordinarily be made by mail within five Business Days
after proper receipt by CGFSC of the redemption request in good order.
Questions with respect to the proper form for redemption requests should be
directed to CGFSC at (800) 446-1012 (from overseas, call (617) 557-8280).
REDEMPTION BY WIRE OR TELEPHONE
Direct Investors who have so indicated on the 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
Direct Investor's account at any commercial bank in the United States. Direct
Investors who are shareholders of record may also redeem Shares by instructing
CGFSC by telephone to mail a check for redemption proceeds of $500 or more to
the shareholder of record at his or her address of record. Institutional
Investors may also redeem Shares by instructing CGFSC by telephone at (800) 446-
1012 or by terminal access. Only redemptions of $500 or more will be wired to a
Direct Investor's account. The redemption proceeds for Direct Investors must be
paid to the same bank and account as designated on the Application or in written
instructions subsequently received by CGFSC.
In order to arrange for redemption by wire or telephone after an account
has been opened or to change the bank or account designated to receive
redemption proceeds, a Direct Investor must send a written request to Excelsior
Fund, c/o CGFSC, at the address listed above under "Redemption by Mail." Such
requests must be signed by the Direct Investor, with signatures guaranteed (see
"Redemption by Mail" above, for details regarding signature guarantees).
Further documentation may be requested.
CGFSC and the Distributor reserve the right to refuse a wire or telephone
redemption if it is believed advisable to do so. Procedures for redeeming
Shares by wire or telephone may be modified or terminated at any time by
Excelsior Fund, CGFSC or
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the Distributor. EXCELSIOR FUND, CGFSC, AND THE DISTRIBUTOR WILL NOT BE LIABLE
FOR ANY LOSS, LIABILITY, COST OR EXPENSE FOR ACTING UPON TELEPHONE INSTRUCTIONS
THAT ARE REASONABLY BELIEVED TO BE GENUINE. IN ATTEMPTING TO CONFIRM THAT
TELEPHONE INSTRUCTIONS ARE GENUINE, EXCELSIOR FUND WILL USE SUCH PROCEDURES AS
ARE CONSIDERED REASONABLE, INCLUDING RECORDING THOSE INSTRUCTIONS AND REQUESTED
INFORMATION AS TO ACCOUNT REGISTRATION.
If any portion of the Shares to be redeemed represents an investment made
by personal check, Excelsior Fund 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 which may take up to 15
days. A Direct Investor who anticipates the need for more immediate access to
his or her 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 Direct Investor's purchase check is not collected, the purchase
will be cancelled and CGFSC will charge a fee of $25.00 to the Direct Investor's
account.
During periods of substantial economic or market change, telephone
redemptions may be difficult to complete. If an Investor is unable to contact
CGFSC by telephone, the Investor may also deliver the redemption request to
CGFSC in writing at the address noted above under "How to Purchase and Redeem
Shares -- Redemption by Mail."
OTHER REDEMPTION INFORMATION
Except as described in "Investor Programs" below, 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 in the Fund remains below
$500. If a Customer has agreed with a particular Shareholder Organization to
maintain a minimum balance in his or her account at the institution with respect
to Shares of the Fund, and the balance in such account falls below that minimum,
the Customer may be obliged by the Shareholder Organization to redeem all or
part of his or her Shares to the extent necessary to maintain the required
minimum balance.
GENERAL
Purchase and redemption orders for Shares which are received in good order
prior to the close of regular trading hours on the Exchange (currently 4:00
p.m., Eastern Time) on any Business Day are priced according to the net asset
value determined on that day. Purchase orders received in good order after the
close of regular trading hours on the Exchange are priced at the net asset value
per Share determined on the next Business Day.
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INVESTOR PROGRAMS
EXCHANGE PRIVILEGE
Investors and Customers of Shareholder Organizations may, after appropriate
prior authorization and without an exchange fee imposed by Excelsior Fund,
exchange Shares in the Fund having a value of at least $500 for shares of any
other portfolio offered by Excelsior Fund or Excelsior Tax-Exempt Funds, Inc.
("Excelsior Tax-Exempt Fund") or for Trust Shares of Excelsior Institutional
Trust, provided that such other shares may legally be sold in the state of the
Investor's residence.
Excelsior Fund currently offers 17 additional portfolios as follows:
Money Fund, a money market fund seeking as high a level of current
income as is consistent with liquidity and stability of principal through
investments in high-quality money market investments maturing within 13
months;
Government Money Fund, a money market fund seeking as high a level of
current income as is consistent with liquidity and stability of principal
through investments in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and repurchase agreements
collateralized by such obligations;
Treasury Money Fund, a money market fund seeking current income
generally exempt from state and local income taxes through investments in
direct short-term obligations issued by the U.S. Treasury and certain
agencies or instrumentalities of the U.S. Government;
Short-Term Government Securities Fund, a fund seeking a high level of
current income by investing principally in obligations issued or guaranteed
by the U.S. Government, its agencies or instrumentalities and repurchase
agreements collateralized by such obligations, and having a dollar-weighted
average portfolio maturity of 1 to 3 years;
Intermediate-Term Managed Income Fund, a fund seeking a high level of
current interest income by investing principally in investment grade or
better debt obligations and money market instruments, and having a dollar-
weighted average portfolio maturity of 3 to 10 years;
Managed Income Fund, a fund seeking higher current income primarily
through investments in investment grade debt obligations, U.S. Government
obligations and money market instruments;
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Blended Equity Fund, a fund seeking long-term capital appreciation
through investments in a diversified portfolio primarily of equity
securities;
Income and Growth Fund, a fund seeking to provide moderate current
income and to achieve capital appreciation as a secondary objective by
investing in common stock, preferred stock and securities convertible into
common stock;
Energy and Natural Resources Fund, a non-diversified fund seeking
long-term capital appreciation by investing in companies that are in the
energy and other natural resources groups of industries;
Value and Restructuring Fund, a fund seeking long-term capital
appreciation by investing in companies benefitting from their restructuring
or redeployment of assets and operations in order to become more
competitive or profitable;
Large Cap Growth Fund, a fund seeking superior, risk-adjusted total
return by investing in larger companies whose growth prospects, in the
opinion of the Investment Adviser, appear to exceed that of the overall
market;
Real Estate Fund, a non-diversified fund seeking current income and
long-term capital appreciation by investing in real estate investment
trusts and other companies principally engaged in the real estate business;
Small Cap Fund, a fund seeking long-term capital appreciation by
investing in companies with capitalization of $1 Billion or less;
International Fund, a fund seeking total return derived primarily from
investments in foreign equity securities;
Latin America Fund, a fund seeking long-term capital appreciation
through investments in companies and securities of governments based in all
countries in Central and South America;
Pacific/Asia Fund, a fund seeking long-term capital appreciation
through investments in companies and securities of governments based in
Asia and on the Asian side of the Pacific Ocean; and
Pan European Fund, a fund seeking long-term capital appreciation
through investments in companies and securities of governments based in
Europe.
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Excelsior Tax-Exempt Fund currently offers 6 portfolios as follows:
Tax-Exempt Money Fund, a diversified tax-exempt money market fund
seeking a moderate level of current interest income exempt from Federal
income taxes through investing primarily in high-quality municipal
obligations maturing within 13 months;
Short-Term Tax-Exempt Securities Fund, a diversified fund seeking a
high level of current interest income exempt from Federal income taxes
through investments in municipal obligations and having a dollar-weighted
average portfolio maturity of 1 to 3 years;
Intermediate-Term Tax-Exempt Fund, a diversified fund seeking a high
level of current income exempt from Federal income taxes through
investments in municipal obligations and having a dollar-weighted average
portfolio maturity of 3 to 10 years;
Long-Term Tax-Exempt Fund, a diversified fund seeking to maximize over
time current interest income exempt from Federal income taxes, through
investments in municipal obligations and having a dollar-weighted average
maturity of 10 to 30 years;
New York Intermediate-Term Tax-Exempt Fund, a non diversified fund
designed to provide New York investors with a high level of current income
exempt from Federal and, to the extent possible, New York state and New
York City income taxes; this fund invests primarily in New York municipal
obligations and has a dollar-weighted average portfolio maturity of 3 to 10
years; and
California Tax-Exempt Income Fund, a non-diversified fund designed to
provide California investors with as high a level of current interest
income exempt from Federal and, to the extent possible, California state
personal income taxes as is consistent with relative stability of
principal; this fund invests primarily in California municipal obligations
and has a dollar-weighted average portfolio maturity of 3 to 10 years.
Excelsior Institutional Trust currently offers Trust Shares in the
following portfolios:
Optimum Growth Fund, a fund seeking superior, risk-adjusted total
return through investments in a diversified portfolio of equity securities
whose growth prospects, in the opinion of its investment adviser, appear to
exceed that of the overall market; and
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Value Equity Fund, a fund seeking long-term capital appreciation
through investments in a diversified portfolio of equity securities whose
market value, in the opinion of its investment adviser, appears to be
undervalued relative to the marketplace.
An exchange involves a redemption of all or a portion of the Shares in the
Fund and the investment of the redemption proceeds in shares of another
portfolio of Excelsior Fund, Excelsior Tax-Exempt Fund or 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.
Investors may find the exchange privilege useful if their investment
objectives or market outlook should change after they invest in the Fund. For
further information regarding exchange privileges, shareholders should call
(800) 446-1012 (from overseas, call (617) 557-8280). Investors exercising the
exchange privilege with the other portfolios of Excelsior Fund, Excelsior Tax-
Exempt Fund or Excelsior Institutional Trust should request and review the
prospectuses of such funds. Such prospectuses may be obtained by calling the
numbers listed above. In order to prevent abuse of this privilege to the
disadvantage of other shareholders, Excelsior Fund, Excelsior Tax-Exempt Fund
and Excelsior Institutional Trust reserve the right to limit the number of
exchange requests of Investors and Customers of Shareholder Organizations to no
more than six per year. Excelsior Fund may modify or terminate the exchange
program at any time upon 60 days' written notice to shareholders, and may reject
any exchange request.
For Federal income tax purposes, an exchange of Shares is a taxable event
and, accordingly, a capital gain or loss may be realized by an investor. Before
making an exchange, an investor should consult a tax or other financial adviser
to determine tax consequences.
Exchange by Telephone. For shareholders who have previously selected the
telephone exchange option, an exchange order may be placed by calling (800) 446-
1012 (from overseas, please call (617) 557-8280). By establishing the telephone
exchange option, a shareholder authorizes CGFSC and the Distributor to act upon
telephone instructions believed to be genuine. EXCELSIOR FUND, EXCELSIOR TAX-
EXEMPT FUND, 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 FUND, EXCELSIOR TAX-EXEMPT
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FUND AND EXCELSIOR INSTITUTIONAL TRUST WILL USE SUCH PROCEDURES AS ARE
CONSIDERED REASONABLE, INCLUDING RECORDING THOSE INSTRUCTIONS AND REQUESTING
INFORMATION AS TO ACCOUNT REGISTRATION.
SYSTEMATIC WITHDRAWAL PLAN
An Investor who owns Shares of the Fund with a value of $10,000 or more may
establish a Systematic Withdrawal Plan. The Investor may request a declining-
balance withdrawal, a fixed-dollar withdrawal, a fixed-share withdrawal, or a
fixed-percentage withdrawal (based on the current value of Shares in the
account) on a monthly, quarterly, semi-annual or annual basis. To initiate the
Systematic Withdrawal Plan, an investor must complete the Supplemental
Application contained in this Prospectus and mail it to CGFSC at the address
given above. Further information on establishing a Systematic Withdrawal Plan
may be obtained by calling (800) 446-1012 (from overseas, call (617) 557-8280).
Shareholder Organizations may, at their discretion, establish similar
systematic withdrawal plans with respect to the Shares held by their Customers.
Information about such plans and the applicable procedures may be obtained by
Customers directly from their Shareholder Organizations.
RETIREMENT PLANS
Shares are available for purchase by Investors in connection with the
following tax-deferred prototype retirement plans offered by United States Trust
Company of New York:
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.
Investors investing in the Fund pursuant to Profit Sharing and Money-
Purchase Plans and Keogh Plans are not subject to the minimum investment and
forced redemption provisions described above. The minimum initial investment
for IRAs is $250 for the Fund and the minimum subsequent investment is $50 for
the Fund. Detailed information concerning eligibility, service fees and other
matters related to these plans can be obtained by calling (800) 446-1012 (from
overseas, call (617) 557-8280). Customers of Shareholder Organizations may
purchase Shares of the Fund pursuant to retirement plans if such plans are
offered by their Shareholder Organizations.
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AUTOMATIC INVESTMENT PROGRAM
The Automatic Investment Program permits Investors to purchase Shares
(minimum of $50 for the Fund per transaction) at regular intervals selected by
the Investor. The minimum initial investment for an Automatic Investment Program
account is $50 for the Fund. Provided the Investor's financial institution
allows automatic withdrawals, Shares are purchased by transferring funds from an
Investor's checking, bank money market or NOW account designated by the
Investor. At the Investor's option, the account designated will be debited in
the specified amount, and Shares will be purchased, once a month, on either the
first or fifteenth day, or twice a month, on both days.
The Automatic Investment Program is one means by which an Investor may use
"Dollar Cost Averaging" in making investments. Instead of trying to time market
performance, a fixed dollar amount is invested in Shares at predetermined
intervals. This may help Investors to reduce their average cost per Share
because the agreed upon fixed investment amount allows more Shares to be
purchased during periods of lower Share prices and fewer Shares during periods
of higher prices. In order to be effective, Dollar Cost Averaging should
usually be followed on a sustained, consistent basis. Investors should be
aware, however, that Shares bought using Dollar Cost Averaging are purchased
without regard to their price on the day of investment or to market trends. In
addition, while Investors may find Dollar Cost Averaging to be beneficial, it
will not prevent a loss if an Investor ultimately redeems his Shares at a price
which is lower than their purchase price.
To establish an Automatic Investment account permitting Investors to use
the Dollar Cost Averaging investment method described above, an Investor must
complete the Supplemental Application contained in this Prospectus and mail it
to CGFSC. An Investor may cancel his participation in this Program or change
the amount of purchase at any time by mailing written notification to CGFSC,
P.O. Box 2798, Boston, MA 02208-2798 and notification will be effective three
Business Days following receipt. Excelsior Fund may modify or terminate this
privilege at any time or charge a service fee although no such fee currently is
contemplated. An Investor may also implement the Dollar Cost Averaging method
on his own initiative or through other entities.
DIVIDENDS AND DISTRIBUTIONS
Dividends from the net investment income of the Fund are declared and paid
at least annually. For dividend purposes, the Fund's investment income is
reduced by accrued expenses directly attributable to the Fund and the general
expenses of Excelsior Fund prorated to the Fund on the basis of its relative net
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assets. Net realized capital gains are distributed at least annually.
Dividends and distributions will reduce the net asset value of the Fund by the
amount of the dividend or distribution. All dividends and distributions paid on
Shares held of record by the Investment Adviser and its affiliates or
correspondent banks will be paid in cash. Direct and Institutional Investors
and Customers of other Shareholder Organizations will receive dividends and
distributions in additional Shares of the Fund (as determined on the payable
date), unless they have requested in writing (received by CGFSC at Excelsior
Fund's address prior to the payment date) to receive dividends and distributions
in cash. Reinvested dividends and distributions receive the same tax treatment
as those paid in cash.
TAXES
FEDERAL
The Fund intends to qualify as a "regulated investment company" under the
Code. Such qualification generally relieves the Fund of liability for Federal
income taxes to the extent its earnings are distributed in accordance with the
Code.
Qualification as a regulated investment company under the Code requires,
among other things, that the Fund distribute to its shareholders an amount equal
to at least 90% of its investment company taxable income for each taxable year.
In general, the Fund's investment company taxable income will be its income
(including dividends and interest), subject to certain adjustments and excluding
the excess of any net long-term capital gain for the taxable year over the net
short-term capital loss, if any, for such year. The Fund intends to distribute
substantially all of its investment company taxable income each year. Such
dividends will be taxable as ordinary income to Fund shareholders who are not
currently exempt from Federal income taxes, whether such income is received in
cash or reinvested in additional Shares. (Federal income taxes for
distributions to IRAs and qualified pension plans are deferred under the Code.)
The dividends received deduction for corporations will apply to such ordinary
income distributions to the extent of the total qualifying dividends received by
the Fund from domestic corporations for the taxable year.
Distribution by the Fund of the excess of its net long-term capital gain
over its net short-term capital loss is taxable to shareholders as long-term
capital gain, regardless of how long the shareholders have held their Shares and
whether such gains are received in cash or reinvested in additional Shares.
Such distributions are not eligible for the dividends received deduction.
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Dividends declared in October, November or December of any year payable to
shareholders of record on a specified date in such months 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.
An investor considering buying Shares of the Fund on or just before the
record date of a dividend should be aware that the amount of the forthcoming
dividend payment, although in effect a return of capital, will be taxable to
him.
A taxable gain or loss may be realized by a shareholder upon his
redemption, transfer or exchange of Shares depending upon the tax basis of such
Shares and their price at the time of redemption, transfer or exchange. If a
shareholder holds Shares for six months or less and during that time receives a
capital gain dividend on those Shares, any loss recognized on the sale or
exchange of those Shares will be treated as a long-term capital loss to the
extent of the capital gain dividend. Generally, a shareholder may include sales
charges incurred upon the purchase of Shares in his tax basis for such Shares
for the purpose of determining gain or loss on a redemption, transfer or
exchange of such Shares. However, if the shareholder effected an exchange of
such Shares for Shares of another Fund within 90 days of the purchase and was
able to reduce the sales charges previously applicable to the new Shares (by
virtue of the exchange privilege), the amount equal to such reduction may not be
included in the tax basis of the shareholder's exchanged Shares for the purpose
of determining gain or loss, but may be included (subject to the same
limitation) in the tax basis of the new Shares.
It is expected that dividends and certain interest income earned by the
Fund from foreign securities will be subject to foreign withholding taxes or
other taxes. So long as more than 50% of the value of the Fund's total assets
at the close of any taxable year consists of stock or securities of foreign
corporations, the Fund may elect, for U.S. Federal income tax purposes, to treat
certain foreign taxes paid by it, including generally any withholding taxes and
other foreign income taxes, as paid by its shareholders. The Fund may make this
election. As a consequence, the amount of such foreign taxes paid by the Fund
will be included in its shareholders' income pro rata (in addition to taxable
distributions actually received by them), and each shareholder will be entitled
either (a) to credit his proportionate amounts of such taxes against his U.S.
Federal income tax liabilities, or (b) if he itemizes his deductions, to deduct
such proportionate amounts from his U.S. taxable income, should he so choose.
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Qualification as a regulated investment company under the Code also
requires that the Fund satisfy certain requirements with respect to the source
of its income for a taxable year. At least 90% of the gross income of the Fund
must be derived from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stock, securities or foreign
currencies, and other income (including, but not limited to, gains from options,
futures, or forward contracts) derived with respect to the Fund's business of
investing in such stock, securities or currencies. The Treasury Department may
by regulation exclude from qualifying income foreign currency gains which are
not directly related to the Fund's principal business of investing in stock or
securities, or options and futures with respect to stock or securities. Any
income derived by the Fund from a partnership or trust is treated for this
purpose as derived with respect to the Fund's business of investing in stock,
securities or currencies only to the extent that such income is attributable to
items of income which would have been qualifying income if realized by the Fund
in the same manner as by the partnership or trust.
The foregoing summarizes some of the important 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 situations.
Shareholders will be advised annually as to the Federal income tax consequences
of distributions made each year.
STATE AND LOCAL
Purchasers are advised to consult their tax advisers concerning the
application of state and local taxes, which may have different consequences from
those of Federal income tax law described above.
MANAGEMENT OF THE FUND
The business and affairs of the Fund are managed under the direction of
Excelsior Fund's Board of Directors. The Statement of Additional Information
contains the names of and general background information concerning Excelsior
Fund's directors.
INVESTMENT ADVISER
United States Trust Company of New York ("U.S. Trust New York") and U.S.
Trust Company of Connecticut ("U.S. Trust Connecticut" and, collectively with
U.S. Trust New York, "U.S. Trust" or the "Investment Adviser") serve as the
Investment Adviser to the Fund. U.S. Trust New York is a state-chartered bank
and trust company and a member bank of the Federal Reserve System and is one of
the twelve members of the New York Clearing
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House Association. U.S. Trust Connecticut is a Connecticut state bank and trust
company. U.S. Trust New York and U.S. Trust Connecticut are wholly-owned
subsidiaries of U.S. Trust Corporation, a registered bank holding company.
The Investment Adviser provides trust and banking services to individuals,
corporations, and institutions both nationally and internationally, including
investment management, estate and trust administration, financial planning,
corporate trust and agency banking, and personal and corporate banking. On June
30, 1997, the Asset Management Groups of U.S. Trust New York and U.S. Trust
Connecticut had approximately $53 billion in aggregate assets under management.
U.S. Trust New York has its principal offices at 114 W. 47th Street, New York,
New York 10036. U.S. Trust Connecticut has its principal offices at 225 High
Ridge Road, East Building, Stamford, CT 06905.
The Investment Adviser manages the Fund, makes decisions with respect to
and places orders for all purchases and sales of its portfolio securities, and
maintains records relating to such purchases and sales.
Don Hoskins is the person primarily responsible for the day-to-day
management of the Fund's investment portfolio. Mr. Hoskins is a Senior Vice
President in U.S. Trust's Global Investment Division, where he heads the
Emerging Markets investment team. Mr. Hoskins has been employed by U.S. Trust
since February 1997. Prior to joining U.S. Trust, he was Director of Research
at Globalvest, an advisory firm based in St. Thomas, V.I., where he specialized
in Latin American investments. From 1993 to 1995, Mr. Hoskins worked in Peru for
a local brokerage firm and as a Consultant to the World Bank. Prior to 1993, he
was with Sanford Bernstein as an International Equities Analyst. Mr. Hoskins has
been the Fund's portfolio manager since its inception.
For the services provided and expenses assumed pursuant to its Investment
Advisory Agreement, the Investment Adviser is entitled to be paid a fee,
computed daily and paid monthly, at the annual rate of 1.25% of the average
daily net assets of the Fund.
From time to time, the Investment Adviser may voluntarily waive all or a
portion of the advisory fees payable to it by the Fund, which waiver may be
terminated at any time. See "Management of the Fund--Shareholder Organizations"
for additional information on fee waivers.
In executing portfolio transactions for the Fund, the Investment Adviser
may use affiliated brokers in accordance with the requirements of the 1940 Act.
The Investment Adviser may
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also take into account the sale of Excelsior Fund's shares in allocating
brokerage transactions.
ADMINISTRATORS
CGFSC, Federated Administrative Services and U.S. Trust Connecticut serve
as the Fund's administrators (the "Administrators") and provide it with general
administrative and operational assistance. For the services provided to the
Fund, the Administrators are entitled jointly to annual fees, computed daily and
paid monthly, at an annual rate of .20% of the average daily net assets of the
Fund. From time to time, the Administrators may voluntarily waive all or a
portion of the administration fee payable to them by the Fund, which waivers may
be terminated at any time. See "Management of the Fund--Shareholder
Organizations" for additional information on fee waivers.
SHAREHOLDER ORGANIZATIONS
As described above under "Purchase of Shares," Excelsior Fund has
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 up to .40% of the average daily net asset value of its Shares held by
the Shareholder Organization's Customers. Such services, which are described
more fully in the Statement of Additional Information under "Management of the
Fund--Shareholder Organizations," 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 Investment Adviser and
Administrators have voluntarily agreed to waive fees payable by the Fund in an
aggregate amount equal to administrative service fees payable by the Fund.
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
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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.
The Investment Adviser, CGFSC 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 the Investment Adviser or other Shareholder Organizations in
connection with purchases of Fund Shares, the Investment Adviser 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 their net asset values per Share or result in financial loss to any
shareholder.
DESCRIPTION OF CAPITAL STOCK
Excelsior Funds, Inc. (formerly UST Master Funds, Inc.) was organized as a
Maryland corporation on August 2, 1984. Currently, Excelsior Fund has
authorized capital of 35 billion shares of Common Stock, $.001 par value per
share, classified into 43 series of shares representing interests in 18
investment portfolios. This Prospectus describes the Emerging Markets Fund.
Each Share in the Fund represents an equal proportionate interest in the
Fund with other shares of the same class, and is entitled to such dividends and
distributions out of the income earned on the assets belonging to the Fund as
are declared in the discretion of Excelsior Fund's Board of Directors.
Excelsior Fund's Charter authorizes the Board of Directors to classify or
reclassify any class of shares into one or more additional classes or series.
Excelsior Fund's shareholders are entitled to one vote for each full share
held and fractional votes for fractional shares held and will vote in the
aggregate and not by class or series, except as otherwise expressly required by
law.
Certificates for Shares will not be issued unless expressly requested in
writing to CGFSC and will not be issued for fractional Shares.
As of September 25, 1997, U.S. Trust and its affiliates held of record
substantially all of the shares of Excelsior Fund'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.
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CUSTODIAN AND TRANSFER AGENT
The Chase Manhattan Bank ("Chase"), a wholly-owned subsidiary of The
Chase Manhattan Corporation, serves as the custodian of the Fund's assets.
Communications to the custodian should be directed to Chase, Mutual Funds
Service Division, 3 Chase MetroTech Center, 8th Floor, Brooklyn, NY 11245.
U.S. Trust New York serves as the Fund's transfer and dividend
disbursing agent. U.S. Trust New York has also entered into a sub-transfer
agency arrangement with CGFSC, 73 Tremont Street, Boston, Massachusetts 02108-
3913, pursuant to which CGFSC provides certain transfer agent, dividend
disbursement and registrar services to the Fund.
EXPENSES
Except as otherwise noted, the Investment Adviser and the
Administrators bear all expenses in connection with the performance of their
services. The Fund bears the expenses incurred in its operations. Expenses of
the Fund include taxes; interest; fees (including fees paid to Excelsior Fund's
Directors and officers who are not affiliated with the Distributor or the
Administrators); SEC fees; state securities qualifications fees; costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders; advisory, administration and administrative servicing fees;
charges of the custodian, transfer agent, and dividend disbursing agent; certain
insurance premiums; outside auditing and legal expenses; costs of shareholder
reports and shareholder meetings; and any extraordinary expenses. The Fund also
pays for brokerage fees and commissions in connection with the purchase of
portfolio securities.
PERFORMANCE INFORMATION
From time to time, in advertisements or in reports to shareholders,
the performance of the Fund may be quoted and compared to that of other mutual
funds with similar investment objectives and to stock or other 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
performance of the Fund may be compared to data prepared by Lipper Analytical
Services, Inc., a widely recognized independent service which monitors the
performance of mutual funds, the Morgan Stanley Capital Investments Emerging
Markets Free Index or other unmanaged foreign securities indexes.
Performance 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,
-40-
<PAGE>
or in publications of a local or regional nature, may also be used in comparing
the performance of the Fund.
From time to time, the Fund may advertise its performance by using
"average annual total return" over various periods of time. Such total return
figure reflects the average percentage change in the value of an investment in
the Fund from the beginning date of the measuring period to the end of the
measuring period. Average total return figures will be given for the most
recent one-year period, and may be given for other periods as well (such as from
the commencement of the Fund's operations, or on a year-by-year basis). The
Fund may also use aggregate total return figures for various periods,
representing the cumulative change in the value of an investment in the Fund for
the specific period. Both methods of calculating total return assume that
dividends and capital gain distributions made by the Fund during the period are
reinvested in Fund Shares.
Performance will fluctuate and any quotation of performance and yield
should not be considered as representative of the Fund's future performance.
Shareholders should remember that performance is generally a function of the
kind and quality of the instruments held in a portfolio, 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 semiannual reports describing the
Fund's investment operations and annual financial statements audited by the
Fund's independent auditors.
As used in this Prospectus, a "vote of the holders of a majority of
the outstanding shares" of Excelsior Fund or the Fund means, with respect to the
approval of an investment advisory agreement or a change in a fundamental
investment policy, the affirmative vote of the lesser of (a) more than 50% of
the outstanding shares of Excelsior Fund or the Fund, or (b) 67% or more of the
shares of Excelsior Fund or the Fund present at a meeting if more than 50% of
the outstanding shares of Excelsior Fund or the Fund are represented at the
meeting in person or by proxy.
Inquiries regarding the Fund may be directed to the Distributor at the
address listed under "Distributor."
-41-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUMMARY......................................................... 3
EXPENSE SUMMARY............................................................ 4
INVESTMENT OBJECTIVE AND POLICIES.......................................... 6
PORTFOLIO INSTRUMENTS AND OTHER INVESTMENT INFORMATION..................... 12
INVESTMENT LIMITATIONS..................................................... 19
PRICING OF SHARES.......................................................... 20
HOW TO PURCHASE AND REDEEM SHARES.......................................... 22
INVESTOR PROGRAMS.......................................................... 28
DIVIDENDS AND DISTRIBUTIONS................................................ 33
TAXES...................................................................... 34
MANAGEMENT OF THE FUND..................................................... 36
DESCRIPTION OF CAPITAL STOCK............................................... 39
CUSTODIAN AND TRANSFER AGENT............................................... 40
EXPENSES................................................................... 40
PERFORMANCE INFORMATION.................................................... 40
MISCELLANEOUS.............................................................. 41
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT OF ADDI-
TIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OF-
FERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY EXCELSIOR
FUND OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY
EXCELSIOR FUND OR BY ITS DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING
MAY NOT LAWFULLY BE MADE.
[LOGO] EXCELSIOR
FUNDS INC.
EMERGING MARKETS FUND
Prospectus
December __, 1997
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION DATED
OCTOBER 8, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
ANY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE
A PROSPECTUS.
EXCELSIOR FUNDS, INC.
Emerging Markets Fund
STATEMENT OF ADDITIONAL INFORMATION
December ___, 1997
This Statement of Additional Information is not a prospectus but should be read
in conjunction with the current prospectus for the Emerging Markets Fund (the
"Fund") of Excelsior Funds, Inc. ("Excelsior Fund") dated December ___, 1997
(the "Prospectus"). Much of the information contained in this Statement of
Additional Information expands upon the subjects discussed in the Prospectus.
No investment in shares of the Fund described herein (the "Shares") should be
made without reading the Prospectus. A copy of the Prospectus may be obtained
by writing Excelsior Fund c/o Chase Global Funds Services Company, 73 Tremont
Street, Boston, MA 02108-3913 or by calling (800) 446-1012.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
INVESTMENT OBJECTIVE AND POLICIES.................... 1
Other Investment Considerations.................... 1
Additional Information on Portfolio Instruments.... 2
Additional Investment Limitations.................. 10
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION....... 11
INVESTOR PROGRAMS.................................... 13
Systematic Withdrawal Plan......................... 13
Exchange Privilege................................. 14
Other Investor Programs............................ 14
DESCRIPTION OF CAPITAL STOCK......................... 15
MANAGEMENT OF THE FUND............................... 16
Directors and Officers............................. 16
Investment Advisory and Administration Agreements.. 22
Shareholder Organizations.......................... 22
Expenses........................................... 23
Custodian and Transfer Agent....................... 24
PORTFOLIO TRANSACTIONS............................... 25
INDEPENDENT AUDITORS................................. 27
COUNSEL.............................................. 27
ADDITIONAL INFORMATION CONCERNING TAXES.............. 27
PERFORMANCE INFORMATION.............................. 29
MISCELLANEOUS........................................ 31
APPENDIX A........................................... A-1
-i-
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
---------------------------------
The investment objective and policies of the Fund are described in the
Prospectus. The following information supplements the description of the
investment objective and policies as set forth in the Prospectus.
Other Investment Considerations
- -------------------------------
In determining the preferred allocation of investments of the Fund
among various geographic regions and countries, United States Trust Company of
New York ("U.S. Trust New York") and U.S. Trust Company of Connecticut ("U.S.
Trust Connecticut" and, collectively with U.S. Trust New York, the "Investment
Adviser" or "U.S. Trust") will consider, among other things, regional and
country-by-country prospects for economic growth, anticipated levels of
inflation, prevailing interest rates, the historical patterns of government
regulation of the economy and the outlook for currency relationships.
The transaction costs to the Fund of engaging in forward currency
transactions described in the Prospectus vary with factors such as the currency
involved, the length of the contract period and prevailing currency market
conditions. Because currency transactions are usually conducted on a principal
basis, no fees or commissions are involved. The use of forward currency
contracts does not eliminate fluctuations in the underlying prices of the
securities being hedged, but it does establish a rate of exchange that can be
achieved in the future. Thus, although forward currency contracts used for
transaction or position hedging purposes may limit the risk of loss due to an
increase in the value of the hedged currency, at the same time they limit
potential gain that might result were the contracts not entered into. Further,
the Investment Adviser may be incorrect in its expectations as to currency
fluctuations, and the Fund may incur losses in connection with its currency
transactions that it would not otherwise incur. If a price movement in a
particular currency is generally anticipated, the Fund may not be able to
contract to sell or purchase that currency at an advantageous price.
At or before the maturity of a forward sale contract, the Fund may
sell a portfolio security and make delivery of the currency, or retain the
security and offset its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which the Fund will obtain, on the same
maturity date, the same amount of the currency which it is obligated to deliver.
If the Fund retains the portfolio security and engages in an offsetting
transaction, the Fund, at the time of execution of the offsetting transaction,
will incur a gain or a loss to the extent that movement has occurred in forward
<PAGE>
contract prices. Should forward prices decline during the period between the
Fund's entering into a forward contract for the sale of a currency and the date
it enters into an offsetting contract for the purchase of the currency, the Fund
will realize a gain to the extent the price of the currency it has agreed to
sell exceeds the price of the currency it has agreed to purchase. Should
forward prices increase, the Fund will suffer a loss to the extent the price of
the currency it has agreed to sell is less than the price of the currency it has
agreed to purchase in the offsetting contract. The foregoing principles
generally apply also to forward purchase contracts.
The Fund may purchase gold bars primarily of standard weight
(approximately 400 troy ounces) at the best available prices in the New York
bullion market. However, the Investment Adviser will have discretion to
purchase or sell gold bullion in other markets, including foreign markets, if
better prices can be obtained. Gold bullion is valued by the Fund at the mean
between the closing bid and asked prices in the New York bullion market as of
the close of the New York Stock Exchange each business day. When there is no
readily available market quotation for gold bullion, the bullion will be valued
by such method as determined by Excelsior Fund's Board of Directors to best
reflect its fair value. For purpose of determining net asset value, gold held
by the Fund, if any, will be valued in U.S. dollars.
Additional Information on Portfolio Instruments
- -----------------------------------------------
Repurchase Agreements
---------------------
The repurchase price under the repurchase agreements described in the
Prospectus generally equals the price paid by the Fund plus interest negotiated
on the basis of current short-term rates (which may be more or less than the
rate on the securities underlying the repurchase agreement). Securities subject
to repurchase agreements are held by the Fund's custodian (or sub-custodian) or
in the Federal Reserve/Treasury book-entry system. Repurchase agreements are
considered to be loans by the Fund under the Investment Company Act of 1940, as
amended (the "1940 Act").
Securities Lending
------------------
When the Fund lends its portfolio securities, it continues to receive
interest or dividends on the securities lent and may simultaneously earn
interest on the investment of the cash loan collateral, which will be invested
in readily marketable, high-quality, short-term obligations. Although voting
rights, or rights to consent, attendant to securities lent pass to the borrower,
such loans may be called at any time and will be called so that the securities
may be voted by the Fund if a material event affecting the investment is to
occur.
-2-
<PAGE>
Government Obligations
----------------------
Examples of the types of U.S. Government obligations that may be held
by the Fund include, in addition to U.S. Treasury Bills, the obligations of
Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, the
Federal Housing Administration, Farmers Home Administration, Export-Import Bank
of the United States, Small Business Administration, Government National
Mortgage Association, Federal National Mortgage Association, General Services
Administration, Student Loan Marketing Association, Central Bank for
Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate
Credit Banks and Maritime Administration.
Options
-------
As stated in the Prospectus, the Fund may enter into options
transactions for hedging purposes or to increase total return. Such purchases
would be in an amount not exceeding 5% of the Fund's net assets. Purchase of
options is a highly specialized activity which entails greater than ordinary
investment risks. Regardless of how much the market price of the underlying
security or the value of a foreign currency increases or decreases, the option
buyer's risk is limited to the amount of the original investment for the
purchase of the option. However, options may be more volatile than the
underlying securities or currency, and therefore, on a percentage basis, an
investment in options may be subject to greater fluctuation than an investment
in the underlying securities or currency. A listed call option gives the
purchaser of the option the right to buy from a clearing corporation, and the
writer has the obligation to sell to the clearing corporation, the underlying
security or currency at the stated exercise price at any time prior to the
expiration of the option, regardless of the market price of the security or
currency. The premium paid to the writer is in consideration for undertaking
the obligations under the option contract. A listed put option gives the
purchaser the right to sell to a clearing corporation the underlying security or
currency at the stated exercise price at any time prior to the expiration date
of the option, regardless of the market price of the security or currency. Put
and call options purchased by the Fund will be valued at the last sale price or,
in the absence of such a price, at the mean between bid and asked prices.
Also as stated in the Prospectus, the Fund may engage in writing
covered call options and enter into closing purchase transactions with respect
to such options. When the Fund writes a covered call option, it may terminate
its obligation to sell the underlying security prior to the expiration date of
the option by executing a closing purchase transaction, which is effected by
purchasing on an exchange an option of the same series (i.e., same underlying
security, exercise price and
-3-
<PAGE>
expiration date) as the option previously written. Such a purchase does not
result in the ownership of an option. A closing purchase transaction will
ordinarily be effected to realize a profit on an outstanding call option, to
prevent an underlying security from being called, to permit the sale of the
underlying security or to permit the writing of a new call option containing
different terms on such underlying security. The cost of such a liquidation
purchase plus transaction costs may be greater than the premium received upon
the original option, in which event the writer will have incurred a loss on the
transaction. An option position may be closed out only on an exchange which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option. A covered option writer, unable to effect a closing purchase
transaction, will not be able to sell the underlying security until the option
expires or the underlying security is delivered upon exercise, with the result
that the writer in such circumstances will be subject to the risk of market
decline in the underlying security during such period. The Fund will write an
option on a particular security only if the Investment Adviser believes that a
liquid secondary market will exist on an exchange for options of the same
series, which will permit the Fund to make a closing purchase transaction in
order to close out its position.
When the Fund writes an option, an amount equal to the net premium
(the premium less the commission) received by that Fund is included in the
liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of the deferred credit will be subsequently marked
to market to reflect the current value of the option written. The current value
of the traded option is the last sale price or, in the absence of a sale, the
average of the closing bid and asked prices. If an option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund will realize a gain (or loss if the cost of a closing
purchase transaction exceeds the net premium received when the option is sold),
and the deferred credit related to such option will be eliminated. If an option
is exercised, the Fund may deliver the underlying security from its portfolio or
purchase the underlying security in the open market. In either event, the
proceeds of the sale will be increased by the net premium originally received,
and the Fund will realize a gain or loss. Premiums from expired call options
written by the Fund and net gains from closing purchase transactions are treated
as short-term capital gains for Federal income tax purposes, and losses on
closing purchase transactions are short-term capital losses.
-4-
<PAGE>
Futures Contracts and Related Options
-------------------------------------
The Fund may invest in futures contracts and related options. The
Fund may enter into interest rate futures contracts and other types of financial
futures contracts, including foreign currency futures contracts, as well as any
index or foreign market futures which are available on recognized exchanges or
in other established financial markets. A futures contract on foreign currency
creates a binding obligation on one party to deliver, and a corresponding
obligation on another party to accept delivery of, a stated quantity of a
foreign currency for an amount fixed in U.S. dollars. Foreign currency futures,
which operate in a manner similar to interest rate futures contracts, may be
used by the Fund to hedge against exposure to fluctuations in exchange rates
between the U.S. dollar and other currencies arising from multinational
transactions.
Futures contracts will not be entered into for speculative purposes,
but to hedge risks associated with the Fund's securities investments. Positions
in futures contracts may be closed out only on an exchange which provides a
secondary market for such futures. However, there can be no assurance that a
liquid secondary market will exist for any particular futures contract at any
specific time. Thus, it may not be possible to close a futures position. In
the event of adverse price movements, the Fund would continue to be required to
make daily cash payments to maintain its required margin. In such situations,
if the Fund has insufficient cash, it may have to sell portfolio securities to
meet daily margin requirements at a time when it may be disadvantageous to do
so. In addition, the Fund may be required to make delivery of the instruments
underlying futures contracts it holds. The inability to close options and
futures positions also could have an adverse impact on the Fund's ability to
effectively hedge.
Successful use of futures by the Fund is also subject to the ability
of the Investment Adviser to correctly predict movements in the direction of the
market. For example, if the Fund has hedged against the possibility of a
decline in the market adversely affecting securities held by it and securities
prices increase instead, the Fund will lose part or all of the benefit to the
increased value of its securities which it has hedged because it will have
approximately equal offsetting losses in its futures positions. In addition, in
some situations, if the Fund has insufficient cash, it may have to sell
securities to meet daily variation margin requirements. Such sales of
securities may be, but will not necessarily be, at increased prices which
reflect the rising market. The Fund may have to sell securities at a time when
it may be disadvantageous to do so.
-5-
<PAGE>
The risk of loss in trading futures contracts in some strategies can
be substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in futures pricing. As a result, a relatively
small price movement in a futures contract may result in immediate and
substantial loss (as well as gain) to the investor. For example, if at the time
of purchase, 10% of the value of the futures contract is deposited as margin, a
subsequent 10% decrease in the value of the futures contract would result in a
total loss of the margin deposit, before any deduction for the transaction
costs, if the account were then closed out. A 15% decrease would result in a
loss equal to 150% of the original margin deposit, before any deduction for the
transaction costs, if the contract were closed out. Thus, a purchase or sale of
a futures contract may result in losses in excess of the amount invested in the
contract.
Utilization of futures transactions by the Fund involves the risk of
loss by the Fund of margin deposits in the event of bankruptcy of a broker with
whom the Fund has an open position in a futures contract or related option.
Most futures exchanges limit the amount of fluctuation permitted in
futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of a
trading session. Once the daily limit has been reached in a particular type of
contract, no trades may be made on that day at a price beyond that limit. The
daily limit governs only price movement during a particular trading day and
therefore does not limit potential losses, because the limit may prevent the
liquidation of unfavorable positions. Futures contract prices have occasionally
moved to the daily limit for several consecutive trading days with little or no
trading, thereby preventing prompt liquidation of futures positions and
subjecting some futures traders to substantial losses.
The trading of futures contracts is also subject to the risk of
trading halts, suspensions, exchange or clearing house equipment failures,
government intervention, insolvency of a brokerage firm or clearing house or
other disruptions of normal trading activity, which could at times make it
difficult or impossible to liquidate existing positions or to recover excess
variation margin payments.
Options on Futures Contracts
----------------------------
The Fund may purchase options on the futures contracts described
above. A futures option gives the holder, in return for the premium paid, the
right to buy (call) from or sell (put) to the writer of the option a futures
contract at a specified
-6-
<PAGE>
price at any time during the period of the option. Upon exercise, the writer of
the option is obligated to pay the difference between the cash value of the
futures contract and the exercise price. Like the buyer or seller of a futures
contract, the holder, or writer, of an option has the right to terminate its
position prior to the scheduled expiration of the option by selling, or
purchasing, an option of the same series, at which time the person entering into
the closing transaction will realize a gain or loss.
Investments in futures options involve some of the same considerations
that are involved in connection with investments in futures contracts (for
example, the existence of a liquid secondary market). In addition, the purchase
of an option also entails the risk that changes in the value of the underlying
futures contract will not be fully reflected in the value of the option
purchased. Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the instruments
being hedged, an option may or may not be less risky than ownership of the
futures contract or such instruments. In general, the market prices of options
can be expected to be more volatile than the market prices on the underlying
futures contract. Compared to the purchase or sale of futures contracts,
however, the purchase of call or put options on futures contracts may frequently
involve less potential risk to the Fund because the maximum amount at risk is
the premium paid for the options (plus transaction costs). Although permitted
by its fundamental investment policies, the Fund does not currently intend to
write futures options, and will not do so in the future absent any necessary
regulatory approvals.
When-Issued and Forward Transactions
------------------------------------
When the Fund agrees to purchase securities on a "when-issued" or
forward commitment basis, the custodian will set aside cash or liquid portfolio
securities equal to the amount of the commitment in a separate account.
Normally, the custodian will set aside portfolio securities to satisfy a
purchase commitment and, in such case, the Fund may be required subsequently to
place additional assets in the separate account in order to ensure that the
value of the account remains equal to the amount of the Fund's commitment. It
may be expected that the Fund's net assets will fluctuate to a greater degree
when it sets aside portfolio securities to cover such purchase commitments than
when it sets aside cash. Because the Fund will set aside cash or liquid assets
to satisfy its purchase commitments in the manner described, its liquidity and
ability to manage its portfolio might be affected in the event its forward
commitments or commitments to purchase "when-issued" securities ever exceed 25%
of the value of its assets.
-7-
<PAGE>
The Fund will purchase securities on a "when-issued" or forward
commitment basis only with the intention of completing the transaction. If
deemed advisable as a matter of investment strategy, however, the Fund may
dispose of or renegotiate a commitment after it is entered into, and may sell
securities it has committed to purchase before those securities are delivered to
the Fund on the settlement date. In these cases, the Fund may realize a taxable
capital gain or loss.
When the Fund engages in "when-issued" or forward commitment
transactions, it relies on the other party to consummate the trade. Failure of
such other party to do so may result in the Fund incurring a loss or missing an
opportunity to obtain a price considered to be advantageous.
The market value of the securities underlying a "when-issued" purchase
or a forward commitment to purchase securities and any subsequent fluctuations
in their market value are taken into account when determining the market value
of the Fund starting on the day the Fund agrees to purchase the securities. The
Fund does not earn interest on the securities it has committed to purchase until
they are paid for and delivered on the settlement date.
Brady Bonds
-----------
The Fund may invest in Brady Bonds, which are securities created
through the exchange of existing commercial bank loans to Latin American public
and private entities for new bonds in connection with debt restructurings under
a debt restructuring plan announced by former U.S. Secretary of the Treasury
Nicholas F. Brady (the "Brady Plan"). Brady Bonds may be collateralized or
uncollateralized, are issued in various currencies (primarily the U.S. dollar)
and are currently actively traded in the over-the-counter secondary market for
Latin American debt instruments.
Dollar-denominated, collateralized Brady Bonds, which may be fixed
rate par bonds or floating rate discount bonds, are collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Interest payments on these Brady Bonds generally are collateralized by
cash or securities in an amount that, in the case of fixed rate bonds, is equal
to at least one year of rolling interest payments or, in the case of floating
rate bonds, initially is equal to at least one year's rolling interest payments
based on the applicable interest rate at that time and is adjusted at regular
intervals thereafter.
All Mexican Brady Bonds issued to date, except New Money Bonds, have
principal repayments at final maturity fully collateralized by U.S. Treasury
zero coupon bonds (or comparable
-8-
<PAGE>
collateral in other currencies) and interest coupon payments collateralized on
an 18-month rolling-forward basis by funds held in escrow by an agent for the
bondholders. Approximately half of the Venezuelan Brady Bonds issued to date
have principal repayments at final maturity collateralized by U.S. Treasury zero
coupon bonds (or comparable collateral in other currencies), while slightly more
than half have interest coupon payments collateralized on a 14-month rolling-
forward basis by securities held by the Federal Reserve Bank of New York as
collateral agent.
Brady Bonds are often viewed as having three or four valuation
components: the collateralized repayment of principal at final maturity; the
collateralized interest payments; the uncollateralized interest payments; and
any uncollateralized repayment of principal at maturity (these uncollateralized
amounts constituting the "residual risk").
ADRs, EDRs and GDRs
- -------------------
The Fund may invest indirectly in the securities of foreign issuers
through sponsored and unsponsored American Depository Receipts ("ADRs"),
European Depository Receipts ("EDRs"), Global Depository Receipts ("GDRs") and
other similar instruments. ADRs typically are issued by an American bank or
trust company and evidence ownership of underlying securities issued by a
foreign corporation. EDRs, which are sometimes referred to as Continental
Depository Receipts, are receipts issued in Europe, typically by foreign banks
and trust companies, that evidence ownership of either foreign or domestic
underlying securities. GDRs are depository receipts structured like global debt
issues to facilitate trading on an international basis. Unsponsored ADR, EDR
and GDR programs are organized independently and without the cooperation of the
issuer of the underlying securities. As a result, available information
concerning the issuer may not be as current as for sponsored ADRs, EDRs and
GDRs, and the prices of unsponsored ADRs, EDRs and GDRs may be more volatile
than if such instruments were sponsored by the issuer.
Each Fund may also invest indirectly in foreign securities through
share entitlement certificates. Share entitlement certificates are
transferrable securities similar to depository receipts which are structured
like global debt issues to facilitate trading on an international basis. The
holder of a share entitlement certificate holds a fully collateralized
obligation of the issuer the value of which is linked directly to that of the
underlying foreign security.
World Equity Benchmark Shares/SM/
- ------------------------------
The Fund may invest up to 5% of its total assets in World Equity
Benchmark Shares/SM/ issued by The Foreign Fund, Inc.
-9-
<PAGE>
("WEBS"), closed-end funds and similar securities of other issuers. WEBS are
shares of an investment company that invests substantially all of its assets in
securities included in the Morgan Stanley Capital International ("MSCI") indices
for specific countries. Because the expense associated with an investment in
WEBS may be substantially lower than the expense of small investments directly
in the securities comprising the indices they seek to track, U.S. Trust believes
that investments in WEBS may provide a cost-effective means of diversifying the
Fund's assets across a broad range of equity securities.
The market prices of WEBS are expected to fluctuate in accordance with
both changes in the net asset values of their underlying indices and the supply
and demand of WEBS on the exchanges on which they are traded. To date, WEBS
have traded at relatively modest discounts and premiums to their net assets
values. However, WEBS have a limited operating history, and information is
lacking regarding the actual performance and trading liquidity of WEBS for
extended periods or over complete market cycles. In addition, there is no
assurance that the requirements of the exchanges necessary to maintain the
listing of WEBS will continue to be met or will remain unchanged. In the event
substantial market or other disruptions affecting WEBS should occur in the
future, the liquidity and value of the Fund's Shares could be adversely
affected.
Additional Investment Limitations
- ---------------------------------
In addition to the investment limitations disclosed in the Prospectus,
the Fund is subject to the investment limitations enumerated below. Fundamental
investment limitations may be changed with respect to the Fund only by a vote of
a majority of the holders of the Fund's outstanding Shares (as defined under
"Miscellaneous" in the Prospectus). However, investment limitations which are
"operating policies" may be changed by Excelsior Fund's Board of Directors
without a shareholder vote.
The following investment limitations are fundamental with respect to
the Fund. The Fund may not:
1. Act as an underwriter of securities within the meaning of the
Securities Act of 1933, except insofar as it might be deemed to be an
underwriter upon disposition of certain portfolio securities acquired within the
limitation on purchases of restricted securities;
2. Purchase or sell real estate, except that the Fund may purchase
securities of issuers which deal in real estate and may purchase securities
which are secured by interests in real estate;
-10-
<PAGE>
3. Issue any senior securities, except insofar as any borrowing in
accordance with the Fund's investment limitation contained in the Prospectus
might be considered to be the issuance of a senior security; and
4. Purchase or sell commodities or commodities futures contracts or
invest in oil, gas, or other mineral exploration or development programs;
provided, however, that (i) this shall not prohibit the Fund from purchasing
publicly traded securities of companies engaging in whole or in part in such
activities; and (ii) the Fund may enter into forward currency contracts, futures
contracts and related options and may invest up to 5% of its total assets in
gold bullion.
The following investment limitations are operating policies with
respect to the Fund. The Fund may not:
5. Purchase securities on margin, make short sales of securities, or
maintain a short position;
6. Invest in companies for the purpose of exercising management or
control; and
7. Acquire any other investment company or investment company
security, except in connection with a merger, consolidation, reorganization, or
acquisition of assets or where otherwise permitted by the 1940 Act.
* * *
For the purpose of Investment Limitation No. 2, the prohibition of
purchases of real estate includes acquisition of limited partnership interests
in partnerships formed with a view toward investing in real estate, but does not
prohibit purchases of shares in real estate investment trusts.
In addition to the above investment limitations, the Fund currently
intends to refrain from entering into arbitrage transactions.
If a percentage limitation is satisfied at the time of investment, a
later increase or decrease in such percentage resulting from a change in value
of the Fund's portfolio securities will not constitute a violation of such
limitation.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
----------------------------------------------
Shares are continuously offered for sale by Edgewood Services, Inc.
(the "Distributor"), a wholly-owned subsidiary of Federated Investors, and the
Distributor has agreed to use appropriate efforts to solicit all purchase
orders. As described
-11-
<PAGE>
in the Prospectus, Shares may be sold to customers ("Customers") of financial
institutions ("Shareholder Organizations"). Shares are also offered for sale
directly to institutional investors and to members of the general public.
Different types of Customer accounts at the Shareholder Organizations may be
used to purchase Shares, including eligible agency and trust accounts. In
addition, Shareholder Organizations may automatically "sweep" a Customer's
account not less frequently than weekly and invest amounts in excess of a
minimum balance agreed to by the Shareholder Organization and its Customer in
Shares selected by the Customer. Investors purchasing Shares may include
officers, directors, or employees of the particular Shareholder Organization.
Shares of the Fund are offered for sale at their net asset value per
Share next computed after a purchase order is received by Excelsior Fund's sub-
transfer agent.
Excelsior Fund 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 New York Stock Exchange (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 his original investment due to changes in the market prices of
the Fund's portfolio securities.
Excelsior Fund reserves the right to honor any request for redemption
or repurchase of the Fund's Shares by making payment in whole or in part in
securities chosen by Excelsior Fund and valued in the same way as they would be
valued for purposes of computing the Fund's net asset value. If payment is made
in securities, a shareholder may incur transaction costs in converting these
securities into cash. Such redemptions in kind will be governed by Rule 18f-1
under the 1940 Act so that the Fund is obligated to redeem its Shares solely in
cash up to the lesser of $250,000 or 1% of its net asset value during any 90-day
period for any one shareholder of the Fund.
Under limited circumstances, Excelsior Fund may accept securities as
payment for Shares. Securities acquired in this manner will be limited to
securities issued in transactions involving a bona fide reorganization or
---------
statutory merger, or will be limited to other securities (except for municipal
debt securities issued by state political subdivisions or their
-12-
<PAGE>
agencies or instrumentalities) that: (a) meet the investment objective and
policies of the Fund; (b) are acquired for investment and not for resale; (c)
are liquid securities that are not restricted as to transfer either by law or
liquidity of market; and (d) have a value that is readily ascertainable (and not
established only by evaluation procedures) as evidenced by a listing on the
American Stock Exchange, New York Stock Exchange or NASDAQ, or as evidenced by
their status as U.S. Government securities, bank certificates of deposit,
banker's acceptances, corporate and other debt securities that are actively
traded, money market securities and other similar securities with a readily
ascertainable value.
INVESTOR PROGRAMS
-----------------
Systematic Withdrawal Plan
- --------------------------
An investor who owns Shares with a value of $10,000 or more may begin
a Systematic Withdrawal Plan. The withdrawal can be on a monthly, quarterly,
semiannual or annual basis. There are four options for such systematic
withdrawals. The investor may request:
(1) A fixed-dollar withdrawal;
(2) A fixed-share withdrawal;
(3) A fixed-percentage withdrawal (based on the current value of the
account); or
(4) A declining-balance withdrawal.
Prior to participating in a Systematic Withdrawal Plan, the investor must
deposit any outstanding certificates for Shares with Chase Global Funds Services
Company, the Fund's sub-transfer agent. Under this Plan, dividends and
distributions are automatically reinvested in additional Shares of the Fund.
Amounts paid to investors under this Plan should not be considered as income.
Withdrawal payments represent proceeds from the sale of Shares, and there will
be a reduction of the shareholder's equity in the Fund if the amount of the
withdrawal payments exceeds the dividends and distributions paid on the Shares
and the appreciation of the investor's investment in the Fund. This in turn may
result in a complete depletion of the shareholder's investment. An investor may
not participate in a program of systematic investing in the Fund while at the
same time participating in the Systematic Withdrawal Plan with respect to an
account in the Fund. Customers of Shareholder Organizations may obtain
information on the availability of, and the procedures and fees relating to, the
Systematic Withdrawal Plan directly from their Shareholder Organizations.
-13-
<PAGE>
Exchange Privilege
- ------------------
Investors and Customers of Shareholder Organizations may exchange
Shares having a value of at least $500 for shares of any other portfolio of
Excelsior Fund or Excelsior Tax-Exempt Funds, Inc. ("Excelsior Tax-Exempt Fund"
and, collectively with Excelsior Fund, the "Companies") or for Trust Shares of
Excelsior Institutional Trust. Shares may be exchanged by wire, telephone or
mail and must be made to accounts of identical registration. There is no
exchange fee imposed by the Companies or Excelsior Institutional Trust. In
order to prevent abuse of this privilege to the disadvantage of other
shareholders, the Companies and Excelsior Institutional Trust reserve the right
to limit the number of exchange requests of investors to no more than six per
year. The Companies and Excelsior Institutional Trust may modify or terminate
the exchange program at any time upon 60 days' written notice to shareholders,
and may reject any exchange request. Customers of Shareholder Organizations may
obtain information on the availability of, and the procedures and fees relating
to, such program directly from their Shareholder Organizations.
For Federal income tax purposes, exchanges are treated as sales on
which the shareholder will realize a gain or loss, depending upon whether the
value of the Shares to be given up in exchange is more or less than the basis in
such Shares at the time of the exchange. Generally, a shareholder may include
sales loads incurred upon the purchase of Shares in his or her tax basis for
such Shares for the purpose of determining gain or loss on a redemption,
transfer or exchange of such Shares. However, if the shareholder effected an
exchange of Shares for shares of another portfolio of the Companies within 90
days of the purchase and was able to reduce the sales load previously applicable
to the new shares (by virtue of the Companies' exchange privilege), the amount
equal to such reduction may not be included in the tax basis of the
shareholder's exchanged Shares but may be included (subject to the limitation)
in the tax basis of the new shares.
Other Investor Programs
- -----------------------
As described in the Prospectus, Shares of the Fund may be purchased in
connection with 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.
-14-
<PAGE>
DESCRIPTION OF CAPITAL STOCK
----------------------------
Excelsior Fund's Charter authorizes its Board of Directors to issue up
to thirty-five billion full and fractional shares of capital stock, and to
classify or reclassify any unissued shares of Excelsior Fund into one or more
classes or series by setting or changing in any one or more respects their
respective preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions of
redemption. The Prospectus describes the classes of shares into which Excelsior
Fund's authorized capital is currently classified.
Shares have no preemptive rights and only such conversion or exchange
rights as the Board of Directors may grant in its discretion. When issued for
payment as described in the Prospectus, Shares will be fully paid and non-
assessable. In the event of a liquidation or dissolution of the Fund,
shareholders of the Fund are entitled to receive the assets available for
distribution belonging to that Fund and a proportionate distribution, based upon
the relative asset values of Excelsior Fund's portfolios, of any general assets
of Excelsior Fund not belonging to any particular portfolio of Excelsior Fund
which are available for distribution. In the event of a liquidation or
dissolution of Excelsior Fund, its shareholders will be entitled to the same
distribution process.
Shareholders of Excelsior Fund are entitled to one vote for each full
share held, and fractional votes for fractional shares held, and will vote in
the aggregate and not by class, except as otherwise required by the 1940 Act or
other applicable law or when the matter to be voted upon affects only the
interests of the shareholders of a particular class. Voting rights are not
cumulative and, accordingly, the holders of more than 50% of the aggregate of
Excelsior Fund's shares may elect all of Excelsior Fund's directors, regardless
of votes of other shareholders.
Rule 18f-2 under the 1940 Act provides that any matter required to be
submitted to the holders of the outstanding voting securities of an investment
company such as Excelsior Fund shall not be deemed to have been effectively
acted upon unless approved by the holders of a majority of the outstanding
shares of each portfolio affected by the matter. A portfolio is affected by a
matter unless it is clear that the interests of each portfolio in the matter are
substantially identical or that the matter does not affect any interest of the
portfolio. Under the Rule, the approval of an investment advisory agreement or
any change in a fundamental investment policy would be effectively acted upon
with respect to a portfolio only if approved by a majority of the outstanding
shares of such portfolio. However, the Rule also provides that the ratification
of the appointment of independent
-15-
<PAGE>
public accountants and the election of directors may be effectively acted upon
by shareholders of Excelsior Fund voting without regard to class.
Excelsior Fund's Charter authorizes its Board of Directors, without
shareholder approval (unless otherwise required by applicable law), to (a) sell
and convey the assets of the Fund to another management investment company for
consideration which may include securities issued by the purchaser and, in
connection therewith, to cause all outstanding Shares of the Fund to be redeemed
at a price which is equal to their net asset value and which may be paid in cash
or by distribution of the securities or other consideration received from the
sale and conveyance; (b) sell and convert the Fund's assets into money and, in
connection therewith, to cause all outstanding Shares of the Fund to be redeemed
at their net asset value; or (c) combine the assets belonging to the Fund with
the assets belonging to another portfolio of Excelsior Fund, if the Board of
Directors reasonably determines that such combination will not have a material
adverse effect on shareholders of any portfolio participating in such
combination, and, in connection therewith, to cause all outstanding Shares of
the Fund to be redeemed at their net asset value or converted into shares of
another class of Excelsior Fund's capital stock at net asset value. The
exercise of such authority by the Board of Directors will be subject to the
provisions of the 1940 Act, and the Board of Directors will not take any action
described in this paragraph unless the proposed action has been disclosed in
writing to the Fund's shareholders at least 30 days prior thereto.
Notwithstanding any provision of Maryland law requiring a greater vote
of Excelsior Fund's Common Stock (or of the Shares of the Fund voting separately
as a class) in connection with any corporate action, unless otherwise provided
by law (for example, by Rule 18f-2, discussed above) or by Excelsior Fund's
Charter, Excelsior Fund may take or authorize such action upon the favorable
vote of the holders of more than 50% of the outstanding Common Stock of
Excelsior Fund voting without regard to class.
MANAGEMENT OF THE FUND
----------------------
Directors and Officers
- ----------------------
The directors and executive officers of Excelsior Fund, their
addresses, ages, principal occupations during the past five years, and other
affiliations are as follows:
-16-
<PAGE>
Position Principal Occupation
with During Past 5 Years and
Name and Address Excelsior Fund Other Affiliations
- ------------------------ -------------------------- -------------------------
Frederick S. Wonham/1/ Chairman of the Retired; Director of
238 June Road Board, President Excelsior Fund and
Stamford, CT 06903 and Treasurer Excelsior Tax-Exempt Fund
Age: 66 (since 1995); Trustee of
Excelsior Funds and
Excelsior Institutional
Trust (since 1995); Vice
Chairman of U.S. Trust
Corporation and U.S. Trust
New York (from February
1990 until September
1995); and Chairman, U.S.
Trust Connecticut (from
March 1993 to May 1997).
Donald L. Campbell Director Retired; Director of
333 East 69th Street Excelsior Fund and
Apt. 10-H Excelsior Tax-Exempt Fund
New York, NY 10021 (since 1984); Director of
Age: 71 UST Master Variable
Series, Inc. (from 1994 to
June 1997); Trustee of
Excelsior Institutional
Trust(since 1995); and
Director, Royal Life
Insurance Co. of New York
(since 1991).
Rodman L. Drake Director Director, Excelsior Fund
485 Park Avenue and Excelsior Tax-Exempt
New York, NY 10022 Fund (since 1996);
Age: 54 Trustee, and Excelsior
Funds (since 1994);
Director, Parsons
Brinkerhoff Energy
Services Inc. (since
1996); Director, Parsons
Brinkerhoff, Inc.
(engineering firm) (since
1995); President, Mandrake
Group (investment and
consulting firm) (since
1994); Director, Hyperion
Total Return Fund, Inc.
and four other funds for
which Hyperion Capital
Management, Inc. serves as
investment adviser (since
1991); Co-Chairman, KMR
Power Corporation (power
plants) (from 1993 to
1996); Director, The Latin
American Growth Fund
(since 1993); Member of
Advisory Board, Argentina
Private Equity Fund L.P.
(from 1992 to 1996) and
- ----------
/1/ This director is considered to be an "interested person" of Excelsior Fund
as defined in the 1940 Act.
-17-
<PAGE>
Position Principal Occupation
with During Past 5 Years and
Name and Address Excelsior Fund Other Affiliations
- ------------------------ -------------------------- -------------------------
Garantia L.P. (Brazil)
(from 1993 to 1996); and
Director, Mueller
Industries, Inc. (from
1992 to 1994).
Joseph H. Dugan Director Retired; Director of
913 Franklin Lakes Road Excelsior Fund and
Franklin Lakes, NJ 07417 Excelsior Tax-Exempt Fund
Age: 72 (since 1984); Director of
UST Master Variable
Series, Inc. (from 1994 to
June 1997); and Trustee of
Excelsior Institutional
Trust (since 1995).
Wolfe J. Frankl Director Retired; Director of
2320 Cumberland Road Excelsior Fund and
Charlottesville, VA 22901 Excelsior Tax-Exempt Fund
Age: 76 (since 1986);
Director of UST Master
Variable Series, Inc.
(from 1994 to June 1997);
Trustee of Excelsior
Institutional Trust (since
1995); Director, Deutsche
Bank Financial, Inc.
(since 1989); Director,
The Harbus Corporation
(since 1951); and Trustee,
HSBC Funds Trust and HSBC
Mutual Funds Trust (since
1988).
W. Wallace McDowell, Jr. Director Director, Excelsior Fund
c/o Prospect Capital Corp. and Excelsior Tax-Exempt
43 Arch Street Fund (since 1996);
Greenwich, CT 06830 Trustee, Excelsior
Age: 60 Institutional Trust and
Excelsior Funds (since
1994); Private Investor
(since 1994); Managing
Director, Morgan Lewis
Githens & Ahn (from 1991
to 1994); and Director,
U.S. Homecare Corporation
(since 1992), Grossmans,
Inc. (from 1993 to 1996),
Children's Discovery
Centers (since 1984), ITI
Technologies, Inc. (since
1992) and Jack Morton
Productions (since 1987).
Jonathan Piel Director Director, Excelsior Fund
558 E. 87th Street and Excelsior Tax-Exempt
New York, NY 10128 Fund (since 1996);
Age: 58 Trustee, Excelsior
Institutional Trust and
Excelsior Funds (since
1994); Vice President and
Editor, Scientific
American, Inc. (from 1986
to 1994); Director, Group
for The South Fork,
Bridgehampton, New York
(since 1993); and Member,
Advisory Committee, Knight
Journalism Fellowships,
Massachusetts Institute of
Technology (since 1984).
-18-
<PAGE>
Position Principal Occupation
with During Past 5 Years and
Name and Address Excelsior Fund Other Affiliations
- ------------------------ -------------------------- -------------------------
Robert A. Robinson Director Director of Excelsior Fund
Church Pension Fund and Excelsior Tax-Exempt
800 Second Avenue Fund (since 1987);
New York, NY 10017 Director of UST Master
Age: 71 Variable Series, Inc.
(from 1994 to June 1997);
Trustee of Excelsior
Institutional Trust (since
1995); President Emeritus,
The Church Pension Fund
and its affiliated
companies (since 1966);
Trustee, H.B. and F.H.
Bugher Foundation and
Director of its wholly
owned subsidiaries --
Rosiclear Lead and
Flourspar Mining Co. and
The Pigmy Corporation
(since 1984); Director,
Morehouse Publishing Co.
(since 1974); Trustee,
HSBC Funds Trust and HSBC
Mutual Funds Trust (since
1982); and Director,
Infinity Funds, Inc.
(since 1995).
Alfred C. Tannachion/1/ Director Retired; Director of
6549 Pine Meadows Drive Excelsior Fund and
Spring Hill, FL 34606 Excelsior Tax-Exempt Fund
Age: 71 (since 1985); Chairman
of the Board, President
and Treasurer of UST
Master Variable Series,
Inc. (from 1994 to June
1997); and Trustee of
Excelsior Institutional
Trust (since 1995).
W. Bruce McConnel, III Secretary Partner of the law firm
Philadelphia National of Drinker Biddle &
Bank Building Reath LLP.
1345 Chestnut Street
Philadelphia, PA 19107
Age: 54
Michael P. Malloy Assistant Partner of the law firm
Philadelphia National Secretary of Drinker Biddle &
Bank Building Reath LLP.
1345 Chestnut Street
Philadelphia, PA 19107-3496
Age: 37
Gregory Sackos Assistant Second Vice President,
Chase Global Funds Secretary Senior Manager of Blue
Services Company Sky Compliance and
73 Tremont Street Financial Reporting,
Boston, MA 02108-3913 Chase GlobalFunds
Services Company (March
1997to present); Second
Vice President,
- ----------
/1/ This director is considered to be an "interested person" of Excelsior Fund
as defined in the 1940 Act.
-19-
<PAGE>
Position Principal Occupation
with During Past 5 Years and
Name and Address Excelsior Fund Other Affiliations
- ------------------------ -------------------------- -------------------------
Age: 32 Senior Manager of
Financial Reporting, Chase
Global Funds Services
Company (September 1996 to
March 1997); and Assistant
Vice President, Assistant
Manager of Financial
Reporting, Scudder,
Stevens & Clark, Inc.
(October 1992 to September
1996).
John M. Corcoran Assistant Vice President, Director
Chase Global Funds Treasurer of Administration Client
Services Company Group, Chase Global Funds
73 Tremont Street Services Company (since
Boston, MA 02108-3913 July 1996); Second Vice
Age: 32 President, Manager of
Administration, Chase
Global Funds Services
Company (from October1993
to July 1996); and Audit
Manager, Ernst & Young LLP
(from August 1987 to
September 1993).
Each director of Excelsior Fund receives an annual fee of $9,000 plus
a meeting fee of $1,500 for each meeting attended and is reimbursed for expenses
incurred in attending meetings. The Chairman of the Board is entitled to
receive an additional $5,000 per annum for services in such capacity. Drinker
Biddle & Reath LLP, of which Mr. McConnel is a partner, receives legal fees as
counsel to Excelsior Fund. The employees of Chase Global Funds Services Company
do not receive any compensation from Excelsior Fund for acting as officers of
Excelsior Fund. No person who is currently an officer, director or employee of
the Investment Adviser serves as an officer, director or employee of Excelsior
Fund. As of September 25, 1997, the directors and officers of Excelsior Fund as
a group owned beneficially less than 1% of the outstanding shares of each fund
of Excelsior Fund, and less than 1% of the outstanding shares of all funds of
Excelsior Fund in the aggregate.
The following chart provides certain information about the fees
received by Excelsior Fund's directors in the most recently completed fiscal
year.
-20-
<PAGE>
Pension or
Retirement Total
Benefits Compensation
Accrued as from Excelsior Fund
Aggregate Part of and Fund
Name of Compensation from Fund Complex* Paid
Person/Position Excelsior Fund Expenses to Directors
- ----------------------------- ----------------- -------- -------------------
Donald L. Campbell $13,500 None $31,750(4)**
Director
Rodman L. Drake*** $ 3,750 None $12,250(4)**
Director
Joseph H. Dugan $15,000 None $35,000(4)**
Director
Wolfe J. Frankl $15,000 None $35,000(4)**
Director
W. Wallace McDowell, Jr.*** $ 2,250 None $ 9,250(4)**
Director
Jonathan Piel*** $ 3,750 None $12,500(4)**
Director
Robert A. Robinson $15,000 None $35,000(4)**
Director
Alfred C. Tannachion**** $20,000 None $45,000(4)**
Director
Frederick S. Wonham**** $15,000 None $35,000(4)**
Chairman of the Board,
President and Treasurer
- ---------------------------
/*/ The "Fund Complex" consists of Excelsior Fund, Excelsior Tax-Exempt
Fund, UST Master Variable Series, Inc., Excelsior Funds and Excelsior
Institutional Trust.
/**/ Number of investment companies in the Fund Complex for which director
served as director or trustee.
/***/ Messrs. Drake, McDowell and Piel were elected to the Board of
Excelsior Fund and Excelsior Tax-Exempt Fund on December 9, 1996.
/****/ Mr. Tannachion served as Excelsior Fund's Chairman of the Board,
President and Treasurer until February 13, 1997. On that date, Mr.
Wonham was elected to serve as Excelsior Fund's Chairman of the Board,
President and Treasurer.
-21-
<PAGE>
Investment Advisory and Administration Agreements
- -------------------------------------------------
United States Trust Company of New York ("U.S. Trust New York") and
U.S. Trust Company of Connecticut ("U.S. Trust Connecticut" and, collectively
with U.S. Trust New York, "U.S. Trust" or the "Investment Adviser") serve as
Investment Adviser to the Fund. In the Investment Advisory Agreement, the
Investment Adviser has agreed to provide the services described in the
Prospectus. The Investment Adviser has also agreed to pay all expenses incurred
by it in connection with its activities under the agreement other than the cost
of securities, including brokerage commissions, purchased for the Fund.
The Investment Advisory Agreement provides that the Investment Adviser
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the performance of such agreement,
except that the Investment Adviser shall be jointly, but not severally, liable
for a loss resulting from a breach of fiduciary duty with respect to the receipt
of compensation for advisory services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Investment Adviser
in the performance of its duties or from reckless disregard by it of its duties
and obligations thereunder. In addition, the Investment Adviser has undertaken
in the Investment Advisory Agreement to maintain its policy and practice of
conducting its Asset Manage ment Group independently of its Banking Group.
Chase Global Funds Services Company ("CGFSC"), Federated
Administrative Services (an affiliate of the Distributor) and U.S. Trust
Connecticut (collectively, the "Administrators") serve as the Fund's
administrators. Under the Administration Agreement, the Administrators have
agreed to maintain office facilities for the Fund, furnish the Fund with
statistical and research data, clerical, accounting and bookkeeping services,
and certain other services required by the Fund, and to compute the net asset
value, net income and realized capital gains or losses, if any, of the Fund.
The Administrators prepare semiannual reports to the SEC, prepare Federal and
state tax returns, prepare filings with state securities commissions, arrange
for and bear the cost of processing Share purchase and redemption orders,
maintain the Fund's financial accounts and records, and generally assist in the
Fund's operations.
Shareholder Organizations
- -------------------------
As stated in the Prospectus, Excelsior Fund has entered into
agreements with certain Shareholder Organizations. Such agreements require the
Shareholder Organizations to provide shareholder administrative services to
their Customers who beneficially own Shares in consideration for the Fund's
payment of not more than the annual rate of .40% of the average daily net
-22-
<PAGE>
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 Excelsior
Fund to Customers; and (f) providing or arranging for the provision of other
related services.
Excelsior Fund's agreements with Shareholder Organizations are
governed by an Administrative Services Plan (the "Plan") adopted by Excelsior
Fund. Pursuant to the Plan, Excelsior Fund's Board of Directors will review, at
least quarterly, a written report of the amounts expended under Excelsior Fund'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 Excelsior Fund's
directors, including a majority of the directors who are not "interested
persons" of Excelsior Fund as defined in the 1940 Act and have no direct or
indirect financial interest in such arrangements (the "Disinterested
Directors").
Any material amendment to Excelsior Fund's arrangements with
Shareholder Organizations must be approved by a majority of Excelsior Fund's
Board of Directors (including a majority of the Disinterested Directors). So
long as Excelsior Fund's arrangements with Shareholder Organizations are in
effect, the selection and nomination of the members of Excelsior Fund's Board of
Directors who are not "interested persons" (as defined in the 1940 Act) of
Excelsior Fund will be committed to the discretion of such Disinterested
Directors.
Expenses
- --------
Except as otherwise noted, the Investment Adviser and the
Administrators bear all expenses in connection with the performance of their
services. The Fund bears the expenses incurred in its operations. Expenses of
the Fund include taxes; interest; fees (including fees paid to Excelsior Fund's
directors and officers who are not affiliated with the Distributor or the
Administrators); SEC fees; state securities qualifications fees; costs of
preparing and printing prospectuses for regulatory purposes and for distribution
to shareholders; advisory, administration and administrative servicing fees;
charges of the custodian, transfer agent, and dividend disbursing agent; certain
insurance premiums; outside auditing and legal expenses; cost of independent
pricing services; costs of shareholder reports and shareholder meetings; and any
extraordinary expenses. The Fund
-23-
<PAGE>
also pays for brokerage fees and commissions in connection with the purchase of
portfolio securities.
Custodian and Transfer Agent
- ----------------------------
The Chase Manhattan Bank ("Chase") serves as custodian of the Fund's
assets. Under the Custodian Agreement, Chase has agreed to (i) maintain a
separate account or accounts in the name of the Fund; (ii) make receipts and
disbursements of money on behalf of the Fund; (iii) collect and receive all
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 Excelsior Fund's Board of Directors concerning the
Fund's operations. Chase may, at its own expense, open and maintain custody
accounts with respect to the Fund with other banks or trust companies, provided
that Chase shall remain liable for the performance of all its custodial duties
under the Custodian Agreement, notwithstanding any delegation.
U.S. Trust New York serves as the Fund's transfer agent and dividend
disbursing agent. In such capacity, U.S. Trust New York has agreed to (i) issue
and redeem Shares; (ii) address and mail all communications by the Fund to its
shareholders, including reports to shareholders, dividend and distribution
notices, and proxy materials for its 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 Excelsior Fund's Board of
Directors concerning the Fund's operations. For its transfer agency, dividend
disbursing, and subaccounting services, U.S. Trust New York is entitled to
receive $15.00 per annum per account and subaccount. In addition, U.S. Trust
New York is entitled to be reimbursed for its 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 New York may, at its own expense, delegate its transfer
agency obligations to another transfer agent registered or qualified under
applicable law, provided that U.S. Trust New York shall remain liable for the
performance of all of its transfer agency duties under the Transfer Agency
Agreement, notwithstanding any delegation. Pursuant to this provision in the
agreement, U.S. Trust New York has entered into a sub-transfer agency
arrangement with CGFSC, an affiliate of Chase, with respect to accounts of
shareholders who are not Customers of U.S. Trust New York. For the services
provided by CGFSC, U.S. Trust New York has agreed to pay CGFSC $15.00 per annum
per account or subaccount plus out-of-pocket expenses. CGFSC receives no fee
directly from Excelsior Fund for any of its sub-
-24-
<PAGE>
transfer agency services. U.S. Trust New York may, from time to time, enter
into sub-transfer agency arrangements with third party providers of transfer
agency services.
PORTFOLIO TRANSACTIONS
----------------------
Subject to the general control of Excelsior Fund's Board of Directors,
the Investment Adviser is responsible for, makes decisions with respect to, and
places orders for all purchases and sales of all portfolio securities of the
Fund.
The Fund may engage in short-term trading to achieve its investment
objective. Portfolio turnover may vary greatly from year to year as well as
within a particular year. The Fund's portfolio turnover rate may also be
affected by cash requirements for redemptions of Shares and by regulatory
provisions which enable the Fund to receive certain favorable tax treatment.
Portfolio turnover will not be a limiting factor in making portfolio decisions.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers.
Transactions on foreign stock exchanges involve payment of brokerage
commissions which are generally fixed. Transactions in both foreign and
domestic over-the-counter markets are generally principal transactions with
dealers, and the costs of such transactions involve dealer spreads rather than
brokerage commissions. With respect to over-the-counter transactions, the Fund,
where possible, will deal directly with the dealers who make a market in the
securities involved, except in those circumstances where better prices and
execution are available elsewhere. The cost of securities purchased from
underwriters includes an underwriting commission or concession.
The Investment Advisory Agreement between Excelsior Fund and the
Investment Adviser provides that, in executing portfolio transactions and
selecting brokers or dealers, the Investment Adviser will seek to obtain the
best net price and the most favorable execution. The Investment Adviser shall
consider factors it deems relevant, including the breadth of the market in the
security, the price of the security, the financial condition and execution
capability of the broker or dealer and whether such broker or dealer is selling
shares of Excelsior Fund, and the reasonableness of the commission, if any, for
the specific transaction and on a continuing basis.
-25-
<PAGE>
In addition, the Investment Advisory Agreement authorizes the
Investment Adviser, to the extent permitted by law and subject to the review of
Excelsior Fund's Board of Directors from time to time with respect to the extent
and continuation of the policy, to cause the Fund to pay a broker which
furnishes brokerage and research services a higher commission than that which
might be charged by another broker for effecting the same transaction, provided
that the Investment Adviser determines in good faith that such commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker, viewed in terms of either that particular transaction
or the overall responsibilities of the Investment Adviser to the accounts as to
which it exercises investment discretion. Such brokerage and research services
might consist of reports and statistics on specific companies or industries,
general summaries of groups of stocks and their comparative earnings, or broad
overviews of the stock market and the economy. Such services might also include
reports on global, regional, and country by country prospects for economic
growth, anticipated levels of inflation, prevailing and expected interest rates,
and the outlook for currency relationships.
Supplementary research information so received is in addition to and
not in lieu of services required to be performed by the Investment Adviser and
does not reduce the investment advisory fees payable by the Fund. Such
information may be useful to the Investment Adviser in serving the Fund and
other clients and, conversely, supplemental information obtained by the
placement of business of other clients may be useful to the Investment Adviser
in carrying out its obligations to the Fund.
Portfolio securities will not be purchased from or sold to the
Investment Adviser, Distributor, or any affiliated person of either of them (as
such term is defined in the 1940 Act) acting as principal, except to the extent
permitted by the SEC.
Investment decisions for the Fund are made independently from those
for other investment companies, common trust funds and other types of funds
managed by the Investment Adviser. Such other investment companies and funds
may also invest in the same securities as the Fund. When a purchase or sale of
the same security is made at substantially the same time on behalf of the Fund
and another investment company or common trust fund, the transaction will be
averaged as to price, and available investments allocated as to amount, in a
manner which the Investment Adviser believes to be equitable to the Fund and
such other investment company or common trust fund. In some instances, this
investment procedure may adversely affect the price paid or received by the Fund
or the size of the position obtained by the Fund. To the extent permitted by
law, the Investment Adviser may aggregate the securities to be sold or purchased
for the Fund with those to be sold or purchased for
-26-
<PAGE>
other investment companies or common trust funds in order to obtain best
execution.
To the extent that the Fund effects brokerage transactions with any
broker-dealer affiliated directly or indirectly with U.S. Trust, such
transactions, including the frequency thereof, the receipt of any commissions
payable in connection therewith, and the selection of the affiliated broker-
dealer effecting such transactions, will be fair and reasonable to the
shareholders of the Fund.
INDEPENDENT AUDITORS
--------------------
Ernst & Young LLP, independent auditors, 200 Clarendon Street, Boston,
MA 02116, serve as auditors of Excelsior Fund.
COUNSEL
-------
Drinker Biddle & Reath LLP (of which Mr. McConnel, Secretary of
Excelsior Fund, is a partner), Philadelphia National Bank Building, 1345
Chestnut Street, Philadelphia, Pennsylvania 19107, is counsel to Excelsior Fund
and will pass upon the legality of the Shares offered by the Prospectus.
ADDITIONAL INFORMATION CONCERNING TAXES
---------------------------------------
The following supplements the tax information contained in the
Prospectus.
The Fund is treated as a separate corporate entity under the Internal
Revenue Code of 1986, as amended (the "Code"), and intends to qualify as a
regulated investment company. If, for any reason, the Fund does not qualify for
a taxable year for the special Federal tax treatment afforded regulated
investment companies, the Fund would be subject to Federal tax on all of its
taxable income at regular corporate rates, without any deduction for
distributions to shareholders. In such event, dividend distributions would be
taxable as ordinary income to shareholders to the extent of the Fund's current
and accumulated earnings and profits and would be eligible for the dividends
received deduction in the case of corporate shareholders.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute an amount equal to specified
percentages of their ordinary taxable income and capital gain net income (excess
of capital gains over capital losses). The Fund intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and any
-27-
<PAGE>
capital gain net income prior to the end of each calendar year to avoid
liability for this excise tax.
For fiscal years beginning before August 5, 1997, the Fund will not be
treated as a regulated investment company under the Code if 30% or more of the
Fund's gross income for a taxable year is derived from gains realized on the
sale or other disposition of the following investments held for less than three
months (the "Short-Short Test"): (1) stock and securities (as defined in
section 2(a)(36) of the 1940 Act); (2) options, futures and forward contracts
other than those on foreign currencies; and (3) foreign currencies (and options,
futures and forward contracts on foreign currencies) that are not directly
related to the Fund's principal business of investing in stock and securities
(and options and futures with respect to stocks and securities). Interest
(including original issue discount and accrued market discount) received by the
Fund upon maturity or disposition of a security held for less than three months
will not be treated as gross income derived from the sale or other disposition
of such security within the meaning of this requirement. However, any other
income which is attributable to realized market appreciation will be treated as
gross income from the sale or other disposition of securities for this purpose.
With respect to covered call options, if the call is exercised by the holder,
the premium and the price received on exercise constitute the proceeds of sale,
and the difference between the proceeds and the cost of the securities subject
to the call is capital gain or loss. Premiums from expired call options written
by the Fund and net gains from closing purchase transactions are treated as
short-term capital gains for Federal income tax purposes, and losses on closing
purchase transactions are short-term capital losses. With respect to forward
contracts, futures contracts, options on futures contracts, and other financial
instruments subject to the "mark-to-market" rules, the Internal Revenue Service
has ruled in private letter rulings that a gain realized from such a contract,
option or financial instrument will be treated as being derived from a security
held for three months or more (regardless of the actual period for which the
contract, option or instrument is held) if the gain arises as a result of a
constructive sale under the mark-to-market rules, and will be treated as being
derived from a security held for less than three months only if the contract,
option or instrument is terminated (or transferred) during the taxable year
(other than by reason of mark-to-market) and less than three months has elapsed
between the date the contract, option or instrument was acquired and the
termination date. Increases and decreases in the value of the forward
contracts, futures contracts, options on futures contracts and other investments
that qualify as part of a "designated hedge," as defined in Section 851(g) of
the Code, may be netted for purposes of determining whether the Short-Short Test
is met.
-28-
<PAGE>
The Fund will be required in certain cases to withhold and remit to
the U.S. Treasury 31% of taxable dividends or gross proceeds realized upon sale
paid to shareholders who have failed to provide a correct tax identification
number in the manner required, who are subject to withholding by the Internal
Revenue Service for failure properly to include on their return payments of
taxable interest or dividends, or who have failed to certify to the Fund when
required to do so either that they are not subject to backup withholding or that
they are "exempt recipients."
The foregoing discussion is based on Federal tax laws and regulations
which are in effect on the date of this Statement of Additional Information;
such laws and regulations may be changed by legislative or administrative
action. Shareholders are advised to consult their tax advisers concerning their
specific situations and the application of state and local taxes.
PERFORMANCE INFORMATION
-----------------------
The Fund may advertise the "average annual total return" for its
Shares. Such return is computed by determining the average annual compounded
rate of return during specified periods that equates the initial amount invested
to the ending redeemable value of such investment according to the following
formula:
ERV to the power of one divided by n
T = [(-----) - 1]
P
Where: T = average annual total return.
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the 1, 5 or 10 year
(or other) periods at the end of the applicable period
(or a fractional portion thereof).
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in years.
The Fund may also advertise the "aggregate total return" for its
Shares which is computed by determining the aggregate compounded rates of return
during specified periods that likewise equate the initial amount invested to the
ending
-29-
<PAGE>
redeemable value of such investment. The formula for calculating aggregate
total return is as follows:
ERV
Aggregate Total Return = [(------)] - 1
P
The above calculations are made assuming that (1) all dividends and
capital gain distributions are reinvested on the reinvestment dates at the price
per Share existing on the reinvestment date, (2) all recurring fees charged to
all shareholder accounts are included, and (3) for any account fees that vary
with the size of the account, a mean (or median) account size in the Fund during
the periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all nonrecurring charges at the end of the
measuring period.
The Fund may also from time to time include in advertisements, sales
literature and communications to shareholders a total return figure that is not
calculated according to the formula set forth above in order to compare more
accurately the Fund's performance with other measures of investment return. For
example, in comparing the Fund's total return with data published by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc. or Weisenberger
Investment Company Service, or with the performance of an index, the Fund may
calculate its aggregate total return for the period of time specified in the
advertisement, sales literature or communication by assuming the investment of
$10,000 in Shares and assuming the reinvestment of each dividend or other
distribution at net asset value on the reinvestment date. Percentage increases
are determined by subtracting the initial value of the investment from the
ending value and by dividing the remainder by the beginning value.
The total return of the Fund may be compared to that of other mutual
funds with similar investment objectives and to other relevant indices or to
ratings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example, the
total return of the Fund may be compared to data prepared by Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc. and Weisenberger Investment
Company Service. Total return as reported in national financial publications
such as 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 performance of the Fund. Advertisements, sales literature or
reports to shareholders may from time to time also include a discussion and
analysis of the
-30-
<PAGE>
Fund's performance, including, without limitation, those factors, strategies and
techniques that, together with market conditions and events, materially affected
the Fund's performance.
The Fund may also from time to time include discussions or
illustrations of the effects of compounding in advertisements. "Compounding"
refers to the fact that, if dividends or other distributions on the Fund
investment are reinvested by being paid in additional Fund Shares, any future
income or capital appreciation of the Fund would increase the value, not only of
the original Fund investment, but also of the additional Fund Shares received
through reinvestment. As a result, the value of the Fund investment would
increase more quickly than if dividends or other distributions had been paid in
cash. The Fund may also include discussions or illustrations of the potential
investment goals of a prospective investor, investment management techniques,
policies or investment suitability of the Fund, economic conditions, the effects
of inflation and historical performance of various asset classes, including but
not limited to, stocks, bonds and Treasury bills. From time to time
advertisements, sales literature or communications to shareholders may summarize
the substance of information contained in shareholder reports (including the
investment composition of the Fund), as well as the views of the Investment
Adviser as to current market, economy, trade and interest rate trends,
legislative, regulatory and monetary developments, investment strategies and
related matters believed to be of relevance to the Fund. The Fund may also
include in advertisements charts, graphs or drawings which illustrate the
potential risks and rewards of investment in various investment vehicles,
including but not limited to, stocks, bonds, Treasury bills and Shares of the
Fund. In addition, advertisements, sales literature or shareholder
communications may include a discussion of certain attributes or benefits to be
derived by an investment in the Fund. Such advertisements or communications may
include symbols, headlines or other material which highlight or summarize the
information discussed in more detail therein.
MISCELLANEOUS
-------------
As used in the Prospectus, "assets belonging to the Fund" means the
consideration received upon the issuance of Shares in the Fund, together with
all income, earnings, profits, and proceeds derived from the investment thereof,
including any proceeds from the sale of such investments, any funds or payments
derived from any reinvestment of such proceeds, and a portion of any general
assets of Excelsior Fund not belonging to a particular portfolio of Excelsior
Fund. In determining the Fund's net asset value, assets belonging to the Fund
are charged with the direct liabilities in respect of the Fund and with a share
of the general liabilities of Excelsior Fund which are
-31-
<PAGE>
normally allocated in proportion to the relative asset values of Excelsior
Fund's portfolios at the time of allocation. Subject to the provisions of
Excelsior Fund's Charter, determinations by the Board of Directors as to the
direct and allocable liabilities, and the allocable portion of any general
assets with respect to the Fund, are conclusive.
-32-
<PAGE>
APPENDIX A
----------
COMMERCIAL PAPER RATINGS
- ------------------------
A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment of debt considered short-term in the relevant
market. The following summarizes the rating categories used by Standard and
Poor's for commercial paper:
"A-1" - The highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess
extremely strong safety characteristics are denoted with a plus sign (+)
designation.
"A-2" - Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."
"A-3" - Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
"B" - Issues are regarded as having only a speculative capacity for
timely payment.
"C" - This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
"D" - Issues are in payment default.
Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of 9 months. The following summarizes the rating categories
used by Moody's for commercial paper:
"Prime-1" - Issuers or related supporting institutions have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well established industries; high rates of return on funds
employed; conservative capitalization structures with moderate reliance on debt
and ample asset protection; broad margins in earning coverage of fixed financial
charges and high internal cash generation; and well established access to a
range of financial markets and assured sources of alternate liquidity.
A-1
<PAGE>
"Prime-2" - Issuers or related supporting institutions have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternative liquidity is maintained.
"Prime-3" - Issuers or related supporting institutions have an
acceptable capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuers do not fall within any of the Prime rating
categories.
The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps
employs three designations, "D-1+," "D-1" and "D-1-," within the highest rating
category. The following summarizes the rating categories used by Duff & Phelps
for commercial paper:
"D-1+" - Debt possesses highest certainty of timely payment. Short-
term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below risk-free
U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.
"D-2" - Debt possesses good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good. Risk
factors are small.
"D-3" - Debt possesses satisfactory liquidity and other protection
factors qualify issue as investment grade. Risk
A-2
<PAGE>
factors are larger and subject to more variation. Nevertheless, timely payment
is expected.
"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to ensure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.
"D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.
Fitch short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years. The
following summarizes the rating categories used by Fitch for short-term
obligations:
"F-1+" - Securities possess exceptionally strong credit quality.
Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."
"F-2" - Securities possess good credit quality. Issues assigned this
rating have a satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as the "F-1+" and "F-1" ratings.
"F-3" - Securities possess fair credit quality. Issues assigned this
rating have characteristics suggesting that the degree of assurance for timely
payment is adequate; however, near-term adverse changes could cause these
securities to be rated below investment grade.
"F-S" - Securities possess weak credit quality. Issues assigned this
rating have characteristics suggesting a minimal degree of assurance for timely
payment and are vulnerable to near-term adverse changes in financial and
economic conditions.
"D" - Securities are in actual or imminent payment default.
Fitch may also use the symbol "LOC" with its short-term ratings to
indicate that the rating is based upon a letter of credit issued by a commercial
bank.
Thomson BankWatch short-term ratings assess the likelihood of an
untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one
A-3
<PAGE>
year or less which are issued by United States commercial banks, thrifts and
non-bank banks; non-United States banks; and broker-dealers. The following
summarizes the ratings used by Thomson BankWatch:
"TBW-1" - This designation represents Thomson BankWatch's highest
rating category and indicates a very high degree of likelihood that principal
and interest will be paid on a timely basis.
"TBW-2" - This designation indicates that while the degree of safety
regarding timely payment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents the lowest investment grade
category and indicates that while the debt is more susceptible to adverse
developments (both internal and external) than obligations with higher ratings,
capacity to service principal and interest in a timely fashion is considered
adequate.
"TBW-4" - This designation indicates that the debt is regarded as non-
investment grade and therefore speculative.
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for short-term debt ratings:
"A1+" - Obligations which posses a particularly strong credit feature
are supported by the highest capacity for timely repayment.
"A1" - Obligations are supported by the highest capacity for timely
repayment.
"A2" - Obligations are supported by a good capacity for timely
repayment.
"A3" - Obligations are supported by a satisfactory capacity for timely
repayment.
"B" - Obligations for which there is an uncertainty as to the capacity
to ensure timely repayment.
"C" - Obligations for which there is a high risk of default or which
are currently in default.
A-4
<PAGE>
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
- ----------------------------------------------
The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:
"AAA" - This designation represents the highest rating assigned by
Standard & Poor's to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.
"AA" - Debt is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in small degree.
"A" - Debt is considered to have a strong capacity to pay interest and
repay principal although such issues are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher-rated categories.
"BB," "B," "CCC," "CC" and "C" - Debt is regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "C" the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
"BB" - Debt has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.
"B" - Debt has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
A-5
<PAGE>
"CCC" - Debt has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The "CCC" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"B" or "B-" rating.
"CC" - This rating is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
"C" - This rating is typically applied to debt subordinated to senior
debt which is assigned an actual or implied "CCC-" debt rating. The "C" rating
may be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
"CI" - This rating is reserved for income bonds on which no interest
is being paid.
"D" - Debt is in payment default. This rating is used when interest
payments or principal payments are not made on the date due, even if the
applicable grace period has not expired, unless S & P believes that such
payments will be made during such grace period. "D" rating is also used upon
the filing of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
"r" - This rating is attached to highlight derivative, hybrid, and
certain other obligations that S & P believes may experience high volatility or
high variability in expected returns due to non-credit risks. Examples of such
obligations are: securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and interest
only and principal only mortgage securities. The absence of an "r" symbol
should not be taken as an indication that an obligation will exhibit no
volatility or variability in total return.
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are
A-6
<PAGE>
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
"Aa" - Bonds are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as high-
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.
"A" - Bonds possess many favorable investment attributes and are to be
considered as upper medium-grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
"Baa" - Bonds considered medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these
ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing; "Ca"
represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in
default.
Con. (---) - Bonds for which the security depends upon the completion
of some act or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
(P)... - When applied to forward delivery bonds, indicates that the
rating is provisional pending delivery of the bonds. The rating may be revised
prior to delivery if changes occur in the legal documents or the underlying
credit quality of the bonds.
A-7
<PAGE>
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols, Aa1, A1, Baa1, Ba1 and B1.
The following summarizes the long-term debt ratings used by Duff &
Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The
risk factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
"AA" - Debt is considered of high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.
"BBB" - Debt possesses below average protection factors but such
protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these
ratings is considered to be below investment grade. Although below investment
grade, debt rated "BB" is deemed likely to meet obligations when due. Debt
rated "B" possesses the risk that obligations will not be met when due. Debt
rated "CCC" is well below investment grade and has considerable uncertainty as
to timely payment of principal, interest or preferred dividends. Debt rated
"DD" is a defaulted debt obligation, and the rating "DP" represents preferred
stock with dividend arrearages.
To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major categories.
The following summarizes the highest four ratings used by Fitch for
corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.
"AA" - Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong
A-8
<PAGE>
as bonds rated "AAA." Because bonds rated in the "AAA" and "AA" categories are
not significantly vulnerable to foreseeable future developments, short-term debt
of these issuers is generally rated "F-1+."
"A" - Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
To provide more detailed indications of credit quality, the Fitch
ratings from and including "AA" to "BBB" may be modified by the addition of a
plus (+) or minus (-) sign to show relative standing within these major rating
categories.
IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for long-term debt ratings:
"AAA" - Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.
"AA" - Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial, such that adverse changes in business, economic or financial
conditions may increase investment risk, albeit not very significantly.
"A" - Obligations for which there is a low expectation of investment
risk. Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions may lead
to increased investment risk.
"BBB" - Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of
A-9
<PAGE>
principal and interest is adequate, although adverse changes in business,
economic or financial conditions are more likely to lead to increased investment
risk than for obligations in other categories.
"BB," "B," "CCC," "CC," and "C" - Obligations are assigned one of
these ratings where it is considered that speculative characteristics are
present. "BB" represents the lowest degree of speculation and indicates a
possibility of investment risk developing. "C" represents the highest degree of
speculation and indicates that the obligations are currently in default.
IBCA may append a rating of plus (+) or minus (-) to a rating below
"AAA" to denote relative status within major rating categories.
Thomson BankWatch assesses the likelihood of an untimely repayment of
principal or interest over the term to maturity of long term debt and preferred
stock which are issued by United States commercial banks, thrifts and non-bank
banks; non-United States banks; and broker-dealers. The following summarizes
the rating categories used by Thomson BankWatch for long-term debt ratings:
"AAA" - This designation represents the highest category assigned by
Thomson BankWatch to long-term debt and indicates that the ability to repay
principal and interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to repay
principal and interest on a timely basis with limited incremental risk compared
to issues rated in the highest category.
"A" - This designation indicates that the ability to repay principal
and interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
"BBB" - This designation represents Thomson BankWatch's lowest
investment grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BB," "B," "CCC," and "CC" - These designations are assigned by
Thomson BankWatch to non-investment grade long-term debt. Such issues are
regarded as having speculative characteristics regarding the likelihood of
timely payment of
A-10
<PAGE>
principal and interest. "BB" indicates the lowest degree of speculation and
"CC" the highest degree of speculation.
"D" - This designation indicates that the long-term debt is in
default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may
include a plus or minus sign designation which indicates where within the
respective category the issue is placed.
MUNICIPAL NOTE RATINGS
- ----------------------
A Standard and Poor's rating reflects the liquidity concerns and
market access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's Ratings Group for municipal
notes:
"SP-1" - The issuers of these municipal notes exhibit very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit speculative
capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:
"MIG-1"/"VMIG-1" - Loans bearing this designation are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
"MIG-2"/"VMIG-2" - Loans bearing this designation are of high quality,
with margins of protection ample although not so large as in the preceding
group.
"MIG-3"/"VMIG-3" - Loans bearing this designation are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well established.
A-11
<PAGE>
"MIG-4"/"VMIG-4" - Loans bearing this designation are of adequate
quality, carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
"SG" - Loans bearing this designation are of speculative quality and
lack margins of protection.
Fitch and Duff & Phelps use the short-term ratings described under
Commercial Paper Ratings for municipal notes.
A-12
<PAGE>
EXCELSIOR FUNDS, INC.
FORM N-1A
---------
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
(1) Included in Part A: None.
(2) Included in Part B: None.
(b) Exhibits:
--------
(1) (a) Articles of Incorporation of Registrant dated
August 1, 1984 (1).
(b) Articles Supplementary of Registrant dated October
30, 1985 (3).
(c) Articles Supplementary of Registrant dated
September 30, 1986 (4).
(d) Articles Supplementary of Registrant dated April
10, 1987 (6).
(e) Articles Supplementary of Registrant dated April
27, 1990 (12).
(f) Articles Supplementary of Registrant dated October
26, 1990 (13).
(g) Articles Supplementary of Registrant dated January
29, 1991 (13).
(h) Articles Supplementary of Registrant dated December
24, 1992 (16).
(i) Articles Supplementary of Registrant dated August
31, 1995 (20).
(j) Articles Supplementary of Registrant dated December
28, 1995 (20).
(k) Articles Supplementary of Registrant dated
September 11, 1997 and filed on September 15, 1997 (25).
(2) (a) Amended and Restated By-Laws of Registrant dated
February 2, 1995 (25).
(b) Amendment No. 1 to By-Laws of Registrant dated May
16, 1997 (25).
<PAGE>
(3) None.
(4) (a) Articles VI, VII, VIII and X of Registrant's
Articles of Incorporation dated August 7, 1984 are incorporated
herein by reference to Exhibit 1(a) of Registrant's Registration
Statement on Form N-1A filed on August 8, 1984;
(b) Articles I, II, IV and VI of Registrant's By-Laws
are incorporated herein by reference to Exhibit 2(a) of
Registrant's Registration Statement on Form N-1A filed on August
8, 1984.
(5) (a) Investment Advisory Agreement among Registrant,
U.S. Trust Company of Connecticut and United States Trust Company
of New York dated May 16, 1997 with respect to the Money Fund,
Government Money Fund, Blended Equity Fund, Small Cap Fund, Long-
Term Supply of Energy Fund, Productivity Enhancers Fund,
Environmentally-Related Products and Services Fund, Aging of
America Fund, Communication and Entertainment Fund, Value and
Restructuring Fund, Global Competitors Fund, Latin America Fund,
Pacific/Asia Fund, Pan European Fund, Short-Term Government
Securities Fund and Intermediate-Term Managed Income Fund (24).
(b) Amendment No. 1 dated July 25, 1997 to the
Investment Advisory Agreement among Registrant, U.S. Trust
Company of Connecticut and United States Trust Company of New
York dated May 16, 1997 (adding the Large Cap Growth and Real
Estate Funds) (25).
(c) Investment Advisory Agreement among Registrant,
U.S. Trust Company of Connecticut and United States Trust Company
of New York dated May 16, 1997 with respect to the Managed Income
Fund (24).
(d) Investment Advisory Agreement among Registrant,
U.S. Trust Company of Connecticut and United States Trust Company
of New York dated May 16, 1997 with respect to the Income and
Growth Fund (24).
(e) Investment Advisory Agreement among Registrant,
U.S. Trust Company of Connecticut and United States Trust Company
of New York dated May 16, 1997 with respect to the International
Fund (24).
(f) Investment Advisory Agreement among Registrant,
U.S. Trust Company of Connecticut and United States Trust Company
of New York dated May 16, 1997 with respect to the Treasury Money
Fund (24).
(6) (a) Distribution Contract dated August 1, 1995 between
Registrant Edgewood Services, Inc (20).
(b) Amended Exhibit A dated September 24, 1997 to the
Distribution Contract dated August 1, 1995 between Registrant and
Edgewood Services, Inc (25).
(7) None.
(8) Custody Agreement between Registrant and The Chase
Manhattan Bank dated September 1, 1995 (as amended and restated
on August 1, 1997) (25).
-2-
<PAGE>
(9) (a) Amended and Restated Administrative Services Plan
and Related Form of Shareholder Servicing Agreement (25).
(b) Administration Agreement dated May 16, 1997 among
Registrant, Chase Global Funds Services Company, Federated
Administrative Services and U.S. Trust Company of Connecticut
(24).
(c) Mutual Funds Transfer Agency Agreement dated as
of September 1, 1995 between Registrant and United States Trust
Company of New York (25).
(d) Mutual Funds Sub-Transfer Agency Agreement dated as
of September 1, 1995 between United States Trust Company of New
York and Chase Global Funds Services Company (25).
(10) Opinion of counsel/1/.
(11) Consent of Drinker Biddle & Reath LLP (25).
(12) None.
(13) (a) Purchase Agreement between Registrant and Shearson
Lehman Brothers Inc. dated February 6, 1985 (2).
(b) Purchase Agreement between Registrant and UST
Distributors, Inc. dated December 29, 1992 (17).
(c) Purchase Agreement between Registrant and Edgewood
Services, Inc. dated November 17, 1995 (20).
(d) Purchase Agreement between Registrant and Edgewood
Services, Inc. dated September 25, 1997 (25).
(14) None.
(15) Amended and Restated Distribution Plan and Related Form
of Distribution Agreement (21).
(16) (a) Schedule for computation of performance quotation
(14).
(b) Schedule for computation of performance quotation
(17).
(17) None.
(18) Amended and Restated Plan Pursuant to Rule 18f-3 for
Operation of a Multi-Class System (22).
Notes:
- -----
(1) Incorporated herein by reference to Registrant's Registration Statement on
Form N-1A filed August 8, 1984.
- ----------------------
1 Filed with the SEC as part of Registrant's Rule 24f-2 Notice.
-3-
<PAGE>
(2) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 1 to its Registration Statement on Form N-1A filed October 30, 1985.
(3) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 2 to its Registration Statement on Form N-1A filed June 6, 1986.
(4) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 3 to its Registration Statement on Form N-1A filed October 17, 1986.
(5) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 4 to its Registration Statement on Form N-1A filed March 19, 1987.
(6) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 5 to its Registration Statement on Form N-1A filed July 23, 1987.
(7) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 6 to its Registration Statement on Form N-1A filed July 29, 1988.
(8) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 7 to its Registration Statement on Form N-1A filed November 1, 1988.
(9) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 8 to its Registration Statement on Form N-1A filed June 2, 1989.
(10) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 9 to its Registration Statements on Form N-1A filed March 12, 1990.
(11) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 10 to its Registration Statement on Form N-1A filed July 27, 1990.
(12) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 11 to its Registration Statement on Form N-1A filed December 7, 1990.
(13) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 12 to its Registration Statement on Form N-1A filed May 31, 1991.
(14) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 13 to its Registrant Statement on Form N-1A filed August 1, 1991.
(15) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 15 to its Registration Statement on Form N-1A filed October 29, 1992.
(16) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 16 to its Registration Statement on Form N-1A filed December 24, 1992.
(17) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 17 to its Registration Statement on Form N-1A filed August 2, 1993.
-4-
<PAGE>
(18) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 18 to its Registration Statement on Form N-1A filed December 27, 1993.
(19) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 21 to its Registration Statement on Form N-1A filed August 1, 1995.
(20) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 23 to its Registration Statement on Form N-1A filed July 31, 1996.
(21) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 24 to its Registration Statement on Form N-1A filed May 15, 1997.
(22) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 26 to its Registration Statement on Form N-1A filed July 3, 1997.
(23) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 27 to its Registration Statement on Form N-1A filed July 14, 1997.
(24) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 29 to its Registration Statement on Form N-1A filed July 31, 1997.
(25) Filed herewith.
Item 25. Persons Controlled By or Under
Common Control with Registrant
------------------------------
Registrant is controlled by its Board of Directors.
Item 26. Number of Holders of Securities
-------------------------------
The following information is as of July 14, 1997:
-5-
<PAGE>
Title of Class Number of Record Holders
-------------- ------------------------
Class A Common Stock 497
Class B Common Stock 1063
Class C Common Stock 99
Class C Common Stock -
Special Series 1 0
----
Class D Common Stock 1422
Class E Common Stock 2617
Class F Common Stock 2846
Class G Common Stock 811
Class H Common Stock 2080
Class H Common Stock -
Special Series 1 0
----
Class I Common Stock 1766
Class J Common Stock 867
Class K Common Stock 633
Class L Common Stock 1355
Class L Common Stock -
Special Series 1 0
----
Class M Common Stock 1255
Class M Common Stock -
Special Series 1 0
----
Class N Common Stock 3093
Class N Common Stock -
Special Series 1 0
----
Class O Common Stock 1763
Class O Common Stock -
Special Series 1 0
----
Class P Common Stock 3366
Class Q Common Stock 3433
Class R Common Stock 3351
Class S Common Stock 460
Class T Common Stock 994
Item 27. Indemnification
---------------
Article VII, Section 3 of Registrant's Articles of Incorporation,
incorporated by reference as Exhibit (1)(a) hereto, and Article VI, Section 2 of
Registrant's Bylaws, incorporated by reference as Exhibit (2)(a) hereto, provide
for the indemnification of Registrant's directors and officers. Indemnification
of Registrant's principal underwriter, custodian, transfer agent and co-
administrators is provided for, respectively, in Section 1.11 of the
Distribution Contract incorporated by reference as Exhibit (6) hereto, Section
12 of the Custody Agreement filed herewith as Exhibit (8), Section 7 of the
Mutual Funds Transfer Agency Agreement filed herewith as Exhibit 9(c), and
Section 6 of the Administration Agreement incorporated by reference as Exhibit
9(b) hereto. Registrant has obtained from a major insurance carrier a
directors' and officers' liability policy covering certain types of errors and
omissions. In no event will Registrant indemnify any of its directors,
officers, employees, or agents against any liability to which such person would
otherwise be subject by reason of his willful misfeasance, bad faith, gross
negligence in the performance of his duties, or by reason of his reckless
disregard of the duties involved in the conduct of his office or arising under
his agreement with Registrant. Registrant will comply with Rule 484 under the
Securities Act of 1933 and Release No. 11330 under the Investment Company Act of
1940 in connection with any indemnification.
Insofar as indemnification for liability arising under the Secu rities
Act of 1933 may be permitted to directors, officers, and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant
-6-
<PAGE>
of expenses incurred or paid by a director, officer, or controlling person of
Registrant in the successful defense of any action, suit, or proceeding) is
asserted by such director, officer, or controlling person in connection with the
securities being registered, 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 Act and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
(a) U.S. Trust Company of Connecticut.
U.S. Trust Company of Connecticut ("U.S. Trust CT") is a Connecticut
State Bank and Trust Company located in Stamford, Connecticut. Set forth below
are the names and principal businesses of the trustees and certain senior
executive officers of U.S. Trust CT, including those who are engaged in any
other business, profession, vocation or employment of a substantial nature.
Position
with U.S. Principal Type of
Trust CT Name Occupation Business
- ------------- -------------------- ------------------- ------------------
Director John N. Irwin Lawyer
1133 Avenue of the
Americas
New York, NY 10035
Director June Noble Larkin Foundation Not-for-Profit
Edward John Noble Director Organization
Foundation, Inc.
32 East 57th Street
New York, NY 10022
Director Tucker H. Warner Co-Founder, Consulting Firm
The Nutmeg Financial Partner &
Group, LLC Director
1157 Highland Avenue
West
Cheshire, CT 06903
Director Thomas C. Clark Managing Director, Asset Management,
United States Trust United States Trust Investment and
Company of New York Company of New York Fiduciary Services
11 West 54th Street
New York, NY 10019
Director Maribeth S. Rahe Vice Chairman, Asset Management,
United States Trust United States Trust Investment and
Company of New York Company of New York Fiduciary Services
114 West 47th Street
New York, NY 10036
Director Frederick B. Taylor Vice Chairman, Asset Management,
United States Trust United States Trust Investment and
Company of New York Company of New York Fiduciary Services
114 West 47th Street
New York, NY 10036
-7-
<PAGE>
Position
with U.S. Principal Type of
Trust CT Name Occupation Business
- ------------- -------------------- ------------------- ------------------
Director Kenneth G. Walsh Executive Vice Asset Management,
United States Trust President, Investment and
Company of New York United States Fiduciary Services
114 West 47th Street Trust Company of
New York, NY 10036 New York
Director, William V. Ferdinand Managing Director Asset Management,
Managing U.S. Trust Company & CIO Fiduciary Services
Director & of Connecticut & Private Banking
CIO 225 High Ridge Road
Stamford, CT 06905
Director, W. Michael Funck President & CEO Asset Management,
President & U.S. Trust Company Fiduciary Services
CEO of Connecticut & Private Banking
225 High Ridge Road
Stamford, CT 06905
Vice Presi- Neil M. McDonnell Vice President & Asset Management,
dent & U.S. Trust Company Treasurer Fiduciary Services
Treasurer of Connecticut & Private Banking
225 High Ridge Road
Stamford, CT 06905
Vice Presi- Alberto Rodriguez Vice President & Asset Management,
dent & U.S. Trust Company Secretary Fiduciary Services
Secretary of Connecticut & Private Banking
225 High Ridge Road
Stamford, CT 06905
(b) United States Trust Company of New York.
United States Trust Company of New York ("U.S. Trust NY") is a
full-service state-chartered bank located in New York, New York. Set forth below
are the names and principal businesses of the trustees and certain senior
executive officers of U.S. Trust NY, including those who are engaged in any
other business, profession, vocation, or employment of a substantial nature.
Position
with U.S. Principal Type of
Trust NY Name Occupation Business
- ------------- -------------------- ------------------- ------------------
Director Eleanor Baum Dean of School Academic
The Cooper Union for of Engineering
the Advancement
of Science & Art
51 Astor Place
New York, NY 10003
Director Samuel C. Butler Partner in Cravath, Law Firm
Cravath, Swaine Swaine & Moore
& Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
-8-
<PAGE>
Position
with U.S. Principal Type of
Trust NY Name Occupation Business
- ------------- -------------------- ------------------- ------------------
Director Peter O. Crisp Chairman Venture
Venrock Inc. Capital
Room 5600
30 Rockefeller Plaza
New York, NY 10112
Director Antonia M. Grumbach Partner in Patter- Law Firm
Patterson, Belknap, son, Belknap, Webb
Webb & Tyler LLP & Tyler
1133 Avenue of the
Americas
New York, NY 10036
Director, H. Marshall Schwarz Chairman of the Asset Management,
Chairman United States Trust Board & Chief Exe- Investment and
of the Board Company of New York cutive Officer of Fiduciary Services
and Chief 114 West 47th Street U.S. Trust Corp. and
Executive New York, NY 10036 U.S. Trust NY
Officer
Director Philippe de Montebello Director of the Art Museum
The Metropolitan Museum Metropolitan
of Art Museum of Art
1000 Fifth Avenue
New York, NY 10028-0198
Director Paul W. Douglas Retired Chairman of Coal Mining,
250 Park Avenue The Pittston Company Transportation
Suite 1800 and Security
New York, NY 10177 Services
Director Frederic C. Hamilton Chairman of the Investment and
The Hamilton Companies Board Venture Capital
1560 Broadway
Suite 2000
Denver, CO 80202
Director John H. Stookey Corporate Director
Per Scholas Inc. and Trustee
131 Walnut Avenue
Bronx, New York 10454
Director Robert N. Wilson Vice Chairman of Health Care
Johnson & Johnson the Board of Johnson Products
One Johnson & & Johnson
Johnson Plaza
New Brunswick, NJ 08933
-9-
<PAGE>
<TABLE>
<CAPTION>
Position
with U.S. Principal Type of
Trust NY Name Occupation Business
- ------------- -------------------- ------------------- ------------------
<S> <C> <C> <C>
Director Peter L. Malkin Chairman of Law Firm
Wein, Malkin LLP Wein, Malkin & Bettex
Lincoln Building
60 East 42nd Street
New York, NY 10165
Director David A. Olsen Vice Chairman Risk & Insurance
Marsh & McLennan, Inc. Services
125 Broad Street
New York, NY 10004
Director Richard F. Tucker Retired Vice Chairman- Petroleum
P.O.Box 2072 Mobil Oil Corporation and Chemicals
New York, NY 10163
Director Carroll L. Wainright, Consulting Partner Law Firm
Jr. of Milbank, Tweed,
Milbank, Tweed, Hadley Hadley & McCloy
& McCloy
One Chase Manhattan Plaza
New York, NY 10005
Director Ruth A. Wooden President & CEO Not for
The Advertising Profit Public
Council, Inc. Service
261 Madison Avenue Advertising
11th Floor
New York, NY 10016
Executive Paul K. Napoli Executive Asset Management,
Vice United States Trust Vice President Investment and
President Company of New York Fiduciary Services
114 West 47th Street
New York, NY 10036
Director and Maribeth S. Rahe Vice Chairman Asset Management,
Vice Chair- United States Trust Investment and
man Company of New York Fiduciary Services
114 West 47th Street
New York, NY 10036
Director, Frederick B. Taylor Vice Chairman and Asset Management,
Vice Chair- United States Trust Chief Investment Of- Investment and
man and Company of New York ficer of U.S. Trust Fiduciary Services
Chief Invest- 114 West 47th Street Corporation and United
ment Officer New York, NY 10036 States Trust Company
of New York
Director, Jeffrey S. Maurer President and Asset Management,
President, United States Trust Chief Operating Investment and
and Chief Company of New York Officer Fiduciary Services
Operating 114 West 47th Street
Officer New York, NY 10036
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
Position
with U.S. Principal Type of
Trust NY Name Occupation Business
- ------------- -------------------- ------------------- ------------------
<S> <C> <C> <C>
Trustee/ Daniel P. Davison Chairman, Christie, Fine Art
Director Christie, Manson Manson & Woods Auctioneer
& Woods International, Inc.
International,Inc.
502 Park Avenue
New York, NY 10021
Trustee/ Orson D. Munn Chairman and Investment
Director Munn, Bernhard & Director of Munn, Advisory
Associates, Inc. Bernhard & Asso- Firm
6 East 43rd Street ciates, Inc.
28th Floor
New York, NY 10017
Executive John L. Kirby Executive Asset Management,
Vice United States Trust Vice President Investment and
President Company of New York Fiduciary Services
114 West 47th Street
New York, NY 10030
Executive Kenneth G. Walsh Executive Asset Management,
Vice United States Trust Vice President Investment and
President Company of New York Fiduciary Services
114 West 47th Street
New York, NY 10030
Director Philip L. Smith Corporate Director and
P.O. Box 386 Trustee
Ponte Verde Beach,
FL 32004
Executive John C. Hoover, II Executive Asset Management,
Vice United States Trust Vice President Investment and
President Company of New York Fiduciary Services
114 West 47th Street
New York, NY 10030
Executive John M. Deignan Executive Asset Management,
Vice United States Trust Vice President Investment and
President Company of New York Fiduciary Services
114 West 47th Street
New York, NY 10030
</TABLE>
Item 29. Principal Underwriter
---------------------
(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, Excelsior Tax-Exempt Funds, Inc., Excelsior
Institutional Trust, Excelsior Funds, FTI Funds, FundManager Portfolios, Great
Plains Funds, Marketvest Funds, Marketvest Funds, Inc., Old Westbury Funds,
Inc., and WesMark Funds.
-11-
<PAGE>
(b) Names and Principal Positions and Offices with Offices with
Business Addresses the Distributor Registrant
------------------------- -------------------------- ------------
Lawrence Caracciolo Director and President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Arthur L. Cherry Director, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
J. Christopher Donahue Director, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas P. Sholes Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas P. Schmitt Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Thomas J. Ward Assistant Secretary, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
Kenneth W. Pegher, Jr. Treasurer, --
Federated Investors Tower Edgewood Services, Inc.
Pittsburgh, PA 15222-3779
(c) Not Applicable.
Item 30. Location of Accounts and Records
--------------------------------
1. United States Trust Company of New York, 114 W. 47th Street, New
York, NY 10036 (records relating to its functions as investment adviser and
transfer agent).
2. U.S. Trust Company of Connecticut, 225 High Ridge Road, East
Building, Stamford, Connecticut 06905 (records relating to its function as
investment adviser and co-administrator).
3. Edgewood Services, Inc., Clearing Operations, P.O. Box 897,
Pittsburgh, PA 15230-0897 (records relating to its function as distributor).
4. Chase Global Funds Services Company, 73 Tremont Street, Boston,
Massachusetts 02108-3913 (records relating to its function as co-administrator
and sub-transfer agent).
-12-
<PAGE>
5. Federated Administrative Services, Federated Investors Tower,
Pittsburgh, PA 15222-3799 (records relating to its function as co-
administrator).
6. The Chase Manhattan Bank, 3 Chase MetroTech Center, 8th Floor,
Brooklyn, NY 11245 (records relating to its function as custodian).
7. 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
------------
(1) Registrant undertakes to furnish each person to whom a prospectus
is delivered with a copy of Registrant's latest available Annual Report to
Shareholders upon request and without charge.
(2) Registrant hereby undertakes to file a post-effective amendment
with respect to the Emerging Markets Fund, using financial statements which need
not be certified, within four to six months from the effective date of this
Post-Effective Amendment to Registrant's 1933 Act registration statement.
-13-
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Excelsior Funds, Inc. has duly caused this Post-
Effective Amendment No. 30 to its Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Philadelphia and the Commonwealth of Pennsylvania on the 8th day of October,
1997.
EXCELSIOR FUNDS, INC.
Registrant
* Frederick S. Wonham
---------------------
Frederick S. Wonham, President
(Signature and Title)
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment No. 30 to Excelsior Funds, Inc.'s Registration Statement on
Form N-1A has been signed below by the following persons in the capacities and
on the dates indicated.
Signature Title Date
- ----------------------- ----------------------- ---------------
* Frederick S. Wonham
- -----------------------
Frederick S. Wonham Chairman of the Board, October 8, 1997
President and Treasurer
* Joseph H. Dugan
- -----------------------
Joseph H. Dugan Director October 8, 1997
* Donald L. Campbell
- --------------------
Donald L. Campbell Director October 8, 1997
* Wolfe J. Frankl
- -----------------
Wolfe J. Frankl Director October 8, 1997
* Robert A. Robinson
- --------------------
Robert A. Robinson Director October 8, 1997
* Alfred Tannachion
- -------------------
Alfred Tannachion Director October 8, 1997
* W. Wallace McDowell, Jr.
- -------------------------
W. Wallace McDowell, Jr. Director October 8, 1997
* Jonathan Piel
- ---------------
Jonathan Piel Director October 8, 1997
* Rodman L. Drake
- -----------------
Rodman L. Drake Director October 8, 1997
*By: /s/ W. Bruce McConnel, III
-----------------------------------------
W. Bruce McConnel, III, Attorney-in-Fact
-14-
<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 said attorney shall have full power and authority, to
do and perform in the name and on behalf of the undersigned in any and all
capacities, every act whatsoever requisite or necessary to be done, as fully and
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that said attorney may lawfully do or cause to be done by
virtue hereof.
Dated: May 16, 1997 /s/ Alfred C. Tannachion
-------------------------
Alfred C. Tannachion
<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 16, 1997 /s/ Donald L. Campbell
-----------------------
Donald L. Campbell
<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 16, 1997 /s/ Joseph H. Dugan
--------------------
Joseph H. Dugan
<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 16, 1997 /s/ Robert A. Robinson
-----------------------
Robert A. Robinson
<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 16, 1997 /s/ Wolfe J. Frankl
--------------------
Wolfe J. Frankl
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints W.
Bruce McConnel, III his true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, for him and in his name, place and
stead, in his capacity as director/trustee or officer, or both, to execute
amendments to Excelsior Funds, Inc.'s, Excelsior Tax-Exempt Funds, Inc.'s,
Excelsior Institutional Trust's and Excelsior Funds' (collectively, the
"Companies") respective Registration Statements on Form N-1A pursuant to the
Investment Company Act of 1940, as amended, and the Securities Act of 1933, as
amended (the "Acts") and all instruments necessary or incidental in connection
therewith pursuant to said Acts and any rules, regulations, or requirements of
the Securities and Exchange Commission in respect thereof, and to file the same
with the Securities and Exchange Commission, and said attorney shall have full
power and authority, to do and perform in the name and on behalf of the
undersigned in any and all capacities, every act whatsoever requisite or
necessary to be done, as fully and to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney may
lawfully do or cause to be done by virtue hereof.
Dated: May 16, 1997 /s/ Frederick S. Wonham
------------------------
Frederick S. Wonham
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, to execute amendments to Excelsior Funds, Inc.'s,
Excelsior Tax-Exempt Fund's, Excelsior Institutional Trust's and Excelsior
Funds' (collectively, the "Companies") respective Registration Statements on
Form N-1A pursuant to the Investment Company Act of 1940, as amended, and the
Securities Act of 1933, as amended (the "Acts") and all instruments necessary or
incidental in connection therewith pursuant to said Acts and any rules,
regulations, or requirements of the Securities and Exchange Commission in
respect thereof, and to file the same with the Securities and Exchange
Commission, and either of said attorneys shall have full power and authority, to
do and perform in the name and on behalf of the undersigned in any and all
capacities, every act whatsoever requisite or necessary to be done, as fully and
to all intents and purposes as he might or could do in person, hereby ratifying
and confirming all that either of said attorneys may lawfully do or cause to be
done by virtue hereof.
Dated: May 16, 1997 /s/ Rodman L. Drake
---------------------
Rodman L. Drake
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, to execute amendments to Excelsior Funds, Inc,'s,
Excelsior Tax-Exempt Funds, Inc.'s, Excelsior Institutional Trust's and
Excelsior Funds' (collectively, the "Companies") respective Registration
Statements on Form N-1A pursuant to the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended (the "Acts") and all
instruments necessary or incidental in connection therewith pursuant to said
Acts and any rules, regulations, or requirements of the Securities and Exchange
Commission in respect thereof, and to file the same with the Securities and
Exchange Commission, and either of said attorneys shall have full power and
authority, to do and perform in the name and on behalf of the undersigned in any
and all capacities, every act whatsoever requisite or necessary to be done, as
fully and to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that either of said attorneys may lawfully do or
cause to be done by virtue hereof.
Dated: May 16, 1997 /s/ W. Wallace McDowell
------------------------
W. Wallace McDowell
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
EXCELSIOR FUNDS
POWER OF ATTORNEY
-----------------
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
Frederick S. Wonham and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, to execute amendments to Excelsior Funds, Inc.'s,
Excelsior Tax-Exempt Funds, Inc.'s, Excelsior Institutional Trust's and
Excelsior Funds' (collectively, the "Companies") respective Registration
Statements on Form N-1A pursuant to the Investment Company Act of 1940, as
amended, and the Securities Act of 1933, as amended (the "Acts") and all
instruments necessary or incidental in connection therewith pursuant to said
Acts and any rules, regulations, or requirements of the Securities and Exchange
Commission in respect thereof, and to file the same with the Securities and
Exchange Commission, and either of said attorneys shall have full power and
authority, to do and perform in the name and on behalf of the undersigned in any
and all capacities, every act whatsoever requisite or necessary to be done, as
fully and to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that either of said attorneys may lawfully do or
cause to be done by virtue hereof.
Dated: May 17, 1997 /s/ Jonathan Piel
-------------------
Jonathan Piel
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
(1) (k) Articles Supplementary of Registrant dated September 11, 1997 and
filed on September 15, 1997.
(2) (a) Amended and Restated By-Laws of Registrant dated February 2, 1995.
(2) (b) Amendment No. 1 to By-Laws of Registrant dated May 16, 1997.
(5) (b) Amendment No. 1 dated July 25, 1997 to the Investment Advisory
Agreement among Registrant, U.S. Trust Company of Connecticut and
United States Trust Company of New York dated May 16, 1997 (adding
the Large Cap Growth and Real Estate Funds).
(6) (b) Amended Exhibit A dated September 24, 1997 to the Distribution
Contract dated August 1, 1995 between Registrant and Edgewood
Services, Inc.
(8) Custody Agreement between Registrant and The Chase Manhattan Bank
dated September 1, 1995 (as amended and restated on August 1, 1997).
(9) (a) Amended and Restated Administrative Services Plan and Related Form
of Shareholder Servicing Agreement.
(9) (c) Mutual Funds Transfer Agency Agreement dated as of September 1, 1995
between Registrant and United States Trust Company of New York.
(9) (d) Mutual Funds Sub-Transfer Agency Agreement dated as of September 1,
1995 between United States Trust Company of New York and Chase
Global Funds Services Company.
(11) Consent of Drinker Biddle & Reath LLP.
(13) (d) Purchase Agreement between Registrant and Edgewood Services, Inc.
dated September 25, 1997.
<PAGE>
EXHIBIT (1)(k)
EXCELSIOR FUNDS, INC.
ARTICLES SUPPLEMENTARY
Excelsior Funds, Inc., a Maryland Corporation having its principal office
in the City of Baltimore, Maryland (hereinafter called the "Company"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to Section 2-208 of the Maryland General Corporation Law,
the Board of Directors of the Company (the "Board") has classified Five Hundred
Million (500,000,000) shares of the Company's authorized but unissued and
unclassified shares of capital stock, of the par value of One Mill ($.001) per
share, as Class U Common Stock, of the par value of One Mill ($.001) per share,
and Five Hundred Million (500,000,000) shares of the Company's authorized but
unissued and unclassified shares of capital stock, of the par value of One Mill
($.001) per share, as Class V Common Stock, of the par value of One Mill ($.001)
per share, pursuant to the following resolutions adopted at a regular meeting of
the Board held on July 25, 1997:
RESOLVED, that pursuant to the authority expressly given to the Board
in Article VI of the Company's Charter, the Board hereby classifies Five
Hundred Million (500,000,000) of the Company's authorized but unissued and
unclassified shares as Class U Common Stock (with an aggregate par value of
Five Hundred Thousand Dollars ($500,000)), and Five Hundred Million
(500,000,000) of the Company's authorized but unissued and unclassified
shares as Class V Common Stock (with an aggregate par value of Five Hundred
Thousand Dollars ($500,000)); and
FURTHER RESOLVED, that each share of Class U Common Stock and Class V
Common Stock shall have all the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications,
and terms and conditions of redemption as set forth in the Company's
Charter.
SECOND: The shares of capital stock of the Company classified pursuant to
the resolutions set forth herein have been classified by the Board under the
authority contained in the Charter of the Company.
THIRD: These Articles Supplementary do not increase the total number of
shares that the Company is authorized to issue or the aggregate par value
thereof. The total number of shares of capital stock which the Company is
presently authorized to issue
<PAGE>
remains Thirty-Five Billion (35,000,000,000) shares of capital stock of the par
value of One Mill ($0.001) per share and of the aggregate par value of Thirty-
Five Million Dollars ($35,000,000), classified or remaining unclassified as
follows:
Class A Common Stock: One Billion Five Hundred Million
--------------------
(1,500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of One Million
Five Hundred Thousand Dollars ($1,500,000);
Class A Common Stock -- Special Series 1: One Billion (1,000,000,000)
----------------------------------------
shares of capital stock of the Company of the par value of One Mill
($0.001) per share and of the aggregate par value of One Million Dollars
($1,000,000);
Class B Common Stock: One Billion Five Hundred Million
--------------------
(1,500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of One Million
Five Hundred Thousand Dollars ($1,500,000);
Class B Common Stock -- Special Series 1: One Billion (1,000,000,000)
----------------------------------------
shares of capital stock of the Company of the par value of One Mill
($0.001) per share and of the aggregate par value of One Million Dollars
($1,000,000);
Class C Common Stock: Three Hundred Seventy Five Million
--------------------
(375,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Three Hundred
Seventy Five Thousand Dollars ($375,000);
Class C Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class D Common Stock: Three Hundred Seventy Five Million
--------------------
(375,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Three Hundred
Seventy Five Thousand Dollars ($375,000);
Class D Common Stock -- Special Series 1: Three Hundred Seventy Five
----------------------------------------
Million (375,000,000) shares of capital stock of the Company of the par
value of One Mill ($0.001) per share and of the aggregate par value of
Three Hundred Seventy Five Thousand Dollars ($375,000);
-2-
<PAGE>
Class E Common Stock: Three Hundred Seventy Five Million (375,000,000)
--------------------
shares of capital stock of the Company of the par value of One Mill
($0.001) per share and of the aggregate par value of Three Hundred Seventy
Five Thousand Dollars ($375,000);
Class E Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class F Common Stock: Three Hundred Seventy Five Million
--------------------
(375,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Three Hundred
Seventy Five Thousand Dollars ($375,000);
Class F Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class G Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class G Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class H Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class H Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class I Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the
-3-
<PAGE>
aggregate par value of Five Hundred Thousand Dollars ($500,000);
Class I Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class J Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class J Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class K Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class K Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class L Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class L Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class M Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
-4-
<PAGE>
Class M Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class N Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class N Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class O Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class O Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class P Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class P Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class Q Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class Q Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and
-5-
<PAGE>
of the aggregate par value of Five Hundred Thousand Dollars ($500,000);
Class R Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class R Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class S Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class S Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class T Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000);
Class T Common Stock -- Special Series 1: Five Hundred Million
----------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mill ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
Class U Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000); and
Class V Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mill ($0.001) per
share and of the aggregate par value of Five Hundred Thousand Dollars
($500,000).
-6-
<PAGE>
The total number of authorized and unclassified shares of capital stock of
the Company remaining after the actions described above is Eleven Billion Six
Hundred Twenty-Five Million (11,625,000,000) shares of capital stock of the par
value of One Mill ($0.001) per share and of the aggregate par value of Eleven
Million Six Hundred Twenty-Five Thousand Dollars ($11,625,000).
-7-
<PAGE>
IN WITNESS WHEREOF, Excelsior Funds, Inc. has caused these presents to be
signed in its name and on its behalf by its President and its Corporate Seal to
be herewith affixed and attested to by its Secretary as of September 11, 1997.
EXCELSIOR FUNDS, INC.
[SEAL]
Attest:
/s/ W. Bruce McConnel, III By:/s/ Frederick S. Wonham
- ------------------------- -----------------------
W. Bruce McConnel, III Frederick S. Wonham
Secretary President
-8-
<PAGE>
CERTIFICATE
THE UNDERSIGNED, President of Excelsior Funds, Inc., who executed on behalf
of said Corporation the attached Articles Supplementary of said Corporation, of
which this Certificate is made a part, hereby acknowledges, in the name and on
behalf of said Corporation, the attached Articles Supplementary to be the
corporate act of said Corporation, and certifies that to the best of his
knowledge, information and belief the matters and facts set forth in the
attached Articles Supplementary with respect to authorization and approval are
true in all material respects, under the penalties for perjury.
/s/ Frederick S. Wonham
-----------------------
Frederick S. Wonham
President
Dated as of: September 11, 1997
<PAGE>
EXHIBIT (2)(a)
Amendment and Restated By-Laws
EXCELSIOR FUNDS, INC.
BY-LAWS
ARTICLE I
---------
STOCKHOLDERS
------------
SECTION 1. Annual Meetings. The Corporation is not required to hold
---------------
an annual stockholder meeting in any year in which the election of directors is
not required by the Investment Company Act of 1940, as amended (the "1940 Act").
If the Corporation is required to hold a meeting of stockholders to elect
directors, such meeting shall be designated an annual meeting and shall be held
at the registered office of the Corporation, or at such other place, within the
United States of America, within or without the State of Maryland, as may be
determined by the Board of Directors and as shall be designated in the notice of
said meeting, on such day and at such time as shall be specified by the Board of
Directors for the purpose of electing directors and for the transaction of such
other business as may properly be brought before the meeting.
SECTION 2. Special Meetings. Special meetings of the stockholders
----------------
for any purpose or purposes, unless otherwise prescribed by statute or by the
Charter, may be held at any place, within the United States of America, within
or without the State of Maryland, and may be called at any time by the Board of
Directors or by the President, and shall be called by the President or Secretary
at the request in writing of a majority of the Board or at the request in
writing of stockholders entitled to cast at least twenty-five (25) percent of
all the votes entitled to be cast at such meeting. Such request shall state the
purpose or purposes of the proposed meeting and the matters proposed to be acted
on at it; provided, however, that unless requested by stockholders entitled to
cast a majority of all the votes entitled to be cast at the meeting, a special
meeting need not be called to consider any matter which is substantially the
same as a matter voted on at any special meeting of the stockholders held during
the preceding twelve (12) months.
SECTION 3. Notice of Meetings and Shareholder - List. Written or
-----------------------------------------
printed notice of the purpose or purposes and of the time and place of every
meeting of the stockholders shall be given by the Secretary of the Corporation
to each stockholder of record entitled to vote at the meeting and each other
stockholder entitled to notice of the meeting, by placing such notice in the
mail at least ten (10) days, but not more than ninety (90) days, and in any
event within the period prescribed by law, prior to
<PAGE>
the date named for the meeting addressed to each stockholder at his address
appearing on the books of the Corporation or supplied by him to the Corporation
for the purpose of notice. The notice of every meeting of stockholders may be
accompanied by a form of proxy approved by the Board of Directors in favor of
such actions or persons as the Board of Directors may select. At least five (5)
days prior to each meeting of stockholders, the officer or agent having charge
of the share transfer books of the Corporation shall make a complete list of
stockholders entitled to vote at such meeting in alphabetical order with the
address of and the number of shares held by each stockholder.
SECTION 4. Record Date. The Board of Directors may fix a date not
-----------
more than ninety (90) days preceding the date of any meeting of stockholders, or
the date fixed for the payment of any dividend, or the date of the allotment of
rights or the date when any change or conversion or exchange of shares shall go
into effect, as a record date for the determination of stockholders entitled to
notice of, or to vote at, any such meeting (or any adjournment thereof) or
entitled to receive payment of any dividend, or to receive such allotment of
rights, or to exercise such rights, as the case may be. In such case, only
stockholders of record at the close of business on the date so fixed shall be
entitled to vote, to receive notice, or receive dividends or rights, or to
exercise rights, notwithstanding any subsequent transfer on the books of the
Corporation. The Board of Directors shall not close the books of the
Corporation against transfers of shares during the whole or any part of such
period. In the case of a meeting of stockholders, the record date shall be
fixed not less than ten (10) days prior to the date of the meeting.
SECTION 5. Quorum and Shareholder Action. Except as otherwise
-----------------------------
provided by statute or by the Charter, the presence in person or by proxy of
stockholders of the Corporation entitled to cast at least a majority of all the
votes entitled to be cast at the meeting (without regard to class) shall
constitute a quorum at any meeting of the stockholders, except with respect to
any matter that affects only one or more classes of stock or any matter that,
under the Charter or applicable law, requires approval by a separate vote of one
or more classes of stock, in which case the presence in person or by proxy of
stockholders of the Corporation entitled to cast at least a majority of all of
the votes of the separate class or classes, as the case may be, entitled to be
cast on such matter shall constitute a quorum; and, at a meeting at which a
quorum is present, a majority of all the votes cast and entitled to vote on a
matter at the meeting shall be sufficient to approve any such matter which
properly comes before the meeting. In the absence of a quorum, the stockholders
present in person or by proxy, by majority vote and without notice other than by
announcement at the meeting, may adjourn the meeting from time to time as
provided in Section 7 of this Article I until a quorum shall attend. The
stockholders
-2-
<PAGE>
present at any duly organized meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough stockholders to leave less
than a quorum.
SECTION 6. Organization. At every meeting of the stockholders, the
------------
Chairman of the Board, if one has been selected and is present or, if not, the
President, or in the absence of the Chairman of the Board and the President, a
Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a chairman chosen by the stockholders, shall act as
chairman; and the Secretary, or in his absence, an Assistant Secretary, or in
the absence of the Secretary and all the Assistant Secretaries, a person
appointed by the chairman, shall act as secretary.
SECTION 7. Adjournment. Any meeting of the stockholders may be
-----------
adjourned from time to time, without notice other than by announcement at the
meeting at which such adjournment is taken, and at any such adjourned meeting at
which a quorum shall be present any action may be taken that could have been
taken at the meeting originally called; provided, that the meeting may not be
adjourned to a date more than the number of days after the original record date
for the meeting permitted by law, and if after the adjournment a new record date
is fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the adjourned meeting.
ARTICLE II
----------
BOARD OF DIRECTORS
------------------
SECTION 1. Election and Powers. The number of directors shall
-------------------
be.fixed from time to time by resolution of the Board of Directors adopted by a
majority of the directors then in office; provided, however, that the number of
directors shall in no event be less than three (3) nor more than fifteen (15),
except that (a) if there is no stock outstanding the number of directors may be
less than three (3) but not less than one (1), and (b) if there is stock
outstanding and so long as there are less than three (3) stockholders, the
number of directors may be less than three (3) but not less than the number of
stockholders. The business, affairs and property of the Corporation shall be
managed by the Board of Directors, which may exercise all such powers of the
Corporation and do all such lawful acts and things as are not by statute, the
Charter or these By-Laws required to be exercised or done by the stockholders.
Subject to the provisions of Article 1, Section 1, the members of the Board of
Directors shall be elected by the stockholders at their annual meeting and each
director shall hold office until the annual
-3-
<PAGE>
meeting next after his election and until his successor shall have been duly
elected and qualified, until he shall have resigned, or until he shall have been
removed as provided in Sections 10 and 11 of this Article II.
SECTION 2. Regular Meetings. Regular meetings of the Board of
----------------
Directors may be held without notice on such dates as the Board may from time to
time determine.
SECTION 3. Special Meetings. Special meetings of the Board of
----------------
Directors shall be held whenever called by the Chairman of the Board, the
President or by a majority of the directors either in writing or by vote at a
meeting.
SECTION 4. Notice of Special Meetings. Notice of the place, day and
--------------------------
hour of every special meeting shall be delivered personally to each director or
mailed, telegraphed or cabled to his address on the books of the Corporation at
least one (1) day before the meeting. It shall not be requisite to the validity
of any meeting of the Board of Directors that notice thereof shall have been
given to any director who is present thereat, or, if absent, waives notice
thereof in writing filed with the records of the meeting either before or after
the holding thereof.
SECTION 5. Place of Meetings. The Board of Directors may hold its
-----------------
regular and special meetings at such place or places within or without the State
of Maryland as the Board may from time to time determine.
SECTION 6. Quorum and Board Action. Except as otherwise provided by
-----------------------
statute or by the Charter: (a) one-third (1/3) of the entire Board of Directors,
but in no case less than two (2) directors (unless there is only one (1)
director of the Corporation, in which event one (1) director), shall be
necessary to constitute a quorum for the transaction of business at each meeting
of the Board; (b) the action of a majority of the directors present at a meeting
at which a quorum is present shall be the action of the Board; and (c) if at any
meeting there be less than a quorum present, a majority of those directors
present may adjourn the meeting from time to time, but not for a period greater
than thirty (30) days at any one time, without notice other than by announcement
at the meeting until a quorum shall attend. At any such adjourned meeting at
which a quorum shall be present, any business may be transacted which might have
been transacted at the meeting as originally scheduled.
SECTION 7. Chairman. The Board of Directors may at any time appoint
--------
one of its members as Chairman of the Board, who shall serve at the pleasure of
the Board and who shall perform and execute such duties and powers as may be
conferred upon or assigned to him by the Board or these By-Laws, but who shall
not by reason of performing and executing these duties and powers be
-4-
<PAGE>
deemed an officer or employee of the Corporation.
SECTION 8. Organization. At every meeting of the Board of Directors,
------------
the Chairman of the Board, if one has been selected and is present, and, if not,
the President, or in the absence of the Chairman of the Board and the President,
a Vice President, or in the absence of the Chairman of the Board, the President
and all the Vice Presidents, a chairman chosen by a majority of the directors
present, shall preside; and the Secretary, or in his absence, an Assistant
Secretary, or in the absence of the Secretary and all the Assistant Secretaries,
a person appointed by the chairman, shall act as secretary.
SECTION 9. Vacancies. Any vacancy on the Board of Directors
----------
occurring by reason of any increase in the number of directors may be filled by
a majority of the entire Board of Directors then in office. Any vacancy on the
Board of Directors occurring for any other cause may be filled by a majority of
the remaining members of the Board of Directors, whether or not these members
constitute a quorum under Section 6 of this Article II. Any director so chosen
to fill a vacancy shall hold office until the next annual meeting of
stockholders and until his successor shall have been duly elected and qualified.
SECTION 10. Removal. At any meeting of the stockholders called for
-------
that purpose, the stockholders of the Corporation may remove from office any
director, with or without cause, by the affirmative vote of a majority of the
votes entitled to be cast for the election of directors, and another director
may be elected in the place of the director so removed to serve for the
remainder of the term of the removed director.
SECTION 11. Resignations. Any director may resign at any time by
------------
giving written notice to the Board of Directors, the President or the Secretary.
Any such resignation shall take effect at the time of the receipt of such notice
or at any later time specified therein; and unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
SECTION 12. Committees. The Board of Directors may appoint from
----------
among its members an executive and other committees of the Board composed of two
(2) or more directors. To the extent permitted by law, the Board of Directors
may delegate to any such committee or committees any of the powers of the Board
of Directors in the management of the business, affairs and property of the
Corporation and may authorize any such committee or committees to cause the seal
of the Corporation to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors. Each committee
shall keep regular minutes of its meetings and report
-5-
<PAGE>
the same to the Board of Directors when required. The members of a committee
present at any meeting, whether or not they constitute a quorum, may appoint a
director to act in the place of an absent member.
SECTION 13. Telephone Conference. Members of the Board of Directors
--------------------
or any committee thereof may participate in a meeting of the Board or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other
at the same time, and participation by such means shall constitute presence in
person at the meeting.
SECTION 14. Written Consent. Any action required or permitted to be
---------------
taken at any meeting of the Board of Directors or any committee thereof may be
taken without a meeting, if a written consent to such action is signed by all
members of the Board or of such committee, as the case be, and such written
consent is filed with the minutes of proceedings of the Board or committee.
SECTION 15. Compensation of Directors. Any director, whether or not
--------------------------
he is a compensated officer, employee, agent or contractor of the Corporation,
may be compensated for his services as director or as a member of a committee,
or as Chairman of the Board or chairman of a committee, and in addition may be
reimbursed for transportation and other expenses, all in such manner and amounts
as the directors may from time to time determine.
ARTICLE III
-----------
OFFICERS
--------
SECTION 1. Number. The officers of the Corporation shall be a
------
President, a Secretary and a Treasurer, and may include one or more Vice
Presidents, one or more Assistant Secretaries, one or more Assistant Treasurers,
and such other officers as the Board of Directors may from time to time
determine. Any officer may hold more than one office in the Corporation, except
that an officer may not serve concurrently as both the President and a Vice
President.
SECTION 2. Election and Term of Office. The officers of the
---------------------------
Corporation shall be elected by the Board of Directors and, subject to earlier
termination of office, each officer shall hold office for one year and until his
successor shall have been elected and qualified.
SECTION 3. Resignations. Any officer may resign at any time by
------------
giving written notice to the Board of Directors or to
-6-
<PAGE>
the President or the Secretary of the Corporation. Any such resignation shall
take effect at the date of the receipt of such notice or at any later time
specified therein; and, unless otherwise specified therein, the acceptance of
such resignation shall not be necessary to make it effective.
SECTION 4. Removal. If the Board of Directors in its judgment finds
-------
that the best interests of the Corporation will be served, the Board may remove
any officer of the Corporation at any time.
SECTION 5. President. The President shall be the chief executive
---------
officer of the Corporation and shall have general supervision over the business
and operations of the Corporation, subject, however, to the control of the Board
of Directors. He, or such persons as he shall designate, shall sign, execute,
acknowledge, verify, deliver and accept, in the name of the Corporation, deeds,
mortgages, bonds, contracts and other instruments authorized by the Board of
Directors, except in the case where the signing, execution, acknowledgement,
verification, delivery or acceptance thereof shall be delegated by the Board to
some other officer or agent of the Corporation; and, in general, he shall have
general executive powers as well as other powers and duties as from time to time
may be conferred upon or assigned to him by the Board.
SECTION 6. The Vice Presidents. In the absence or disability of the
-------------------
President, or when so directed by the President, any Vice President designated
by the Board of Directors may perform any or all of the duties of the President,
and, when so acting, shall have all the powers of, and be subject to all the
restrictions upon, the President; provided, however, that no Vice President
shall act as a member of or as chairman of any committee of which the President
is a member or chairman by designation or ex-officio, except when designated by
the Board. Each Vice President shall perform such other duties as from time to
time may be conferred upon or assigned to him by the Board or the President.
SECTION 7. The Secretary. The Secretary shall record all the votes
-------------
of the stockholders and of the directors and the minutes of the meetings of the
stockholders and of the Board of Directors in a book or books to be kept for
that purpose; he shall see that notices of meetings of the stockholders and the
Board of Directors are given and that all records and reports are properly kept
and filed by the Corporation as required by law; he shall be the custodian of
the seal of the Corporation and shall see that it is affixed to all documents to
be executed on behalf of the Corporation under its seal, provided that in lieu
of affixing the corporate seal to any document, it shall be sufficient to meet
the requirements of any law, rule or
-7-
<PAGE>
regulation relating to a corporate seal to affix the word "(SEAL)" adjacent to
the signature of the authorized officer of the Corporation; and, in general, he
shall perform all duties incident to the office of Secretary, and such other
duties as from time to time may be conferred upon or assigned to him by the
Board or the President.
SECTION 8. Assistant Secretaries. In the absence or disability of
---------------------
the Secretary, or when so directed by the Secretary, any Assistant Secretary may
perform any or all of the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Secretary.
Each Assistant Secretary shall perform such other duties as from time to time
may be conferred upon or assigned to him by the Board of Directors, the
President or the Secretary.
SECTION 9. The Treasurer. Subject to the provisions of any contract
-------------
which may be entered into with any custodian pursuant to authority granted by
the Board of Directors, the Treasurer shall have charge of all receipts and
disbursements of the Corporation and shall have or provide for the custody of
its funds and securities; he shall have full authority to receive and give
receipts for all money due and payable to the Corporation, and to endorse
checks, drafts and warrants, in its name and on its behalf, and to give full
discharge for the same; he shall deposit all funds of the Corporation, except
such as may be required for current use, in such banks or other places of
deposit as the Board of Directors may from time to time designate; and, in
general, he shall perform all duties incident to the office of Treasurer and
such other duties as from time to time may be conferred upon or assigned to him
by the Board or the President.
SECTION 10. Assistant Treasurers. Each Assistant Treasurer shall
--------------------
exercise such powers and perform such duties as shall be determined from time to
time by the Board of Directors or the President.
SECTION 11. Compensation of Officers. The compensation of all
------------------------
officers shall be fixed from time to time by the Board of Directors, or any
committee or officer authorized by the Board so to do. No officer shall be
precluded, except as determined by the Board of Directors or any such committee
thereof, from receiving such compensation by reason of the fact that he is also
a director of the Corporation.
-8-
<PAGE>
ARTICLE IV
----------
STOCK
-----
SECTION 1. Certificates. Each stockholder shall be entitled upon
------------
written request to a stock certificate or certificates, representing and
certifying the number and kind of full shares held by him signed by the
President, a Vice President or the Chairman of the Board and counter-signed by
the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer,
which signatures may be either manual or facsimile signatures, and sealed with
the seal of the Corporation, which seal may be either facsimile or any other
form of seal. Stock certificates shall be in such form, not inconsistent with
law or with the Charter, as shall be approved by the Board of Directors.
SECTION 2. Transfer of Shares. Transfers of shares shall be made on
------------------
the books of the Corporation at the direction of the person named on the
Corporation's books or named in the certificate or certificates for such shares
(if issued), or by his attorney lawfully constituted in writing, upon surrender
of such certificate or certificates (if issued) properly endorsed, together with
a proper request for redemption, to the Corporation's Transfer Agent, with such
evidence of the authenticity of such transfer, authorization and such other
matters as the Corporation or its agents may reasonably require, and subject to
such other reasonable terms and conditions as may be required by the Corporation
or its agents; or, if the Board of Directors shall by resolution so provide,
transfer of shares may be made in any other manner permitted by law.
SECTION 3. Transfer Agents and Registrars. The Corporation may have
------------------------------
one or more Transfer Agents and one or more Registrars of its stock, whose
respective duties the Board of Directors may, from time to time, define. No
certificate of stock shall be valid until countersigned by a Transfer Agent, if
the Corporation shall have a Transfer Agent, or until registered by a Registrar,
if the Corporation shall have a Registrar. The duties of Transfer Agent and
Registrar may be combined.
SECTION 4. Mutilated, Lost, Stolen or Destroyed Certificates. The
-------------------------------------------------
Board of Directors, by standing resolution or by resolutions with respect to
particular cases, may authorize the issuance of a new stock certificate in lieu
of any stock certificate lost, stolen, destroyed or mutilated, upon such terms
and conditions as the Board may direct. The Board may in its discretion refuse
to issue such a new certificate, unless ordered to do so by a court of competent
jurisdiction.
SECTION 5. Stock Ledgers. The Corporation shall not be required to
-------------
keep original or duplicate stock ledgers at its principal office in the City of
Baltimore, Maryland, but stock
-9-
<PAGE>
ledgers shall be kept at the respective offices of the Transfer Agents of the
Corporation's capital stock.
ARTICLE V
---------
SEAL
----
The seal of the Corporation shall be in such form as the Board of
Directors shall prescribe.
ARTICLE VI
----------
SUNDRY PROVISIONS
-----------------
SECTION 1. Amendments. (a) By Stockholders. By-Laws may be adopted,
----------
altered, amended or repealed in the manner provided in Section 5 of Article I
hereof at any annual or special meeting of the stockholders.
(b) By Directors. By-Laws may be adopted, altered, amended or
repealed in the manner provided in Section 6 of Article II hereof by the Board
of Directors at any regular or special meeting of the Board.
SECTION 2. Indemnification of Directors and Officers
-----------------------------------------
(a) Indemnification. Any person who was or is a party or is threatened to be
---------------
made a party in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is a current or former director or officer of the Corporation,
or is or was serving while a director or officer of the Corporation at the
request of the Corporation as a director, officer, partner, trustee, employee,
agent or fiduciary of another corporation, partnership, joint venture, trust,
enterprise or employee benefit plan, shall be indemnified by the Corporation
against judgments, penalties, fines, excise taxes, settlements and reasonable
expenses (including attorney's fees) actually incurred by such person in
connection with such action, suit or proceeding to the full extent permissible
under the General Laws of the State of Maryland, the Securities Act of 1933 and
the Investment Company Act of 1940, as such statutes are now or hereafter in
force, except that such indemnity shall not protect any such person against any
liability to the Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
(b) Advances. Any current or former director or officer of the
--------
Corporation claiming indemnification within the
-10-
<PAGE>
scope of this Section 2 shall be entitled to advances from the Corporation for
payment of the reasonable expenses incurred by him in connection with
proceedings to which he is a party in the manner and to the full extent
permissible under the General Laws of the State of Maryland, the Securities Act
of 1933 and the Investment Company Act of 1940, as such statutes are now or
hereafter in force.
(c) Procedure. On the request of any current or former director or
---------
officer requesting indemnification or an advance under this Section 2, the Board
of Directors shall determine, or cause to be determined, in a manner consistent
with the General Laws of the State of Maryland, the Securities Act of 1933 and
the Investment Company Act of 1940, as such statutes are now or hereafter in
force, whether the standards required by this Section 2 have been met.
(d) Other Rights. The indemnification provided by this Section 2
------------
shall not be deemed exclusive of any other right, in respect of indemnification
or otherwise, to which those seeking such indemnification may be entitled under
any insurance or other agreement, vote of stockholders or disinterested
directors or otherwise, both as to action by a director or officer of the
Corporation in his official capacity and as to action by such person in another
capacity while holding such office or position, and shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators of such a person.
-11-
<PAGE>
EXHIBIT (2)(b)
EXCELSIOR FUNDS, INC.
Amendment of By-Laws as adopted at the Regular Meeting
of the Board of Directors held May 16, 1997
RESOLVED, that ARTICLE I, SECTION 6 of Excelsior Funds, Inc.'s By-Laws
be, and hereby is, amended and restated in its entirety as follows:
SECTION 6. Organization. At every meeting of the stockholders,
------------
the Chairman of the Board, if one has been selected and is present or, if
not, the President, or in the absence of the Chairman of the Board and the
President, a Vice President, or in the absence of the Chairman of the
Board, the President and all the Vice Presidents, a chairman chosen by the
Chairman of the Board, the President, a Vice President or the Secretary,
shall act as chairman; and the Secretary, or in his absence, an Assistant
Secretary, or in the absence of the Secretary and all the Assistant
Secretaries, a person appointed by the Chairman of the Board, the
President, a Vice President, the Secretary or the chairman of the meeting
of stockholders, shall act as secretary.
<PAGE>
EXHIBIT (5)(b)
EXCELSIOR FUNDS, INC.
AMENDMENT NO. 1
TO
INVESTMENT ADVISORY AGREEMENT
WHEREAS, Excelsior Funds, Inc. (the "Company"), U.S. Trust Company of
Connecticut ("USTCT") and United States Trust Company of New York ("USTNY")
desire to amend the Investment Advisory Agreement of May 16, 1997 (the
"Agreement") by and among them to include the Real Estate and Large Cap Growth
Funds as investment portfolios for which USTCT and USTNY render investment
advisory and other services; and
WHEREAS, USTCT and USTNY are willing to render such services to the Company
with respect to the Real Estate and Large Cap Growth Funds;
The parties hereto, intending to be legally bound hereby, agree that the
Agreement is amended as follows:
1. The third paragraph of the preamble to the Agreement shall
henceforth read:
"WHEREAS, the Company desires to retain the Investment Adviser to
render investment advisory and other services to the Company for its
Money Fund, Government Money Fund, Equity Fund, Early Life Cycle Fund,
Long-Term Supply of Energy Fund, Productivity Enhancers Fund,
Environmentally-Related Products and Services Fund, Aging of America
Fund, Communication and Entertainment Fund, Business and Industrial
Restructuring Fund, Global Competitors Fund, Emerging Americas Fund,
Pacific/Asia Fund, Pan European Fund, Short-Term Government Securities
Fund, Intermediate-Term Managed Income Fund, Real Estate Fund and
Large Cap Growth Fund portfolios (collectively, the "Funds"), and the
Investment Adviser is willing to so render such services;
Compensation. For the services provided and the expenses assumed
------------
pursuant to this Agreement, the Company will pay the Investment Adviser and the
Investment Adviser will accept as full compensation therefor a fee, computed
daily and payable monthly, at the following annual rates: .25% of the average
daily net assets of each of the Money Fund and the Government Money Fund; .75%
of the average daily net assets of the Equity Fund and the Large Cap Growth
Fund; .60% of the average daily net assets of each of the Early Life Cycle Fund,
the Long-Term Supply of Energy Fund, the Productivity Enhancers Fund, the
Environmentally-Related Products and Services Fund, the Aging of
<PAGE>
America Fund, the Communication and Entertainment Fund, the Business and
Industrial Restructuring Fund and the Global Competitors Fund; 1% of the average
daily net assets of each of the Emerging Americas Fund, Pacific/Asia Fund, Pan
European Fund and the Real Estate Fund; .30% of the average daily net assets of
the Short-Term Government Securities Fund; and .35% of the average daily net
assets of the Intermediate-Term Managed Income Fund.
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have caused this instrument to be executed by their officers designated
below as of July 25, 1997.
EXCELSIOR FUNDS, INC.
By: /s/ Frederick S. Wonham
------------------------
its: President
------------------------
UNITED STATES TRUST COMPANY OF
NEW YORK
By: /s/ Kenneth G. Walsh
--------------------
its: Executive Vice President
------------------------
UNITED STATES TRUST COMPANY OF
CONNECTICUT
By: /s/ W. Michael Funck
-------------------------
its: President & CEO
------------------------
-2-
<PAGE>
EXHIBIT (6)(b)
Amended Exhibit A to the
Distribution Contract
EXCELSIOR FUNDS, INC.
---------------------
Money Fund
Government Money Fund
Treasury Money Fund
Short-Term Government Securities Fund
Intermediate-Term Managed Income Fund
Managed Income Fund
Blended Equity Fund
Income and Growth Fund
Energy and Natural Resources Fund
Productivity Enhancers Fund
Environmentally-Related Products and Services Fund
Aging of America Fund
Communication and Entertainment Fund
Value and Restructuring Fund
Global Competitors Fund
Small Cap Fund
International Fund
Latin America Fund
Pacific/Asia Fund
Pan European Fund
Large Cap Growth Fund
Real Estate Fund
In consideration of the mutual covenants set forth in the Distribution
Contract dated August 1, 1995 and last approved as of May 16, 1997 between
Excelsior Funds, Inc. (formerly known as UST Master Funds, Inc.) and Edgewood
Services, Inc., Excelsior Funds, Inc. and Edgewood Services, Inc. execute and
deliver this intending to be legally bound hereby and intending this to be
Exhibit A to said Distribution Contract.
Witness the due execution hereof this 24th day of September, 1997.
EXCELSIOR FUNDS, INC.
/s/ Frederick S. Wonham
------------------------------
Frederick S. Wonham
President
EDGEWOOD SERVICES, INC.
/s/ Kenneth U. Pegher, Jr.
---------------------------
Name:Kenneth U. Pegher, Jr.
Title:Treasurer
<PAGE>
EXHIBIT (8)
CUSTODY AGREEMENT
-----------------
AGREEMENT effective as of September 1, 1995 (as amended and restated on
August 1, 1997) between THE CHASE MANHATTAN BANK ("Bank") and EXCELSIOR FUNDS,
INC., a Maryland corporation (the "Fund").
WITNESSETH:
WHEREAS, the Fund wishes to retain Bank to provide custodian services to
the Fund for the benefit of the investment portfolios of the Fund listed on
Exhibit A hereto, as the same may be amended from time to time by the parties
hereto (each a "Portfolio," collectively, "Portfolios"), and Bank 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. Custody Account. The Bank agrees to establish and maintain (a) a
---------------
separate custody account for each Portfolio of the Fund ("Custody Account") for
any and all stocks, shares, bonds, debentures, notes, mortgages or other
obligations for the payment of money and any certificates, receipts, warrants or
other instruments representing rights to receive, purchase or subscribe for the
same or evidencing or representing any other rights or interests therein and
other similar property (hereinafter called "Securities") from time to time
received by the Bank or any subcustodian (as defined in the second paragraph of
Section 3 hereof) for the account of the particular Portfolio of the Fund and
(b) a separate deposit account(s) in the
<PAGE>
name of each Portfolio of the Fund ("Deposit Account") for any and all cash and
cash equivalents in any currency received by the Bank or any subcustodian for
the account of the particular Portfolio of the Fund, which cash shall not be
subject to withdrawal by draft or check. The term "Property" as used herein
shall mean all Securities, cash, cash equivalents and other assets of the Fund.
2. Maintenance of Property Domestically and Abroad. Securities in a
-----------------------------------------------
Custody Account shall be held in the country or other jurisdiction in which the
principal trading market for such Securities is located or the country of other
jurisdiction in which such Securities are to be presented for payment or are
acquired for the Custody Account, and cash in a Deposit Account shall be
credited to an account in such country or other jurisdiction in which such cash
may be legally deposited or is the legal currency for the payment of public or
private debts. Cash may be held pursuant to Instructions (as defined in Section
9 hereof) in either interest or non-interest bearing accounts as may be
available for the particular currency. To the extent Instructions are issued
and the Bank can comply with such Instructions, the Bank is authorized to
maintain cash balances on deposit for the Fund with itself or one of its
affiliates at such reasonable rates of interest as may from time to time be paid
on such accounts, or in non-interest bearing accounts as the Fund may direct, if
acceptable to the Bank.
3. Eligible Foreign Custodians and Securities Depositories. The Board of
-------------------------------------------------------
Directors of the Fund authorizes the Bank to hold the Securities in the Custody
Account(s) and the cash in the Deposit Account(s) in custody and deposit
accounts, respectively, which have been established by the Bank with one of its
branches, a branch of a qualified U.S.
-2-
<PAGE>
bank, an eligible foreign custodian or an eligible foreign securities
depository; provided, however, that the Board of Directors of the Fund has
approved the use of, and the Bank's contract with, such eligible foreign
custodian or eligible foreign securities depository by resolution, and
Instructions to such effect have been provided to the Bank. Furthermore, if a
branch of the Bank, a branch of a qualified U.S. bank or an eligible foreign
custodian is selected to act as the Bank's subcustodian to hold any Property,
such entity is authorized to hold such Property in its account with any eligible
foreign securities depository in which it participates so long as such foreign
securities depository has been approved by the Board of Directors of the Fund.
For purposes of this Agreement, "qualified U.S. bank" and "eligible foreign
custodian" shall have the same meanings as given in Rule 17f-5 under the
Investment Company Act of 1940, as amended ("Rule 17f-5"), and "eligible foreign
securities depository" shall be a depository within the meaning of Rule 17f-
5(c)(2)(iii) and (iv) as said Rule 17f-5 was in effect on September 1, 1995.
Hereinafter the term "subcustodian" will refer to any Bank branch, any
branch of a qualified U.S. bank, any eligible foreign custodian or any eligible
foreign securities depository with which the Bank has entered into an agreement
of the type contemplated hereunder regarding Securities and/or cash held in or
to be acquired for a Custody Account or a Deposit Account.
If, after the initial approval of the subcustodians by the Board of
Directors of the Fund in connection with this Agreement, the Bank wishes to
appoint other subcustodians to hold the Fund's Property, it will so notify the
Fund and will provide it with information reasonably necessary to determine any
such new subcustodian's eligibility under Rule 17f-5,
-3-
<PAGE>
including a copy of the proposed agreement with such subcustodian. The Fund
shall within 30 days after receipt of such notice give a written approval or
disapproval of the proposed action.
If the Bank intends to remove any subcustodian previously approved, it
shall so notify the Fund and shall move the Property deposited with such
subcustodian to another subcustodian previously approved or to a new
subcustodian, provided that the appointment of any new subcustodian will be
subject to the requirements set forth in the preceding paragraph. The Bank
shall take steps as may be required to remove any subcustodian which has ceased
to meet the requirements of Rule 17f-5.
4. Use of Subcustodians. With respect to Property which is maintained by
--------------------
the Bank in the custody of a subcustodian pursuant to Section 3:
(a) The Bank will identify on its books as belonging to the particular
Portfolio of the Fund any Property held by such subcustodian.
(b) In the event that a subcustodian permits any of the Securities
placed in its care to be held in an eligible foreign securities depository, such
subcustodian will be required by its agreement with the Bank to identify on its
books such Securities as being held for the account of the Bank as a custodian
for its customers.
(c) Any Securities in a Custody Account held by a subcustodian of the
Bank will be subject only to the instructions of the Bank or its agents; and any
Securities held in an eligible foreign securities depository for the account of
a subcustodian will be subject only to the instructions of such subcustodian.
-4-
<PAGE>
(d) The Bank will only deposit Securities in an account with a
subcustodian which includes exclusively the assets held by the Bank for its
customers, and the Bank will cause such account to be designated by such
subcustodian as a special custody account for the exclusive benefit of customers
of the Bank.
(e) Any agreement the Bank shall enter into with a subcustodian with
respect to the holding of Securities shall require that (i) the Securities are
not subject to any right, charge, security interest, lien or claim of any kind
in favor of such subcustodian or its creditors except for a claim of payment for
its safe custody or administration and (ii) beneficial ownership of such
Securities is freely transferable without the payment of money or value other
than for safe custody or administration; provided, however, that the foregoing
shall not apply to the extent that any of the above-mentioned rights, charges,
etc. result from any compensation or other expenses arising with respect to the
safekeeping of Securities pursuant to such agreement.
(f) The Bank shall allow independent public accountants of the Fund
such reasonable access to the records of the Bank relating to Property held in a
Custody Account and a Deposit Account as required by such accountants in
connection with their examination of the books and records pertaining to the
affairs of the Fund. The Bank shall, subject to restrictions under applicable
law, also obtain from any subcustodian with which the Fund maintains the
physical possession of any Property an undertaking to permit independent public
accountants of the Fund such reasonable access to the records of such
subcustodian as may be required in connection with their examination of the
books and records pertaining to the affairs of the Fund or to supply a
verifiable confirmation of the contents of such records.
-5-
<PAGE>
The Bank shall furnish the Fund such reports (or portions thereof) of the Bank's
external auditors as relate directly to the Bank's system of internal accounting
controls applicable to the Bank's duties under this Agreement. The Bank shall
request for and furnish to the Fund such similar reports as may be furnished to
it with respect to each subcustodian and securities depository holding the
Fund's assets.
(g) The Bank will supply to the Fund, care of its investment adviser,
at least monthly a statement in respect to any Property in a Custody and a
Deposit Account held by each subcustodian, including an identification of the
entity having possession of such Property, and the Bank will send to the Fund an
advice or notification of any transfers of Property to or from the Custody
Account and Deposit Account, indicating, as to Property acquired for an
investment portfolio of the Fund, the identity of the entity having physical
possession of such Property. In the absence of the filing in writing with the
Bank by the Fund of exceptions or objections to any such statement within sixty
(60) days of the Fund's receipt of such statement, or within sixty (60) days
after the date that a material defect is reasonably discoverable, the Fund shall
be deemed to have approved such statement and in such case or upon written
approval of the Fund of any such statement the Bank shall, to the extent
permitted by law and provided the Bank has met the standard of care in Section
12 hereunder, be released, relieved and discharged with respect to all matters
and things set forth in such statement as though such statement has been settled
by the decree of a court of competent jurisdiction in an action in which the
Fund and all persons having any equity interest in the Fund were parties.
-6-
<PAGE>
(h) The Bank hereby warrants to the Fund that in its opinion, after
due inquiry, the established procedures to be followed by each of its branches,
each branch of a qualified U.S. bank and each eligible foreign custodian holding
Securities of the Fund pursuant to this Agreement afford protection for such
Securities at least equal to that afforded by the Bank's established procedures
with respect to similar Securities held by the Bank (and its securities
depositories) in New York.
(i) The Bank hereby warrants to the Fund that as of the date of this
Agreement it is maintaining a Bankers Blanket Bond sufficient to cover any of
its reasonably anticipated liabilities hereunder and hereby agrees to notify the
Fund in the event its Bankers Blanket Bond is canceled or otherwise lapses.
5. Deposit Account Payments. Subject to the provisions of Section 7, the
------------------------
Bank shall make, or cause its subcustodian to make, payments of cash credited to
a Deposit Account only:
(a) in connection with the purchase of Securities for the particular
Portfolio of the Fund involved and the delivery of such Securities to, or the
crediting of such Securities to, the particular Custody Account of the Bank or
its subcustodian, each such payment to be made at prices as confirmed by
Instructions from Authorized Persons (as defined in Section 10 hereof);
(b) for the purchase or redemption of shares of the capital stock of
the particular Portfolio of the Fund involved and the delivery to, or crediting
to the account of, the Bank or its subcustodian of such shares to be so
purchased or redeemed;
-7-
<PAGE>
(c) for the payment for the account of the particular Portfolio of the
Fund involved of dividends, interest, taxes, management or supervisory fees,
capital distributions or operating expenses;
(d) for the payments to be made in connection with the conversion,
exchange or surrender of Securities held in a Custody Account;
(e) for spot or forward foreign exchange transactions to facilitate
security trading, receipt of income from Securities or related transactions;
(f) for other proper corporate purposes of the particular Portfolio of
the Fund involved; or
(g) upon the termination of this Custody Agreement as hereinafter set
forth.
All payments of cash for a purpose permitted by subsection (a), (b), (c),
(d) or (e) of this Section 5 will be made only upon receipt by the Bank of
Instructions from Authorized Persons which shall specify the purpose for which
the payment is to be made and the applicable subsection of this Section 5. In
the case of any payment to be made for the purpose permitted by subsection (f)
of this Section 5, the Bank must first receive a certified copy of a resolution
of the Board of Directors of the Fund adequately describing such payment,
declaring such purpose to be a proper corporate purpose, and naming the person
or persons to whom such payment shall be made. Any payment pursuant to
subsection (g) of this Section 5 will be made in accordance with Section 17
hereof.
In the event that any payment for a Portfolio of the Fund made under this
Section 5 exceeds the funds available in that Portfolio's Deposit Account, the
Bank may, in its
-8-
<PAGE>
discretion, advance the Fund on behalf of that Portfolio an amount equal to such
excess and such advance shall be deemed a loan from the Bank to that Portfolio
payable on demand, bearing interest at the rate of interest customarily charged
by the Bank on similar loans. If the Bank causes a Deposit Account to be
credited on the payable date for interest, dividends or redemptions, the
particular Portfolio of the Fund involved will promptly return to the Bank any
such amount or property so credited upon oral or written notification that such
amount has not been received in the ordinary course of business or that such
amount was incorrectly credited. The Bank or its subcustodian, as the case may
be, shall have no duty or obligation to institute legal proceedings, file a
claim or proof of claim in any insolvency proceeding or take any other action
with respect to the collection of such amount or property.
6. Custody Account Transactions. Subject to the provisions of Section 7,
----------------------------
Securities in a Custody Account will be transferred, exchanged or delivered by
the Bank or its subcustodians only:
(a) upon sale of such Securities for the particular Portfolio of the
Fund involved and receipt by the Bank or its subcustodian of payment therefor,
each such payment to be in the amount confirmed by Instructions from Authorized
Persons;
(b) when such Securities are called, redeemed or retired, or otherwise
become payable;
(c) in exchange for or upon conversion into other Securities alone or
other Securities and cash pursuant to any plan of merger, consolidation,
reorganization, recapitalization or readjustment;
-9-
<PAGE>
(d) upon conversion of such Securities pursuant to their terms into
other Securities;
(e) upon exercise of subscription, purchase or other similar rights
represented by such Securities;
(f) for the purpose of exchanging interim receipts or temporary
Securities for definitive Securities;
(g) for the purpose of redeeming in-kind shares of the capital stock
of the particular Portfolio of the Fund involved against delivery to the Bank or
its subcustodian of such shares to be redeemed;
(h) in connection with any borrowings by the particular Portfolio
requiring a pledge of Securities, but only against receipt of amounts borrowed;
(i) in connection with any loans, but only against receipt of adequate
collateral as specified in Instructions which shall reflect any restrictions
applicable to the Fund;
(j) for delivery in accordance with the provisions of any agreement
among the Fund, the Bank and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of the National
Association of Securities Dealers, Inc. relating to compliance with the rules of
The Options Clearing Corporation and of any registered national securities
exchange, or of any similar organizations, regarding escrow or other
arrangements in connection with transactions by the particular Portfolio;
(k) for release of Securities to designated brokers under covered call
options, provided, however, that such Securities shall be released only upon
payment to the
-10-
<PAGE>
Bank of monies for the premium due and a receipt for the Securities which are to
be held in escrow. Upon exercise of the option, or at expiration, the Bank will
receive the Securities previously deposited from brokers. The Bank will act
strictly in accordance with Instructions in the delivery of Securities to be
held in escrow and will have no responsibility or liability for any such
Securities which are not returned promptly when due other than to make proper
request for such return.
(l) for other proper corporate purposes of the particular Portfolio of
the Fund involved; or
(m) upon the termination of this Custody Agreement as hereinafter set
forth.
All transfers, exchanges or deliveries of Securities in a Custody Account
for a purpose permitted by either subsection (a), (b), (c), (d), (e) or (f) of
this Section 6 will be made, except as provided in Section 8 hereof, only upon
receipt by the Bank of Instructions from Authorized Persons which shall specify
the purpose of the transfer, exchange or delivery to be made and the applicable
subsection of this Section 6. In the case of any transfer or delivery to be
made for the purpose permitted by subsection (g) of this Section 6, the Bank
must first receive Instructions from Authorized Persons specifying the
Securities held by the Bank or its subcustodian to be so transferred or
delivered and naming the person or persons to whom transfers or delivery of such
Securities shall be made. In the case of any transfer, exchange or delivery to
be made for the purpose permitted by subsections (h) or (l) of this Section 6,
the Bank must first receive a certified copy of a resolution of the Board of
Directors of the Fund adequately describing such transfer, exchange or delivery,
declaring
-11-
<PAGE>
such purpose to be a proper corporate purpose, and naming the person or persons
to whom delivery of such Securities shall be made. Any transfer or delivery
pursuant to subsection (m) of this Section 6 will be made in accordance with
Section 17 hereof.
7. Custody Account Procedures. With respect to any transaction involving
--------------------------
Securities held in or to be acquired for a Custody Account, the Bank in its
discretion may cause the Deposit Account for the particular Portfolio of the
Fund involved to be credited on the contractual settlement date with the
proceeds of any sale or exchange of Securities from the particular Custody
Account and to be debited on the contractual settlement date for the cost of
Securities purchased or acquired for the particular Custody Account. The Bank
may reverse any such credit or debit if the transaction with respect to which
such credit or debit was made fails to settle within a reasonable period,
determined by the Bank in its discretion, after the contractual settlement date,
except that if any Securities delivered pursuant to this Section 7 are returned
by the recipient thereof, the Bank may cause any such credits and debits to be
reversed at any time. With respect to any transactions as to which the Bank does
not determine so to credit or debit the particular Deposit Account, the proceeds
from the sale or exchange of Securities will be credited and the cost of such
Securities purchased or acquired will be debited to the particular Deposit
Account on the date such proceeds or Securities are received by the Bank.
Notwithstanding the preceding paragraph and Section 6 hereof, settlement
and payment for Securities received for, and delivery of Securities out of, a
Custody Account may be effected in accordance with the customary or established
securities trading or securities processing practices and procedures in the
jurisdiction or market in which the
-12-
<PAGE>
transaction occurs, including, without limitation, delivering Securities to the
purchaser thereof or to a dealer therefor (or an agent for such purchaser or
dealer) against a receipt with the expectation of receiving later payment for
such Securities from such purchaser or dealer.
8. Actions of the Bank. Until the Bank receives Instructions from
-------------------
Authorized Persons to the contrary, the Bank will, or will instruct its
subcustodian, to:
(a) present for payment any Securities in a Custody Account which are
called, redeemed or retired or otherwise become payable and all coupons and
other income items which call for payment upon presentation to the extent that
the Bank or subcustodian is aware of such opportunities for payment, and hold
cash received upon presentation of such Securities in accordance with the
provisions of Sections 2, 3 and 4 hereof;
(b) in respect of Securities in a Custody Account, execute in the name
of the Fund on behalf of the particular Portfolio involved such ownership and
other certificates as may be required to obtain payments in respect thereof;
(c) exchange interim receipts or temporary Securities in a Custody
Account for definitive Securities;
(d) (if applicable) convert monies received with respect to Securities
of foreign issue into United States dollars or any other currency necessary to
effect any transaction involving the Securities whenever it is practicable to do
so through customary banking channels, using any method or agency available,
including, but not limited to, the facilities of the Bank, its subsidiaries,
affiliates or subcustodians;
-13-
<PAGE>
(e) (if applicable) appoint brokers and agents for any transaction
involving the Securities in a Custody Account, including, without limitation,
affiliates of the Bank or any subcustodian; and
(f) apply for a reduction of withholding tax and any refund of any tax
paid or tax credits which apply in each applicable market in respect of income
payments or Securities for the benefit of each Portfolio of the Fund which the
Bank believes may be available to such Portfolio. The provision of tax reclaim
services by the Bank is conditioned upon the Bank receiving from the Fund (A) a
declaration of its identity and place of residence and (B) certain other
documentation (pro forma copies of which are available from the Bank) requested
--- -----
by the Bank. The Fund shall provide to the Bank such documentation and
information as it may request in connection with taxation, and warrants that,
when given, this information shall be true and correct in every respect, not
misleading in any way, and shall contain all material information. The Fund
undertakes to notify the Bank immediately if any such information requires
updating or amendment. The Bank shall not be liable to the Fund or any third
party for any tax fines or penalties payable by the Bank or the Fund, and shall
be indemnified accordingly, whether these result from the inaccurate completion
of documents by the Fund or any third party, or as a result of the provision to
the Bank or any third party of inaccurate or misleading information or the
withholding of material information by the Fund or any other third party, or as
a result of any delay of any revenue authority or any other matter beyond the
control of the Bank. The Fund confirms that the Bank is authorized to deduct
from any cash received or credited to the Deposit Account any taxes or levies
required by any revenue or governmental authority in respect of
-14-
<PAGE>
the Securities or Deposit Accounts. The Bank shall perform tax reclaim services
only with respect to taxation levied by the revenue authorities of the countries
notified to the Fund from time to time and the Bank may, by notification in
writing, at its absolute discretion, supplement or amend the markets in which
the tax reclaim services are offered. Other than as expressly provided in this
clause, the Bank shall have no responsibility with regard to the Fund's tax
position or status in any jurisdiction. The Fund confirms that the Bank is
authorized to disclose any information requested by any revenue authority or any
governmental body in relation to the Fund or the Securities and/or cash held for
the Fund. Tax reclaim services may be provided by the Bank or, in whole or in
part, by one or more third parties appointed by the Bank (which may be
affiliates of the Bank), provided that the Bank shall be liable for the
performance of any such third party to the same extent as the Bank would have
been if it performed such services itself.
9. Instructions. As used in this Agreement, the term "Instructions" means
------------
instructions of the Fund received by the Bank via telephone, telex, TWX,
facsimile transmission, bank wire or other teleprocess or electronic instruction
system acceptable to the Bank which the Bank believes in good faith to have been
given by Authorized Persons or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Bank may specify.
Any Instructions delivered to the Bank by telephone shall promptly
thereafter be confirmed in writing by an Authorized Person (which confirmation
may bear the facsimile signature of such Person), but the particular Portfolio
of the Fund involved will hold the Bank harmless for the Fund's (i) failure to
send such confirmation in writing, or (ii) the
-15-
<PAGE>
failure of such confirmation to conform to the telephone Instructions received.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded. If the Bank requires test
arrangements, authentication methods or other security devices to be used with
respect to Instructions, any Instructions given by the Fund thereafter shall be
given and processed in accordance with such terms and conditions for the use of
such arrangements, methods or devices as the Bank may put into effect and modify
from time to time. The Fund shall safeguard any testkeys, identification codes
or other security devices which the Bank shall make available to them. The Bank
may electronically record any Instructions given by telephone, and any other
telephone discussions, with respect to a Custody Account.
10. Authorized Persons. As used in this Agreement, the term "Authorized
------------------
Persons" means such officers or such agents of the Fund as have been designated
by a resolution of the Board of Directors of the Fund, a certified copy of which
has been provided to the Bank, to act on behalf of the Fund in the performance
of any acts which Authorized Persons may do under this Agreement. Such persons
shall continue to be Authorized Persons until such time as the Bank receives
Instructions from Authorized Persons that any such officer or agent is no longer
an Authorized Person.
11. Nominees. Securities in a Custody Account which are ordinarily held
--------
in registered form may be registered in the name of the Bank's nominee or, as to
any Securities in the possession of an entity other than the Bank, in the name
of such entity's nominee. The particular Portfolio of the Fund involved agrees
to hold any such nominee harmless from any liability as a holder of record of
such Securities, but not if such liability is a result of
-16-
<PAGE>
such nominee's negligence. The Bank may without notice to the Fund cause any
such Securities to cease to be registered in the name of any such nominee and to
be registered in the name of the Fund. In the event that any Securities
registered in the name of the Bank's nominee or held by one of its subcustodians
and registered in the name of such subcustodian's nominee are called for partial
redemption by the issuer of such Security, the Bank may allot, or cause to be
allotted, the called portion to the respective beneficial holders of such class
of security in any manner the Bank deems to be fair and equitable.
12. Standard of Care.
----------------
(a) The Bank shall be obligated to perform only such duties as are set
forth in this Agreement or expressly contained in Instructions given to Bank
which are consistent with the provisions of this Agreement.
(i) The Bank will use reasonable care with respect to its
obligations under this Agreement and the safekeeping of Property.
The Bank shall be liable to the Fund for any loss which shall
occur as the result of the failure of a subcustodian to exercise
reasonable care with respect to the safekeeping of such Property
to the same extent that the Bank would be liable to the Fund if
the Bank were holding such Property in New York. In the event of
any loss to the Fund by reason of the failure of the Bank or its
subcustodian to exercise reasonable care, the Bank shall be
liable to the Fund only to the extent the Fund's direct damages
and expenses, to be determined based on, but not limited to, the
market value of the Property which is the subject of the loss at
the date of
-17-
<PAGE>
discovery of such loss, and without reference to any special
conditions or circumstances. For purposes of this Section
12(a)(i), the term "subcustodian" shall not include any
securities depository or clearing agency the use of which is
compulsory because: (a) its use is required by law or regulation,
(b) securities cannot be withdrawn from the depository, or (c)
maintaining securities outside the depository is not consistent
with prevailing custodial practices in the country which the
depository serves.
(ii) The Bank will not be responsible for any act, omission,
default or for the solvency of any broker or agent (other than as
provided herein) which it or a subcustodian appoints and uses
unless such appointment and use were made or done negligently or
in bad faith.
(iii) The Bank shall be indemnified by, and without liability
to, the Fund and the particular Portfolio of the Fund involved
for any action taken or omitted by the Bank whether pursuant to
Instructions or otherwise within the scope of this Agreement if
such act or omission was in good faith and without negligence.
In performing its obligations under this Agreement, the Bank may
rely on the genuineness of any document which it believes in good
faith to have been validly executed.
(iv) The Fund, on behalf of the particular Portfolio of the Fund
involved, agrees to cause such Portfolio to pay for and hold the
Bank harmless from any liability or loss resulting from the
imposition or
-18-
<PAGE>
assessment of any taxes or other governmental charges, and any
related expenses, with respect to income from or Property in such
Portfolio's Custody Account and Deposit Account.
(v) The Bank shall be entitled to rely, and may act upon the
advice of counsel (who may be counsel for the Fund) on all
matters and shall be without liability for any action reasonably
taken or omitted in good faith and without negligence pursuant to
such advice.
(vi) The Bank need not maintain any insurance for the exclusive
benefit of the Fund.
(vii) Without limiting the foregoing, the Bank shall not be
liable for any loss which results from:
(1) the general risk of investing, or
(2) subject to Section 12(a)(i) hereof, investing or holding
Property in a particular country including, but not limited to,
losses resulting from nationalization, expropriation or other
governmental actions; regulation of the banking or securities
industry; currency restrictions, devaluations or fluctuations;
and market conditions which prevent the orderly execution of
securities transactions or affect the value of Property.
(viii) No party shall be liable to the other for any loss due to
forces beyond its control including but not limited to strikes or
work
-19-
<PAGE>
stoppages, acts of war or terrorism, insurrection, revolution,
nuclear fusion, fission or radiation, or acts of God.
(b) Consistent with and without limiting the first paragraph of this
Section 12, it is specifically acknowledged that the Bank shall have no duty or
responsibility to:
(i) Question Instructions or make any suggestions to the Fund or
an Authorized Person regarding such Instructions;
(ii) Supervise or make recommendations with respect to
investments or the retention of Securities;
(iii) Advise the Fund or an Authorized Person regarding any
default in the payment of principal or income of any Security
other than as provided in the last paragraph of Section 5 hereof;
(iv) Subject to Section 12(a)(ii) hereof, evaluate or report to
the Fund or an Authorized Person regarding the financial
condition of any broker, agent or other party to which Securities
are delivered or payments are made pursuant to this Agreement; or
(v) Review or reconcile trade confirmations received from
brokers. The Fund or its Authorized Persons issuing Instructions
shall bear any responsibility to review such confirmations
against Instructions issued to and statements issued by the Bank.
(c) The Bank shall provide to the Fund, on an annual basis, a report
confirming that the arrangements hereunder remain in compliance with the rules
of the Securities and Exchange Commission governing such arrangements.
-20-
<PAGE>
(d) The Fund authorizes the Bank to act under this Agreement
notwithstanding that the Bank or any of its divisions or affiliates may have a
material interest in a transaction, or circumstances are such that the Bank may
have a potential conflict of duty or interest, including the fact that the Bank
or any of its affiliates may provide brokerage services to other customers, act
as financial advisor to the issuer of Securities, act as a lender to the issuer
of Securities, act in the same transaction as agent for more than one customer,
have a material interest in the issue of Securities, or earn profits from any of
the activities listed herein.
13. Compliance with Securities and Exchange Commission Rules and Orders.
-------------------------------------------------------------------
Except to the extent the Bank has specifically agreed pursuant to this Agreement
or in an exemptive order to comply with a condition of Rule 17f-5 or any
interpretation or exemptive order promulgated thereunder by or under the
authority of the Securities and Exchange Commission, the Fund shall be solely
responsible to assure that the maintenance of Securities and cash under this
Agreement complies with such Rule 17f-5.
14. Corporate Actions.
-----------------
(a) With respect to domestic U.S. and Canadian Securities (the latter
only when held with DTC), the Bank will send to the Fund or the Authorized
Person for a Custody Account such proxies (signed in blank, if issued in the
name of the Bank's nominee or the nominee of a central depository) and
communications with respect to Securities in the Custody Account as call for
voting or relate to legal proceedings within a reasonable time after sufficient
copies are received by the Bank for forwarding to its customers. In addition,
the Bank will follow coupon payments, redemptions, exchanges or similar matters
with
-21-
<PAGE>
respect to Securities in the Custody Account and advise the Fund or the
Authorized Person for such account of rights issued, tender offers or any other
discretionary rights with respect to such Securities, in each case, of which the
Bank has received notice from the issuer of the Securities, or as to which
notice is published in publications routinely utilized by the Bank for this
purpose.
(b) With respect to proxies and Corporate Actions (as defined below)
not covered by paragraph (a) of this Section 14:
(i) Whenever the Bank or its subcustodian receives information
concerning the Securities which requires discretionary action by
the beneficial owner of the Securities (other than a proxy), such
as subscription rights, bonus issues, stock repurchase plans and
rights offerings, or legal notices or other material intended to
be transmitted to securities holders ("Corporate Actions"), the
Bank will give the Fund notice of such Corporate Actions to the
extent that the Bank's central corporate actions department has
actual knowledge of a Corporate Action in time to notify its
customers.
(ii) When a rights entitlement or a fractional interest
resulting from a rights issue, stock dividend, stock split or
similar Corporate Action is received which bears an expiration
date, the Bank or its subcustodians will endeavor to obtain
Instructions from the Fund or its Authorized Persons, but if
Instructions are not received in time for the Bank to take timely
action, or actual notice of such Corporate Action was
-22-
<PAGE>
received too late to seek Instructions, the Bank is authorized to
sell such rights entitlement or fractional interest and to credit
the applicable Deposit Account with the proceeds and to take any
other action it deems in good faith to be appropriate in which
case, provided it has met the standard of care in Section 12
hereof, it shall be held harmless by the particular Portfolio of
the Fund involved for any such action.
(iii) Proxies will only be voted pursuant to special
arrangements which may have been agreed to in writing between the
parties hereto.
15. Fees and Expenses. The Fund agrees to pay the Bank from time to time
-----------------
such compensation for its services pursuant to this Agreement as may be mutually
agreed upon in writing from time to time and the Bank's out-of-pocket or
incidental expenses, including (but without limitation) reasonable legal fees.
The Fund hereby agrees on behalf of its respective Portfolios to cause the
particular Portfolio of the Fund involved to hold the Bank harmless from any
liability or loss resulting from any taxes or other governmental charges, and
any expenses related thereto, which may be imposed or assessed with respect to
such Portfolio's Custody Account and also agrees on behalf of its respective
Portfolios to cause the particular Portfolio of the Fund involved to hold the
Bank, its subcustodians, and their respective nominees harmless from any
liability as a record holder of Securities in such Portfolio's Custody Account.
The Bank is authorized to charge any account of the particular Portfolio of the
Fund involved for such items specified in the previous sentence and the Bank
shall have a lien on Securities in such Portfolio's Custody Account and on cash
in such Portfolio's
-23-
<PAGE>
Deposit Account for any amount owing to the Bank in connection with such
Portfolio from time to time under this Agreement.
16. Effectiveness. This Agreement shall be effective on the date first
-------------
noted above.
17. Termination. This Agreement may be terminated by the Fund or the Bank
-----------
by 60 days' written notice to the other, sent by registered mail. If notice of
termination is given by the Bank, the Fund shall, within 60 days following the
giving of such notice, deliver to the Bank a certified copy of a resolution of
the Board of Directors of the Fund specifying the names of the persons to whom
the Bank shall deliver such Securities and cash, after deducting therefrom any
amounts which the Bank determines to be owed to it under Section 15 hereof. If
within 60 days following the giving of a notice of termination by the Bank, the
Bank does not receive from the Fund a certified copy of a resolution of the
Board of Directors of the Fund specifying the names of the persons to whom the
cash in each Deposit Account shall be paid and to whom the Securities in each
Custody Account shall be delivered, the Bank, at its election, may deliver such
Securities and pay such cash to a bank or trust company doing business in the
State of New York and qualified as a custodian under the Investment Company Act
of 1940 and other applicable rules and regulations to be held and disposed of
pursuant to the provisions of this Agreement, or to Authorized Persons, or may
continue to hold such Securities and cash until a certified copy of one or more
resolutions as aforesaid is delivered to the Bank. The obligations of the
parties hereto regarding the use of reasonable care, indemnities and payment of
fees and expenses shall survive the termination of this Agreement, and the
obligations of each Portfolio of the Fund
-24-
<PAGE>
to indemnify and/or hold harmless other persons or entities under this Agreement
shall be the several (and not the joint or joint and several) obligation of each
Portfolio of the Fund.
18. Notices. Any notice or other communication from the Fund to the Bank
-------
is to be sent to the office of the Bank at:
The Chase Manhattan Bank
Mutual Funds Service Division
3 Chase MetroTech Center
Brooklyn, New York 11245
or such other address as may hereafter be given to the Fund in accordance with
the notice provisions hereunder, and any notice from the Bank to the Fund is to
be mailed postage prepaid, addressed to the Fund at the addresses appearing
below, or as the same may hereafter be changed on the Bank's records in
accordance with notice hereunder from the Fund.
19. Governing Law and Successors and Assigns. This Agreement shall be
----------------------------------------
governed by the law of the State of New York and shall not be assignable by any
party without the prior written consent of the other party, and shall bind the
successors and assigns of the Fund and the Bank.
20. Names. The names "Excelsior Funds, Inc." and "Board of Directors of
------
Excelsior Funds, Inc." refer respectively to the corporation created and the
Directors, as directors but not individually or personally, acting from time to
time under Articles of Incorporation dated August 1, 1984, which is hereby
referred to and a copy of which is on file at the office of the State Department
of Assessments and Taxation of the State of Maryland and at the principal office
of the Fund. The obligations of "Excelsior Funds, Inc."
-25-
<PAGE>
entered into in the name or on behalf thereof by any of its Directors,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Directors, shareholders or representatives of
the Fund personally, but bind only the Fund's Property, and all persons dealing
with any Portfolio of the Fund must look solely to the Property belonging to
such Portfolio for the enforcement of any claims against the Portfolio.
21. Headings. The headings of the paragraphs hereof are included for
--------
convenience of reference only and do not form a part of this Agreement.
22. Counterpart Execution. This Agreement may be executed in any number
---------------------
of counterparts with the same effect as if all parties hereto had signed the
same document. All counterparts shall be construed together and shall
constitute one agreement.
23. Confidentiality. Bank agrees on behalf of itself and its employees to
---------------
treat confidentially all records and other information relative to the Fund and
its prior, present, or potential shareholders, except, after prior notification
to and approval in writing by the Fund (which approval shall not be unreasonably
withheld and may not be withheld where Bank 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 Fund.
-26-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below effective as of the day and year
first above written.
THE CHASE MANHATTAN BANK
By:/s/ Christopher Lynch
---------------------
Address for record:
3 Chase MetroTech Center
Brooklyn, New York 11245
EXCELSIOR FUNDS, INC.
By:/s/ Frederick S. Wonham
-----------------------
Address for record:
73 Tremont Street
Boston, Massachusetts 02108
-27-
<PAGE>
EXHIBIT A
---------
Portfolios covered by the Custody Agreement between The Chase Manhattan
Bank and Excelsior Funds, Inc.
Money Fund
Government Money Fund
Treasury Money Fund
Blended Equity Fund
Income and Growth Fund
Energy and Natural Resources Fund
Productivity Enhancers Fund
Environmentally-Related Products and Services Fund
Aging of America Fund
Communication and Entertainment Fund
Value and Restructuring Fund
Global Competitors Fund
Small Cap Fund
International Fund
Latin America Fund
Pacific/Asia Fund
Pan European Fund
Short-Term Government Securities Fund
Intermediate-Term Managed Income Fund
Managed Income Fund
Large Cap Growth Fund
Real Estate Fund
-28-
<PAGE>
EXHIBIT (9)(a)
EXCELSIOR FUNDS, INC.
---------------------
AMENDED AND RESTATED ADMINISTRATIVE SERVICES PLAN
Section 1. Upon the recommendation of Chase Global Funds Services Company,
---------
Federated Administrative Services or U.S. Trust Company of Connecticut (each a
"Co-Administrator") as Co-Administrator of Excelsior Funds, Inc. (the
"Company"), any officer of the Company (or any other person authorized by the
Company's Board) is authorized to execute and deliver, in the name and on behalf
of the Company, written agreements in substantially the form attached hereto or
in any other form duly approved by the Board of Directors ("Servicing
Agreements") with institutions that are shareholders of record or that have
clients that are shareholders of record or beneficial owners of any of the Funds
of the Company, including without limitation the Company's service providers and
their affiliates ("Service Organizations"). Such Servicing Agreements shall
require the Service Organizations to provide or arrange for the provision of
support services as set forth therein to their clients who beneficially own
Shares of any Fund offered by the Company in consideration of a fee, computed
and paid in the manner set forth in the Servicing Agreements, at the annual rate
of up to .40% of the applicable net asset value of Shares beneficially owned by
such clients. Among other institutions, any bank, trust company, thrift
institution or broker-dealer is eligible to become a Service Organization and to
receive fees under this Plan. All expenses incurred by the Company with respect
to a particular class or series of Shares of a particular Fund in connection
with Servicing Agreements and the implementation of this Plan shall be borne
entirely by the holders of that class or series.
Section 2. The Co-Administrators shall monitor the arrangements pertaining
---------
to the Company's Servicing Agreements with Service Organizations in accordance
with the terms of the Co-Administration Agreement by and among the Co-
Administrators and the Company. The Co-Administrators shall not, however, be
obliged by this Plan to recommend, and the Company shall not be obliged to
execute, any Servicing Agreement with any qualifying Service Organization.
Section 3. So long as this Plan is in effect, the Co-Administrators shall
---------
provide to the Company's Board of Directors, and the Directors shall review, at
least quarterly, a written report of the amounts expended pursuant to this Plan
and the purposes for which such expenditures were made.
<PAGE>
Section 4. This Plan shall become effective immediately upon the approval
---------
of the Plan (and the form of Servicing Agreement attached hereto) by a majority
of the Board of Directors, including a majority of the Directors who are not
"interested persons" as defined in the Investment Company Act of 1940 (the
"Act") of the Company and have no direct or indirect financial interest in the
operation of this Plan or in any Servicing Agreement or other agreements related
to this Plan (the "Disinterested Directors"), pursuant to a vote cast in person
at a meeting called for the purpose of voting on the approval of this Plan (or
form of Servicing Agreement).
Section 5. Unless sooner terminated, this Plan shall continue until July
---------
31, 1996 and thereafter shall continue automatically for successive annual
periods provided such continuance is approved at least annually in the manner
set forth in Section 4.
Section 6. This Plan may be amended at any time by the Board of Directors,
---------
provided that any material amendments of the terms of this Plan shall become
effective only upon the approvals set forth in Section 4.
Section 7. This Plan is terminable at any time by vote of a majority of
---------
the Disinterested Directors.
Section 8. While this Plan is in effect, the selection and nomination of
---------
the new Directors of the Company who are not "interested persons" (as defined in
the Act) of the Company shall be committed to the discretion of the existing
Disinterested Directors.
Section 9. The Company initially adopted this Plan as of February 21,
---------
1994, and amended this Plan as of February 10, 1995, July 27, 1995, November 17,
1995 and May 16, 1997.
-2-
<PAGE>
SHAREHOLDER SERVICING AGREEMENT
THIS AGREEMENT, by and between Excelsior Funds, Inc. (the "Corporation")
and the shareholder service organization (the "Organization") listed on the
signature page hereof;
WITNESSETH:
WHEREAS, certain transactions in Shares of Common Stock, $.001 par value,
of the Corporation or of any series now existing or later created of the
Corporations ("Shares") may be made by investors who are customers of, and using
the services of or arranged by, an Organization, including without limitation
the Company's service providers and their affiliates, that has entered into a
shareholder servicing agreement with the Corporation; and
WHEREAS, the Organization wishes to make it possible for its customers (the
"Customers") to purchase Shares and wishes to act as the Customers' agent in
performing or arranging for the performance of certain administrative functions
in connection with purchases, exchanges and redemptions of Shares from time to
time upon the order and for the account of Customers and to provide related
services to its Customers in connection with their investments in the
Corporation; and
WHEREAS, it is in the interest of the Corporation to make the services of
the Organization available to Customers who are or may become beneficial owners
of Shares of the Corporation;
NOW, THEREFORE, the Corporation and the Organization hereby agree as
follows:
1. Appointment. The Organization, as an independent contractor, hereby
-----------
agrees to perform or to have performed certain services for Customers as
hereinafter set forth. The Organization's appointment hereunder is non-
exclusive, and the parties recognize and agree that, from time to time, the
Corporation may enter into other shareholder servicing agreements, with others
without the Organization's consent. For the purposes of this Agreement, the
Organization is deemed an independent contractor and will have no authority to
act as the Corporation's agent in any respect.
2. Service to be Performed.
-----------------------
2.1 Type of Service. The Organization shall be responsible for performing
---------------
or having performed shareholder account administrative and servicing functions,
which shall include
<PAGE>
without limitation/1/: (a) assisting Customers in designating and changing
dividend options, account designations and addresses; (b) providing necessary
personnel and facilities to establish and maintain certain shareholder accounts
and records, as may reasonably be requested from time to time by the
Corporation; (c) assisting in processing purchases, exchange and redemption
transactions; (d) arranging for the wiring of funds; (e) transmitting and
receiving funds in connection with Customer orders to purchase, exchange or
redeem Shares; (f) verifying and guaranteeing Customer signatures in connection
with redemption orders, transfers among and changes in Customer-designated
accounts; (g) providing periodic statements showing a Customer's account
balances and, to the extent practicable, integration of such information with
information concerning other client transactions otherwise effected with or
through the Organization; (h) furnishing on behalf of the Corporation's
distributor (either separately or on an integrated basis with other reports sent
to a Customer by the Organization) periodic statements and confirmations of all
purchases, exchanges and redemptions of Shares in a Customer's account required
by applicable federal or state law, all such confirmations and statements to
conform to Rule 10b-10 under the Securities Exchange Act of 1934 and other
applicable federal or state law; (i) transmitting proxy statements, annual
reports, updating prospectuses and other communications from the Corporation to
Customers; (j) receiving, tabulating and transmitting to the Corporation proxies
executed by Customers with respect to annual and special meetings of
shareholders of the Corporation; (k) providing reports (at least monthly, but
more frequently if so requested by the Corporation's distributor) containing
state-by-state listings of the principal residences of the beneficial owners of
the Shares; and (l) providing or arranging for the provision of such other
related services as the Corporation or a Customer may reasonably request. The
Organization shall provide or arrange for all personnel and facilities to
perform the functions described in this paragraph with respect to its Customers.
2.2 Standard of Services. All services to be rendered or arranged for by
--------------------
the Organization hereunder shall be performed in a professional, competent and
timely manner. The details of the operating standards and procedures to be
followed in performance of the services described above shall be determined from
time to time by agreement between the Organization and the Corporation. The
Corporation acknowledges that the Organization's ability to perform on a timely
basis certain of its obligations under this Agreement depends upon the
Corporation's timely delivery of
- -------------------
1. Services may be modified or omitted in a particular case and items
relettered or renumbered.
-2-
<PAGE>
certain materials and/or information to the Organization. The Corporation
agrees to use its best efforts to provide such materials to the Organization in
a timely manner.
3. Fees.
----
3.1 Fees from the Corporation. In consideration for the services
-------------------------
described in Section 2 hereof and the incurring of expenses in connection
therewith, the Organization shall receive fees set forth in Appendix A hereto,
such fees to be paid in arrears periodically (but in no event less frequently
than semi-annually) at annual rates of up to .40% of the average daily net
assets of the Corporation's Shares owned during the period for which payment has
been made by Customers for whom the Organization is the holder or agent of
record or with whom it maintains a servicing relationship. For purposes of
determining the fees payable to the Organization hereunder, the value of the
Corporation's net assets shall be computed in the manner specified in the
Corporation's then-current prospectus for computation of the net asset value of
the Corporation's Shares. The above fees constitute all fees to be paid to the
Organization by the Corporation with respect to the transactions contemplated
hereby. The Corporation may at any time in its discretion suspend or withdraw
the sale of its Shares.
3.2 Fees from Customers. It is agreed that the Organization may impose
-------------------
certain conditions on Customers, in addition to or different from those imposed
by the Corporation, such as requiring a minimum initial investment or charging
Customers direct fees for the same or similar services as are provided hereunder
by the Organization (which fees may either relate specifically to the
Organization's services with respect to the Corporation or generally cover
services not limited to those with respect to the Corporation). The
Organization shall bill Customers directly for such fees. In the event the
Organization charges Customers such fees, it shall notify the Corporation in
advance and make appropriate prior written disclosure (such disclosure to be in
accordance with all applicable laws) to Customers of any such fees charged to
the Customer. To the extent required by applicable rules and regulations of the
Securities and Exchange Commission, the Corporation shall make written
disclosure of the fees paid or to be paid to the Organization pursuant to
Section 3.1 of this Agreement. It is understood, however, that in no event
shall the Organization have recourse or access to the account of any shareholder
of the Corporation except to the extent expressly authorized by law or by such
shareholder, or to any assets of the Corporation, for payment of any direct fees
referred to in this Section 3.2.
4. Information Pertaining to the Shares. The Organization and its
------------------------------------
officers, employees and agents are not authorized to make
-3-
<PAGE>
any representations concerning the Corporation or the Shares to Customers or
prospective Customers, excepting only accurate communication of any information
provided by or on behalf of any administrator or distributor of the Corporation
or any factual information contained in the then-current prospectus relating to
the Corporation or to any series of the Corporation. In furnishing such
information regarding the Corporation or the Shares, the Organization shall act
as agent for the Customer only and shall have no authority to act as agent for
the Corporation. Advance copies or proofs of all materials which are generally
circulated or disseminated by the Organization to Customers or prospective
Customers which identify or describe the Corporation shall be provided to the
Corporation at least 10 days prior to such circulation or dissemination (unless
the Corporation consents in writing to a shorter period), and such materials
shall not be circulated or disseminated or further circulated or disseminated at
any time after the Corporation shall have given written notice within such 10
day period to the Organization of any objection thereto.
Nothing in this Section 4 shall be construed to make the Corporation liable
for the use (or accuracy unless prepared by the Corporation for the specific
use) of any information about the Corporation which is disseminated by the
Organization.
5. Use of the Organization's Name. The Corporation shall not use the name
------------------------------
of the Organization (or any of its affiliates or subsidiaries) in any
prospectus, sales literature or other material relating to the Corporation in a
manner not approved by the Organization prior thereto in writing; provided,
however, that the approval of the Organization shall not be required for any use
of its name which merely refers in accurate and factual terms to its appointment
hereunder and the terms hereof or which is required by law, including without
limitation, by the Securities and Exchange Commission or any state securities
authority or any other appropriate regulatory, governmental or judicial
authority; provided, further, that in no event shall such approval be
unreasonably withheld or delayed.
6. Use of the Corporation's Name. The Organization shall not use the name
-----------------------------
of the Corporation on any checks, bank drafts, bank statements or forms for
other than internal use in a manner not approved by the Corporation prior
thereto in writing; provided, however, that the approval of the Corporation
shall not be required for the use of the Corporation's name in connection with
communications permitted by Section 4 hereof or (subject to Section 4, to the
extent the same may be applicable) for any use of the Corporation's name which
merely refers in accurate and factual terms to the Corporation in connection
with the Organization's role hereunder or which is required by law, including
without limitations, by the Securities and Exchange Commission or any state
securities authority or any other
-4-
<PAGE>
appropriate regulatory, governmental or judicial authority; provided, further,
that in no event shall such approval be unreasonably withheld or delayed.
7. Security. The Organization represents and warrants that to the best of
--------
its knowledge, the various procedures and systems which it has implemented
(including provision for twenty-four hours a day restricted access) with regard
to safeguarding from loss or damage attributable to fire, theft or any other
cause the Corporation's records and other data and the Organization's records,
data, equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and procedures
on a periodic basis, and the Corporation shall from time to time specify the
types of records and other data of the Corporation to be safeguarded in
accordance with this Section 7.
8. Compliance with Laws. The Organization shall comply with all
--------------------
applicable federal and state laws and regulations, including without limitation
securities laws. The Organization represents and warrants to the Corporation
that the performance of all its obligations hereunder will comply with all
applicable laws and regulations, the provisions of its charter documents and by-
laws and all material contractual obligations binding upon the Organization.
The Organization furthermore undertakes that it will promptly, after the
Organization becomes so aware, inform the Corporation of any change in
applicable laws or regulations (or interpretations thereof) or in its charter or
by-laws or material contracts which would prevent or impair full performance of
any of its obligations hereunder.
9. Reports. Quarterly, and more frequently to the extent requested by the
-------
Corporation from time to time, the Organization agrees that it will provide the
administrator of the Corporation with a written report of the amounts expended
by the Organization pursuant to this Agreement and the purposes for which such
expenditures were made. Such written reports shall be in a form satisfactory to
the Corporation and shall supply all information necessary for the Corporation
to discharge its responsibilities under applicable laws and regulations.
-5-
<PAGE>
10. Record Keeping.
--------------
10.1 Section 31. The Organization shall maintain records in a form
----------
reasonably acceptable to the Corporation and in compliance with applicable laws
and the rules and regulations of the Securities and Exchange Commission,
including but not limited to the record-keeping requirements of Section 31 of
the Investment Company Act of 1940, as amended (the "1940 Act") and the rules
thereunder. Such records shall be deemed to be the property of the Corporation
and will be made available at the Corporation's request for inspection and use
by the Corporation, representatives of the Corporation and governmental
authorities. The Organization agrees that, for so long as it retains any
records of the Corporation, it will meet all reporting requirements pursuant to
the 1940 Act and applicable to the Organization with respect to such records.
Upon termination of this Agreement, the Organization shall deliver to the
administrator of the Corporation all books and records maintained by the
Organization and deemed to be the Corporation's property hereunder.
10.2 Rules 17a-3 and 17a-4. The Organization shall maintain accurate and
---------------------
complete records with respect to services performed by the Organization in
connection with the purchase and redemption of Shares. Such records shall be
maintained in form reasonably acceptable to the Corporation and in compliance
with the requirements of all applicable laws, rules and regulations, including
without limitation, Rules 17a-3 and 17a-4 under the Securities Exchange Act of
1934, as amended, pursuant to which any dealer of the Shares must maintain
certain records. All such records maintained by the Organization shall be the
property of such dealer and will be made available for inspection and use by the
Corporation or such dealer upon the request of either. The Organization shall
file with the Securities and Exchange Commission and other appropriate
governmental authorities, and furnish to the Corporation and any such dealer
copies of, all reports and undertakings as may be reasonably requested by the
Corporation or such dealer in order to comply with the said rules. If so
requested by any such dealer, the Organization shall confirm to such dealer its
obligations under this Section 10.2 by a writing reasonably satisfactory to such
dealer.
10.3 Transfer of Customer Data. In the event this Agreement is terminated
-------------------------
or a successor to the Organization is appointed, the Organization shall transfer
to such designee as the Corporation may direct a certified list of the
shareholders of the Corporation serviced by the Organization (with name, address
and tax identification or Social Security number, if any), a complete record of
the account of each such shareholder and the status thereof, and all other
relevant books, records, correspondence, and other data established or
maintained by the Organization under this Agreement. In the event this
Agreement
-6-
<PAGE>
is terminated, the Organization will use its best efforts to cooperate in the
orderly transfer of such duties and responsibilities, including assistance in
the establishment of books, records and other data by the successor.
10.4 Survival of Record-Keeping Obligations. The record-keeping
--------------------------------------
obligations imposed in this Section 10 shall survive the termination of this
Agreement for a period of three years.
10.5 Obligations Pursuant to Agreement Only. Nothing in this Section 10
--------------------------------------
shall be construed so that the Organization would, by virtue of its role
hereunder, be required under applicable law to maintain the records required to
be maintained by it under this Section 10, but is understood that the
Organization has agreed to do so in order to enable the Corporation and its
dealer or dealers to comply with laws and regulations applicable to them.
10.6 Organization's Rights to Copy Records. Anything in this Section 10
-------------------------------------
to the contrary notwithstanding, except to the extent otherwise prohibited by
law, the Organization shall have the right to copy, maintain and use any records
maintained by the Organization pursuant to this Section 10, except as otherwise
prohibited by Sections 4 and 6 hereof.
11. Force Majeure. The Organization shall not be liable or responsible
-------------
for delays or errors by reason of circumstances beyond its reasonable control,
including, but not limited to, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdown, flood or
catastrophe, Acts of God, insurrection, war, riots or failure of communication
or power supply.
12. Indemnification.
---------------
12.1 Indemnification of the Organization. The Corporation will indemnify
-----------------------------------
and hold the Organization harmless from all losses, claims, damages, liabilities
or expenses (including reasonable counsel fees and expenses) from any claim,
demand, action or suit (collectively, "Claims") arising in connection with
material misstatements or omissions in the Corporation's Prospectus.
Notwithstanding anything herein to the contrary, the Corporation will indemnify
and hold the Organization harmless from any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from any Claim as a result of its acting in accordance with any
written instructions reasonably believed by the Organization to have been
executed by any person duly authorized by the Corporation, or as a result of
acting in reliance upon any instrument or stock certificate reasonably believed
by the Organization to have been genuine and signed, countersigned or
-7-
<PAGE>
executed by a person duly authorized by the Corporation, excepting only the
negligence or bad faith of the Organization.
In any case in which the Corporation may be asked to indemnify or hold the
Organization harmless, the Corporation shall be advised of all pertinent facts
concerning the situation in question and the Organization shall use reasonable
care to identify and notify the Corporation promptly concerning any situation
which presents or appears likely to present a claim for indemnification against
the Corporation. The Corporation shall have the option to defend the
Organization against any Claim which may be the subject of indemnification
hereunder. In the event that the Corporation elects to defend against such
Claim, the defense shall be conducted by counsel chosen by the Corporation and
satisfactory to the Organization. The Organization may retain additional
counsel at its expense. Except with the prior written consent of the
Corporation, the Organization shall not confess any Claim or make any compromise
in any case in which the Corporation will be asked to indemnify the
Organization.
12.2 Indemnification of the Corporation. Without limiting the rights of
----------------------------------
the Corporation under applicable law, the Organization will indemnify and hold
the Corporation harmless from all losses, claims, damages, liabilities or
expenses (including reasonable counsel fees and expenses) from any Claim (a)
arising from (i) the bad faith or negligence of the Organization, its officers,
employees or agents, (ii) any breach of applicable law by the Organization, its
officers, employees or agents, (iii) any action of the Organization, its
officers, employees or agents which exceeds the legal authority of the
Organization or its authority hereunder, or (iv) any actions, inactions, errors
or omissions of the Organization, its officers, employees or agents with respect
to the purchase, redemption, transfer and registration of Customers' Shares or
the Corporation's verification or guarantee of any Customer signature.
In any case in which the Organization may be asked to indemnify or hold the
Corporation harmless, the Organization shall be advised of all pertinent facts
concerning the situation in question and the Corporation shall use reasonable
care to identify and notify the Organization promptly concerning any situation
which presents or appears likely to present a claim for indemnification against
the Organization. The Organization shall have the option to defend the
Corporation against any Claim which may be the subject of indemnification
hereunder. In the event that the Organization elects to defend against such
Claim, the defense shall be conducted by counsel chosen by the Organization and
satisfactory to the Corporation. The Corporation may retain additional counsel
at its expense. Except with the prior written consent of the Organization, the
Corporation shall not confess
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<PAGE>
any Claim or make any compromise in any case in which the Organization will be
asked to indemnify the Corporation.
12.3 Survival of Indemnities. The indemnities granted by the parties in
-----------------------
this Section 12 shall survive the termination of this Agreement.
13. Notices. All notices or other communications hereunder to either party
-------
shall be in writing and shall be deemed sufficient if mailed to such party at
the address of such party set forth on the signature page of this Agreement or
at such other address as such party may have designated by written notice to the
other.
14. Further Assurances. Each party agrees to perform such further acts
------------------
and execute such further documents as are necessary to effectuate the purposes
hereof.
15. Termination. Unless sooner terminated, this Agreement will continue
-----------
until July 31, 1996 and thereafter will continue automatically for successive
annual periods provided such continuance is specifically approved at least
annually by vote of a majority of (i) the Board of Directors of the Corporation
and (ii) those Directors who are not "interested persons" (as defined in the
1940 Act) of the Corporation and have no direct or indirect financial interest
in the operation of the Corporation's Administrative Services Plan or in any
agreement related thereto cast in person at a meeting called for the purpose of
voting on such approval ("Disinterested Directors"). This Agreement is
terminable, without penalty, at any time by the Corporation (which termination
may be by a vote of a majority of the Disinterested Directors) or by you upon
notice to the Corporation.
16. Changes; Amendments. This Agreement may be changed or amended only by
-------------------
written instrument signed by both parties hereto.
17. Subcontracting By Organization. The Organization may, with the
------------------------------
written approval of the Corporation (such approval not to be unreasonably
withheld), subcontract for the performance of the Organization's obligations
hereunder with any one or more persons, including but not limited to any one or
more persons which is an affiliate of the Organization; provided, however, that
the Organization shall be as fully responsible to the Corporation for the acts
and omissions of any subcontractor as it would be for its own acts or omissions.
18. Compliance with Laws and Policies; Cooperation. The Corporation
----------------------------------------------
hereby agrees that it will comply with all laws and regulations applicable to
its operations and the Organization agrees that it will comply with all laws and
regulations applicable to its operations hereunder. Each party understands
-9-
<PAGE>
that the other may from time to time adopt or modify policies relating to the
subject matter of this Agreement, in which case the party adopting or modifying
such a policy shall notify the other thereof and the parties shall consider the
applicability thereof and endeavor to comply therewith to the extent not
impracticable or unreasonably burdensome. Each of the parties agrees to
cooperate with the other in connection with the performance of this Agreement
and the resolution of any problems, questions or disagreements in connection
herewith.
18.1 Annual Financial Reports. At least once a year, the Corporation
------------------------
shall send to the record owners of its shares the Corporation's audited
financial statements.
18.2 Annual Certification. At least once a year, the Organization shall
--------------------
certify to the Corporation that it is conducting its business in accordance with
the terms and conditions of the Agreement.
19. Single Portfolio. Notwithstanding anything in this Agreement to the
----------------
contrary, any amount owed by Corporation to the Organization under this
Agreement or otherwise with respect to any matter hereunder shall be paid only
from and shall be limited to the assets and property of the particular
investment portfolio of the Corporation to which the matter relates.
20. Miscellaneous. This Agreement shall be construed and enforced in
-------------
accordance with and governed by the laws of the State of Maryland. The captions
in this Agreement are included for convenience of reference only and in no way
define or limit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument. The terms of this
Agreement shall become effective as of the date set forth below.
-10-
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound hereby, the parties
hereto have caused this Agreement to be executed and delivered in their names
and on their behalf by the undersigned, thereunto duly authorized, all as of the
day and year set forth below.
Dated as of: ___________________
Excelsior Funds, Inc. Address for Notices:
_________________________
_________________________
By: ___________________________ _________________________
(Authorized Officer)
_________________________________ Address for Notices:
[Service Organization] ________________________
________________________
________________________
________________________
By: _______________________________
(Authorized Officer)
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<PAGE>
APPENDIX A
----------
EXCELSIOR FUNDS, INC.
Pursuant to the terms and conditions set forth in the attached Shareholder
Servicing Agreement, the Organization will receive the fees set forth below in
consideration for the services described in Section 2 of said Agreement and the
incurring of expenses in connection therewith, such fees (calculated pursuant to
Section 3.1 of said Agreement) to be paid in arrears periodically (but in no
event less frequently than semi-annually):
====================================================
FUND SHAREHOLDER
SERVICING
FEE
====================================================
Money Fund __ BP
Government Money Fund __ BP
Treasury Money Fund __ BP
====================================================
Short-Term Government Securities Fund __ BP
Intermediate-Term Managed Income Fund __ BP
Managed Income Fund __ BP
====================================================
Equity Fund __ BP
Income and Growth Fund __ BP
Long-Term Supply of Energy Fund __ BP
Productivity Enhancers Fund __ BP
Environmentally-Related Products and
Services Fund __ BP
Aging of America Fund __ BP
Communication and Entertainment Fund __ BP
Business and Industrial Restructuring
Fund __ BP
Global Competitors Fund __ BP
Early Life Cycle Fund __ BP
International Fund __ BP
Emerging Americas Fund __ BP
Pacific/Asia Fund __ BP
Pan European Fund __ BP
====================================================
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<PAGE>
EXHIBIT (9)(c)
MUTUAL FUNDS TRANSFER AGENCY AGREEMENT
AGREEMENT made as of September 1, 1995 by and between UST Master
Funds, Inc. (the "Company") a Maryland corporation, and United States Trust
Company of New York ("U.S. Trust"), a New York corporation.
W I T N E S S E T H:
WHEREAS, the Company is registered as an open-end investment company
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Company is authorized to issue shares of Common Stock in
separate series and classes representing interests in separate portfolios of
securities and other assets;
WHEREAS, the Company wishes to retain U.S. Trust to serve as the
Company's transfer agent, registrar and dividend disbursing agent;
WHEREAS, U.S. Trust desires to assign its duties and obligations with
respect to the provision of such services to Chase Global Funds Services Company
("CGFSC"), and the Company acknowledges the right of U.S. Trust to make such
assignment provided U.S. Trust shall be as fully responsible to the Company for
the acts and omissions of CGFSC as U.S. Trust is for its own acts and omissions;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
<PAGE>
1. APPOINTMENT. The Company hereby appoints U.S. Trust to serve as
transfer agent, registrar and dividend disbursing agent for each class and/or
series of Common Stock of the Company with respect to its existing Funds (as
hereinafter defined) for the period and on the terms set forth in this
Agreement. In the event that the Company establishes additional classes or
series other than the Common Stock of the Funds covered by this Agreement with
respect to which it desires to retain U.S. Trust to serve as transfer agent,
registrar and dividend disbursing agent hereunder, the Company shall notify U.S.
Trust in writing, whereupon such fund 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 the compensation payable
on behalf of such new Fund, may be modified in writing by the Company and U.S.
Trust at the time). U.S. Trust accepts such appointment and agrees to furnish
the services herein set forth in return for the compensation as provided in
Paragraph 5 of this Agreement.
2. REPRESENTATIONS AND WARRANTIES.
(a) U.S. Trust represents and warrants to the Company that:
(i) U.S. Trust is a state chartered bank and trust company
organized and existing under the laws of the State of New York;
-2-
<PAGE>
(ii) U.S. Trust is empowered under applicable laws and by its charter
and by-laws to enter into and perform this Agreement;
(iii) all requisite corporate proceedings have been taken to
authorize U.S. Trust to enter into and perform this Agreement;
(iv) U.S. Trust is duly registered as a transfer agent under Section
17A of the Securities Exchange Act of 1934, as amended (the "1934 Act"). U.S.
Trust shall promptly give written notice to the Company in the event that its
registration is revoked or a proceeding is commenced that could result in such
revocation;
(v) U.S. Trust has been in, and shall continue to be in, compliance
with all provisions of law, including Section 17A(c) of the 1934 Act, required
in connection with the performance of its duties under this Agreement;
(vi) U.S. Trust has, and will continue to have, access to the
facilities, personnel and equipment required to fully perform its duties and
obligations hereunder;
(vii) no legal or administrative proceedings have been instituted or
threatened which would impair U.S. Trust's ability to perform its duties and
obligations under this Agreement; and
(viii) U.S. Trust's entrance into this Agreement shall not cause a
material breach or be in material conflict with
-3-
<PAGE>
any other agreement or obligation of U.S. Trust or any law or regulation
applicable to U.S. Trust;
(b) The Company represents and warrants to U.S. Trust that:
(i) the Company is a Maryland corporation, duly organized and
existing and in good standing under the laws of Maryland;
(ii) the Company is empowered under applicable laws and by
its Articles of Incorporation, as supplemented ("Charter"), and By-Laws, as
amended ("By-Laws"), to enter into and perform this Agreement;
(iii) all requisite proceedings have been taken to authorize
the Company to enter into and perform this Agreement;
(iv) the Company is an investment company properly registered
under the 1940 Act;
(v) a registration statement under the Securities Act of
1933, as amended (the "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;
(vi) no legal or administrative proceedings have been
instituted or threatened which would impair the Company's ability to perform its
duties and obligations under this Agreement;
-4-
<PAGE>
(vii) the Company's registration statement complies in all material
respects with the 1933 Act and the 1940 Act (including the rules and regulations
thereunder) and none of the Company's prospectuses contain any untrue statement
of material fact or omit to state a material fact necessary to make the
statements therein not misleading; and
(viii) the Company's entrance into this Agreement shall not cause a
material breach or be in material conflict with any other agreement or
obligation of the Company or any law or regulation applicable to it.
3. DELIVERY OF DOCUMENTS. The Company has furnished U.S. Trust with
copies properly certified or authenticated of each of the following:
(a) Resolutions of the Company's Board of Directors authorizing the
appointment of U.S. Trust as transfer agent, registrar and dividend disbursing
agent for each class and/or series of Common Stock of the Company and approving
this Agreement;
(b) Incumbency and signature certificates identifying and containing
the signatures of the Company's officers and/or the persons authorized to sign
Written Instructions, as hereafter defined, on behalf of the Company;
(c) The Company's Charter;
(d) The Company's By-Laws;
(e) Resolutions of the Company's Board of Directors appointing U.S.
Trust as the investment adviser to the Company's
-5-
<PAGE>
Money, Government Money, Equity, Managed Income, Income and Growth,
International, Treasury Money, Early Life Cycle, Long-Term Supply of Energy,
Productivity Enhancers, Environmentally-Related Products and Services, Aging of
America, Communication and Entertainment, Business and Industrial Restructuring,
Global Competitors, Emerging Americas, Pacific/Asia, Pan European, Short-Term
Government Securities and Intermediate-Term Managed Income Funds (herein "the
Funds") and resolutions of the Company's Board of Directors and Fund
shareholders ("Shareholders") approving an Investment Advisory Agreement between
U.S. Trust and the Company dated February 6, 1985, as amended; an Investment
Advisory Agreement between U.S. Trust and the Company dated November 26, 1985,
as amended; an Investment Advisory Agreement between U.S. Trust and the Company
dated December 16, 1986, as amended; an Investment Advisory Agreement between
U.S. Trust and the Company dated May 27, 1987, as amended; an Investment
Advisory Agreement between U.S. Trust and the Company dated February 1, 1991; a
Sub-Advisory Agreement dated May 27, 1987 between U.S. Trust and Foreign and
Colonial Asset Management ("FACAM"); a Sub-Advisory Agreement dated December 15,
1992 between U.S. Trust and FACAM; and a Sub-Advisory Agreement dated February
16, 1994 between U.S. Trust and Foreign and Colonial Emerging Markets Limited
(the "Advisory Agreements");
(f) Resolutions of the Company's Board of Directors appointing
Edgewood Services, Inc. (the "Distributor") as the
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<PAGE>
Company's distributor for the Funds and approving a Distribution Agreement
between the Distributor and the Company dated as of August 1, 1995 (the
"Distribution Agreement");
(g) Resolutions of the Company's Board of Directors appointing
Federated Administrative Services ("Federated") and Mutual Funds Service Company
("MFSC") as the administrators for the Funds and approving an Administration
Agreement among Federated, MFSC and the Company dated as of August 1, 1995 (the
"Administration Agreement");
(h) The Advisory Agreements, the Distribution Agreement and the
Administration Agreement;
(i) The Company's Notification of Registration filed pursuant to
Section 8(a) of the 1940 Act on Form N-8A with the Securities and Exchange
Commission ("SEC") on August 8, 1984;
(j) Post-Effective Amendment No. 21 to the Company's Registration
Statement on Form N-1A under the 1940 Act and the 1933 Act, as filed with the
SEC on August 1, 1995 (File No. 2-92665) relating to shares of the Company's
Class A Common Stock, $.001 par value per share, which represent interests in
the Money Fund; Class B Common Stock, $.001 par value per share, which
represents interests in the Government Money Fund; Class C Common Stock and
Class C Common Stock - Special Series 1, $.001 par value per share, which
represent interests in the Equity Fund; Class D Common Stock, $.001 par value
per share, which represent interests in the Managed Income Fund; Class E Common
Stock and Class E Common Stock - Special Series 1, $.001 par value per share,
which represent interests in the Income and Growth Fund;
-7-
<PAGE>
Class F Common Stock, $.001 par value per share, which represent interests in
the International Fund; Class G Common Stock, $.001 par value per share, which
represent interests in the Treasury Money Fund; Class H Common Stock and Class H
Common Stock -Special Series 1, $.001 par value per share, which represent
interests in the Early Life Cycle Fund; Class I Common Stock and Class I Common
Stock - Special Series 1, $.001 par value per share, which represent interests
in the Long-Term Supply of Energy Fund; Class J Common Stock and Class J Common
Stock -Special Series 1, $.001 par value per share, which represent interests in
the Productivity Enhancers Fund; Class K Common Stock and Class K Common Stock -
Special Series 1, $.001 par value per share, which represent interests in the
Environmentally-Related Products and Services Fund; Class L Common Stock and
Class L Common Stock - Special Series 1, $.001 par value per share, which
represent interests in the Aging of America Fund; Class M Common Stock and Class
M Common Stock -Special Series 1, $.001 par value per share, which represent
interests in the Communication and Entertainment Fund; Class N Common Stock and
Class N Common Stock - Special Series 1, $.001 par value per share, which
represent interests in the Business and Industrial Restructuring Fund; Class O
Common Stock and Class O Common Stock - Special Series 1, $.001 par value per
share, which represent interests in the Global Competitors Fund; Class P Common
Stock, $.001 par value per share, which represent interests in the Emerging
Americas Fund; Class Q Common Stock,
-8-
<PAGE>
$.001 par value per share, which represent interests in the Pacific/Asia Fund;
Class R Common Stock, $.001 par value per share, which represent interests in
the Pan European Fund; Class S Common Stock, $.001 par value per share, which
represent interests in the Short-Term Government Securities Fund; and Class T
Common Stock, $.001 par value per share, which represent interests in the
Intermediate-Term Managed Income Fund (such shares and shares of the Company
hereafter classified by the Company's Board of Directors are hereinafter
collectively called "Shares"), and all amendments thereto; and
(k) The Company's most recent prospectuses (such prospectuses, as
currently in effect, and all amendments and supplements thereto and future
versions thereof are herein called the "Prospectuses").
The Company will furnish U.S. Trust from time to time with copies of
all amendments of or supplements to the foregoing, if any, and with comparable
documents with respect to any Fund of the Company organized after the date of
this Agreement that is covered by this Agreement. The Company shall also
deliver to U.S. Trust the following documents on or before the effective date of
any increase or decrease in the total number of Shares authorized to be issued
by the Company: (a) a certified copy of the amendment of the Articles of
Incorporation giving effect to such increase or decrease, and (b) in the case of
an increase, if the appointment of U.S. Trust was theretofore expressly limited,
-9-
<PAGE>
a certified copy of a resolution of the Board of Directors of the Company
increasing the authority of U.S. Trust.
4. SERVICES PROVIDED
(a) U.S. Trust will provide the following services subject to the
control, direction and supervision of the Board of Directors and in compliance
with the objectives, policies and limitations set forth in the Company's
Registration Statement, Charter and By-Laws; applicable laws and regulations;
and all resolutions and policies implemented by the Board of Directors.
The following is a general description of the transfer agency services
U.S. Trust shall provide to the Company.
A. SHAREHOLDER RECORDKEEPING. Maintain records showing for each
Fund shareholder the following: (i) name, address, appropriate
tax certification and tax identifying number; (ii) number of
shares of each Fund; (iii) historical information including, but
not limited to, dividends paid and date and price of all
transactions including individual purchase and redemptions and
appropriate supporting documents; and (iv) any dividend
reinvestment order, application, dividend to a specific address
and correspondence relating to the current maintenance of the
account.
B. SHARE ISSUANCE. Record the issuance of shares of each Fund.
Except as specifically agreed in writing between U.S. Trust and
the Company, U.S.
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<PAGE>
Trust 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 as
policies and procedures of the Stock Transfer Association
recognize such laws. U.S. Trust shall notify the Company in case
any proposed issue of shares by the Company shall result in an
over-issuance. In case any issue of shares would result in such
an over-issue, U.S. Trust shall refuse to issue said shares and
shall not countersign and issue certificates (if any) for such
shares.
C. PURCHASE ORDERS. Process all orders for the purchase of shares
of the Company in accordance with the Company's Prospectuses,
including electronic transmissions, which the Company
acknowledges it has authorized. Upon receipt of any check or
other payment for purchase of shares of the Company from an
investor, U.S. Trust will (i) stamp the order or other
documentation with the date and time of receipt, (ii) forthwith
process the same for collection, (iii) determine the amounts
thereof due the Company, and notify the Company of such
determination and deposit, such notification to be given on a
daily basis of the total amounts determined and deposited to the
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<PAGE>
Company's custodian bank account during such day. U.S. Trust
shall then credit the share account of the investor with the
number of Fund shares to be purchased made on the date such
payment is received by U.S. Trust, as set forth in the Company's
Prospectus and shall promptly mail a confirmation of said
purchase to the investor, all subject to any instructions which
the Company may give to U.S. Trust with respect to the timing or
manner of acceptance of orders for shares relating to payments so
received by it. Any purchase order received by U.S. Trust, which
is not in good order will be rejected immediately.
D. REDEMPTION ORDERS. Receive and stamp with the date and time 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 Company, U.S. Trust shall on each business day
notify the Company of the total number of shares presented and
covered by such requests received by U.S. Trust on such day; (ii)
within the time specified in the Prospectus and if not so
specified on or prior to the seventh calendar day
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<PAGE>
succeeding any such requests received by U.S. Trust, shall notify
The Chase Manhattan Bank, N.A. (the "Custodian"), subject to
instructions from the Company, to transfer monies to such account
as designated by U.S. Trust for such payment to the redeeming
shareholder of the applicable redemption or repurchase price;
(iii) if any such certificate or request for redemption of
repurchase does not comply with applicable standards, U.S. Trust
shall promptly notify the investor of such fact, together with
the reason therefor, and shall effect such redemption at the
Company's price next determined after receipt of documents
complying with said standards.
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
Company's Prospectuses. The administrator shall be permitted to
redeem, exchange and/or transfer Fund shares from any account for
which such services have been authorized, including electronic
transmissions.
F. TRANSFER OF SHARES. Upon receipt by U.S. Trust of documentation
in proper form to effect a transfer of shares, including in the
case of shares for
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<PAGE>
which certificates have been issued the share certificates in
proper form for transfer, U.S. Trust will register such transfer
on the Company's shareholder records maintained by U.S. Trust
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. Address and mail all communications
by the Company to its shareholders promptly following the
delivery by the Company of the material to be mailed.
H. PROXY MATERIALS. Prepare shareholder lists, mail and certify as
to the mailing of proxy materials, receive the tabulated proxy
cards, render periodic reports to the Company on the progress of
such tabulation, and provide the Company with inspectors of
election at any meeting of shareholders.
I. SHARE CERTIFICATES. If a shareholder of the Company requests a
certificate representing his shares, U.S. Trust as Transfer Agent
or CGFSC as sub-transfer agent, will countersign and mail, a
share certificate to the investor at his/her
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<PAGE>
address as it appears on the Company's transfer books. U.S.
Trust shall supply, at the expense of the Company a supply of
blank share certificates. The certificates shall be properly
signed, manually or by facsimile, as authorized by the Company,
and shall bear the Company's seal or facsimile; and
notwithstanding the death, resignation or removal of any officers
of the Company authorized to sign certificates, U.S. Trust and/or
CGFSC may, until otherwise directed by the Company, continue to
countersign certificates which bear the manual or facsimile
signature of such officer.
J. RETURNED CHECKS. In the event that any check or other order for
the payment of money is returned unpaid for any reason, U.S.
Trust will take such steps, including redepositing the check for
collection or returning the check to the investor, as U.S. Trust
may, at its discretion, deem appropriate and notify the Company
of such action, or as the Company may instruct. However, subject
to Paragraph 7(b) below, the Company remains ultimately liable
for any returned checks of its shareholders.
K. SHAREHOLDER CORRESPONDENCE. Acknowledge all correspondence from
shareholders relating to their
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share accounts and undertake such other shareholder
correspondence as may from time to time be mutually agreed upon.
L. TAX REPORTING. U.S. Trust shall issue appropriate shareholder
tax forms on an annual basis.
M. DIVIDEND DISBURSING. U.S. Trust will serve as the Company's
dividend disbursing agent. U.S. Trust will prepare and mail
checks, place wire transfers of credit income and capital gain
payments to shareholders. The Company will advise U.S. Trust 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. U.S. Trust will, on or before the payment date of
any such dividend or distribution, notify the Company'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 Company will instruct its
Custodian to make available to U.S. Trust 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.
(b) U.S. Trust will also:
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(i) provide office facilities with respect to the provision of the
services contemplated herein (which may be in the offices of U.S. Trust or a
corporate affiliate of U.S. Trust);
(ii) provide the services of individuals to serve as officers of the
Company who will be designated by U.S. Trust and elected by the Board of
Directors subject to reasonable Board approval;
(iii) provide or otherwise obtain personnel sufficient, in U.S.
Trust's sole discretion, for provision of the services contemplated herein;
(iv) furnish equipment and other materials, which U.S. Trust, 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
accordance with the 1940 Act and the rules thereunder. To the extent required
by the 1940 Act and the rules thereunder, U.S. Trust agrees that all such
records prepared or maintained by U.S. Trust relating to the services provided
hereunder are the property of the Company and will be preserved for the periods
prescribed under the 1940 Act and the rules thereunder, maintained at the
Company's expense, and made available in accordance with such Act and rules.
U.S. Trust further agrees to surrender promptly to the Company upon its request
and cease to retain in its records and files those
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records and documents created and maintained by U.S. Trust pursuant to this
Agreement.
5. FEES; EXPENSES; EXPENSE REIMBURSEMENT.
(a) As compensation for the services rendered to the Company pursuant
to this Agreement, the Company shall pay U.S. Trust monthly $15.00 per account
and subaccount of each Fund of the Company per year or for any portion of a year
plus U.S. Trust's out-of-pocket expenses relating to such services, including,
but not limited to, expenses of postage, telephone, TWX rental and line charges,
communication forms, and checks and check processing. Such fees are to be
billed monthly and shall be due and payable upon receipt of the invoice. The
Company shall also pay U.S. Trust monthly any fees and expenses charged by any
sub-transfer agent other than CGFSC provided that the sub-transfer agent and the
fees and expenses charged by that sub-transfer agent have been approved by the
Company's Board of Directors. Upon 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 Company's assets, the value of the Company's assets and net assets shall be
computed as required by its Prospectuses, generally accepted accounting
principles, and resolutions of the Board of Directors.
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(c) U.S. Trust may, in its sole discretion, from time to time employ
or associate with such person or persons as may be appropriate to assist U.S.
Trust in the performance of this Agreement. Such person or persons may be
officers and employees who are employed or designated as officers by both U.S.
Trust and the Company. The compensation of such person or persons for such
employment shall be paid by U.S. Trust and no obligation will be incurred by or
on behalf of the Company in such respect.
(d) The Company may request additional services, additional
processing, or special reports. The Company shall submit such requests in
writing together with such specifications and documentation as may be reasonably
required by U.S. Trust. If U.S. Trust elects to provide such services or
arrange for their provision, it shall be entitled to additional fees and
expenses at its customary rates and charges as approved by the Company's Board
of Directors.
(e) U.S. Trust 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 Company agrees to promptly reimburse U.S. Trust
for any equipment and supplies specially ordered by or for the Company through
U.S. Trust, and for any other expenses not contemplated by this Agreement that
U.S. Trust may incur on the Company's behalf, as consented to by the Company
from time to time. Expenses to be incurred in the operation of the Company and
to be borne by the Company, include, but are not limited to: taxes; interest;
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brokerage fees and commissions, salaries and fees of officers and directors who
are not officers, directors, shareholders or employees of U.S. Trust, or the
Company's investment adviser, or distributor or other service providers; SEC and
state Blue Sky registration and qualification fees, levies, fines and other
charges; EDGAR filing fees, processing services and related fees; advisory and
administration fees; charges and expenses of pricing and data services,
independent public accountants and custodians; insurance premiums including
fidelity bond premiums; 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 Company (the
Company's distributor to bear the expense of all other printing, production, and
distribution of prospectuses, statements of additional information, and
marketing materials except as otherwise approved by the Board of Directors of
the Company); expenses of printing and production costs of shareholders' reports
and proxy statements and materials; costs 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; trade association
dues and expenses; and any extraordinary expenses and other customary Fund
expenses. In addition, U.S. Trust 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
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determining the net asset values of the Company, and the Company will reimburse
U.S. Trust for the Company'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 Company.
(f) All fees, out-of-pocket expenses, or additional charges of U.S.
Trust shall be billed on a monthly basis and shall be due and payable upon
receipt of the invoice.
U.S. Trust will render, after the close of each month in which
services have been furnished, a statement reflecting all of the charges for such
month.
6. PROPRIETARY AND CONFIDENTIAL INFORMATION. U.S. Trust agrees on behalf
of itself and its employees to treat confidentially and as proprietary
information of the Company, all records and other information relative to the
Company's prior, present or potential shareholders, and to not use such records
and information for any purpose other than performance of U.S. Trust's
responsibilities and duties hereunder. U.S. Trust may seek a waiver of such
confidentiality provisions by furnishing reasonable prior notice to the Company
and obtaining approval in writing from the Company, which approval shall not be
unreasonably withheld and may not be withheld where U.S. Trust may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities. Waivers of
confidentiality are automatically effective without further action by U.S. Trust
with
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respect to Internal Revenue Service levies, subpoenas and similar actions, or
with respect to any request by the Company.
7. DUTIES, RESPONSIBILITIES, AND LIMITATION OF LIABILITY.
(a) In the performance of its duties hereunder, U.S. Trust shall be
obligated to act in good faith in performing the services provided for under
this Agreement. In performing its services hereunder, U.S. Trust shall be
entitled to rely on any oral or written instructions, notices or other
communications, including electronic transmissions, from the Company and its
custodians, officers and directors, investors, agents and other service
providers which U.S. Trust reasonably believes to be genuine, valid and
authorized. U.S. Trust shall also be entitled to consult with and rely on the
advice and opinions of outside legal counsel retained by the Company, as
necessary or appropriate.
(b) Except as provided herein, U.S. Trust 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 caused by or resulting from willful misfeasance, bad faith
or negligence on U.S. Trust's part in the performance of its duties or from
reckless disregard by U.S. Trust of its obligations and duties under this
Agreement. Any person, even though also an officer, director, partner, employee
or agent of U.S. Trust, who may be or become an officer, director, partner,
employee or agent of the Company, shall be deemed when rendering
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services to the Company in that capacity or acting on any business of the
Company in that capacity (other than services or business in connection with
U.S. Trust's duties hereunder) to be rendering such services to or acting solely
for the Company and not as an officer, director, partner, employee or agent or
person under the control or direction of U.S. Trust even though paid by U.S.
Trust.
(c) Subject to Paragraphs 7(b) and (d), U.S. Trust shall not be
responsible for, and the Company shall indemnify and hold U.S. Trust 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 U.S. Trust or its officers or agents
required to be taken pursuant to this Agreement;
(ii) the reliance on or use by U.S. Trust or its officers or
agents of information, records, or documents which are received by U.S. Trust or
its officers or agents and furnished to it or them by or on behalf of the
Company, and which have been prepared or maintained by the Company or any third
party on behalf of the Company other than U.S. Trust or any of its affiliates;
(iii) the Company's refusal or failure to comply with the
terms of this Agreement or the Company's lack of good faith, or its actions, or
lack thereof, involving gross negligence or willful misfeasance;
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(iv) the material breach of any representation or warranty of
the Company hereunder;
(v) the legal taping or other form of legal recording of
telephone conversations or other legal forms of electronic communications with
investors and shareholders, or reliance by U.S. Trust or its officers or agents
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 U.S. Trust or its
officers or agents of any proper instructions reasonably believed to be duly
authorized, or requests of the Company or recognition by U.S. Trust or its
officers or agents of any share certificates which are reasonably believed to
bear the proper signatures of the officers of the Company and the proper
countersignature of any transfer agent or registrar of the Company;
(vii) any delays, inaccuracies, errors in or omissions from
data provided to U.S. Trust or its officers or agents by data and pricing
services;
(viii) the offer or sale of shares by the Company 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 (1) resulting
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from activities, actions, or omissions by the Company or its other service
providers and agents other than U.S. Trust or its officers or agents or any of
their affiliates, or (2) existing or arising out of activities, actions or
omissions by or on behalf of the Company other than by U.S. Trust or its
officers or agents or any of their affiliates prior to the effective date of
this Agreement;
(ix) any failure of the Company's registration statement to
comply with the 1933 Act and the 1940 Act (including the rules and regulations
thereunder) and any other applicable laws, or any untrue statement of a material
fact or omission of a material fact necessary to make any statement therein not
misleading in a Fund's prospectus, unless such failure, misstatement or omission
relates to, results from or otherwise arises in connection with, actions,
inactions and/or information provided by U.S. Trust or its officers or agents;
and
(x) the actions taken by the Company, its investment adviser
(other than U.S. Trust or its officers or agents or any of their affiliates),
and its distributor in compliance with applicable securities, tax, commodities
and other laws, rules and regulations, or the failure to so comply.
(d) Notwithstanding anything herein to the contrary, U.S. Trust shall
be as fully responsible to the Company for the acts and omissions of any sub-
transfer agent as U.S. Trust is for its own acts and omissions.
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8. TERM. This Agreement shall become effective on the date first
hereinabove 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 120 days' prior written
notice provided that should U.S. Trust fail to be registered pursuant to Section
17A of the 1934 Act as a transfer agent at any time, the Company may, on written
notice to U.S. Trust, immediately terminate this Agreement. Upon termination of
this Agreement, the Company shall pay to U.S. Trust such compensation and any
out-of-pocket or other reimbursable expenses which may become due or payable
under the terms hereof as of the date of termination or after the date that the
provision of services ceases, whichever is later.
9. 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):
If to the Company:
Drinker Biddle & Reath LLP
1345 Chestnut Street, Suite 1100
Philadelphia, PA 19107
Attn: W. Bruce McConnel, III
Fax: (215) 988-2757
If to U.S. Trust:
United States Trust Company of New York
114 West 47th Street
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New York, NY 10036
Attention: Maureen Scannell Bateman
Fax: (212) 852-1310
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.
10. ASSIGNMENT AND DELEGATION. This Agreement shall not be assigned and
the rights, duties and obligations of the parties hereunder may not be
subcontracted or delegated by either of the parties hereto without the prior
consent in writing of the other party.
11. 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.
12. FORCE MAJEURE. U.S. Trust 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, fires, floods, wars,
acts of civil or military authorities, or governmental actions, nor shall any
such failure or delay give the Company the right to terminate this Agreement.
During the term of this Agreement, at no additional cost to the Company, U.S.
Trust shall
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provide a facility capable of safeguarding the transfer agency and dividend
disbursing records of the Company in case of damage to the primary facility
providing those services (the "Back-Up Facility"). Transfer of the transfer
agency and dividend records of the Company to the Back-Up Facility shall be at
U.S. Trust's expense, shall commence immediately after damage to the primary
facility results in an inability to provide the transfer agency and dividend
disbursing services, and shall be completed within 72 hours of commencement.
After the primary facility has recovered, U.S. Trust shall again utilize it to
provide the transfer agency and dividend disbursing services to the Company at
no additional cost to the Company. U.S. Trust shall use reasonable efforts to
provide the services described in this Agreement from the Back-Up Facility.
13. USE OF NAME. The Company and U.S. Trust 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 approved by the other or such other's affiliates, designees, or
assignees except where required by the SEC or other regulatory authorities.
14. 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
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writing signed by the party against which enforcement of the change, discharge
or termination is sought.
15. 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.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK, INCLUDING THE DETERMINATION OF WHEN AN
"ASSIGNMENT" HAS OCCURRED.
This Agreement may be executed in one or more counterparts and all
such counterparts will constitute one and the same instrument.
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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.
UST MASTER FUNDS, INC.
By: /s/ Alfred C. Tannachion
------------------------
Name: Alfred C. Tannachion
--------------------
Title: President
-------------------
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/ Kenneth G. Walsh
-------------------------
Name: Kenneth G. Walsh
-----------------------
Title: Executive Vice President
------------------------
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EXHIBIT 9(d)
MUTUAL FUNDS SUB-TRANSFER AGENCY AGREEMENT
AGREEMENT made as of September 1, 1995 by and between United States
Trust Company of New York ("U.S. Trust"), and Chase Global Funds Services
Company ("Sub-Transfer Agent").
W I T N E S S E T H:
WHEREAS, UST Master Funds, Inc. (the "Company") a Maryland
corporation, is registered as an open-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Company is authorized to issue shares of Common Stock in
separate series and classes representing interests in separate portfolios of
securities and other assets;
WHEREAS, the Company has retained U.S. Trust to serve as the Company's
transfer agent, registrar and dividend disbursing agent;
WHEREAS, U.S. Trust desires to assign its duties and obligations with
respect to the provision of such services to Sub-Transfer Agent, and the Company
has acknowledged the right of U.S. Trust to make such assignment provided U.S.
Trust shall be as fully responsible to the Company for the acts and omissions of
Sub-Transfer Agent as U.S. Trust is for its own acts and omissions;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
<PAGE>
1. APPOINTMENT. U.S. Trust hereby appoints Sub-Transfer Agent to serve
as sub-transfer agent, sub-registrar and sub-dividend disbursing agent for each
class and/or series of Common Stock of the Company with respect to its existing
Funds (as hereinafter defined) for the period and on the terms set forth in this
Agreement. In the event that the Company establishes additional classes or
series other than the Common Stock of the Funds covered by this Agreement with
respect to which U.S. Trust desires to retain Sub-Transfer Agent to serve as
sub-transfer agent, sub-registrar and sub-dividend disbursing agent hereunder,
U.S. Trust shall notify Sub-Transfer Agent in writing, whereupon such fund 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 the compensation payable on behalf of such new Fund, may be modified
in writing by U.S. Trust and Sub-Transfer Agent at the time). Sub-Transfer
Agent accepts such appointment and agrees to furnish the services herein set
forth in return for the compensation as provided in Paragraph 5 of this
Agreement.
2. REPRESENTATIONS AND WARRANTIES.
(a) U.S. Trust and Sub-Transfer Agent represent and warrant to each
other that:
(i) it is empowered under applicable laws and by its charter
and by-laws to enter into and perform this Agreement;
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(ii) all requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement;
(iii) it is duly registered as a transfer agent under Section 17A of
the Securities Exchange Act of 1934, as amended (the "1934 Act"). Each shall
promptly give written notice to the other and the Company in the event that its
registration is revoked or a proceeding is commenced that could result in such
revocation;
(iv) it has been in, and shall continue to be in, compliance with all
provisions of law, including Section 17A(c) of the 1934 Act, required in
connection with the performance of its duties under this Agreement;
(v) it 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 its ability to perform its duties and obligations
under this Agreement; and
(vii) its entrance into this Agreement shall not cause a material
breach or be in material conflict with any other agreement or obligation of it
or any law or regulation applicable to it;
U.S. Trust represents and warrants to Sub-Transfer Agent that:
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(i) U.S. Trust is a state chartered bank and trust company
organized and existing under the laws of the State of New York;
(c) Sub-Transfer Agent represents and warrants to U.S. Trust that:
(i) Sub-Transfer Agent is a Delaware corporation, duly organized
and existing and in good standing under the laws of Delaware;
3. DELIVERY OF DOCUMENTS. U.S. Trust has furnished Sub-Transfer Agent
with copies properly certified or authenticated of each of the following:
(a) Resolutions of the Company's Board of Directors authorizing the
appointment of U.S. Trust as transfer agent, registrar and dividend disbursing
agent for each class and/or series of Common Stock of the Company and approving
the Mutual Funds Transfer Agency Agreement made as of September 1, 1995 by and
between the Company and U.S. Trust;
(b) Incumbency and signature certificates identifying and containing
the signatures of the Company's officers and/or the persons authorized to sign
Written Instructions, as hereafter defined, on behalf of the Company;
(c) The Company's Charter;
(d) The Company's By-Laws;
(e) Resolutions of the Company's Board of Directors appointing U.S.
Trust as the investment adviser to the Company's Money, Government Money,
Equity, Managed Income, Income and
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Growth, International, Treasury Money, Early Life Cycle, Long-Term Supply of
Energy, Productivity Enhancers, Environmentally-Related Products and Services,
Aging of America, Communication and Entertainment, Business and Industrial
Restructuring, Global Competitors, Emerging Americas, Pacific/Asia, Pan
European, Short-Term Government Securities and Intermediate-Term Managed Income
Funds (herein "the Funds") and resolutions of the Company's Board of Directors
and Fund shareholders ("Shareholders") approving an Investment Advisory
Agreement between U.S. Trust and the Company dated February 6, 1985, as amended;
an Investment Advisory Agreement between U.S. Trust and the Company dated
November 26, 1985, as amended; an Investment Advisory Agreement between U.S.
Trust and the Company dated December 16, 1986, as amended; an Investment
Advisory Agreement between U.S. Trust and the Company dated May 27, 1987, as
amended; an Investment Advisory Agreement between U.S. Trust and the Company
dated February 1, 1991; a Sub-Advisory Agreement dated May 27, 1987 between U.S.
Trust and Foreign and Colonial Asset Management ("FACAM"); a Sub-Advisory
Agreement dated December 15, 1992 between U.S Trust and FACAM; and a Sub-
Advisory Agreement dated February 16, 1994 between U.S. Trust and Foreign and
Colonial Emerging Markets Limited (the "Advisory Agreements");
(f) Resolutions of the Company's Board of Directors appointing
Edgewood Services, Inc. (the "Distributor") as the Company's distributor for the
Funds and approving a Distribution
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Agreement between the Distributor and the Company dated as of August 1, 1995
(the "Distribution Agreement");
(g) Resolutions of the Company's Board of Directors appointing
Federated Administrative Services ("Federated") and Mutual Funds Service Company
("MFSC") as the administrators for the Funds and approving an Administration
Agreement among Federated, MFSC and the Company dated as of August 1, 1995 (the
"Administration Agreement");
(h) The Advisory Agreements, the Distribution Agreement and the
Administration Agreement;
(i) The Company's Notification of Registration filed pursuant to
Section 8(a) of the 1940 Act on Form N-8A with the Securities and Exchange
Commission ("SEC") on August 8, 1984;
(j) Post-Effective Amendment No. 21 to the Company's Registration
Statement on Form N-1A under the 1940 Act and the 1933 Act, as filed with the
SEC on August 1, 1995 (File No. 2-92665) relating to shares of the Company's
Class A Common Stock, $.001 par value per share, which represent interests in
the Money Fund; Class B Common Stock, $.001 par value per share, which
represents interests in the Government Money Fund; Class C Common Stock and
Class C Common Stock - Special Series 1, $.001 par value per share, which
represent interests in the Equity Fund; Class D Common Stock, $.001 par value
per share, which represent interests in the Managed Income Fund; Class E Common
Stock and Class E Common Stock - Special Series 1, $.001 par value per share,
which represent interests in the Income and Growth Fund; Class F Common Stock,
$.001 par value per share, which represent
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interests in the International Fund; Class G Common Stock, $.001 par value per
share, which represent interests in the Treasury Money Fund; Class H Common
Stock and Class H Common Stock -Special Series 1, $.001 par value per share,
which represent interests in the Early Life Cycle Fund; Class I Common Stock and
Class I Common Stock - Special Series 1, $.001 par value per share, which
represent interests in the Long-Term Supply of Energy Fund; Class J Common Stock
and Class J Common Stock - Special Series 1, $.001 par value per share, which
represent interests in the Productivity Enhancers Fund; Class K Common Stock and
Class K Common Stock - Special Series 1, $.001 par value per share, which
represent interests in the Environmentally-Related Products and Services Fund;
Class L Common Stock and Class L Common Stock - Special Series 1, $.001 par
value per share, which represent interests in the Aging of America Fund; Class M
Common Stock and Class M Common Stock -Special Series 1, $.001 par value per
share, which represent interests in the Communication and Entertainment Fund;
Class N Common Stock and Class N Common Stock - Special Series 1, $.001 par
value per share, which represent interests in the Business and Industrial
Restructuring Fund; Class O Common Stock and Class O Common Stock - Special
Series 1, $.001 par value per share, which represent interests in the Global
Competitors Fund; Class P Common Stock, $.001 par value per share, which
represent interests in the Emerging Americas Fund; Class Q Common Stock, $.001
par value per share, which represent interests in the
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Pacific/Asia Fund; Class R Common Stock, $.001 par value per share, which
represent interests in the Pan European Fund; Class S Common Stock, $.001 par
value per share, which represent interests in the Short-Term Government
Securities Fund; and Class T Common Stock, $.001 par value per share, which
represent interests in the Intermediate-Term Managed Income Fund (such shares
and shares of the Company hereafter classified by the Company's Board of
Directors are hereinafter collectively called "Shares"), and all amendments
thereto; and
(k) The Company's most recent prospectuses (such prospectuses, as
currently in effect, and all amendments and supplements thereto and future
versions thereof are herein called the "Prospectuses").
U.S. Trust will furnish Sub-Transfer Agent from time to time with
copies of all amendments of or supplements to the foregoing, if any, and with
comparable documents with respect to any Fund of the Company organized after the
date of this Agreement that is covered by this Agreement. U.S. Trust shall also
deliver to Sub-Transfer Agent the following documents on or before the effective
date of any increase or decrease in the total number of Shares authorized to be
issued by the Company: (a) a certified copy of the amendment of the Articles of
Incorporation giving effect to such increase or decrease, and (b) in the case of
an increase, if the appointment of U.S. Trust was theretofore expressly limited,
a certified copy of a resolution
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of the Board of Directors of the Company increasing the authority of U.S. Trust.
4. SERVICES PROVIDED
(a) Sub-Transfer Agent will provide the following services subject to
the control, direction and supervision of U.S. Trust and in compliance with the
objectives, policies and limitations set forth in the Company's Registration
Statement, Charter and By-Laws; applicable laws and regulations; and all
resolutions and policies implemented by the Board of Directors.
The following is a general description of the transfer agency services
Sub-Transfer Agent shall provide to the Company.
A. SHAREHOLDER RECORDKEEPING. Maintain records showing for each
Fund shareholder the following: (i) name, address, appropriate
tax certification and tax identifying number; (ii) number of
shares of each Fund; (iii) historical information including, but
not limited to, dividends paid and date and price of all
transactions including individual purchase and redemptions and
appropriate supporting documents; and (iv) any dividend
reinvestment order, application, dividend to a specific address
and correspondence relating to the current maintenance of the
account.
B. SHARE ISSUANCE. Record the issuance of shares of each Fund.
Except as specifically agreed in writing between U.S. Trust and
Sub-Transfer Agent,
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Sub-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 as policies and procedures of the Stock Transfer
Association recognize such laws. Sub-Transfer Agent shall notify
U.S. Trust and the Company in case any proposed issue of shares
by the Company shall result in an over-issuance. In case any
issue of shares would result in such an over-issue, Sub-Transfer
Agent shall refuse to issue said shares and shall not countersign
and issue certificates (if any) for such shares.
C. PURCHASE ORDERS. Process all orders for the purchase of shares
of the Company in accordance with the Company's Prospectuses,
including electronic transmissions, which the Company has
acknowledged it has authorized. Upon receipt of any check or
other payment for purchase of shares of the Company from an
investor, Sub-Transfer Agent will (i) stamp the order or other
documentation with the date and time of receipt, (ii) forthwith
process the same for collection, (iii) determine the amounts
thereof due the
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Company, and notify U.S Trust and the Company of such
determination and deposit, such notification to be given on a
daily basis of the total amounts determined and deposited to the
Company's custodian bank account during such day. Sub-Transfer
Agent shall then credit the share account of the investor with
the number of Fund shares to be purchased made on the date such
payment is received by Sub-Transfer Agent, as set forth in the
Company's Prospectus and shall promptly mail a confirmation of
said purchase to the investor, all subject to any instructions
which the Company or U.S. Trust may give to Sub-Transfer Agent
with respect to the timing or manner of acceptance of orders for
shares relating to payments so received by it. Any purchase
order received by Sub-Transfer Agent, which is not in good order
will be rejected immediately.
D. REDEMPTION ORDERS. Receive and stamp with the date and time 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 Company, Sub-Transfer Agent shall on each
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business day notify the Company of the total number of shares
presented and covered by such requests received by Sub-Transfer
Agent on such day; (ii) within the time specified in the
Prospectus and if not so specified on or prior to the seventh
calendar day succeeding any such requests received by Sub-
Transfer Agent, shall notify The Chase Manhattan Bank, N.A. (the
"Custodian"), subject to instructions from the Company or U.S.
Trust, to transfer monies to such account as designated by Sub-
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 of repurchase does not
comply with applicable standards, Sub-Transfer Agent shall
promptly notify the investor of such fact, together with the
reason therefor, and shall effect such redemption at the
Company's price next determined after receipt of documents
complying with said standards.
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
Company's Prospectuses. The administrator shall
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be permitted to redeem, exchange and/or transfer Fund shares from
any account for which such services have been authorized,
including electronic transmissions.
F. TRANSFER OF SHARES. Upon receipt by Sub-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, Sub-
Transfer Agent will register such transfer on the Company's
shareholder records maintained by Sub-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. Address and mail all communications
by the Company to its shareholders promptly following the
delivery by the Company or U.S. Trust of the material to be
mailed.
H. PROXY MATERIALS. Prepare shareholder lists, mail and certify as
to the mailing of proxy materials, receive the tabulated proxy
cards, render periodic reports to the Company and U.S. Trust on
the progress of such tabulation, and provide the
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<PAGE>
Company with inspectors of election at any meeting of
shareholders.
I. SHARE CERTIFICATES. If a shareholder of the Company requests a
certificate representing his shares, Sub-Transfer Agent as sub-
transfer agent will countersign and mail, a share certificate to
the investor at his/her address as it appears on the Company's
transfer books. Sub-Transfer Agent shall supply, at the expense
of the Company a supply of blank share certificates. The
certificates shall be properly signed, manually or by facsimile,
as authorized by the Company, and shall bear the Company's seal
or facsimile; and notwithstanding the death, resignation or
removal of any officers of the Company authorized to sign
certificates, Sub-Transfer Agent may, until otherwise directed by
the Company or U.S. Trust, continue to countersign certificates
which bear the manual or facsimile signature of such officer.
J. RETURNED CHECKS. In the event that any check or other order for
the payment of money is returned unpaid for any reason, Sub-
Transfer Agent will take such steps, including redepositing the
check for collection or returning the check to the investor, as
Sub-Transfer Agent may, at its discretion, deem appropriate and
notify the
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<PAGE>
Company and U.S. Trust of such action, or as the Company or U.S.
Trust may instruct. However, subject to Paragraph 7(b) below,
the Company remains ultimately liable for any returned checks of
its shareholders.
K. 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.
L. TAX REPORTING. Sub-Transfer Agent shall issue appropriate
shareholder tax forms on an annual basis.
M. DIVIDEND DISBURSING. Sub-Transfer Agent will serve as the
Company's dividend disbursing agent. Sub-Transfer Agent will
prepare and mail checks, place wire transfers of credit income
and capital gain payments to shareholders. The Company or U.S.
Trust will advise Sub-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. Sub-Transfer
Agent will, on or before the payment date of any such dividend or
distribution, notify the Company's Custodian of the estimated
amount required to pay any portion of such dividend or
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<PAGE>
distribution payable in cash, and on or before the payment date
of such distribution, the Company will instruct its Custodian to
make available to Sub-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.
(b) Sub-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 Sub-Transfer Agent
or a corporate affiliate of Sub-Transfer Agent);
(ii) provide the services of individuals to serve as officers of the
Company who will be designated by Sub-Transfer Agent and elected by the
Company's Board of Directors subject to reasonable Board approval;
(iii) provide or otherwise obtain personnel sufficient, in Sub-
Transfer Agent's sole discretion, for provision of the services contemplated
herein;
(iv) furnish equipment and other materials, which Sub-Transfer Agent,
in its sole discretion, believes are necessary or desirable for provision of the
services contemplated herein; and
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<PAGE>
(v) keep records relating to the services provided hereunder in
accordance with the 1940 Act and the rules thereunder. To the extent required
by the 1940 Act and the rules thereunder, Sub-Transfer Agent agrees that all
such records prepared or maintained by Sub-Transfer Agent relating to the
services provided hereunder are the property of the Company and will be
preserved for the periods prescribed under the 1940 Act and the rules
thereunder, maintained at the Company's expense, and made available in
accordance with such Act and rules. Sub-Transfer Agent further agrees to
surrender promptly to the Company upon its request and cease to retain in its
records and files those records and documents created and maintained by Sub-
Transfer Agent pursuant to this Agreement.
5. FEES; EXPENSES; EXPENSE REIMBURSEMENT.
(a) As compensation for the services rendered to the Company for U.S.
Trust pursuant to this Agreement, U.S. Trust shall pay Sub-Transfer Agent
monthly $15.00 per account and subaccount of each Fund of the Company per year
or for any portion of a year plus Sub-Transfer Agent's out-of-pocket expenses
relating to such services, including, but not limited to, expenses of postage,
telephone, TWX rental and line charges, communication forms, and checks and
check processing. Such fees are to be billed monthly and shall be due and
payable upon receipt of the invoice. Upon 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
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<PAGE>
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 Company's assets, the value of the Company's assets and net assets shall be
computed as required by its Prospectuses, generally accepted accounting
principles, and resolutions of the Board of Directors.
(c) Sub-Transfer Agent may, in its sole discretion, from time to time
employ or associate with such person or persons as may be appropriate to assist
Sub-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
Sub-Transfer Agent and the Company. The compensation of such person or persons
for such employment shall be paid by Sub-Transfer Agent and no obligation will
be incurred by or on behalf of the Company or U.S. Trust in such respect.
(d) U.S. Trust may request additional services, additional processing,
or special reports. U.S. Trust shall submit such requests in writing together
with such specifications and documentation as may be reasonably required by Sub-
Transfer Agent. If Sub-Transfer Agent elects to provide such services or
arrange for their provision, it shall be entitled to additional fees and
expenses at its customary rates and charges as approved by U.S. Trust.
(e) Sub-Transfer Agent will bear all of its own expenses in connection
with the performance of the services under
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<PAGE>
this Agreement except as otherwise expressly provided herein. U.S. Trust agrees
to promptly reimburse Sub-Transfer Agent for any equipment and supplies
specially ordered by or for the Company through Sub-Transfer Agent, and for any
other expenses not contemplated by this Agreement that Sub-Transfer Agent may
incur on the Company's behalf, as consented to by U.S. Trust and the Company
from time to time. Expenses to be incurred in the operation of the Company and
to be borne by the Company, 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 U.S. Trust, or the
Company's investment adviser, or distributor or other service providers; SEC and
state Blue Sky registration and qualification fees, levies, fines and other
charges; EDGAR filing fees, processing services and related fees; advisory and
administration fees; charges and expenses of pricing and data services,
independent public accountants and custodians; insurance premiums including
fidelity bond premiums; 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 Company (the
Company's distributor to bear the expense of all other printing, production, and
distribution of prospectuses, statements of additional information, and
marketing materials except as otherwise approved by the Board of Directors of
the Company); expenses of printing and production costs of
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<PAGE>
shareholders' reports and proxy statements and materials; costs 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; trade association dues and expenses; and any extraordinary expenses
and other customary Fund expenses. In addition, Sub-Transfer 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 Company,
and U.S. Trust will reimburse Sub-Transfer Agent for the Company'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 Company.
(f) All fees, out-of-pocket expenses, or additional charges of Sub-
Transfer Agent shall be billed on a monthly basis and shall be due and payable
upon receipt of the invoice.
Sub-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.
6. PROPRIETARY AND CONFIDENTIAL INFORMATION. Sub-Transfer Agent agrees
on behalf of itself and its employees to treat confidentially and as proprietary
information of the Company, all records and other information relative to the
Company's prior, present or potential shareholders, and to not use such records
and information for any purpose other than performance of Sub-
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<PAGE>
Transfer Agent's responsibilities and duties hereunder. Sub-Transfer Agent may
seek a waiver of such confidentiality provisions by furnishing reasonable prior
notice to the Company and obtaining approval in writing from the Company, which
approval shall not be unreasonably withheld and may not be withheld where Sub-
Transfer Agent may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities. Waivers of confidentiality are automatically
effective without further action by Sub-Transfer Agent with respect to Internal
Revenue Service levies, subpoenas and similar actions, or with respect to any
request by the Company.
7. DUTIES, RESPONSIBILITIES, AND LIMITATION OF LIABILITY.
(a) In the performance of its duties hereunder, Sub-Transfer Agent
shall be obligated to act in good faith in performing the services provided for
under this Agreement. In performing its services hereunder, Sub-Transfer Agent
shall be entitled to rely on any oral or written instructions, notices or other
communications, including electronic transmissions, from the Company and its
custodians, officers and directors, investors, agents and other service
providers which Sub-Transfer Agent reasonably believes to be genuine, valid and
authorized. Sub-Transfer Agent shall also be entitled to consult with and rely
on the advice and opinions of outside legal counsel retained by the Company, as
necessary or appropriate.
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<PAGE>
(b) Sub-Transfer Agent shall not be liable for any error of judgment
or mistake of law or for any loss or expense suffered by the Company or U.S.
Trust, in connection with the matters to which this Agreement relates, except
for a loss or expense caused by or resulting from willful misfeasance, bad faith
or negligence on Sub-Transfer Agent's part in the performance of its duties or
from reckless disregard by Sub-Transfer Agent of its obligations and duties
under this Agreement. Any person, even though also an officer, director,
partner, employee or agent of Sub-Transfer Agent, who may be or become an
officer, director, partner, employee or agent of the Company, shall be deemed
when rendering services to the Company in that capacity or acting on any
business of the Company in that capacity (other than services or business in
connection with Sub-Transfer Agent's duties hereunder) to be rendering such
services to or acting solely for the Company and not as an officer, director,
partner, employee or agent or person under the control or direction of Sub-
Transfer Agent even though paid by Sub-Transfer Agent.
(c) Subject to Paragraphs 7(b) and (d), Sub-Transfer Agent shall not
be responsible for, and U.S. Trust shall indemnify and hold Sub-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:
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(i) all actions of Sub-Transfer Agent or its officers or agents
required to be taken pursuant to this Agreement;
(ii) the reliance on or use by Sub-Transfer Agent or its officers or
agents of information, records, or documents which are received by Sub-Transfer
Agent or its officers or agents and furnished to it or them by or on behalf of
the Company, and which have been prepared or maintained by the Company or any
third party on behalf of the Company other than Sub-Transfer Agent or any of its
affiliates;
(iii) U.S. Trust's refusal or failure to comply with the terms of this
Agreement or U.S. Trust's lack of good faith, or its actions, or lack thereof,
involving gross negligence or willful misfeasance;
(iv) the material breach of any representation or warranty of U.S.
Trust hereunder;
(v) the legal taping or other form of legal recording of telephone
conversations or other legal forms of electronic communications with investors
and shareholders, or reliance by Sub-Transfer Agent or its officers or agents 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 Sub-Transfer Agent or its
officers or agents of any proper instructions reasonably believed to be duly
authorized, or
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<PAGE>
requests of U.S. Trust or the Company or recognition by Sub-Transfer Agent or
its officers or agents of any share certificates which are reasonably believed
to bear the proper signatures of the officers of the Company and the proper
countersignature of any transfer agent or registrar of the Company;
(vii) any delays, inaccuracies, errors in or omissions from data
provided to Sub-Transfer Agent or its officers or agents by data and pricing
services;
(viii) the offer or sale of shares by the Company 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 (1) resulting from activities,
actions, or omissions by the Company or its other service providers and agents
other than Sub-Transfer Agent or its officers or agents or any of their
affiliates, or (2) existing or arising out of activities, actions or omissions
by or on behalf of the Company other than by Sub-Transfer Agent or its officers
or agents or any of their affiliates prior to the effective date of this
Agreement;
(ix) any failure of the Company's registration statement to comply
with the 1933 Act and the 1940 Act (including the rules and regulations
thereunder) and any other applicable laws, or any untrue statement of a material
fact or omission of a
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<PAGE>
material fact necessary to make any statement therein not misleading in a Fund's
prospectus, unless such failure, misstatement or omission relates to, results
from or otherwise arises in connection with, actions, inactions and/or
information provided by Sub-Transfer Agent or its officers or agents; and
(x) the actions taken by the Company, its investment adviser, and its
distributor in compliance with applicable securities, tax, commodities and other
laws, rules and regulations, or the failure to so comply.
(d) Notwithstanding anything herein to the contrary, U.S. Trust shall
be as fully responsible to the Company for the acts and omissions of any sub-
transfer agent as U.S. Trust is for its own acts and omissions.
8. TERM. This Agreement shall become effective on the date first
hereinabove 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 120 days' prior written
notice provided that should Sub-Transfer Agent fail to be registered pursuant to
Section 17A of the 1934 Act as a transfer agent at any time, the Company or U.S.
Trust may, on written notice to Sub-Transfer Agent, immediately terminate this
Agreement. Upon termination of this Agreement, U.S. Trust shall pay to Sub-
Transfer Agent such compensation and any out-of-pocket or other reimbursable
expenses which may become due or payable under the
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terms hereof as of the date of termination or after the date that the provision
of services ceases, whichever is later.
9. 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):
If to the Company:
Drinker Biddle & Reath LLP
1345 Chestnut Street, Suite 1100
Philadelphia, PA 19107
Attn: W. Bruce McConnel, III
Fax: (215) 988-2757
If to U.S. Trust:
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Attention: Maureen Scannell Bateman
Fax: (212) 852-1310
If to Sub-Transfer Agent:
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108-3913
Attention: Karl O. Hartmann
Fax: (617) 557-8616
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.
10. ASSIGNMENT AND DELEGATION. This Agreement shall not be assigned and
the rights, duties and obligations of the parties hereunder may not be
subcontracted or delegated by either of the
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parties hereto without the prior consent in writing of the other party.
11. 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.
12. FORCE MAJEURE. Sub-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, fires, floods,
wars, acts of civil or military authorities, or governmental actions, nor shall
any such failure or delay give the Company the right to terminate this
Agreement. During the term of this Agreement, at no additional cost to the
Company or U.S. Trust, Sub-Transfer Agent shall provide a facility capable of
safeguarding the transfer agency and dividend disbursing records of the Company
in case of damage to the primary facility providing those services (the "Back-Up
Facility"). Transfer of the transfer agency and dividend records of the Company
to the Back-Up Facility shall be at Sub-Transfer Agent's expense, shall commence
immediately after damage to the primary facility results in an inability to
provide the transfer agency and dividend disbursing services, and shall be
completed within 72 hours of
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commencement. After the primary facility has recovered, Sub-Transfer Agent
shall again utilize it to provide the transfer agency and dividend disbursing
services to the Company at no additional cost to the Company. Sub-Transfer
Agent shall use reasonable efforts to provide the services described in this
Agreement from the Back-Up Facility.
13. USE OF NAME. Sub-Transfer Agent and U.S. Trust agree not to use the
other's name nor the name of the Company nor the names of such other's nor the
Company's affiliates, designees, or assignees in any prospectus, sales
literature, or other printed material written in a manner not previously
approved by the other or the Company or such other's or the Company's
affiliates, designees, or assignees except where required by the SEC or other
regulatory authorities.
14. 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.
15. 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.
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16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE SUBSTANTIVE
LAWS OF THE STATE OF NEW YORK, INCLUDING THE DETERMINATION OF WHEN AN
"ASSIGNMENT" HAS OCCURRED.
17. THIRD PARTY BENEFICIARY. U.S. Trust and Sub-Transfer Agent expressly
agree that the Company is a third party beneficiary hereof and expressly agree
that the Company may enforce the provisions hereof.
This Agreement may be executed in one or more counterparts and all
such counterparts will constitute one and the same instrument.
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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.
CHASE GLOBAL FUNDS SERVICES COMPANY
By:/s/ Donald P. Hearn
---------------------------
Name:Donald P. Hearn
-------------------------
Title:Chairman
------------------------
UNITED STATES TRUST COMPANY
OF NEW YORK
By:/s/ Kenneth G. Walsh
---------------------------
Name:Kenneth G. Walsh
-------------------------
Title:Executive Vice President
------------------------
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EXHIBIT 11
CONSENT OF COUNSEL
We hereby consent to the use of our name and to the references to our Firm
under the caption "Counsel" in the Statement of Additional Information that is
included in Post-Effective Amendment No. 30 and Amendment No. 32 to the
Registration Statement (Nos. 2-92665; 811-4088) on Form N-1A of Excelsior Funds,
Inc. under the Securities Act of 1933 and the Investment Company Act of 1940,
respectively. 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 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
October 8, 1997
<PAGE>
EXHIBIT 13(d)
PURCHASE AGREEMENT
------------------
Excelsior Funds, Inc. (the "Company"), a Maryland corporation, and Edgewood
Services, Inc. ("Edgewood"), a New York corporation, hereby agree with each
other as follows:
1. The Company hereby offers Edgewood and Edgewood hereby purchases two
Shares of each of the Real Estate and Large Cap Growth Funds of the
Company at $10 per Share. The Company hereby acknowledges receipt
from Edgewood of funds in the total amount of $40 in full payment for
the Shares.
2. Edgewood represents and warrants to the Company that the Shares are
being acquired for investment purposes and not with a view to the
distribution thereof.
IN AGREEMENT WHEREOF, and intending to be legally bound hereby, the parties
hereto have executed this Agreement as of the 25th day of July, 1997.
EXCELSIOR FUNDS, INC.
By:/s/ Frederick S. Wonham
--------------------------
its President
EDGEWOOD SERVICES, INC.
By:/s/ Kenneth W. Pegher, Jr.
---------------------------
its Treasurer
