<PAGE>
As filed with the SEC on March 16, 1998
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. 31 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY [X]
ACT OF 1940
Excelsior Funds, Inc.: Amendment No. 33 [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)
[X] 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)
[ ] 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.
_____________________________
Title of Securities Being Registered................Class U and Class V shares
of Common Stock
<PAGE>
CROSS-REFERENCE SHEET
---------------------
EXCELSIOR FUNDS, INC.
(Large Cap Growth and Real Estate Funds)
Form N-1A, Part A, Item Prospectus Caption
- ----------------------- ------------------
1. Cover Page............................ Cover Page
2. Synopsis.............................. Prospectus Summary;
Expense Summary
3. Condensed Financial Information....... Financial
Highlights; Performance
and Yield Information
4. General Description of Registrant..... Prospectus Summary; Investment
Objectives and Policies; Portfolio
Instruments and Other Investment
Information; Investment
Limitations
5. Management of the Fund................ Management of the Funds; Custodian
and Transfer Agent
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
<PAGE>
LOGO
Large Cap Growth Fund
Real Estate 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 two separate portfolios offered to investors by Ex-
celsior Funds, Inc. ("Excelsior Fund"), an open-end, management investment com-
pany. Each portfolio (individually, a "Fund" and collectively, the "Funds") has
its own investment objective and policies as follows:
LARGE CAP GROWTH FUND is a diversified portfolio that seeks superior, risk-ad-
justed 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 is a non-diversified portfolio that seeks current income and
long-term capital appreciation by investing in real estate investment trusts
and other companies principally engaged in the real estate business.
Each of the Funds 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 Funds 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 March 16, 1998 and containing additional information about
the Funds has been filed with the Securities and Exchange Commission. The cur-
rent 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 supple-
mented 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 Infor-
mation and other information regarding Excelsior Fund.
SHARES IN THE FUNDS ("SHARES") ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARAN-
TEED 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 FUNDS 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 AC-
CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
March 16, 1998
<PAGE>
PROSPECTUS SUMMARY
EXCELSIOR FUNDS, INC. is an investment company offering various diversified
and non-diversified investment portfolios with differing objectives and poli-
cies. Founded in 1984, Excelsior Fund currently offers 18 Funds with combined
assets of approximately $3.8 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 Advis-
er") serve as the Funds' investment adviser. U.S. Trust New York provides its
investment advisory services to the Large Cap Growth Fund primarily through
its Campbell Cowperthwait division. 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 serv-
ices. See "Management of the Funds--Investment Adviser."
INVESTMENT OBJECTIVES AND POLICIES: Generally, the Large Cap Growth Fund is
a diversified investment portfolio which invests primarily in equity securi-
ties. The Real Estate Fund is a non-diversified investment portfolio which in-
vests primarily in equity securities, including shares of real estate invest-
ment trusts. The Funds' investment objectives and policies are summarized on
the cover and explained in greater detail later in this Prospectus. See "In-
vestment Objectives and Policies," "Portfolio Instruments and Other Investment
Information" and "Investment Limitations."
HOW TO INVEST: The Funds' Shares are offered at their net asset value. Ex-
celsior Fund does not impose a sales load on purchases of Shares. See "How to
Purchase and Redeem Shares."
The minimum to start an account is $500 per Fund, with a minimum of $50 per
Fund 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 appropri-
ate 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, each 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 each Fund. The Real Estate Fund
is non-diversified; therefore, its investment return may at times be dependent
upon the performance of a smaller number of securities relative to the number
of securities held in a diversified portfolio. In addition, the Real Estate
Fund will normally concentrate its investments in the real estate industry.
Therefore, it will be susceptible to industry risk, the possibility that a
particular group of stocks will decline in price due to industry-specific de-
velopments. Because both Funds may invest in securities of foreign issuers,
they are 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.
To the extent the Funds also invest in bonds and other fixed-income securi-
ties, they will also be affected directly by fluctuations in interest rates
and the credit markets. Although each Fund generally seeks to invest for the
long term, each Fund may engage in short-term trading of portfolio securities.
A high rate of portfolio turnover may involve correspondingly greater transac-
tion costs which must be borne directly by a Fund and ultimately by its share-
holders. Investment in the Funds should not be considered a complete invest-
ment program. See "Investment Objectives and Policies."
2
<PAGE>
EXPENSE SUMMARY
<TABLE>
<CAPTION>
LARGE
CAP REAL
GROWTH ESTATE
FUND FUND
------ ------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Front-End Sales Load.............................................. None None
Sales Load on Reinvested Dividends................................ None None
Deferred Sales Load............................................... None None
Redemption Fees................................................... None None
Exchange Fees..................................................... None None
ESTIMATED ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
Advisory Fees (after fee waivers)/1/.............................. 0.68% 0.50%
12b-1 Fees........................................................ None None
Other Operating Expenses
Administrative Servicing Fee/1/.................................. 0.02% 0.02%
Other Expenses................................................... 0.35% 0.68%
----- -----
Total Operating Expenses (after fee waivers)/1/ .................. 1.05% 1.20%
===== =====
</TABLE>
- -------
1. The Investment Adviser and Administrators may, from time to time, voluntar-
ily waive part of their respective fees, which waivers may be terminated at
any time. Until further notice, the Investment Adviser and/or Administrators
intend to voluntarily waive fees in an amount equal to the Administrative
Servicing Fee; and to further waive fees and reimburse expenses to the ex-
tent necessary for Shares of the Large Cap Growth and Real Estate Funds to
maintain an annual expense ratio of not more than 1.05% and 1.20%, respec-
tively. Without such fee waivers, "Advisory Fees" would be 0.75%, and 1.00%,
and "Total Operating Expenses" would be 1.12% and 1.70% for the Large Cap
Growth and Real Estate Funds, respectively.
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:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
------ -------
<S> <C> <C>
Large Cap Growth Fund............................................ $11 $33
Real Estate Fund................................................. 12 38
</TABLE>
The foregoing expense summary and example are intended to assist investors in
understanding the costs and expenses that an investor in Shares of the Funds
will bear directly or indirectly. The expense summary sets forth estimated ad-
visory and other expenses payable with respect to Shares of the Funds for the
current fiscal year. For more complete descriptions of the Funds' operating ex-
penses, see "Management of the Funds" 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.
3
<PAGE>
FINANCIAL HIGHLIGHTS
The following tables include selected data for a Share outstanding throughout
the period indicated and other performance information derived from the unau-
dited financial statements included in the Statement of Additional Information.
The following tables should be read in conjunction with such financial state-
ments and notes thereto. The Statement of Additional Information may be ob-
tained from Excelsior Fund without charge by calling the number on the front
cover of this Prospectus.
LARGE CAP GROWTH FUND
<TABLE>
<CAPTION>
PERIOD ENDED
FEBRUARY 28, 1998/1/
(UNAUDITED)
--------------------
<S> <C>
Net Asset Value, Beginning of Period...................... $ 7.00
-------
Income From Investment Operations:
Net Investment Income................................... 0.00
Net Gains or (Losses) on Securities (both realized and
unrealized)............................................ 1.19
-------
Total From Investment Operations........................ 1.19
-------
Less Distributions:
Dividends From Net Investment Income.................... 0.00
-------
Distributions From Net Realized Gain on Investments and
Options................................................ 0.00
-------
Total Distributions..................................... 0.00
-------
Net Asset Value, End of Period............................ $ 8.19
=======
Total Return.............................................. 17.00%/2/
Ratios/Supplemental Data:
Net Assets, End of Period (in millions)................. $34,261
Ratio of Net Operating Expenses to Average Net Assets... 1.05%/3/
Ratio of Gross Operating Expenses to Average Net
Assets/4/.............................................. 1.23%/3/
Ratio of Net Investment Income to Average Net Assets.... (0.15)%/3/
Portfolio Turnover Rate................................. 18%/3/
Average Commission Rate Paid............................ $0.0324
</TABLE>
- -------
NOTES
1. For the period October 1, 1997 (commencement of operations) through February
28, 1998.
2. Not annualized.
3. Annualized.
4. Expense ratio before waiver of fees by investment adviser and administra-
tors.
4
<PAGE>
REAL ESTATE FUND
<TABLE>
<CAPTION>
PERIOD ENDED
FEBRUARY 28, 1998/1/
(UNAUDITED)
--------------------
<S> <C>
Net Asset Value, Beginning of Period...................... $ 7.00
-------
Income From Investment Operations:
Net Investment Income................................... 0.10
Net Gains or (Losses) on Securities (both realized and
unrealized)............................................ (0.12)
-------
Total From Investment Operations........................ (0.02)
-------
Less Distributions:
Dividends From Net Investment Income.................... (0.07)
-------
Distributions From Net Realized Gain on Investments and
Options................................................ 0.00
-------
Total Distributions..................................... (0.07)
-------
Net Asset Value, End of Period............................ $ 6.91
=======
Total Return.............................................. (0.23)%/2/
Ratios/Supplemental Data:
Net Assets, End of Period (in millions)................. $37,982
Ratio of Net Operating Expenses to Average Net Assets... 1.20%/3/
Ratio of Gross Operating Expenses to Average Net
Assets/4/.............................................. 1.41%/3/
Ratio of Net Investment Income to Average Net Assets.... 4.31%/3/
Portfolio Turnover Rate................................. 28%/3/
Average Commission Rate Paid............................ $0.0704
</TABLE>
- -------
NOTES
1. For the period October 1, 1997 (commencement of operations) through February
28, 1998.
2. Not annualized.
3. Annualized.
4. Expense ratio before waiver of fees by investment adviser and administra-
tors.
5
<PAGE>
U.S. TRUST'S INVESTMENT PHILOSOPHY AND STRATEGIES
U.S. Trust offers a variety of specialized fiduciary and financial services
to high-net worth individuals, institutions and corporations. As one of the
largest institutions of its type, U.S. Trust prides itself in offering an at-
tentive and high level of service to each of its clients. The Excelsior Funds
offer individual investors access to U.S. Trust's services.
Philosophy. In managing investments for the Real Estate Fund, U.S. Trust ex-
pects to follow a long-term investment philosophy which generally does not
change with the short-term variability of financial markets or fundamental
conditions. U.S. Trust's approach begins with the conviction that all worth-
while investments are grounded in value. The Investment Adviser believes that
an investor can identify fundamental values that eventually should be re-
flected in market prices. U.S. Trust believes that over time, a disciplined
search for fundamental value will achieve better results than attempting to
take advantage of short-term price movements.
Implementation of this long-term value philosophy consists of searching for,
identifying and obtaining the benefits of present or future investment values.
For example, such values may be found in a company's future earnings potential
or in its existing resources and assets. Accordingly, U.S. Trust in managing
investments for the Real Estate Fund is constantly engaged in assessing, com-
paring and judging the worth of companies, particularly in comparison to the
price the markets place on such companies' shares.
In managing investments for the Large Cap Growth Fund, U.S. Trust expects to
follow a long-term investment philosophy of buying and holding equity securi-
ties of companies which it believes to be of high quality and of high growth
potential. Typically, these companies are industry leaders with the potential
to dominate their markets by being the low cost, high quality producers of
products or services. U.S. Trust believes that earnings growth is the primary
determinant of stock prices and that efficient financial markets will reward
consistently above-average earnings growth with greater than average capital
appreciation over the long term.
Strategies. In order to translate its investment philosophy into more spe-
cific guidance for selection of investments, the Investment Adviser uses three
specific strategies. These strategies, while identified separately, may over-
lap so that more than one may be applied in an investment decision.
U.S. Trust's "PROBLEM/OPPORTUNITY STRATEGY" seeks to identify industries and
companies with the capabilities to provide solutions to or benefit from com-
plex problems such as the changing demographics and aging of the U.S. popula-
tion or the need to enhance industrial productivity. U.S. Trust's second
strategy is a "TRANSACTION VALUE" comparison of a company's real underlying
asset value with the market price of its shares and with the sale prices for
similar assets changing ownership in public market transactions. Differences
between a company's real asset value and the price of its shares often are
corrected over time by restructuring of the assets or by market recognition of
their value. U.S. Trust's third strategy involves identifying "EARLY LIFE CY-
CLE" companies whose products are in their earlier stages of development or
that seek to exploit new markets. Frequently such companies are smaller compa-
nies, but early life cycle companies may also include larger established com-
panies with new products or markets for existing products. The Investment Ad-
viser believes that over time the value of such companies should be recognized
in the market.
INVESTMENT OBJECTIVES AND POLICIES
The Investment Adviser will use its best efforts to achieve the investment
objective of each Fund, although their achievement cannot be assured. Each
Fund's investment objective and policies may be changed by Excelsior Fund's
Board of Directors without shareholder approval. Each Fund has also adopted
certain "fundamental" investment limitations that may not be changed without a
vote of the holders of a majority of the particular Fund's outstanding Shares
6
<PAGE>
(as defined under "Miscellaneous"). The Funds' fundamental limitations are set
forth below under "Investment Limitations" and in the Statement of Additional
Information.
LARGE CAP GROWTH FUND
The Large Cap Growth Fund's investment objective is to seek superior, long-
term total return. The Fund attempts to achieve this objective through invest-
ments primarily in companies with capitalizations in excess of $5 billion,
whose growth prospects, in the opinion of U.S. Trust, appear to exceed that of
the overall market. Under normal conditions, at least 65% of the Fund's total
assets will be invested in such companies. Additional policies common to both
the Large Cap Growth and Real Estate Funds are discussed below.
REAL ESTATE FUND
The Real Estate Fund's investment objective is to seek current income and
long-term capital appreciation. The Fund attempts to achieve this objective by
concentrating its investments in companies principally engaged in the real es-
tate business, such as real estate investment trusts ("REITs"), real estate de-
velopers, mortgage lenders and servicers, construction companies and building
material suppliers. Under normal conditions, at least 65% of the Fund's total
assets will be invested in such companies. A company is "principally engaged"
in the real estate business if, at the time of investment, the company derives
at least 50% of its revenues from the ownership, construction, financing, man-
agement or sale of commercial, industrial or residential real estate, or that
such company has at least 50% of its assets in such real estate.
It is expected that the Fund will invest a majority of its assets in shares of
REITs during normal market and economic conditions. REITs pool investors' funds
for investment primarily in income-producing real estate or real estate related
loans or interests. Unlike corporations, REITs do not have to pay income taxes
if they meet certain requirements of the Internal Revenue Code of 1986, as
amended (the "Code"). To qualify, a REIT must distribute at least 95% of its
taxable income to its shareholders and receive at least 75% of that income from
rents, mortgages and sales of property. For additional tax information, see
"Taxes--Federal" below.
REITs can generally be classified as equity REITs, mortgage REITs and hybrid
REITs. Equity REITs invest the majority of their assets directly in real prop-
erty and derive their income primarily from rental and lease payments. Equity
REITs can also realize capital gains by selling properties that have appreci-
ated in value. Mortgage REITs make loans to commercial real estate developers
and derive their income primarily from interest payments on such loans. Hybrid
REITs combine the characteristics of both equity and mortgage REITs. The Fund
expects that a substantial portion of its investments in REITs will be in eq-
uity and hybrid REITs.
The Fund's portfolio holdings will include equity securities of companies hav-
ing capitalizations of varying amounts, and the Fund may invest in the securi-
ties of high growth, small companies where the Investment Adviser expects earn-
ings and the price of the securities to grow at an above-average rate. Certain
securities owned by the Fund may be traded only in the over-the-counter market
or on a regional securities exchange, may be listed only in the quotation serv-
ice commonly known as the "pink sheets," and may not be traded every day or in
the volume typical of trading on a national securities exchange. As a result,
there may be a greater fluctuation in the value of the Fund's Shares, and the
Fund may be required, in order to meet redemptions or for other reasons, to
sell these securities at a discount from market prices, to sell during periods
when such disposition is not desirable, or to make many small sales over a pe-
riod of time.
The Fund is a non-diversified investment portfolio under the Investment Com-
pany Act of 1940, as amended (the "1940 Act"). As such, the only limitations on
the percentage of its assets that may be invested in the securities of any one
issuer are its own investment restrictions and the diversification requirements
of the Code.
7
<PAGE>
INVESTMENT POLICIES COMMON TO THE LARGE CAP GROWTH AND REAL ESTATE FUNDS
Under normal market and economic conditions, the Funds will invest at least
65% of their total assets in common stocks, preferred stocks and convertible
securities. Normally, up to 35% of each Fund's total assets may be invested in
other securities and instruments including, e.g., other investment-grade debt
securities (i.e., debt obligations classified within the four highest ratings
of Moody's Investors Service, Inc. ("Moody's") or Standard & Poor's Ratings
Group ("S&P") or, if unrated, which are determined by the Investment Adviser
to be of comparable quality), warrants, options, and futures instruments as
described in more detail below. During temporary defensive periods, each Fund
may hold cash or invest some or all of its assets in U.S. Government securi-
ties, high-quality money market instruments and repurchase agreements collat-
eralized by the foregoing obligations.
In managing the Funds, the Investment Adviser seeks to purchase securities
having value currently not recognized in the market price of a security, con-
sistent with the strategies discussed above.
The Funds may invest in the securities of foreign issuers directly or indi-
rectly through sponsored and unsponsored American Depository Receipts
("ADRs"). ADRs represent receipts typically issued by a U.S. bank or trust
company which evidence ownership of underlying securities of foreign issuers.
Investments in unsponsored ADRs involve additional risk because financial in-
formation based on generally accepted accounting principles ("GAAP") may not
be available for the foreign issuers of the underlying securities. ADRs may
not necessarily be denominated in the same currency as the underlying securi-
ties into which they may be converted.
RISK FACTORS
As noted above, the Real Estate Fund is non-diversified. The investment re-
turn on a non-diversified portfolio typically is dependent upon the perfor-
mance of a smaller number of securities relative to the number of securities
held in a diversified portfolio of comparable size. If the Fund assumes large
positions in the obligations of a small number of issuers, then changes in the
financial condition or in the market's assessment of those issuers may affect
the overall value of the Fund's portfolio to a greater extent than that of a
diversified portfolio.
Each Fund is subject to market risk and interest rate risk, and the Real Es-
tate Fund is also subject to real estate industry risk. Market risk is the
possibility that stock prices will decline over short or even extended peri-
ods. 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 each Fund. In addition, the prices of bonds and other debt instru-
ments generally fluctuate inversely with interest rate changes. Factors af-
fecting debt securities will affect all of the Funds' debt holdings.
Although the Real Estate Fund will not invest in real estate directly, it is
subject to the same risks that are associated with the direct ownership of
real estate. In general, real estate values are affected by a variety of fac-
tors, including: supply and demand for properties; the economic health of the
country, different regions and local markets; and the strength of specific in-
dustries renting properties. An equity REIT's performance ultimately depends
on the types and locations of the properties it owns and on how well it man-
ages its properties. For instance, rental income could decline because of ex-
tended vacancies, increased competition from nearby properties, tenants' fail-
ure to pay rent, or incompetent management. Property values could decrease be-
cause of overbuilding, environmental liabilities, uninsured damages caused by
natural disasters, a general decline in the neighborhood, rent controls,
losses due to casualty or condemnation, increases in property taxes and/or op-
erating expenses, or changes in zoning laws or other factors.
Changes in interest rates could affect the performance of REITs. In general,
during periods of rising interest rates, REITs may lose some of their appeal
to
8
<PAGE>
investors who may be able to obtain higher yields from other income-producing
investments, such as long-term bonds. Higher interest rates may also mean that
it is more expensive to finance property purchases, renovations and improve-
ments, which could hinder a REIT's performance. During periods of declining
interest rates, certain mortgage REITs may hold mortgages that the mortgagors
elect to prepay, which prepayment may diminish the yield on securities issued
by such mortgage REITs.
While equity REITs are affected by changes in the value of the underlying
properties they own, mortgage REITs are affected by changes in the value of
the properties to which they have extended credit. REITs may not be diversi-
fied and are subject to the risks involved with financing projects. REITs may
also be subject to substantial cash flow dependency and self-liquidation. In
addition, REITs could possibly fail to qualify for tax-free pass-through of
income under the Code or to maintain their exemptions from registration under
the 1940 Act.
Such factors may also adversely affect a borrower's or a lessee's ability to
meet its obligations to a REIT. In the event of a default by a borrower or
lessee, a REIT may experience delays in enforcing its rights as a mortgagee or
lessor and may incur substantial costs associated with protecting its invest-
ments.
Under certain circumstances the Real Estate Fund could own real estate di-
rectly as a result of a default on debt securities it owns. If the Fund has
rental income or income from the direct disposition of real property, the re-
ceipt of such income may adversely affect its ability to retain its tax status
as a regulated investment company. See "Taxes--Federal" below.
As noted above, the Real Estate Fund may invest in the securities of smaller
capitalized companies. Such companies may have limited product lines, markets,
or financial resources, or may be dependent upon a small management group, and
their securities may be subject to more abrupt or erratic market movements
than larger capitalized or more established companies, both because their se-
curities typically are traded in lower volume and because the issuers typi-
cally are subject to a greater degree to changes in their earnings and
prospects.
The Funds may invest in the securities of foreign issuers. Investments in
foreign securities involve certain risks not ordinarily associated with in-
vestments 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 restric-
tions. In addition, with respect to certain countries there is the possibility
of expropriation of assets, confiscatory taxation, political or social insta-
bility or diplomatic developments which could adversely affect investments in
those countries. There may be less publicly available information about a for-
eign company than about a U.S. company, and foreign companies may not be sub-
ject to accounting, auditing and financial reporting standards and require-
ments comparable to or as uniform as those of U.S.-based companies. Foreign
securities markets, while growing in volume, have, for the most part, substan-
tially 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 gen-
erally 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 a Fund might have greater difficulty taking
appropriate legal action in a foreign court. Dividends and interest payable on
a Fund's foreign portfolio securities may be subject to foreign withholding
taxes. To the extent such taxes are not offset by credits or deductions al-
lowed to investors under the Federal income tax provisions, they may reduce
the net return to the shareholders.
The Funds should not be considered a complete investment program. In view of
the specialized nature of their investment activities, investment in the
Funds' Shares may be suitable only for those investors who can invest without
concern for current income and are
9
<PAGE>
financially able to assume risk in search of long-term capital gains.
Securities of companies discussed in this section may be more volatile than
the overall market.
PORTFOLIO INSTRUMENTS AND OTHER
INVESTMENT INFORMATION
MONEY MARKET INSTRUMENTS
The Funds may invest in "money market instruments," which include, among
other things, bank obligations, commercial paper and corporate bonds with re-
maining maturities of 13 months or less.
Bank obligations include bankers' acceptances, negotiable certificates of de-
posit, 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 ob-
ligations of domestic branches of foreign banks. Investments in bank obliga-
tions of foreign branches of domestic financial institutions or of domestic
branches of foreign banks are limited so that no more than 5% of the value of
a Fund's total assets may be invested in any one branch, and no more than 20%
of a particular Fund's total assets at the time of purchase may be invested in
the aggregate in such obligations (see "Investment Limitations" below). In-
vestments in time deposits are limited to no more than 5% of the value of a
Fund's total assets at the time of purchase.
Investments by the Funds in commercial paper will consist of issues that are
rated "A-2" or better by S&P or "Prime-2" or better by Moody's. In addition,
each Fund may acquire unrated commercial paper that is determined by the In-
vestment Adviser at the time of purchase to be of comparable quality to rated
instruments that may be acquired by the particular Fund.
Commercial paper may include variable and floating rate instruments. While
there may be no active secondary market with respect to a particular instru-
ment purchased by a 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 a 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 dis-
cussed below under "Investment Limitations."
GOVERNMENT OBLIGATIONS
The Funds may invest in U.S. Government obligations, including U.S. Treasury
Bills and the obligations of Federal Home Loan Banks, Federal Farm Credit
Banks, Federal Land Banks, the Federal Housing Administration, the Farmers
Home Administration, the Export-Import Bank of the United States, the Small
Business Administration, the Government National Mortgage Association, the
Federal National Mortgage Association, the General Services Administration,
the Student Loan Marketing Association, the Central Bank for Cooperatives, the
Federal Home Loan Mortgage Corporation, the Federal Intermediate Credit Banks
and the Maritime Administration.
DEBT SECURITIES AND CONVERTIBLE SECURITIES
Each of the Funds may invest in investment grade debt and convertible securi-
ties of domestic and foreign issuers. The convertible securities in which the
Funds may invest include any debt securities or preferred stock which may be
converted into common stock or which carry the right to purchase common stock.
Convertible securities entitle the holder to exchange the securities for a
specified number of shares
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<PAGE>
of common stock, usually of the same company, at specified prices within a
certain period of time.
REPURCHASE AGREEMENTS
The Funds may agree to purchase portfolio securities subject to the seller's
agreement to repurchase them at a mutually agreed upon date and price ("repur-
chase agreements"). Each 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 Di-
rectors. Neither Fund will enter into repurchase agreements with the Invest-
ment Adviser or any of its affiliates. Repurchase 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."
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 a Fund
at not less than the repurchase price. Default or bankruptcy of the seller
would, however, expose a Fund to possible delay in connection with the dispo-
sition 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, each Fund may lend its port-
folio 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 instrumental-
ities, 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 a Fund exceeds 30% of the value of its total assets.
There may be risks of delay in receiving additional collateral or in recover-
ing 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.
OPTIONS
To further increase return on their portfolio securities in accordance with
their respective investment objectives and policies, the Funds may enter into
option transactions as described below.
The Funds may purchase put and call options listed on a national securities
exchange and issued by the Options Clearing Corporation in an amount not ex-
ceeding 5% of a Fund's net assets, as described further in the Statement of
Additional Information. Such options may relate to particular securities or to
various stock or bond indices. 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 the options.
In addition, each Fund may engage in writing covered call options (options on
securities owned by the particular Fund) and enter into closing purchase
transactions with respect to such options. Such options must be listed on a
national securities exchange and issued by the Options Clearing Corporation.
The aggregate value of the securities subject to options written by each Fund
may not exceed 25% of the value of its net assets. By writing a covered call
option, a Fund forgoes the opportunity to profit from an increase in the mar-
ket 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 ef-
fects a closing purchase transaction by purchasing an option of the same se-
ries. The use of covered call options is not a primary investment technique of
the Funds and such options will normally be written on underlying securities
as to which the Investment Adviser does not anticipate significant short-
11
<PAGE>
term capital appreciation. Additional information on option practices, includ-
ing particular risks thereof, is provided in the Funds' Statement of Addi-
tional Information.
FUTURES CONTRACTS
The Funds may also enter into interest rate 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 Funds will not engage in futures transactions for speculation, but only
as a hedge against changes in market values of securities which a Fund holds
or intends to purchase. The Funds 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 con-
tracts, the Funds must satisfy certain asset segregation requirements to en-
sure that the use of futures is unleveraged. When a 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 depos-
it. When a 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 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 ap-
plicable when a Fund "covers" an options or futures position generally by en-
tering into an offsetting position. Each Fund will limit its hedging transac-
tions 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, af-
ter 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 a Fund's total assets may be hedged.
Transactions in futures as a hedging device may subject a Fund to a number of
risks. Successful use of futures by a Fund is subject to the ability of the
Investment Adviser to correctly anticipate movements in the direction of the
market. There may be an imperfect correlation, or no correlation at all, be-
tween movements in the price of the futures contracts (or options) and move-
ments in the price of the instruments being hedged. In addition, investments
in futures may subject a 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 par-
ticular time. Consequently, a 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
In connection with the management of its daily cash positions, each Fund may
invest in securities issued by other investment companies which invest in
high-quality, short-term debt securities and which determine their net asset
value per share based on the amortized cost or penny-rounding method. In addi-
tion to the advisory fees and other expenses a Fund bears directly in connec-
tion with its own operations, as a shareholder of another investment company,
a Fund would bear its pro rata portion of the other investment company's advi-
sory fees and other expenses. As such, the Fund's
12
<PAGE>
shareholders would indirectly bear the expenses of the Fund and the other in-
vestment company, some or all of which would be duplicative. Such securities
will be acquired by each Fund within the limits prescribed by the 1940 Act
which include, subject to certain exceptions, a prohibition against a Fund in-
vesting more than 10% of the value of its total assets in such securities.
WHEN-ISSUED AND FORWARD TRANSACTIONS
Each Fund may purchase eligible securities on a "when-issued" basis and may
purchase or sell securi-ties on a "forward commitment" basis. These transac-
tions involve a commitment by a Fund to purchase or sell particular securities
with payment and delivery taking place in the future, beyond the normal set-
tlement 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 a Fund's total assets absent unusual market condi-
tions, and that the length of such commitments will not exceed 45 days. The
Funds do not intend to engage in "when-issued" purchases and "forward commit-
ments" for speculative purposes, but only in furtherance of their investment
objectives.
BORROWING AND REVERSE REPURCHASE AGREEMENTS
Each 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 an-
ticipated redemption requests, and not for leverage. Each Fund may also agree
to sell portfolio securities to financial institutions such as banks and bro-
ker-dealers and to repurchase them at a mutually agreed date and price (a "re-
verse repurchase agreement"). The SEC views reverse repurchase agreements as a
form of borrowing. At the time a Fund enters into a reverse repurchase agree-
ment, it will place in a segregated custodial account liquid assets having a
value equal to the repurchase price, including accrued interest. Reverse re-
purchase agreements involve the risk that the market value of the securities
sold by a Fund may decline below the repurchase price of those securities.
ILLIQUID SECURITIES
Neither Fund will knowingly invest more than 15% of the value of its net as-
sets in securities that are illiquid. Each 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 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 increas-
ing the level of illiquidity in a Fund during any period that qualified insti-
tutional buyers become uninterested in purchasing these restricted securities.
PORTFOLIO TURNOVER
Each 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 particular 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 each Fund is not expected to exceed
100%. A rate of 100% indicates that the equivalent of all of a 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 a 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.)
13
<PAGE>
INVESTMENT LIMITATIONS
The investment limitations enumerated below are matters of fundamental policy
and may not be changed with respect to a Fund without the vote of the holders
of a majority of a Fund's outstanding Shares (as defined under "Miscellane-
ous").
A Fund may not:
1. Borrow money or mortgage, pledge or hypothecate its assets except to the
extent permitted under the 1940 Act. Optioned stock held in escrow is not
deemed to be a pledge;
2. Make loans, except that (i) each Fund may purchase or hold debt securi-
ties 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) each Fund
may lend portfolio securities in accordance with its investment objective and
policies; and
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 (i) there is no limitation with respect to secu-
rities issued or guaranteed by the U.S. Government, any state, territory or
possession of the United States, the District of Columbia or any of their au-
thorities, agencies, instrumentalities or political subdivisions, and repur-
chase agreements secured by such securities, (ii) the Real Estate Fund will
concentrate its investments in the securities of issuers principally engaged
in the real estate business, and (iii) neither all finance companies, as a
group, nor all utility companies, as a group, are considered a single indus-
try for purposes of this policy.
The Large Cap Growth Fund may not:
4. Purchase securities of any one issuer, other than securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities or other
investment companies 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 with-
out regard to this 5% limitation.
* * *
In addition to the investment limitations described above, the Large Cap
Growth Fund may not invest in the securities of any single issuer if, as a re-
sult, the Fund holds more than 10% of the outstanding voting securities of such
issuer.
The Funds may not invest in obligations of foreign branches of financial in-
stitutions or in domestic branches of foreign banks if immediately after such
purchase (i) more than 5% of the value of their respective total assets would
be invested in obligations of any one foreign branch of the financial institu-
tion or domestic branch of a foreign bank; or (ii) more than 20% of their re-
spective total assets would be invested in foreign branches of financial insti-
tutions or in domestic branches of foreign banks. The Funds may not knowingly
invest more than 15% of the value of their respective net assets in illiquid
securities, including repurchase agreements with remaining maturities in excess
of seven days, restricted securities and other securities for which market quo-
tations are not readily available. In addition, the Funds will not purchase
portfolio securities while borrowings in excess of 5% of their total assets are
outstanding. These investment policies may be changed by Excelsior Fund's Board
of Directors without shareholder approval.
With respect to all investment policies, if a percentage limitation is satis-
fied at the time of investment, a later increase or decrease in such percentage
resulting from a change in value of a Fund's portfolio securities will not con-
stitute a violation of such limitation.
PRICING OF SHARES
The net asset value of each Fund is determined and the Shares of each Fund are
priced at the close of reg-
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<PAGE>
ular trading hours on the New York Stock Exchange (the "Exchange"), currently
4:00 p.m. (Eastern Time). Net asset value and pricing for each Fund are deter-
mined on each day the Exchange and the Investment Adviser are open for trading
("Business Day"). Currently, the holidays which the Funds observe are New
Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memo-
rial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiv-
ing Day and Christmas. A Fund's net asset value per Share for purposes of
pricing sales and redemptions is calculated by dividing the value of all secu-
rities and other assets allocable to the Fund, less the liabilities allocable
to the Fund, by the number of its outstanding Shares.
Assets in the Funds which are traded on a recognized domestic stock exchange
are valued at the last sale price on the securities exchange on which such se-
curities are primarily traded or at the last sale price on the national secu-
rities market. Securities traded only on over-the-counter markets are valued
on the basis of closing over-the-counter bid prices. Securities for which
there were no transactions are valued at the average of the most recent bid
and asked prices. An option or 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. Restricted securities, securities for which market quo-
tations are not readily available, and other assets are valued at fair value,
pursuant to guidelines adopted by Excelsior Fund's Board of Directors.
Portfolio securities which are primarily traded on foreign securities ex-
changes are generally valued at the preceding closing values of such securi-
ties on their respective exchanges, except that when an event subsequent to
the time where 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. Invest-
ments in debt securities having a maturity of 60 days or less are valued based
upon the amortized cost method. 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 Di-
rectors. 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 Funds
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
a Fund's Shares. Excelsior Fund's administrators have undertaken to price the
securities in the Funds' portfolios, and may use one or more independent pric-
ing services in connection with this service.
HOW TO PURCHASE AND REDEEM SHARES
DISTRIBUTOR
Shares in each Fund are continuously offered for sale by Excelsior Fund's
sponsor and distributor, Edgewood Services, Inc. (the "Distributor"), a whol-
ly-owned subsidiary of Federated Investors. The Distributor is a registered
broker/dealer. Its principal business address is 5800 Corporate Drive, Pitts-
burgh, PA 15237-5829.
At various times the Distributor may implement programs under which a deal-
er's sales force may be eligible to win nominal awards for certain sales ef-
forts or under which the Distributor will make payments to any dealer that
sponsors sales contests or recognition programs conforming to criteria estab-
lished 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 in-
tended to result in sales of Shares of the Funds. If any such program is made
available to any dealer, it will be made available to all dealers on the
15
<PAGE>
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 Funds.
In addition, the Distributor may offer to pay a fee from its own assets to
financial institutions for the continuing investment of customers' assets in
the Funds or for providing substantial marketing, sales and operational sup-
port. The support may include initiating customer accounts, participating in
sales, educational and training seminars, providing sales literature, and en-
gineering computer software programs that emphasize the attributes of the
Funds. Such assistance will be predicated upon the amount of Shares the finan-
cial 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 each 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, collectively with Direct Invest-
ors, "Investors"). Shares may also be purchased by customers ("Customers") of
the Investment Adviser, its affiliates and correspondent banks, and other in-
stitutions ("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 Funds'
sub-transfer agent, in accordance with the procedures agreed to by the Share-
holder 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 es-
tablish 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 Funds, CGFSC will send confirmations of such trans-
actions and periodic account statements directly to the shareholders of rec-
ord. Shares in the Funds bear the expense of fees payable to Shareholder Orga-
nizations for such services. See "Management of the Funds--Shareholder Organi-
zations."
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 fi-
nancial planner may incur transaction charges in connection with such pur-
chases. Such investors should contact their registered investment adviser or
certified financial planner for further information on transaction fees. In-
vestors 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 pur-
chase of Shares accompanying this Prospectus and mailing it, together with a
check payable to Excelsior Funds, to:
Excelsior Funds
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Subsequent investments in an existing account in any Fund may be made at any
time by sending to the above address a check payable to Excelsior Funds
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<PAGE>
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. Institu-
tional Investors may purchase Shares by transmitting their purchase orders to
CGFSC by telephone at (800) 446-1012 or by terminal access. Institutional In-
vestors 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
ABA #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 Appli-
cation accompanying this Prospectus and forward it to CGFSC. Redemptions by In-
vestors 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 invest-
ment by an Investor or initial aggregate investment by a Shareholder Organiza-
tion investing on behalf of its Customers is $500 per Fund. The minimum subse-
quent investment for both types of investors is $50 per 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 ac-
count, Shareholder Organizations may charge a Customer's account fees for auto-
matic investment and other cash management services provided. 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 invest-ments in the Funds in accordance with procedures gov-
erning their accounts at the Shareholder Organizations. It is the responsibil-
ity 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 redemp-
tion payments to Shareholder Organizations or Institutional Investors is im-
posed by Excelsior Fund, although Shareholder Organizations may charge a Cus-
tomer's account for wiring redemption proceeds. Information relating to such
redemption services and charges, if any, is available from the Shareholder Or-
ganizations. An investor redeeming Shares through a registered investment ad-
viser or certified financial planner may incur transaction charges in connec-
tion with such redemptions. Such investors should contact their registered in-
vestment adviser or certified financial planner for further information on
transaction fees. Investors may redeem all or part of their Shares in accor-
dance 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 Bos-
ton, MA 02208-2798
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<PAGE>
A written redemption request to CGFSC must (i) state the number of Shares to
be redeemed, (ii) identify the shareholder account number and tax identifica-
tion 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 exe-
cuted 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 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 secu-
rities associations, clearing agencies and savings associations. All eligible
guarantor institutions must participate in the Securities Transfer Agents Me-
dallion Program ("STAMP") in order to be approved by CGFSC pursuant to the Sig-
nature Guarantee Guidelines. Copies of the Signature Guarantee Guidelines and
information on STAMP can be obtained from CGFSC at (800) 446-1012 or at the ad-
dress given above. CGFSC may require additional supporting documents for re-
demptions made by corporations, executors, administrators, trustees and guardi-
ans. A redemption request will not be deemed to be properly received until
CGFSC receives all required documents in proper form. Payment for Shares re-
deemed will ordinarily be made by mail within five Business Days after 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 subse-
quently 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 In-
vestor'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 share-
holder 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 In-
vestor'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 in-
structions 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 "Redemp-
tion by Mail" above, for details regarding signature guarantees). Further docu-
mentation may be requested.
CGFSC and the Distributor reserve the right to re- fuse 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 Excel-
sior Fund, CGFSC or 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 ATTEMPT-
ING TO CONFIRM THAT TELEPHONE INSTRUCTIONS ARE GENUINE, EXCELSIOR FUND WILL USE
SUCH PROCEDURES AS ARE CONSIDERED REASONABLE, INCLUDING RECORDING THOSE IN-
STRUCTIONS AND REQUESTING 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 re-
demption until CGFSC is reasonably satisfied that the check has been collected
18
<PAGE>
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 redemp-
tions 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 a Fund after 60 days' written notice if due to investor
redemptions the balance in the particular account with respect to the Fund re-
mains below $500. If a Customer has agreed with a particular Shareholder Or-
ganization to maintain a minimum balance in his or her account at the institu-
tion with respect to Shares of a Fund, and the balance in such account falls
below that minimum, the Customer may be obliged by the Shareholder Organiza-
tion 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.
INVESTOR PROGRAMS
EXCHANGE PRIVILEGE
Investors and Customers of Shareholder Organizations may, after appropriate
prior authorization and without an exchange fee imposed by Excelsior Fund, ex-
change Shares in a 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 16 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 cur-
rent income as is consistent with liquidity and stability of principal
through investments in obligations issued or guaranteed by the U.S. Govern-
ment, its agencies or instrumentalities and repurchase agreements collateral-
ized 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 instru-
mentalities of the U.S. Government;
Short-Term Government Securities Fund, a fund seeking a high level of cur-
rent income by investing principally in obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and repurchase agree-
ments collateralized by such obligations, and having a dollar-weighted aver-
age portfolio maturity of 1 to 3 years;
19
<PAGE>
Intermediate-Term Managed Income Fund, a fund seeking a high level of cur-
rent 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;
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 redeploy-
ment of assets and operations in order to become more competitive or profit-
able;
Small Cap Fund, a fund seeking long-term capital appreciation by investing
primarily in companies with capitalization of $1 billion or less;
International Fund, a fund seeking total return derived primarily from in-
vestments 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 in-
vestments in companies and securities of governments based in Asia and on the
Asian side of the Pacific Ocean;
Pan European Fund, a fund seeking long-term capital appreciation through in-
vestments in companies and securities of governments based in Europe; and
Emerging Markets Fund, a fund seeking long-term capital appreciation through
investments primarily in equity securities of emerging country issuers.
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 in-
vestments in municipal obligations and having a dollar-weighted average port-
folio 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 mu-
nicipal 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 current
interest income exempt from Federal income taxes through investments in mu-
nicipal 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 in- vestors with a high level of current interest 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 obliga-
tions 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 pro-
vide California investors
20
<PAGE>
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 Califor-
nia municipal obligations and has a dollar-weighted average portfolio matu-
rity of 3 to 10 years.
Excelsior Institutional Trust currently offers Trust Shares in the following
investment 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
Value Equity Fund, a fund seeking long-term capital appreciation through in-
vestments 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 a 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 be-
ing 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 ex-
change request in good order.
Investors may find the exchange privilege useful if their investment objec-
tives or market outlook should change after they invest in a 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 prospec-
tuses 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. Be-
fore making an exchange, an investor should consult a tax or other financial
adviser to determine tax consequences.
Exchanges 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 tel-
ephone exchange option, a shareholder authorizes CGFSC and the Distributor to
act upon telephone instructions believed to be genuine. EXCELSIOR FUND, EXCEL-
SIOR TAX-EXEMPT FUND, EXCELSIOR INSTITUTIONAL TRUST, CGFSC AND THE DISTRIBUTOR
ARE NOT RESPONSIBLE FOR THE AUTHENTICITY OF EXCHANGE REQUESTS RECEIVED BY TEL-
EPHONE THAT ARE REASONABLY BELIEVED TO BE GENUINE. IN ATTEMPTING TO CONFIRM
THAT TELEPHONE INSTRUCTIONS ARE GENUINE, EXCELSIOR FUND, EXCELSIOR TAX-EXEMPT
FUND AND EXCELSIOR INSTITUTIONAL TRUST WILL USE SUCH PROCEDURES AS ARE CONSID-
ERED REASONABLE, INCLUDING RECORDING THOSE INSTRUCTIONS AND REQUESTING INFOR-
MATION AS TO ACCOUNT REGISTRATION.
SYSTEMATIC WITHDRAWAL PLAN
An Investor who owns Shares of a Fund with a value of $10,000 or more may es-
tablish 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
21
<PAGE>
the current value of Shares in the account) on a monthly, quarterly, semi-an-
nual 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 establish-
ing 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 system-
atic withdrawal plans with respect to the Shares held by their Customers. In-
formation 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 follow-
ing 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 Funds pursuant to Profit Sharing and Money-Pur-
chase 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 per Fund and the minimum subsequent investment is $50 per
Fund. Detailed information concerning eligibility, service fees and other mat-
ters 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 Funds pursuant to retirement plans if such plans are
offered by their Shareholder Organizations.
AUTOMATIC INVESTMENT PROGRAM
The Automatic Investment Program permits Investors to purchase Shares (mini-
mum of $50 per Fund per transaction) at regular intervals selected by the In-
vestor. The minimum initial investment for an Automatic Investment Program ac-
count is $50 per Fund. Provided the Investor's financial institution allows
automatic withdrawals, Shares are purchased by transferring funds from an In-
vestor's checking, bank money market or NOW account designated by the Invest-
or. 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 mar-
ket performance, a fixed dollar amount is invested in Shares at predetermined
intervals. This may help Investors to reduce their average cost per Share be-
cause the agreed upon fixed investment amount allows more Shares to be pur-
chased 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, how-
ever, that Shares bought using Dollar Cost Averaging are purchased without re-
gard 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 com-
plete 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 Busi-
ness
22
<PAGE>
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 contem-
plated. 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 Funds are declared and paid
at least annually. For dividend purposes, a Fund's investment income is re-
duced by accrued expenses directly attributable to that Fund and the general
expenses of Excelsior Fund prorated to that Fund on the basis of its relative
net assets. Net realized capital gains are distributed at least annually. Div-
idends and distributions will reduce the net asset value of each of the Funds
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 on which the dividend or dis-
tribution is paid (as determined on the payable date), unless they have re-
quested in writing (received by CGFSC at Excelsior Fund's address prior to the
payment date) to receive dividends and distributions in cash. Reinvested divi-
dends and distributions receive the same tax treatment as those paid in cash.
TAXES
FEDERAL
Each Fund intends to qualify as a "regulated investment company" under the
Code. Such qualification generally relieves a 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 a Fund distribute to its shareholders an amount equal
to at least 90% of its investment company taxable income for each taxable
year. In general, a Fund's investment company taxable income will be its in-
come (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. Each 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 a Fund from domestic corporations for the taxable year.
With respect to the Real Estate Fund, the dividends received deduction is not
available for dividends attributable to distributions made by a REIT to the
Fund. In addition, distributions paid by REITs often include a "return of cap-
ital." The Code requires a REIT to distribute at least 95% of its taxable in-
come to investors. In many cases, however, because of "non-cash" expenses such
as property depreciation, an equity REIT's cash flow will exceed its taxable
income. The REIT may distribute this excess cash to offer a more competitive
yield. This portion of the distribution is deemed a return of capital, and is
generally not taxable to shareholders. However, if shareholders receive a re-
turn of capital, the basis of their shares is decreased by the amount of such
return of capital. This, in turn, affects the capital gain or loss realized
when shares of the Fund are exchanged or sold. If the Real Estate Fund makes
distributions in excess of its earnings, a shareholder's basis in the Fund
will be reduced by the amount of such return of capital if such shareholder
elects to receive distributions in cash (as opposed to having them reinvested
in additional shares of the Fund). If a shareholder's basis is reduced to ze-
ro, any
23
<PAGE>
further return of capital distribution is taxable as a capital gain.
Distributions by a Fund of the excess of its net long- term capital gain over
its net short-term capital loss are taxable to shareholders as long-term capi-
tal gain, regardless of how long the shareholders have held their Shares and
whether such distributions are received in cash or reinvested in additional
Shares. Such long- term capital gain will be a 20% or 28% rate gain, depending
upon the Fund's holding period for the assets the sale of which generated the
gain. Such distributions are not eligible for the dividends received deduc-
tion.
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 a Fund on December 31 of such
year if such dividends are actually paid during January of the following year.
An investor considering buying Shares of a 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 simply a return of a portion of his investment,
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 in-
curred 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 effects an exchange of such Shares
for Shares of another Fund within 90 days of the purchase and is able to re-
duce the sales charges otherwise applicable to the new Shares (by virtue of
the exchange privilege), the amount equal to such reduction may not be in-
cluded 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 limita-
tion) in the tax basis of the new Shares.
Qualification as a regulated investment company under the Code also requires
that each Fund satisfy certain requirements with respect to the source of its
income for a taxable year. At least 90% of the gross in-come of each Fund must
be derived from dividends, interest, payments with respect to securities
loans, gains from the sale or other disposition of stock, securities or for-
eign 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 a Fund's principal business of invest-
ing in stock or securities, or options and futures with respect to stock or
securities. Any income derived by a Fund from a partnership or trust is
treated for this purpose as derived with respect to the Fund's business of in-
vesting 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 tax considerations generally
affecting the Funds and their shareholders and is not intended as a substitute
for careful tax planning. Accordingly, potential investors in the Funds should
consult their tax advisers with specific reference to their own tax situa-
tions. Shareholders will be advised annually as to the Federal income tax con-
sequences of distributions made each year.
STATE AND LOCAL
Purchasers are advised to consult their tax advisers concerning the applica-
tion of state and local taxes,
24
<PAGE>
which may have different consequences from those of the Federal income tax law
described above.
MANAGEMENT OF THE FUNDS
The business and affairs of the Funds are managed under the direction of Ex-
celsior 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 Funds. 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 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 Corpo-
ration, 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 De-
cember 31, 1997, the Asset Management Groups of U.S. Trust New York and U.S.
Trust Connecticut had approximately $61.2 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 of-
fices at 225 High Ridge Road, East Building, Stamford, CT 06905.
The Investment Adviser manages each 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.
All investment decisions for the Large Cap Growth Fund are made by a commit-
tee of investment professionals and no persons are primarily responsible for
making recommendations to that committee.
Joan Ellis and Katherine Ellis are the persons primarily responsible for the
day-to-day management of the Real Estate Fund's investment portfolio. Ms. Joan
Ellis, Vice President in the Investment Research Division, has been employed
by U.S. Trust since 1984. Ms. Katherine Ellis, Vice President in the Invest-
ment Division, has been employed by U.S. Trust since 1986. Ms. Ellis and Ms.
Ellis have been the Fund's portfolio managers since its inception.
For the services provided and expenses assumed pursuant to its Investment Ad-
visory Agreement, the Investment Adviser is entitled to be paid a fee, com-
puted daily and paid monthly, at the annual rates of: 0.75% of the average
daily net assets of the Large Cap Growth Fund; and 1.00% of the average daily
net assets of the Real Estate Fund.
From time to time, the Investment Adviser may voluntarily waive all or a por-
tion of the advisory fees payable to it by a Fund, which waiver may be termi-
nated at any time. See "Management of the Funds--Shareholder Organizations"
for additional information on fee waivers.
In executing portfolio transactions for the Funds, the Investment Adviser may
use affiliated brokers in accordance with the requirements of the 1940 Act.
The Investment Adviser may 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 Funds' administrators (the "Administrators") and provide them with general
administrative and operational assistance. The Administrators also serve as
administrators of the other portfolios of Excelsior Fund and of all the port-
folios of
25
<PAGE>
Excelsior Tax-Exempt Fund and Excelsior Institutional Trust, which are also
advised by the Investment Adviser and its affiliates and distributed by the
Distributor. For the services provided to all portfolios of Excelsior Fund,
Excelsior Tax-Exempt Fund and Excelsior Institutional Trust (except the inter-
national portfolios of Excelsior Fund and Excelsior Institutional Trust), the
Administrators are entitled jointly to annual fees, computed daily and paid
monthly, based on the combined aggregate average daily net assets of the three
companies (excluding the international portfolios of Excelsior Fund and Excel-
sior Institutional Trust) as follows:
<TABLE>
<CAPTION>
COMBINED AGGREGATE AVERAGE DAILY NET ASSETS
OF EXCELSIOR FUND, EXCELSIOR TAX-EXEMPT FUND AND EXCELSIOR
INSTITUTIONAL TRUST (EXCLUDING THE INTERNATIONAL ANNUAL
PORTFOLIOS OF EXCELSIOR FUND AND EXCELSIOR INSTITUTIONAL TRUST) FEE
--------------------------------------------------------------- ------
<S> <C>
first $200 million..................................................... .200%
next $200 million...................................................... .175%
over $400 million...................................................... .150%
</TABLE>
Administration fees payable to the Administrators by each portfolio of Excel-
sior Fund, Excelsior Tax-Exempt Fund and Excelsior Institutional Trust are al-
located in proportion to their relative average daily net assets at the time
of determination. From time to time, the Administrators may voluntarily waive
all or a portion of the administration fee payable to them by a Fund, which
waivers may be terminated at any time. See "Management of the Funds--Share-
holder 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, a Fund will pay the Shareholder
Organization an administrative service fee up to the annual rate of .40% of
the average daily net asset value of its Shares held by the Shareholder Orga-
nization's Customers. Such services, which are described more fully in the
Statement of Additional Information under "Management of the Funds--Share-
holder 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 in-
vestment. Until further notice, the Investment Adviser and Administrators have
voluntarily agreed to waive fees payable by a Fund in an aggregate amount
equal to administrative service fees payable by that Fund.
BANKING LAWS
Banking laws and regulations currently prohibit a bank holding company regis-
tered under the Federal Bank Holding Company Act of 1956 or any bank or non-
bank affiliate thereof from sponsoring, organizing or controlling a regis-
tered, 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 Funds, but such banking laws and
regulations do not prohibit such a holding company or affiliate or banks gen-
erally from acting as investment adviser, transfer agent, or custodian to such
an investment company, or from purchasing shares of such company for and upon
the order of customers. The Investment Adviser, CGFSC and certain Shareholder
Organizations may be subject to such banking laws and regulations. State secu-
rities laws may differ from the interpretations of Federal law discussed in
this paragraph and banks and financial institutions may be required to regis-
ter 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 invest-
26
<PAGE>
ment services offered by them to Customers. It is not anticipated, however,
that any resulting change in the Funds' method of operations would affect
their net asset values per Share or result in financial loss to any sharehold-
er.
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 autho-
rized 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 Large Cap Growth and Real Estate
Funds.
Each Share in a Fund represents an equal proportionate interest in the par-
ticular Fund with other shares of the same class, and is entitled to such div-
idends and distributions out of the income earned on the assets belonging to
such Fund as are declared in the discretion of Excelsior Fund's Board of Di-
rectors. Excelsior Fund's Charter authorizes the Board of Directors to clas-
sify 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 ag-
gregate 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 March 9, 1998, U.S. Trust and its affiliates held of record substan-
tially all 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.
CUSTODIAN AND TRANSFER AGENT
The Chase Manhattan Bank ("Chase"), a wholly-owned subsidiary of The Chase
Manhattan Corporation, serves as the custodian of the Funds' assets. Communi-
cations to the custodian should be directed to Chase, Mutual Funds Service Di-
vision, 3 Chase MetroTech Center, 8th Floor, Brooklyn, NY 11245.
U.S. Trust New York serves as the Funds' transfer and dividend disbursing
agent. U.S. Trust New York has also entered into a sub-transfer agency ar-
rangement with CGFSC, 73 Tremont Street, Boston, Massachusetts 02108-3913,
pursuant to which CGFSC provides certain transfer agent, dividend disbursement
and registrar services to the Funds.
EXPENSES
Except as otherwise noted, the Investment Adviser and the Administrators bear
all expenses in connection with the performance of their services. The Funds
bear the expenses incurred in their operations. Expenses of the Funds 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 print-
ing 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 Funds also pay
for brokerage fees and commissions in connection with the purchase of portfo-
lio securities.
PERFORMANCE AND YIELD INFORMATION
From time to time, in advertisements or in reports to shareholders, the per-
formance and yields of the Funds may be quoted and compared to that of other
mutual
27
<PAGE>
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 a Fund may be compared to data prepared by Lipper Analytical
Services, Inc., a widely recognized independent service which monitors the per-
formance of mutual funds, the Standard & Poor's 500 Stock Index ("S&P 500"), an
unmanaged index of common stocks of 500 companies, most of which are listed on
the Exchange, the Consumer Price Index, or the Dow Jones Industrial Average, a
recognized unmanaged index of common stocks of 30 industrial companies listed
on the Exchange.
The performance of the Large Cap Growth Fund may also be compared to the Rus-
sell 1000 Growth Index. The Russell 1000 Growth Index contains stocks from the
Russell 1000 Index with a greater-than-average growth orientation. The Russell
1000 Index is composed of the 1,000 largest companies in the Russell 3000 In-
dex. The Russell 3000 Index is composed of 3,000 large U.S. companies by market
capitalization, representing approximately 98% of the U.S. equity market.
The performance of the Real Estate Fund may be compared to the National Asso-
ciation of Real Estate Investment Trusts ("NAREIT") Equity REIT Index, an un-
managed index of all tax-qualified REITs listed on the Exchange, the American
Stock Exchange and the National Association of Securities Dealers Automated
Quotations system ("NASDAQ"), which have 75% or more of their gross invested
book assets invested directly or indirectly in the equity ownership of real es-
tate, or the Morgan Stanley REIT Index, an unmanaged index of all publicly
traded equity REITs (except health care REITs) which have total market capital-
izations of at least $100 million and are considered liquid.
Performance and yield data as reported in national financial publications, in-
cluding but not limited to Money Magazine, Forbes, Barron's, The Wall Street
Journal and The New York Times, or in publications of a local or regional na-
ture, may also be used in comparing the performance and yields of the Funds.
From time to time, each Fund may advertise its performance by using "average
annual total return" over various periods of time. Such total return figure re-
flects the average percentage change in the value of an investment in a Fund
from the beginning date of the measuring period to the end of the measuring pe-
riod. 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 commence-
ment of a Fund's operations, or on a year-by-year basis). Each Fund may also
use aggregate total return figures for various periods, representing the cumu-
lative change in the value of an investment in the Fund for the specific peri-
od. Both methods of calculating total return assume that dividends and capital
gain distributions made by a Fund during the period are reinvested in Fund
Shares.
Performance and yields will fluctuate and any quotation of performance and
yield should not be considered as representative of a Fund's future
performance. Since yields fluctuate, yield data cannot necessarily be used to
compare an investment in the Funds with bank deposits, savings accounts and
similar investment alternatives which often provide an agreed or guaranteed
fixed yield for a stated period of time. Shareholders should remember that
performance and yield are generally functions of the kind and quality of the
instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any fees charged by Shareholder Organizations with respect
to accounts of Customers that have invested in Shares will not be included in
calculations of performance and yield.
MISCELLANEOUS
Shareholders will receive unaudited semiannual reports describing the Funds'
investment operations and annual financial statements audited by the Funds' in-
dependent auditors.
28
<PAGE>
As used in this Prospectus, a "vote of the holders of a majority of the out-
standing shares" of Excelsior Fund or a particular 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 such Fund, or (b) 67% or more of
the shares of Excelsior Fund or such Fund present at a meeting if more than
50% of the outstanding shares of Excelsior Fund or such Fund are represented
at the meeting in person or by proxy.
Inquiries regarding any of the Funds may be directed to the Distributor at
the address listed under "Distributor."
29
<PAGE>
INSTRUCTIONS FOR NEW ACCOUNT APPLICATION
OPENING YOUR ACCOUNT:
Complete the Application(s) and mail to:
FOR OVERNIGHT DELIVERY: send to:
Excelsior Funds Excelsior Funds
c/o Chase Global Funds c/o Chase Global Funds Services Com-
Services Company pany
P.O. Box 2798 73 Tremont Street
Boston, MA 02208-2798 Boston, MA 02108-3913
Please enclose with the Application(s) your check made payable to the "Ex-
celsior Funds" in the amount of your investment.
For direct wire purchases please refer to the section of the Prospectus en-
titled "How to Purchase and Redeem Shares--Purchase Procedures."
MINIMUM INVESTMENTS:
Except as provided in the Prospectus, the minimum initial investment is $500
per Fund; subsequent investments must be in the minimum amount of $50 per
Fund. Investments may be made in excess of these minimums.
REDEMPTIONS:
Shares can be redeemed in any amount and at any time in accordance with pro-
cedures described in the Prospectus. In the case of shares recently purchased
by check, redemption proceeds will not be made available until the transfer
agent is reasonably assured that the check has been collected in accordance
with applicable banking regulations.
Certain legal documents will be required from corporations or other organi-
zations, executors and trustees, or if redemption is requested by anyone other
than the shareholder of record. Written redemption requests in excess of
$50,000 per account must be accompanied by signature guarantees.
SIGNATURES: Please be sure to sign the Application(s).
If the shares are registered in the name of:
- an individual, the individual should sign.
- joint tenants, both tenants should sign.
- a custodian for a minor, the custodian should sign.
- a corporation or other organization, an authorized officer should sign
(please indicate corporate office or title).*
- a trustee or other fiduciary, the fiduciary or fiduciaries should sign
(please indicate capacity).*
* A corporate resolution or appropriate certificate may be required.
QUESTIONS:
If you have any questions regarding the Application or redemption require-
ments, please contact the sub-transfer agent at (800) 446-1012 between 9:00
a.m. and 5:00 p.m. (Eastern Time).
30
<PAGE>
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
LOGO CHASE GLOBAL FUNDS NEW
SERVICES COMPANY CLIENT ACCOUNT
SERVICES APPLICATION
P.O. Box 2798
Boston, MA 02208-2798
(800) 446-1012
ACCOUNT REGISTRATION
[_] Individual [_] Joint
Tenants [_] Trust [_] Gift/Transfer to Minor [_] Other
Note: Joint tenant registration will be as "joint tenants
with right of survivorship" unless otherwise specified. Trust
registrations should specify name of the trust, trustee(s),
beneficiary(ies), and the date of the trust instrument.
Registration for Uniform Gifts/Transfers to Minors should be
in the name of one custodian and one minor and include the
state under which the custodianship is created (using the
minor's Social Security Number ("SSN")). For IRA accounts a
different application is required.
------------------------------ -----------------------------
Name(s) (please print) Social Security # or Taxpayer
------------------------------ Identification #
Name ( )
------------------------------ -----------------------------
Address Telephone #
------------------------------ [_] U.S. Citizen [_] Other
City/State/Zip Code (specify)
FUND SELECTION (THE MINIMUM INITIAL AND SUBSEQUENT INVESTMENT IS $500 PER
FUND AND $50 PER FUND, RESPECTIVELY. MAKE CHECKS PAYABLE TO "EXCELSIOR
FUNDS.")
<TABLE>
<S> <C> <C> <C> <C> <C>
FUND INITIAL INVESTMENT
[_] Large Cap Growth
Fund $ _______ 833
[_] Real Estate Fund $ _______ 834
[_] Other TOTAL INITIAL INVESTMENT $
</TABLE>
NOTE: If investing A. BY MAIL: Enclosed is a check in the
by wire, you must amount of $ _____ payable to "Excelsior
obtain a Bank Wire Funds."
Control Number. To B. BY WIRE: A bank wire in the amount
do so, please call of $ has been sent to the Fund from
(800) 446-1012 and
ask for the Wire ------------------ ---------------
Desk. Name of Bank Wire Control
Number
CAPITAL GAIN AND DIVIDEND DISTRIBUTIONS: All capital gain and
dividend distributions will be reinvested in additional
shares unless appropriate boxes below are checked:
All dividends are to be [_] reinvested [_] paid in cash
All capital gains are to be [_] reinvested [_] paid in cash
ACCOUNT PRIVILEGES
TELEPHONE EXCHANGE AND AUTHORITY TO TRANSMIT
REDEMPTION REDEMPTION PROCEEDS TO PRE-
DESIGNATED ACCOUNT.
I/We hereby authorize CGFSC to
act upon instructions received
[_] I/We appoint CGFSC as by telephone to withdraw $500
my/our agent to act upon or more from my/our account in
instructions received by the Excelsior Funds and to
telephone in order to effect wire the amount withdrawn to
the telephone exchange and the following commercial bank
redemption privileges. I/We account.
hereby ratify any Title on Bank Account*_________
instructions given pursuant Name of Bank __________________
to this authorization and Bank A.B.A. Number Account
agree that Excelsior Fund, Number ________________________
Excelsior Tax-Exempt Fund, Bank Address __________________
Excelsior Institutional City/State/Zip Code ___________
Trust, CGFSC and their (attach voided check here)
directors, trustees,
officers and employees will A corporation, trust or
not be liable for any loss, partnership must also submit a
liability, cost or expense "Corporate Resolution" (or
for acting upon instructions "Certificate of Partnership")
believed to be genuine and indicating the names and
in accordance with the titles of officers authorized
procedures described in the to act on its behalf.
then current Prospectus. To * TITLE ON BANK AND FUND
the extent that Excelsior ACCOUNT MUST BE IDENTICAL.
Fund, Excelsior Tax-Exempt
Fund and Excelsior
Institutional Trust fail to
use reasonable procedures as
a basis for their belief,
they or their service
contractors may be liable
for instructions that prove
to be fraudulent or
unauthorized.
I/We further acknowledge
that it is my/our
responsibility to read the
Prospectus of any Fund into
which I/we exchange.
[_] I/We do not wish to have
the ability to exercise
telephone redemption and
exchange privileges. I/We
further understand that all
exchange and redemption
requests must be in writing.
SPECIAL PURCHASE AND
REDEMPTION PLANS
I/We have completed and
attached the Supplemental
Application for:
[_] Automatic Investment
Plan
[_] Systematic Withdrawal
Plan
<PAGE>
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
AGREEMENT AND SIGNATURES
By signing this application, I/we hereby certify under
penalty of perjury that the information on this application
is complete and correct and that as required by Federal law:
[_] I/WE CERTIFY THAT (1) THE NUMBER(S) SHOWN ON THIS FORM
IS/ARE THE CORRECT TAXPAYER IDENTIFICATION NUMBER(S) AND (2)
I/WE ARE NOT SUBJECT TO BACKUP WITHHOLDING EITHER BECAUSE
I/WE HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE
THAT I/WE ARE SUBJECT TO BACKUP WITHHOLDING, OR THE IRS HAS
NOTIFIED ME/US THAT I AM/WE ARE NO LONGER SUBJECT TO BACKUP
WITHHOLDING. (NOTE: IF ANY OR ALL OF PART 2 IS NOT TRUE,
PLEASE STRIKE OUT THAT PART BEFORE SIGNING.)
[_] IF NO TAXPAYER IDENTIFICATION NUMBER ("TIN") OR SSN HAS
BEEN PROVIDED ABOVE, I/WE HAVE APPLIED, OR INTEND TO APPLY,
TO THE IRS OR THE SOCIAL SECURITY ADMINISTRATION FOR A TIN OR
A SSN, AND I/WE UNDERSTAND THAT IF I/WE DO NOT PROVIDE THIS
NUMBER TO CGFSC WITHIN 60 DAYS OF THE DATE OF THIS
APPLICATION, OR IF I/WE FAIL TO FURNISH MY/OUR CORRECT SSN OR
TIN, I/WE MAY BE SUBJECT TO A PENALTY AND A 31% BACKUP
WITHHOLDING ON DISTRIBUTIONS AND REDEMPTION PROCEEDS. (PLEASE
PROVIDE THIS NUMBER ON FORM W-9. YOU MAY REQUEST THE FORM BY
CALLING CGFSC AT THE NUMBER LISTED ABOVE.)
I/We represent that I am/we are of legal age and capacity to
purchase shares of the Excelsior Funds. I/We have received,
read and carefully reviewed a copy of the appropriate Fund's
current Prospectus and agree to its terms and by signing
below I/we acknowledge that neither the Fund nor the
Distributor is a bank and that Fund Shares are not deposits
or obligations of, or guaranteed or endorsed by, U.S. Trust,
its parent and 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; and that an investment in the
Funds involves investment risks, including possible loss of
principal amount invested.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO
ANY PROVISIONS OF THIS FORM OTHER THAN THE CERTIFICATIONS
REQUIRED TO AVOID BACKUP WITHHOLDING.
X ___________________________ Date __________________________
Owner Signature Date __________________________
X ___________________________
Co-Owner Signature
Sign exactly as name(s) of registered owner(s) appear(s) above
(including legal title if signing for a corporation, trust
custodial account, etc.).
FOR USE BY AUTHORIZED AGENT (BROKER/DEALER) ONLY
We hereby submit this application for the purchase of shares
in accordance with the terms of our selling agreement with
Edgewood Services, Inc., and with the Prospectus and
Statement of Additional Information of each Fund purchased.
----------------------------- -------------------------------
Investment Dealer's Name Source of Business Code
----------------------------- -------------------------------
Main Office Address Branch Number
----------------------------- -------------------------------
Representative's Number Representative's Name
----------------------------- -------------------------------
Branch Address Telephone
----------------------------- -------------------------------
Investment Dealer's Title
Authorized Signature
<PAGE>
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
LOGO CHASE GLOBAL FUNDS SUPPLEMENTAL
SERVICES COMPANY CLIENT APPLICATION
SERVICES
P.O. Box 2798
Boston, MA 02208-2798 SPECIAL INVESTMENT AND
(800) 446-1012 WITHDRAWAL OPTIONS
ACCOUNT REGISTRATION PLEASE SUPPLY THE FOLLOWING INFORMATION EXACTLY AS IT
APPEARS ON THE FUND'S RECORD.
Fund Name __________________ Account Number _________________
Owner Name _________________ Social Security or Taxpayer ID
Street Address _____________ Number _________________________
Resident City, State, Zip Code __________
of [_] U.S. [_] Other ____ [_] Check here if this is a
change of address
DISTRIBUTION OPTIONS (DIVIDENDS AND CAPITAL GAINS WILL BE REINVESTED
UNLESS OTHERWISE INDICATED)
A. CAPITAL GAIN AND DIVIDEND DISTRIBUTIONS: All capital gain and dividend
distributions will be reinvested in additional shares unless appropriate
boxes below are checked:
All dividends are to be [_] reinvested [_] paid in
cash
All capital gains are to be [_] reinvested [_] paid
in cash
B. PAYMENT ORDER: Complete only if distribution checks are to be payable
to another party. Make distribution checks payable to:
Name of Your Bank ______________
Name _______________________ Bank Account Number ____________
Address ____________________ Address of Bank ________________
City, State, Zip Code ________________________________________
C. DISTRIBUTIONS REINVESTED-CROSS FUNDS: Permits all distributions from
one Fund to be automatically reinvested into another identically-
registered Excelsior Fund. (NOTE: You may NOT open a new Fund account with
this option.) Transfer all distributions earned:
From: ______________________ Account No. ____________________
(Fund) Account No. ____________________
To: ________________________
(Fund)
AUTOMATIC INVESTMENT PLAN [_] YES [_] NO
I/We hereby authorize CGFSC to debit my/our personal checking account on
the designated dates in order to purchase shares in the Fund indicated at
the top of this application at the applicable net asset value determined
on that day.
[_] Monthly on the 1st day [_] Monthly on the 15th day [_] Monthly on both
the 1st and 15th days
Amount of each debit (minimum $50
per Fund) $ ________________________
NOTE: A Bank Authorization Form (below) and a voided personal check must
accompany the Automatic Investment Plan application.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
-- -- -- -- -- -- -- -- -- -- -- -- -- -- --
EXCELSIOR FUNDS CLIENT SERVICES
AUTOMATIC INVESTMENT PLAN
BANK AUTHORIZATION
-------------------- ----------------------------------------
Bank Name Bank Address Bank Account Number
I/We authorize you, the above named bank, to debit my/our
account for amounts drawn by CGFSC, acting as my agent for
the purchase of Fund shares. I/We agree that your rights in
respect to each withdrawal shall be the same as if it were a
check drawn upon you and signed by me/us. This authority
shall remain in effect until revoked in writing and received
by you. I/We agree that you shall incur no liability when
honoring debits, except a loss due to payments drawn against
insufficient funds. I/We further agree that you will incur no
liability to me if you dishonor any such withdrawal. This
will be so even though such dishonor results in the
cancellation of that purchase.
---------------------------- --------------------------------
Account Holder's Name Joint Account Holder's Name
X ________________ --------- X __________________ -----------
Signature Date Signature Date
<PAGE>
SYSTEMATIC WITHDRAWAL PLAN[_] YES[_] NO NOT AVAILABLE FOR IRA'S
AVAILABLE TO SHAREHOLDERS WITH ACCOUNT BALANCES OF $10,000 OR
MORE.
I/We hereby authorize CGFSC to redeem the necessary number of
shares from my/our Excelsior Fund Account on the designated
dates in order to make the following periodic payments:
[_] Monthly on the 24th day[_] Quarterly on the 24th day of
January, April, July and October[_] Other_____________________
(This request for participation in the Plan must be received
by the 18th day of the month in which you wish withdrawals to
begin.)
Amount of each check ($100 minimum)
$
Please make Recipient ________________________________
check payable Street Address ___________________________
to: (To be City, State, Zip Code ____________________
completed only
if redemption
proceeds to be
paid to other
than account
holder of record
or mailed to
address other
than address of
record)
NOTE: If recipient of checks is not the registered
shareholder, signature(s) below must be guaranteed. A
corporation, trust or partnership must also submit a
"Corporate Resolution" (or "Certification of Partnership")
indicating the names and titles of officers authorized to act
on its behalf.
AGREEMENT AND SIGNATURES
The investor(s) certifies and agrees that the certifications,
authorizations, directions and restrictions contained herein
will continue until CGFSC receives written notice of any
change or revocation. Any change in these instructions must
be in writing with all signatures guaranteed (if applicable).
Date ______________________
X X
------------------------------- -----------------------------
Signature Signature
------------------------------- -----------------------------
Signature Guarantee* (if applicable)
Signature Guarantee* (if applicable)
X X
------------------------------- -----------------------------
Signature Signature
------------------------------- -----------------------------
Signature Guarantee* (if applicable)
Signature Guarantee* (if applicable)
*ELIGIBLE GUARANTORS: An Eligible Guarantor institution is a
bank, trust company, broker, dealer, municipal or government
securities broker or dealer, credit union, national
securities exchange, registered securities association,
clearing agency or savings association, provided that such
institution is a participant in STAMP, the Securities
Transfer Agents Medallion Program.
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
Attach Copy of Voided Check Here
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUMMARY......................................................... 2
EXPENSE SUMMARY............................................................ 3
FINANCIAL HIGHLIGHTS....................................................... 4
U.S. TRUST'S INVESTMENT PHILOSOPHY AND STRATEGIES.......................... 6
INVESTMENT OBJECTIVES AND
POLICIES.................................................................. 6
PORTFOLIO INSTRUMENTS AND OTHER INVESTMENT INFORMATION..................... 10
INVESTMENT LIMITATIONS..................................................... 14
PRICING OF SHARES.......................................................... 14
HOW TO PURCHASE AND REDEEM SHARES.......................................... 15
INVESTOR PROGRAMS.......................................................... 19
DIVIDENDS AND DISTRIBUTIONS................................................ 23
TAXES...................................................................... 23
MANAGEMENT OF THE FUNDS.................................................... 25
DESCRIPTION OF CAPITAL STOCK............................................... 27
CUSTODIAN AND TRANSFER AGENT............................................... 27
EXPENSES .................................................................. 27
PERFORMANCE AND YIELD INFORMATION.......................................... 27
MISCELLANEOUS.............................................................. 28
INSTRUCTIONS FOR NEW ACCOUNT APPLICATION................................... 30
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESEN-
TATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUNDS' 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
LARGE CAP GROWTH FUND
REAL ESTATE FUND
Prospectus
March 16, 1998
USTLCREP398
<PAGE>
EXCELSIOR FUNDS, INC.
Large Cap Growth Fund
Real Estate Fund
STATEMENT OF ADDITIONAL INFORMATION
March 16, 1998
This Statement of Additional Information is not a prospectus but should be read
in conjunction with the current prospectus for the Large Cap Growth and Real
Estate Funds (individually, a "Fund" and collectively, the "Funds") of Excelsior
Funds, Inc. ("Excelsior Fund") dated March 16, 1998 (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
Funds described herein (collectively, 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
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
INVESTMENT OBJECTIVES AND POLICIES....................................... 1
Other Investment Considerations........................................ 1
Additional Information on Portfolio Instruments........................ 3
Additional Investment Limitations...................................... 10
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION........................... 12
INVESTOR PROGRAMS........................................................ 13
Systematic Withdrawal Plan............................................. 13
Exchange Privilege..................................................... 14
Other Investor Programs................................................ 15
DESCRIPTION OF CAPITAL STOCK............................................. 15
MANAGEMENT OF THE FUNDS.................................................. 17
Directors and Officers................................................. 17
Investment Advisory and Administration Agreements...................... 23
Shareholder Organizations.............................................. 23
Expenses............................................................... 24
Custodian and Transfer Agent........................................... 25
PORTFOLIO TRANSACTIONS................................................... 26
INDEPENDENT AUDITORS..................................................... 28
COUNSEL.................................................................. 28
ADDITIONAL INFORMATION CONCERNING TAXES.................................. 28
PERFORMANCE AND YIELD INFORMATION........................................ 31
MISCELLANEOUS............................................................ 35
FINANCIAL STATEMENTS..................................................... 36
APPENDIX A............................................................... A-1
APPENDIX B............................................................... B-1
</TABLE>
-i-
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
----------------------------------
The investment objective and policies of each 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 - Large Cap Growth and Real Estate Funds
- ------------------------------------------------------------------------
The Funds intend to invest primarily in common stocks, but each Fund
may also purchase both preferred stocks and securities convertible into common
stock at the discretion of 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"). The Investment Adviser expects that the broad and varied strategies
utilized by it will result in somewhat more current income than would be
generated if the Investment Adviser utilized a single strategy more narrowly
focused on rapid growth of principal and involving exposure to higher levels of
risk.
The Investment Adviser's investment philosophy is to identify
investment values available in the market at attractive prices. Investment value
arises from the ability to generate earnings or from the ownership of assets or
resources. Underlying earnings potential and asset values are frequently
demonstrable but not recognized in the market prices of the securities
representing their ownership. The Investment Adviser employs the following three
different but closely interrelated portfolio strategies to focus and organize
its search for investment values.
1. Problem/Opportunity Companies. Important investment opportunities
-----------------------------
often occur where companies develop solutions to large, complex, fundamental
problems, such as declining industrial productivity; rising costs and declining
sources of energy; the economic imbalances and value erosion caused by years of
high inflation and interest rates; the soaring costs and competing priorities of
providing health care; and the accelerating interdependence and "shrinking size"
of the world.
Solutions or parts of solutions to large problems may be generated by
established companies or comparatively new companies of all sizes through the
development of new products, technologies or services, or through new
applications of older ones.
Investment in such companies represents a very wide range of
investment potential, current income return, rates, and
<PAGE>
exposure to fundamental and market risks. Income generated by each Fund's
investments in these companies would be expected to be moderate, characterized
by lesser rates than those of a fund whose sole objective is current income, and
somewhat higher rates than those of a higher-risk growth fund.
2. Transaction Value Companies. In the opinion of the Investment
---------------------------
Adviser, the stock market frequently values the aggregate ownership of a company
at a substantially lower figure than its component assets would be worth if
they were sold off separately over time. Such assets may include intangible
assets such as product and market franchises, operating know-how, or
distribution systems, as well as such tangible properties as oil reserves,
timber, real estate, or production facilities. Investment opportunities in these
companies are determined by the magnitude of difference between economic worth
and current market price.
Market undervaluations are very often corrected by purchase and sale,
restructuring of the company, or market appreciation to recognize the actual
worth. The recognition process may well occur over time, however, incurring a
form of time-exposure risk. Success from investing in these companies is often
great, but may well be achieved only after a waiting period of inactivity.
Income derived from investing in undervalued companies is expected to
be moderately greater than that derived from investments in either the
Problem/Opportunity or Early Life Cycle companies.
3. Early Life Cycle Companies. Investments in Early Life Cycle
--------------------------
companies tend to be narrowly focused on an objective of higher rates of capital
appreciation. They correspondingly will involve a significantly greater degree
of risk and the reduction of current income to a negligible level. Such
investments will not be limited to new, small companies engaged only in frontier
technology, but will seek opportunities for maximum appreciation through the
full spectrum of business operations, products, services and asset values.
Consequently, the Funds' investments in Early Life Cycle companies are primarily
in younger, small- to medium- sized companies in the early stages of their
development. Such companies are usually more flexible in trying new approaches
to problem-solving and in making new or different employment of assets. Because
of the high risk level involved, the ratio of success among such companies is
lower than the average, but for those companies which succeed, the magnitude of
investment reward is potentially higher.
-2-
<PAGE>
Additional Information on Portfolio Instruments
- -----------------------------------------------
Options
-------
As stated in the Prospectus, the Funds may purchase put and call
options listed on a national securities exchange and issued by the Options
Clearing Corporation. Such purchases would be in an amount not exceeding 5% of
each such 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 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, and therefore, on a percentage basis, an investment in
options may be subject to greater fluctuation than an investment in the
underlying securities. 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 at the stated
exercise price at any time prior to the expiration of the option, regardless of
the market price of the security. 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 at the stated exercise price at any time
prior to the expiration date of the option, regardless of the market price of
the security. Put and call options purchased by the Funds 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, each Fund may engage in writing
covered call options and enter into closing purchase transactions with respect
to such options. When either of the Funds 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 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
-3-
<PAGE>
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 Funds 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
Funds to make a closing purchase transaction in order to close out its position.
When a 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 that 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 involved 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 involved 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
involved will realize a gain or loss. Premiums from expired call options written
by the Funds 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.
Repurchase Agreements
---------------------
The repurchase price under the repurchase agreements described in the
Prospectus generally equals the price paid by a 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 Funds' custodian (or sub-custodian) or in
the Federal Reserve/Treasury book-entry system. Repurchase agreements are
considered loans by a Fund under the Investment Company Act of 1940, as amended
(the "1940 Act").
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<PAGE>
Futures Contracts and Related Options
-------------------------------------
The Funds may invest in futures contracts and options thereon. The
Funds 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 Funds 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 a 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, a 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 Funds is also subject to the
Investment Adviser's ability to correctly predict movements in the direction of
the market. For example, if a 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 a 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.
The risk of loss in trading futures contracts in some strategies can
be substantial, due both to the low margin
-5-
<PAGE>
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 Funds involves the risk of
loss by a Fund of margin deposits in the event of bankruptcy of a broker with
whom such 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 Funds 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 price at any time during the period of the option. Upon
-6-
<PAGE>
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 a Fund because the maximum amount at
risk is the premium paid for the options (plus transaction costs). Although
permitted by their fundamental investment policies, the Funds do 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 a 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 a 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 a 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.
A Fund will purchase securities on a "when-issued" or forward
commitment basis only with the intention of completing
-7-
<PAGE>
the transaction. If deemed advisable as a matter of investment strategy,
however, a 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 a 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 a 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.
Forward Currency Transactions
-----------------------------
Each 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. In this respect, forward currency contracts
are similar to foreign currency futures contracts; however, unlike futures
contracts which are traded on recognized commodities exchange, 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.
A Fund's participation in forward currency contracts will be limited
to hedging involving either specific transactions or portfolio positions.
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
a Fund's assets, but will be
-8-
<PAGE>
employed as necessary to correspond to particular transactions or positions. A
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 Funds engage in forward
currency transactions, certain asset segregation requirements must be satisfied
to ensure that the use of foreign currency transactions is unleveraged. When a
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 a 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 a Fund "covers" a forward
currency position generally by entering into an offsetting position.
The transaction costs to the Funds of engaging in forward currency
transactions 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 a 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, a
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, a 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
-9-
<PAGE>
contract prices. Should forward prices decline during the period between a
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.
Securities Lending
------------------
When a Fund lends its 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 lent securities pass to the borrower, such loans
may be called at any time and will be called so that the securities may be voted
by a Fund if a material event affecting the investment is to occur.
Additional Investment Limitations
- ---------------------------------
In addition to the investment limitations disclosed in the Prospectus,
the Funds are subject to the investment limitations enumerated below.
Fundamental investment limitations may be changed with respect to a Fund only by
a vote of a majority of the holders of such Fund's outstanding Shares (as
defined under "Miscellaneous" in the Prospectus). However, investment
limitations which are "operating policies" with respect to a Fund may be changed
by Excelsior Fund's Board of Directors without a shareholder vote.
The following investment limitations are fundamental with respect to
each Fund. Each 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 and except to the extent that
the purchase of obligations directly from the issuer thereof in accordance with
its investment objective, policies and limitations may be deemed to be
underwriting;
2. Purchase or sell real estate, except that (a) the Funds may
purchase securities of issuers which deal in real estate and may purchase
securities which are secured real
-10-
<PAGE>
estate or interests therein, and (b) the Funds may hold and sell any real estate
they acquire as a result of the Fund's ownership of such securities;
3. Issue and senior securities, except insofar as any borrowing in
accordance with a Fund's investment limitations 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 each Fund may: (a) purchase publicly traded securities
of companies engaging in whole or in part in such activities or invest in
liquidating trust receipts, certificates of beneficial ownership or other
instruments in accordance with its investment objective and policies, and (b)
purchase and sell options, forward contracts, futures contracts and futures
options.
The following investment limitations are operating policies with
respect to the Funds. Neither Fund may:
5. Purchase securities on margin, make short sales of securities, or
maintain a short position;
6. Invest in or sell put options, call options, straddles, spreads,
or any combination thereof; provided, however, that each Fund may write covered
call options with respect to its portfolio securities that are traded on a
national securities exchange, and may enter into closing purchase transactions
with respect to such options if, at the time of the writing of such option, the
aggregate value of the securities subject to the options written by the Fund
involved does not exceed 25% of the value of its total assets; and provided that
the Funds may purchase options and other rights in accordance with their
investment objectives and policies;
7. Invest in companies for the purpose of exercising management or
control; and
8. 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.
-11-
<PAGE>
In addition to the above investment limitations, the Funds currently
intend 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 a Fund's 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 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 Funds 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
that Fund's portfolio securities.
Excelsior Fund reserves the right to honor any request for redemption
or repurchase of a Fund's Shares by making payment
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<PAGE>
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 a 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 a 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 a 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 agencies or
instrumentalities) that: (a) meet the investment objective and policies of any
Fund acquiring such securities; (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 Funds' sub-transfer
-13-
<PAGE>
agent. Under this Plan, dividends and distributions are automatically reinvested
in additional Shares of a 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 involved 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 a Fund while at the same time participating in the
Systematic Withdrawal Plan with respect to an account in the same 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.
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
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<PAGE>
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 Funds 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.
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 a 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.
-15-
<PAGE>
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 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 a 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 involved 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 a Fund's assets
into money and, in connection therewith, to cause all outstanding Shares of the
Fund involved to be redeemed at their net asset value; or (c) combine the assets
belonging to a 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 shareholder of any portfolio
participating in such combination will not have material adverse effect on
shareholder of any portfolio participating in such combination, and, in
connection therewith, to cause all outstanding Shares of the Fund involved 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
particular 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 a 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.
-16-
<PAGE>
MANAGEMENT OF THE FUNDS
-----------------------
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:
<TABLE>
<CAPTION>
Position Principal Occupation
with During Past 5 Years and
Name and Address Excelsior Fund Other Affiliations
- ---------------- -------------- -----------------------
<S> <C> <C>
Frederick S. Wonham/1/ Chairman of the Retired; Director of
238 June Road Board, President Excelsior Fund and Excelsior
Stamford, CT 06903 and Treasurer Tax-Exempt Fund (since 1995);
Age: 66 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 Excelsior
Apt. 10-H Tax-Exempt Fund (since 1984);
New York, NY 10021 Director of UST Master
Age: 71 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).
</TABLE>
_____________________
1. This director is considered to be an "interested person" of Excelsior Fund
as defined in the 1940 Act.
-17-
<PAGE>
<TABLE>
<CAPTION>
Position Principal Occupation
with During Past 5 Years and
Name and Address Excelsior Fund Other Affiliations
- ---------------- -------------- -----------------------
<S> <C> <C>
Rodman L. Drake Director Director of Excelsior Fund and
485 Park Avenue Excelsior Tax-Exempt Fund (since
New York, NY 10022 1996); Trustee of Excelsior
Age: 54 Institutional Trust 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 Garantia
L.P. (Brazil) (from 1993 to 1996);
and Director, Mueller Industries,
Inc. (from 1992 to 1994).
Joseph H. Dugan Director Retired; Director of Excelsior
913 Franklin Lakes Road Fund and Excelsior Tax-Exempt Fund
Franklin Lakes, NJ 07417 (since 1984); Director of UST
Age: 72 Master Variable Series, Inc. (from
1994 to June 1997); and Trustee of
Excelsior Institutional Trust
(since 1995).
Wolfe J. Frankl Director Retired; Director of Excelsior
2320 Cumberland Road Fund and Excelsior Tax-Exempt Fund
Charlottesville, VA 22901 (since 1986); Director of UST
Age: 76 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).
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
Position Principal Occupation
with During Past 5 Years and
Name and Address Excelsior Fund Other Affiliations
- ---------------- -------------- ------------------
<S> <C> <C>
W. Wallace McDowell, Jr. Director Director of Excelsior Fund and
c/o Prospect Capital Corp. Excelsior Tax-Exempt Fund (since
43 Arch Street 1996); Trustee of Excelsior
Greenwich, CT 06830 Institutional Trust and Excelsior
Age: 60 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 of Excelsior Fund and
558 E. 87th Street Excelsior Tax-Exempt Fund (since
New York, NY 10128 1996); Trustee of Excelsior
Age: 58 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).
Robert A. Robinson Director Director of Excelsior Fund and
Church Pension Fund Excelsior Tax-Exempt Fund
800 Second Avenue (since 1987); Director of UST
New York, NY 10017 Master Variable Series, Inc. (from
Age: 71 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).
</TABLE>
-19-
<PAGE>
<TABLE>
<CAPTION>
Position Principal Occupation
with During Past 5 Years and
Name and Address Excelsior Fund Other Affiliations
- ---------------- -------------- ------------------------
<S> <C> <C>
Alfred C. Tannachion 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 & Reath
Bank Building LLP.
1345 Chestnut Street
Philadelphia, PA 19107
Age: 55
Michael P. Malloy Assistant Partner of the law firm
Philadelphia National Secretary of Drinker Biddle & Reath
Bank Building LLP.
1345 Chestnut Street
Philadelphia, PA 19107
Age: 38
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 Global Funds
Age: 32 Services Company (March
1997 to Present), Second
Vice President. Senior
Manager of Financial
Reporting, Chase Global
Funds Services Company
(September 1996 to march
1997); and Assistant Vice
President, Assistant
Manager of Financial
Reporting, Scudder,
Stevens & Clark, Inc.
(October 1992 to
September 1996).
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 October
1993 to July 1996); and
Audit Manager, Ernst &
Young LLP (from August
1987 to September 1993).
</TABLE>
______________
1. This director is considered to be an "interested person" of Excelsior Fund
as defined in the 1940 Act.
-20-
<PAGE>
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 Messrs. McConnel and Malloy are partners, 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 March 9, 1998, 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.
-21-
<PAGE>
<TABLE>
<CAPTION>
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
- --------------- ----------------- ---------- --------------------
<S> <C> <C> <C>
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 MaDowell, 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
</TABLE>
____________________
* 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.
-22-
<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 Funds. 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 respective agreements other
than the cost of securities, including brokerage commissions, purchased for the
Funds.
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 Funds in connection with the performance of such agreements,
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 Management 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 Funds'
administrators. Under the Administration Agreement, the Administrators have
agreed to maintain office facilities for the Funds, furnish the Funds with
statistical and research data, clerical, accounting and bookkeeping services,
and certain other services required by the Funds, and to compute the net asset
value, net income and realized capital gains or losses, if any, of the
respective Funds. 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 Funds' financial accounts and records, and
generally assist in the Funds' 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
-23-
<PAGE>
shareholder administrative services to their Customers who beneficially own
Shares in consideration for a Fund's payment of not more than the annual rate of
.40% of the average daily net assets of the Fund's Shares beneficially owned by
Customers of the Shareholder Organization. Such services may include: (a) acting
as recordholder of Shares; (b) assisting in processing purchase, exchange, and
redemption transactions; (c) providing periodic statements showing a Customer's
account balances and confirmations of transactions by the Customer; (d)
providing tax and dividend information to shareholders as appropriate; (e)
transmitting proxy statements, annual reports, updated prospectuses and other
communications from 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 select on 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 discresion 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 Funds bear the expenses incurred in their operations. Expenses of
the Funds 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
-24-
<PAGE>
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 Funds also pay 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 Funds'
assets. Under the Custodian Agreement, Chase has agreed to (i) maintain a
separate account or accounts in the name of the Funds; (ii) make receipts and
disbursements of money on behalf of the Funds; (iii) collect and receive all
income and other payments and distributions on account of the Funds' 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 Funds 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 Funds' 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 Funds to
their shareholders, including reports to shareholders, dividend and distribution
notices, and proxy material 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 Funds' 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 subtransfer agency arrangement with
CGFSC, an affiliate of Chase,
-25-
<PAGE>
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 subtransfer
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
Funds.
The Funds may engage in short-term trading to achieve their investment
objectives. Portfolio turnover may vary greatly from year to year as well as
within a particular year. The Funds' portfolio turnover rate may also be
affected by cash requirements for redemptions of Shares and by regulatory
provisions which enable the Funds 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 in 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 Funds, 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 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.
-26-
<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 Funds 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.
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 Funds. Such
information may be useful to the Investment Adviser in serving the Funds 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 Funds.
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 Funds 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 Funds. When a purchase or sale of the
same security is made at substantially the same time on behalf of a 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
Funds or the size of the position obtained by the Funds. To the extent permitted
by law, the Investment Adviser may aggregate the securities to be sold or
purchased for the Funds with those to be sold or purchased for other investment
companies or common trust funds in order to obtain best execution.
-27-
<PAGE>
To the extent that a 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, and Mr. Malloy, Assistant Secretary of Excelsior Fund, are
Partners), 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.
Each 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, a Fund does not qualify for a
taxable year for the special Federal tax treatment afforded regulated investment
companies, such 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.
To qualify as a regulated investment company, the Code requires, among
other things, that at the end of each quarter, no more than 5% of the value of a
Fund's total assets may be invested in the securities of any one issuer, and no
more than 10% of the outstanding voting securities of such issuer may be held by
the Fund, except that (a) up to 50% of the value of the Fund's total assets may
be invested without regard to these limitations, provided that no more than 25%
of the value of the Fund's total assets are invested in the securities of any
one
-28-
<PAGE>
issuer (or two or more issuers which the Fund controls and which are engaged in
the same or similar trades or businesses or related trades or businesses); (b)
the foregoing limitations do not apply to securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities; and (c) the Fund will be
considered to have violated these diversification requirements only if the
noncompliance results from an acquisition of securities during the quarter and
is not cured within 30 days after the end of the quarter (other than in the case
of the first quarter of the Fund's operations).
Each Fund intends to designate any distribution of the excess of net
long-term capital gain over net short-term capital loss as a capital gain
dividend in a written notice mailed to shareholders within 60 days after the
close of the Fund's taxable year. Upon the sale or exchange of Shares, if the
shareholder has not held such Shares for more than six months, any loss on the
sale or exchange of those Shares will be treated as long-term capital loss to
the extent of the capital gain dividends received with respect to the
Shares.
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 Funds intend to make sufficient
distributions or deemed distributions of their ordinary taxable income and any
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, a 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; (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 a 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 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
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<PAGE>
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 a 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.
Each 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 Real Estate Fund may invest in real estate investment trusts
("REITs") that hold residual interests in real estate mortgage investment
conduits ("REMICs"). Under Treasury regulations that have not yet been issued,
but may apply retroactively, a portion of the Fund's income from a REIT that is
attributable to the REIT's residual interest in a REMIC (referred to in the Code
as an "excess inclusion") will be subject to Federal income tax in all events.
These regulations are also expected to provide that excess inclusion income of a
regulated investment company, such as the Fund, will be allocated to
shareholders of the regulated investment company in proportion to the dividends
received by such shareholders, with the same consequences as if the shareholders
held the related REMIC residual interest directly. In general, excess inclusion
income
-30-
<PAGE>
allocated to shareholders (i) cannot be offset by net operating losses (subject
to a limited exception for certain thrift institutions). (ii) will constitute
unrelated business taxable income to entities (including a qualified pension
plan, an individual retirement account, a 401(k) plan, a Keogh plan or other
tax-exempt) subject to tax on unrelated business income, thereby potentially
requiring such an entity that is allocated excess inclusion income, and
otherwise might not be required to file a tax return, to file a tax return and
pay tax on such income, and (iii) in the case of a foreign shareholder, will not
qualify for any reduction in U.S. Federal withholding tax. In addition, if at
any time during any taxable year a "disqualified organization" (as defined in
the Code) is a record holder of a share in a regulated investment company, then
the regulated investment company will be subject to a tax equal to that portion
of its excess inclusion income for the taxable year that is allocable to the
disqualified organization, multiplied by the highest Federal income tax rate
imposed on corporations. The Investment Adviser does not intend on behalf of the
Fund to invest in REITs, a substantial portion of the assets of which consists
of residual interests in REMICs.
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 AND YIELD INFORMATION
---------------------------------
Each 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:
-31-
<PAGE>
ERV /1/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.
Each 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 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 a 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.
Based on the foregoing calculations, the average annual total returns
for the Shares of the Large Cap Growth and Real Estate Funds for the period
October 1, 1997 (commencement of operations) to February 28, 1998 were 46.16%
and (0.56)%, respectively. The aggregate total returns for the Shares of the
Large Cap Growth and Real Estate Funds for the period October 1, 1997
(commencement of operations) to February 28, 1998 were 17.00% and (0.23)%,
respectively.
-32-
<PAGE>
The Funds 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 a Fund's performance with other measures of investment return. For
example, in comparing a 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, a Fund may
calculate its aggregate total return for the period of time specified in the
advertisement 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 Real Estate Fund may advertise the standardized effective 30-day
(or one month) yield calculated in accordance with the method prescribed by the
SEC for mutual funds. Such yield will be calculated for the Fund according to
the following formula;
a-b
Yield = 2 [(----------- + 1)(to the power of 6) - 1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = average daily number of Shares outstanding that were
entitled to receive dividends.
d = maximum offering price per Share on the last day of the
period.
For the purpose of determining interest earned during the period
(variable "a" in the formula), the Real Estate Fund computes the yield to
maturity of any debt obligation held by it based on the market value of the
obligation (including actual accrued interest) at the close of business on the
last business day of each month, or, with respect to obligations purchased
during the month, the purchase price (plus actual accrued interest). Such yield
is then divided by 360, and the quotient is multiplied by the market value of
the obligation (including actual accrued interest) in order to determine the
interest income on the obligation for each day of the subsequent month
-33-
<PAGE>
that the obligation is in the portfolio. It is assumed in the above calculation
that each month contains 30 days. Also, the maturity of a debt obligation with a
call provision is deemed to be the next call date on which the obligation
reasonably may be expected to be called or, if none, the maturity date. The Fund
calculates interest gained on tax-exempt obligations issued without original
issue discount and having a current market discount by using the coupon rate of
interest instead of the yield to maturity. In the case of tax-exempt obligations
with original issue discount, where the discount based on the current market
value exceeds the then remaining portion of original issue discount, the yield
to maturity is the imputed rate based on the original issue discount
calculation. Conversely, where the discount based on the current market value is
less than the remaining portion of the original issue discount, the yield to
maturity is based on the market value.
Expenses accrued for the period (variable "b" in the formula) include all
recurring fees charged by the Real Estate Fund to all shareholder accounts and
to the particular series of Shares in proportion to the length of the base
period and the Fund's mean (or median) account size. Undeclared earned income
will be subtracted from the maximum offering price per Share (variable "d" in
the formula). Based on the foregoing calculations, the Real Estate Fund's
standardized effective yield for the 30-day period ended February 28, 1998 was
4.57%.
The total return and yield of a 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 and/or yield of a Fund may be compared to data prepared by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc. and Weisenberger
Investment Company Service. Total return and yield data 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 a Fund. Advertisements,
sales literature or reports to shareholders may from time to time also include a
discussion and analysis of each Fund's performance, including, without
limitation, those factors, strategies and techniques that, together with market
conditions and events, materially affected each Fund's performance.
The Funds 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 a Fund investment are
reinvested by being paid in additional Fund Shares, any future income or capital
appreciation of a Fund would increase the value, not only of the original Fund
investment, but also of the
-34-
<PAGE>
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 Funds may also include discussions or
illustrations of the potential investment goals of a prospective investor,
investment management techniques, policies or investment suitability of a 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 a 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 a Fund. The Funds 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 a
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 a Fund. Such advertisements of 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 a 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 a 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 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 a
particular Fund, are conclusive.
As of March 9, 1998, U.S. Trust and its affiliates held of record
substantially all of the Funds' outstanding Shares as agent or custodian for
their customers, but did not own such
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<PAGE>
shares beneficially because they did not have voting or investment discretion
with respect to such Shares.
As of March 9, 1998, the name, address and percentage ownership of
each person, in addition to U.S. Trust and its affiliates, that beneficially
owned 5% or more of the outstanding Shares of a Fund were as follows: Real
Estate Fund: U.S. Trust Retirement Fund, c/o United States Trust Company of New
York, 114 West 47th Street, New York, New York 10036, 11.36%; and Eugene Higgins
Residuary Trust, c/o United States Trust Company of New York, 114 West 47th
Street, New York, New York, 10036, 9.67%.
FINANCIAL STATEMENTS
--------------------
The Fund's unaudited financial statements for the period from October
1, 1997 (commencement of operations) through February 28, 1998 are attached as
Appendix B to this Statement of Additional Information.
-36-
<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 IBCA 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 IBCA 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 highest 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.
"B" - Securities are speculative. 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.
"C" - Default is a real possibility for these securities. Capacity for
meeting financial commitments is solely reliant upon a sustained, favorable
business and economic environment.
"D" - Securities are in actual or imminent payment default.
Fitch IBCA 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.
A-3
<PAGE>
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 year or less which are issued by United States
commercial banks, thrifts and non-bank banks; non-United States banks; and
brokerdealers. 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.
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
A-4
<PAGE>
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.
"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.
A-5
<PAGE>
"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 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 some what 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
A-6
<PAGE>
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.
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.
A-7
<PAGE>
"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 IBCA 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 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 good 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.
A-8
<PAGE>
To provide more detailed indications of credit quality, the Fitch IBCA
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.
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
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-9
<PAGE>
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.
"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 IBCA Duff & Phelps use the short-term ratings described under
Commercial Paper Ratings for municipal notes.
A-10
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1998
LARGE CAP GROWTH FUND (UNAUDITED)
APPENDIX B
----------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- ---------- --------------
COMMON STOCKS - 96.47%
CONSUMER CYCLICAL - 18.51%
<S> <C> <C>
8,000 BMC Software, Inc. $ 612,000
42,000 Cendant Corp. 1,575,000
24,000 Harley-Davidson, Inc. 696,000
22,000 Home Depot, Inc. 1,403,875
18,000 Sylvan Learning Systems, Inc. 822,375
11,000 Walt Disney Co. 1,231,313
----------------
6,340,563
----------------
CONSUMER STAPLES - 18.64%
18,000 Coca Cola Co. 1,236,375
12,000 Gillette Co. 1,294,500
17,500 Pfizer, Inc. 1,548,750
25,000 Philip Morris Companies, Inc. 1,085,938
25,000 Quintiles Transnational Corp. 1,221,875
----------------
6,387,438
----------------
FINANCIAL - 21.10%
10,000 American International Group, Inc. 1,201,875
12,000 Citicorp 1,590,000
20,000 Fannie Mae 1,276,250
22,000 Merrill Lynch & Co. 1,574,375
42,000 Schwab (Charles) Corp. 1,585,500
----------------
7,228,000
----------------
TECHNOLOGY - 38.22%
14,000 America Online, Inc. 1,695,750
26,000 Cisco Systems, Inc. 1,712,750
13,000 Dell Computer Corp. 1,817,562
46,000 EMC Corp. 1,759,500
19,000 Intel Corp. 1,702,875
29,000 Medtronic, Inc. 1,540,625
21,000 Microsoft Corp. 1,779,750
18,000 Tellabs, Inc. 1,086,750
----------------
13,095,562
----------------
TOTAL COMMON STOCKS
(Cost $28,557,150) 33,051,563
----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- --------------
REPURCHASE AGREEMENT - 6.24%
<S> <C> <C> <C>
2,138,000 Agreement with Chase Manhattan Corp., 5.43%, dated 2/27/98, due 3/2/98 to be
repurchased at $2,138,967, collateralized by $1,745,000 U.S. Treasury Notes, 8.125%,
due 8/15/19 valued at $2,193,584.
(Cost $2,138,000) 2,138,000
------------------
2,138,000
------------------
TOTAL INVESTMENTS
(Cost $30,695,150*) 102.71% $35,189,563
LIABILITIES AND OTHER ASSETS (NET)
(2.71%) (928,251)
---------------------- -------------------
NET ASSETS 100.00% $34,261,312
====================== ===================
</TABLE>
* Aggregate cost for Federal tax and book purposes.
See Notes to Financial Statements.
B-1
<PAGE>
EXCELSIOR FUNDS, INC.
PORTFOLIO OF INVESTMENTS FEBRUARY 28, 1998
REAL ESTATE FUND (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
- ---------- --------------
<S> <C>
REAL ESTATE INVESTMENT TRUSTS - 95.77%
55,500 Alexander Haagen Properties $ 953,906
37,500 Associated Estates Realty Corp. 768,750
36,500 Avalon Properties Inc. 1,049,375
35,000 Arden Realty Group, Inc. 999,688
49,000 Bedford Property Investors 961,625
29,500 Boston Properties Inc. 1,003,000
40,000 Cabot Industrial Trust 855,000
52,000 Catellus Development Corp. 942,500
33,500 Chateau Communities Inc. 1,005,000
29,000 Crescent Real Estate Equities Co. 987,812
25,000 Developers Divers Realty Corp. 1,020,312
43,000 Duke Realty Investment Inc. 986,312
34,203 Equity Office Properties Trust 1,008,988
20,000 Equity Residential Props Trust 958,750
38,000 First Washington Realty Trust 988,000
13,500 Forest City Enterprises -Class A 745,875
30,000 Glenborough Realty Trust Inc. 855,000
43,500 Glimcher Realty Trust 978,750
35,500 Golf Trust of America Inc. 1,025,063
36,000 Health Care REIT Inc. 969,750
29,500 Highwoods Properties Inc. 1,026,969
48,000 Health And Retirement Properties Trust 960,000
29,000 Hospitality Properties Trust 1,015,000
29,000 KimCo. Realty Corp. 1,018,625
26,000 Mack-Cali Realty Corp. 981,500
28,500 Meditrust Corp. Paired Stock 876,375
42,000 Merry Land & Investment Co. Inc. 973,875
43,000 Pacific Gulf Properties Inc. 997,063
36,000 Prentiss Properties Trust 960,750
38,000 Security Capital Industrial Trust 921,500
33,000 Shurgard Storage Centers A 919,875
30,000 Simon Debartolo Group Inc. 926,250
23,000 Spieker Properties Inc. 912,813
18,500 Starwood Hotels & Resorts 1,046,406
71,500 Taubman Center Inc. 933,969
66,000 United Dominion Realty Trust 924,000
22,000 Vornado Realty Trust 933,625
22,000 Weingarten Realty Investors 981,750
-----------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Cost $37,186,494) 36,373,801
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- ----------
<S> <C> <C>
REPURCHASE AGREEMENT - 4.27%
1,623,000 Agreement with Chase Manhattan Corp., 5.43%, dated 2/27/98, due
3/02/98 to be repurchased at $1,623,734, collaterallized by
$1,325,000 U.S. Treasury Notes, 8.125%, due 8/15/19, valued at
$1,665,616.
(Cost $1,623,000) 1,623,000
-----------
TOTAL INVESTMENTS
(Cost $38,809,494*) 100.04% $37,996,801
LIABILITIES AND OTHER ASSETS (NET)
(0.04%) (15,097)
---------------------- -----------
NET ASSETS 100.00% $37,981,704
====================== ===========
</TABLE>
* Aggregate cost for Federal tax and book purposes.
See Notes to Financial Statements.
B-2
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF ASSETS AND LIABILITIES
FEBRUARY 28, 1998 (UNAUDITED)
- -------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP GROWTH REAL ESTATE
FUND FUND
---------------- ------------
<S> <C> <C>
ASSETS:
Investments, at cost-see accompanying portfolios............ $ 30,695,150 $ 38,809,494
=============== ===============
Investments, at value (Note 1).............................. $ 35,189,563 $ 37,996,801
Cash........................................................ 1,463 1,635
Dividends receivable........................................ 4,974 945
Interest receivable......................................... 967 734
Receivables for fund shares sold............................ 1,500 -
Prepaid expenses............................................ 628 1,012
Unamortized organization costs (Note 5)..................... 41,743 27,897
--------------- ----------------
TOTAL ASSETS............................................. 35,240,838 38,029,114
LIABILITIES:
Payable for investments purchased........................... 926,686 -
Investment advisory fees payable (Note 2)................... 17,394 24,569
Administration fees payable (Note 2)........................ 4,218 4,966
Directors' fees payable (Note 2)............................ 204 303
Accrued expenses and other payable.......................... 31,024 17,572
--------------- ----------------
TOTAL LIABILITIES........................................ 979,526 47,410
--------------- ----------------
NET ASSETS.................................................... $ 34,261,312 $ 37,981,704
=============== ================
NET ASSETS consist of:
Undistributed net investment income (loss).................. $ (11,597) $ 165,267
Accumulated net realized gain (loss) on investments......... (214,016) 168,428
Unrealized appreciation\depreciation of investments......... 4,494,413 (812,693)
Par value (Note 4).......................................... 4,181 5,495
Paid in capital in excess of par value...................... 29,988,331 38,455,207
--------------- ----------------
TOTAL NET ASSETS.............................................. $ 34,261,312 $ 37,981,704
=============== ================
SHARES:
Net Assets.................................................. $ 34,261,312 37,981,704
Shares of Common Stock Outstanding.......................... 4,181,181 5,495,232
NET ASSET VALUE PER SHARE................................... 8.19 6.91
=============== ================
</TABLE>
See Notes to Financial Statements
B-3
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF OPERATIONS
FOR THE PERIOD OCTOBER 1, 1997 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28,
1998 (UNAUDITED)
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP GROWTH Real Estate
FUND Fund
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income.................................... $ 30,716 $ 56,847
Dividend income.................................... 37,318 519,868
-------------- --------------
Total Income...................................... 68,034 576,715
EXPENSES:
Investment advisory fees (Note 2)................ 56,879 105,457
Administration fees (Note 2)..................... 11,603 15,999
Custodian fees................................... 8,427 9,102
Directors' fees and expenses (Note 2)............ 297 447
Amortization of organization costs (Note 5)...... 1,864 2,525
Miscellaneous expenses........................... 13,598 13,460
-------------- --------------
TOTAL EXPENSES................................ 92,668 146,990
Fees waived by investment adviser and (13,037) (20,620)
administrators (Note 2)..........................
-------------- --------------
NET EXPENSES.................................. 79,631 126,370
--------------
NET INVESTMENT INCOME (LOSS)..................... (11,597) 450,345
-------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(Note 1):
Net realized gain (loss):
Security transactions............................ (214,016) 168,428
Change in unrealized appreciation/depreciation
on investments during the period.................. 4,494,413 (812,693)
-------------- --------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 4,280,397 (644,265)
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,268,800 $ (193,920)
============== ==============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
B-4
<PAGE>
EXCELSIOR FUNDS, INC.
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD OCTOBER 1, 1997 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LARGE CAP GROWTH REAL ESTATE
FUND FUND
---------------- -------------
<S> <C> <C>
Net investment income (loss)............................................ $ (11,597) $ 450,345
Net realized gain (loss) on investments................................. (214,016) 168,428
Change in unrealized appreciation/depreciation on investments........... 4,494,413 (812,693)
---------------- -------------
Net increase (decrease) in net assets resulting from operations......... 4,268,800 (193,920)
Distributions to shareholders:
From net investment income.............................................. - (285,078)
---------------- -------------
Increase in net assets from fund share transactions (Note 4) 29,992,512 38,460,702
---------------- -------------
Net increase (decrease) in net assets................................... 34,231,312 37,981,704
NET ASSETS:
Beginning of period................................................... - -
End of period (1)..................................................... $ 34,261,312 $ 37,981,704
================ =============
------------------------------------------------------------------------
(1) Including undistributed net investment income (11,597) 165,267
================ =============
</TABLE>
See Notes to Financial Statements
B-5
<PAGE>
<TABLE>
<CAPTION>
EXCELSIOR FUNDS, INC.
FINANCIAL HIGHLIGHTS - SELECTED PER SHARE DATA AND RATIOS (UNAUDITED)
- --------------------------------------------------------------------------------------
FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIOD OCTOBER 1, 1997 (COMMENCEMENT OF OPERATIONS) TO FEBRUARY 28, 1998.
NET ASSET NET NET REALIZED
VALUE, INVESTMENT AND UNREALIZED TOTAL FROM
BEGINNING INCOME GAIN (LOSS) INVESTMENT
OF PERIOD (LOSS) ON INVESTMENTS OPERATIONS
------------- ------ -------------- ----------
<S> <C> <C> <C> <C>
LARGE CAP GROWTH FUND $7.00 - $ 1.19 $ 1.19
REAL ESTATE FUND $7.00 $0.10 $(0.12) $(0.02)
<CAPTION>
DIVIDENDS DISTRIBUTIONS
FROM NET FROM NET
INVESTMENT REALIZED GAIN
INCOME ON INVESTMENTS
---------- --------------
<S> <C> <C>
LARGE CAP GROWTH FUND - -
REAL ESTATE FUND $(0.07) -
</TABLE>
* Not Annualized
** Annualized
+ Expense ratios before waiver of fees and
reimbursement of expenses (if any) by adviser and
administrators.
See Notes to Financial Statements
B-6
<PAGE>
EXCELSIOR FUNDS, INC.
FINANCIAL HIGHLIGHTS - SELECTED PER SHARE DATA AND RATIOS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF NET RATIO OF GROSS
DISTRIBUTIONS IN NET ASSETS, OPERATING OPERATING
EXCESS OF NET NET ASSET END EXPENSES EXPENSES
REALIZED GAIN TOTAL VALUE, END TOTAL OF PERIOD TO AVERAGE TO AVERAGE
ON INVESTMENTS DISTRIBUTIONS OF PERIOD RETURN (000) NET ASSETS NET ASSETS +
- ---------------- --------------- ----------- ------------ ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
- - $8.19 17.00 % * $34,261 1.05% ** 1.23% *
- $(0.07) $6.91 (0.23) % * $37,982 1.20% ** 1.41% **
<CAPTION>
RATIO OF NET
INVESTMENT
INCOME (LOSS) PORTFOLIO FEE AVERAGE
TO AVERAGE TURNOVER WAIVERS COMMISSION
NET ASSETS RATE (NOTE 2) RATE
- -------------- ----------- ---------- -------------
<C> <C> <C> <C>
(0.15) % ** 18% ** $0.18 $0.0324
4.31 % ** 28% ** $0.20 $0.0704
</TABLE>
See Notes to Financial Statements
B-7
<PAGE>
EXCELSIOR FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Excelsior Funds, Inc. ("Excelsior Fund") was incorporated under the laws of
the State of Maryland on August 2, 1984 and is registered under the Investment
Company Act of 1940 (the "1940 Act"), as amended, as an open-end management
investment company.
Excelsior Fund currently offers shares in eighteen managed investment
portfolios, each having its own investment objectives and policies. The
following is a summary of significant accounting policies for the Large Cap
Growth Fund and the Real Estate Fund (the "Portfolios"). Such policies are in
conformity with generally accepted accounting principles and are consistently
followed by Excelsior Fund in the preparation of the financial statements.
Generally accepted accounting principles require management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from these estimates. The
Portfolios commenced operations on October 1, 1997.
(A) PORTFOLIO VALUATION:
Investments in securities that are traded on a recognized stock exchange
are valued at the last sale price on the exchange on which such securities are
primarily traded or at the last sale price on the national securities market.
Securities traded over-the-counter are valued each business day on the basis of
the closing over-the-counter bid prices. Securities for which there were no
transactions are valued at the average of the most recent bid prices (as
calculated by an independent pricing service (the "Service") based upon its
evaluation of the market for such securities) when, in the judgment of the
Service, quoted bid prices for securities are readily available and are
representative of the bid side of the market. Portfolio securities that 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 occurrence subsequent to the time a value was so established
is likely to have changed such value, then a 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 traded on more than one exchange is valued at
the quotation on the exchange determined to be the primary market on which the
security is traded. Securities for which market quotations are not readily
available are valued at fair value, pursuant to guidelines adopted by Excelsior
Fund's Board of Directors. Short-term debt instruments with remaining maturities
of 60 days or less are valued at amortized cost, which approximates market
value.
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 policies established by the Board of Directors. Investment valuations,
other assets, and liabilities initially expressed in foreign currencies are
converted each business day into U.S. dollars based upon current exchange rates.
Purchases and sales of foreign investments and income and expenses are converted
into U.S. dollars based upon currency exchange rates prevailing on the
respective dates of such transactions. Gains and losses attributable to foreign
currency exchange rates are recorded for financial statement purposes as net
realized gains and losses on investments. That portion of both realized and
unrealized gains and losses on investments that results from fluctuations in
foreign currency exchange rates is not separately disclosed.
Forward foreign currency exchange contracts: The Portfolios' participation
in forward currency exchange contracts will be limited to hedging involving
either specific transactions or portfolio positions. Transaction hedging
involves the purchase or sale of foreign currency with respect to specific
receivables or payables of a Portfolio generally arising in connection with the
purchase or sale of its portfolio securities. Risk may arise upon entering into
these contracts from the potential inability of counterparties to meet the terms
of their contracts and is generally limited to the amount of unrealized gain on
the
B-8
<PAGE>
contracts, if any, at the date of default. Risk may also arise from
unanticipated movements in the value of a foreign currency relative to the U.S.
dollar. Contracts are marked-to-market daily and the change in market value is
recorded as unrealized appreciation or depreciation. Realized gains or losses
arising from such transactions are included in net realized gains or losses from
foreign currency transactions.
(B) SECURITY TRANSACTIONS AND INVESTMENT INCOME:
Security transactions are recorded on a trade date basis. Realized
gains and losses on investments sold are recorded on the basis of identified
cost. Interest income, adjusted for amortization of premiums and, when
appropriate, discounts on investments, is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date.
(C) REPURCHASE AGREEMENTS:
Excelsior Fund may purchase portfolio securities from financial
institutions deemed to be creditworthy by the investment adviser subject to the
seller's agreement to repurchase and Excelsior Fund's agreement to resell such
securities at mutually agreed upon prices. Securities purchased subject to such
repurchase agreements are deposited with Excelsior Fund's custodian or sub-
custodian or are maintained in the Federal Reserve/Treasury book-entry system
and must have, at all times, an aggregate market value not less than the
repurchase price.
If the value of the underlying security falls below the value of the
repurchase price, Excelsior Fund will require the seller to deposit additional
collateral by the next business day. Default or bankruptcy of the seller may,
however, expose the applicable Portfolio of Excelsior 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.
(D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income and net realized capital gains
are declared and distributed to shareholders at least annually. Dividends and
distributions are determined in accordance with Federal income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments for net operating losses,
foreign currency transactions, partnership income, deferral of losses on wash
sales and post-October losses.
In order to avoid a Federal excise tax, each Portfolio is required to
distribute certain minimum amounts of net realized capital gain and net
investment income for the respective periods ending October 31 and December 31
in each calendar year.
(E) FEDERAL TAXES:
It is the policy of Excelsior Fund that the Portfolios qualify as a
regulated investment company, if such qualification is in the best interest of
the shareholders, by complying with the requirements of the Internal Revenue
Code applicable to regulated investment companies, and by distributing
substantially all of its taxable earnings to its shareholders.
At February 28, 1998, aggregate gross unrealized appreciation for all
securities for which there was an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities for which there was an excess
of tax cost over value is as follows:
B-9
<PAGE>
<TABLE>
<CAPTION>
NET
TAX BASIS TAX BASIS UNREALIZED
UNREALIZED UNREALIZED APPRECIATION
APPRECIATION (DEPRECIATION) (DEPRECIATION)
------------------------------------------------------------
<S> <C> <C> <C>
Large Cap Growth Fund $4,500,107 $ (5,694) $4,494,413
Real Estate Fund 304,342 (1,117,035) (812,693)
</TABLE>
(F) EXPENSE ALLOCATION:
Expenses directly attributable to a Portfolio or a class of shares in
such Portfolio are charged to that Portfolio or such share class. Other expenses
are allocated to the respective Portfolios based on average net assets.
2. INVESTMENT ADVISORY FEE, ADMINISTRATION FEE, DISTRIBUTION EXPENSES AND
RELATED PARTY TRANSACTIONS:
United States Trust Company of New York ("U.S. Trust NY") and U.S. Trust
Company of Connecticut ("U.S. Trust CT" and, collectively with U.S. Trust NY,
"U.S. Trust") serve as the investment advisers to the Portfolios. For the
services provided pursuant to the Investment Advisory Agreements, U.S. Trust is
entitled to receive a fee, computed daily and paid monthly, at the annual rates
of 0.75% of the average daily net assets of the Large Cap Growth Fund and 1.00%
of the average daily net assets of the Real Estate Fund. U.S. Trust NY and U.S.
Trust CT are wholly-owned subsidiaries of U.S. Trust Corporation, a registered
bank holding company.
U.S. Trust CT, Chase Global Funds Services Company ("CGFSC"), a subsidiary
of The Chase Manhattan Bank and Federated Administrative Services ("FAS")
(collectively, the "Administrators") provide administrative services to
Excelsior Fund. For the services provided to the Portfolios, the Administrators
are entitled jointly to annual fees, computed daily and paid monthly, based on
the combined aggregate average daily net assets of Excelsior Fund, Excelsior
Tax-Exempt Fund and Excelsior Institutional Trust (excluding the international
equity portfolios of Excelsior Fund and Excelsior Institutional Trust), all of
which are affiliated investment companies, as follows: 0.200% of the first $200
million, 0.175% of the next $200 million, and 0.150% over $400 million.
Administration fees payable by each portfolio of the three investment companies
are determined in proportion to the relative average daily net assets of the
respective Portfolios for the period paid. For the period October 1, 1997
(commencement of operations) to February 28, 1998, Administration fees charged
by U.S. Trust were as follows:
Large Cap Growth Fund $2,274
Real Estate Fund $3,151
From time to time, as they may deem appropriate in their sole discretion,
or pursuant to applicable state expense limitations, U.S. Trust and the
Administrators may undertake to waive a portion or all of the fees payable to
them and also may reimburse the Portfolios for a portion of other expenses. In
addition, until further notice to Excelsior Fund, U.S. Trust intends to
voluntarily waive fees to the extent necessary for each of the Large Cap Growth
Fund and the Real Estate Fund to maintain an annual expense ratio of not more
than 1.05% and 1.20% respectively. For the period October 1, 1997 (commencement
of operations) to February 28, 1998, pursuant to this voluntary expense
limitation U.S. Trust waived fees of $13,036 and $20,620 for the Large Cap
Growth Fund and the Real Estate Fund, respectively.
Excelsior Fund has also entered into administrative servicing agreements
with various service organizations (which may include affiliates of U.S. Trust)
requiring them to provide administrative support services to their customers
owning shares of the Portfolios. As a consideration for the administrative
B-10
<PAGE>
services provided by each service organization to its customers, each Portfolio
will pay the service organization an administrative service fee at the annual
rate of up to 0.40% of the average daily net asset value of its shares held by
the service organizations' customers. Such services may include assisting in
processing purchase, exchange and redemption requests; transmitting and
receiving funds in connection with customer orders to purchase, exchange or
redeem shares; and providing periodic statements. Until further notice to
Excelsior Fund, U.S. Trust and the Administrators have voluntarily agreed to
waive investment advisory and administration fees payable by each Portfolio in
an amount equal to administrative service fees payable by that Portfolio. For
the period October 1, 1997 (commencement of operations) to February 28, 1998
the Portfolios have incurred no administrative service expense.
Edgewood Services, Inc. (the "Distributor"), a wholly-owned subsidiary of
Federated Investors, serves as the sponsor and distributor of Excelsior Fund.
Shares of each Portfolio are sold without a sales charge on a continuous basis
by the Distributor.
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 for attending meetings. The Chairman receives an additional annual fee
of $5,000.
3. PURCHASES AND SALES OF SECURITIES:
For the period October 1, 1997 (commencement of operations) to February 28,
1998, purchases and sales of securities, excluding short-term investments, for
the Portfolios aggregated:
PURCHASES SALES
--------------------------------------
Large Cap Growth Fund $30,039,676 $1,268,510
Real Estate Fund 39,556,901 2,538,835
4. COMMON STOCK:
Excelsior Fund currently has authorized capital of 35 billion shares of
Common Stock representing interests in one of eighteen separate investment
portfolios. Authorized capital currently offered for each Portfolio is as
follows: 500 million shares of each of the Large Cap Growth and Real Estate
Funds.
Each share has a par value of $.001, and represents an equal proportionate
interest in the particular Portfolio with other shares of the same Portfolio,
and is entitled to such dividends and distributions of taxable earnings on the
assets belonging to such Portfolio as are declared at the discretion of
Excelsior Fund's Board of Directors.
<TABLE>
<CAPTION>
LARGE CAP GROWTH FUND
--------------------------------------
10/01/97*- 02/28/98
--------------------------------------
SHARES AMOUNT
--------------------------------------
<S> <C> <C>
Sold: 4,278,369 $30,707,603
Issued as reinvestment of dividends - -
Redeemed (97,188) (715,091)
--------------------------------------
Net Increase 4,181,181 $29,992,512
======================================
</TABLE>
_____________
* Commencement of operations
B-11
<PAGE>
<TABLE>
<CAPTION>
REAL ESTATE FUND
--------------------------------------
10/01/97*- 02/28/98
--------------------------------------
SHARES AMOUNT
--------------------------------------
<S> <C> <C>
Sold: 5,533,324 $38,728,478
Issued as reinvestment of dividends 203 $ 1,417
Redeemed (38,295) (269,193)
--------------------------------------
Net Increase 5,495,232 $38,460,702
======================================
</TABLE>
_____________
* Commencement of operations
5. ORGANIZATION COSTS
Excelsior Fund has borne all costs in connection with the initial
organization of new portfolios, including the fees for registering and
qualifying its shares for distribution under Federal and state securities
regulations. All such costs are being amortized on the straight-line basis over
periods of five years from the dates on which each Portfolio commenced
operations.
B-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:
. Unaudited Financial Highlights for the
Registrant's Large Cap Growth and Real Estate
Funds for the period from October 1, 1997
(commencement of operations) to February 28,
1998.
(2) Included in Part B are the following unaudited
financial statements for the Registrant's Large
Cap Growth and Real Estate Funds:
. Portfolio of Investments - February 28, 1998;
. Statement of Assets and Liabilities -
February 28, 1998;
. Statement of Operations for the period from
October 1, 1997 (commencement of operations)
to February 28, 1998;
. Statement of Changes in Net Assets for the
period from October 1, 1997 (commencement of
operations) to February 28, 1998;
. Unaudited financial highlights for the period
from October 1, 1997 (commencement of
operations) to February 28, 1998, and
. Notes to Financial Statements.
(b) Exhibits:
--------
(1) (a) Articles of Incorporation of Registrant
dated August 1, 1984 (7).
(b) Articles Supplementary of Registrant dated
October 29, 1985 (7).
(c) Articles Supplementary of Registrant dated
September 30, 1986 (7).
(d) Articles Supplementary of Registrant dated
April 10, 1987 (7).
<PAGE>
(e) Articles Supplementary of Registrant dated April
27, 1990 (7).
(f) Articles Supplementary of Registrant dated October
26, 1990 (7).
(g) Articles Supplementary of Registrant dated January
29, 1991 (7).
(h) Articles Supplementary of Registrant dated
December 23, 1992 (7).
(i) Articles Supplementary of Registrant dated August
31, 1995 (3).
(j) Articles Supplementary of Registrant dated
December 28, 1995 (3).
(k) Articles Supplementary of Registrant dated
September 11, 1997 (6).
(l) Articles Supplementary of Registrant dated
December 22, 1997 (7).
(2) (a) Amended and Restated By-Laws of Registrant dated
February 2, 1995 (6).
(b) Amendment No. 1 to By-Laws of Registrant dated
May 16, 1997 (6).
(3) None.
(4) (a) Articles VI, VII, VIII and X of Registrant's
Articles of Incorporation dated August 1, 1984 are incorporated
herein by reference to Exhibit 1(a) of Registrant's Registration
Statement on Form N-1A.
(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.
(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 (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).
(c) Amendment No.2 dated November 14, 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 Emerging Markets Fund) (7).
-2-
<PAGE>
(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 Managed Income Fund
(5).
(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 Income and Growth Fund
(5).
(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 International Fund
(5).
(g) 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
(5).
(6) (a) Distribution Contract dated August 1, 1995 between
Registrant and Edgewood Services, Inc. (3).
(b) Amended Exhibit A dated November 14, 1997 to the
Distribution Contract dated August 1, 1995 (7).
(7) None.
(8) (a) Custody Agreement between Registrant and The Chase
Manhattan Bank dated September 1, 1995 (as amended and restated on
August 1, 1997) (6).
(b) Amended Exhibit A dated November 28, 1997 to the
Custody Agreement dated September 1, 1995 (as amended and restated on
August 1, 1997) (7).
(9) (a) Amended and Restated Administrative Services Plan and
Related Form of Shareholder Servicing Agreement (6).
(b) Administration Agreement dated May 16, 1997 among
Registrant, Chase Global Funds Services Company, Federated
Administrative Services and U.S. Trust Company of Connecticut (5).
(c) Exhibit A dated November 14, 1997 to the Administration
Agreement dated May 16, 1997 (7).
(d) Exhibit B dated November 14, 1997 to the Administration
Agreement dated May 16, 1997 (7).
(e) Mutual Funds Transfer Agency Agreement dated as of
September 1, 1995 between Registrant and United States Trust Company
of New York (6).
(f) Letter Agreement dated September 11, 1997 with respect
to the Mutual Funds Transfer Agency Agreement dated September 1, 1995
(7).
(g) Letter Agreement dated November 14, 1997 with respect
to the Mutual Funds Transfer Agency Agreement dated September 1, 1995
(7).
(h) Mutual Funds Sub-Transfer Agency Agreement dated as of
September 1, 1995 between United States Trust
-3-
<PAGE>
Company of New York and Chase Global Funds Services Company (6).
(i) Letter Agreement dated September 11, 1997 with respect
to the Mutual Funds Sub-Transfer Agency Agreement dated September 1,
1995 (7).
(j) Letter Agreement dated November 14, 1997 with respect
to the Mutual Funds Sub-Transfer Agency Agreement dated September 1,
1995 (7).
(10) Opinion of counsel (7).
(11) Consent of Drinker Biddle & Reath LLP (7).
(12) None.
(13) (a) Purchase Agreement between Registrant and Shearson
Lehman Brothers Inc. dated February 6, 1985 (7).
(b) Purchase Agreement between Registrant and UST
Distributors, Inc. dated December 29, 1992 (7).
(c) Purchase Agreement between Registrant and Edgewood
Services, Inc. dated November 17, 1995 (3).
(d) Purchase Agreement between Registrant and Edgewood
Services, Inc. dated September 25, 1997 (6).
(e) Purchase Agreement between Registrant and Edgewood
Services, Inc. dated December 30, 1997 (7).
(14) None.
(15) None.
(16) (a) Schedule for computation of performance quotation
(1).
(b) Schedule for computation of performance quotation
(2).
(17) (a) Financial Data Schedule as of February 28, 1998 for the
Large Cap Growth Fund (7).
(b) Financial Data Schedule as of February 28, 1998 for the
Real Estate Fund (7).
(18) Amended and Restated Plan Pursuant to Rule 18f-3 for
Operation of a Multi-Class System (4).
Notes:
(1) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 13 to its Registration Statement on Form N-1A filed August 1,
1991.
(2) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 17 to its Registration Statement on Form N-1A filed August 2,
1993.
(3) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 23 to its Registration Statement on Form N-1A filed July 31, 1996.
-4-
<PAGE>
(4) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 26 to its Registration Statement on Form N-1A filed July 3, 1997.
(5) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 29 to its Registration Statement on Form N-1A filed July 31, 1997.
(6) Incorporated herein by reference to Registrant's Post-Effective Amendment
No. 30 to its Registration Statement on Form N-1A filed October 8,
1997.
(7) 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 March 9, 1998.
-5-
<PAGE>
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
- -------------- ------------------------
<S> <C>
Class A Common Stock (Money Fund) 5,131
Class B Common Stock (Government Money Fund) 1,523
Class C Common Stock (Blended Equity Fund) 5,176
Class C Common Stock
Special Series 1 (Blended Equity Fund) 0
Class D Common Stock (Managed Income Fund) 1,441
Class E Common Stock (Income and Growth
Fund) 2,497
Class F Common Stock (International Fund) 3,026
Class G Common Stock (Treasury Money Fund) 1,349
Class H Common Stock (Small Cap Fund) 2,317
Class H Common Stock -
Special Series 1 (Small Cap Fund) 0
Class I Common Stock (Energy and Natural
Resources Fund) 2,055
Class J Common Stock (Productivity
Enhancers Fund) 0
Class K Common Stock (Environmentally -
Related Products and Services Fund) 0
Class L Common Stock (Aging of America
Fund) 0
Class L Common Stock -
Special Series 1 (Aging of America
Fund) 0
Class M Common Stock (Communication and
Entertainment Fund 0
Class M Common Stock -
Special Series 1 (Communication and
Entertainment Fund 0
Class N Common Stock (Value and
Restructuring Fund 6,208
Class N Common Stock -
Special Series 1 (Value and
Restructuring Fund 0
Class O Common Stock (Global Competitors
Fund 0
Class O Common Stock -
Special Series 1 (Global Competitors
Fund 0
Class P Common Stock (Latin America
Fund) 3,287
Class Q Common Stock (Pacific/Asia Fund) 2,166
Class R Common Stock (Pan European Fund) 3,586
Class S Common Stock (Short-Term
Government Securities Fund 414
Class T Common Stock (Intermediate-Term
Managed Income Fund 1,072
Class U Common Stock (Large Cap Growth
Fund 795
Class V Common Stock (Real Estate Fund) 670
Class W Common Stock (Emerging Markets Fund) 86
</TABLE>
-6-
<PAGE>
Item 27. Indemnification
---------------
Article VII, Section 3 of Registrant's Articles of Incorporation,
filed as Exhibit (1) (a) hereto, and Article VI, Section 2 of Registrant's
Bylaws, incorporated herein by reference to 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 herein by reference to Exhibit (6) (a)
hereto, Section 12 of the Custody Agreement incorporated herein by reference to
Exhibit (8) hereto, Section 7 of the Mutual Funds Transfer Agency Agreement
incorporated herein by reference to Exhibit 9(c) hereto, and Section 6 of the
Administration Agreement incorporated herein by reference to 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
Securities 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 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.
<TABLE>
<CAPTION>
Position
with U.S. Principal Type of
Trust CT Name Occupation Business
- -------- ---- ---------- --------
<S> <C> <C> <C>
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
</TABLE>
-7-
<PAGE>
POSITION
- --------
WITH U.S PRINCIPAL TYPE OF
- -------- --------- -------
TRUST CT NAME OCCUPATION BUSINESS
- -------- ---- ---------- --------
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
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.
-8-
<PAGE>
<TABLE>
<CAPTION>
Position
with U.S. Principal Type of
Trust NY Name Occupation Business
- --------- ---- ---------- --------
<S> <C> <C> <C>
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
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 E. Stookey Corporate Director
Per Scholas Inc. and Trustee
131 Walnut Avenue
Bronx, New York 10454
</TABLE>
-9-
<PAGE>
<TABLE>
<CAPTION>
Position
with U.S. Principal Type of
Trust NY Name Occupation Business
- --------- ---- ---------- --------
<S> <C> <C> <C>
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
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
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
Position
With U.S Principal Type of
Trust NY Name Occupation Business
- -------- ---- ---------- --------
<S> <C> <C> <C>
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
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. Hover, 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>
-11-
<PAGE>
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, Deutsche Portfolios, Deutsche Funds, Inc.,
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., Robertsons Stephens Investment
Trust, WesMark Funds and WCT Funds.
<TABLE>
<CAPTION>
(b) Names and Principal Positions and Offices with Offices with
Business Addresses the Distributor Registrant
------------------- -------------------------- ------------
<S> <C> <C>
Lawrence Caracciolo Director and President, --
Federated Investors Tower Edgewood Services, Inc.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Arthur L. Cherry Director, --
Federated Investors Tower Edgewood Services, Inc.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
J. Christopher Donahue Director, --
Federated Investors Tower Edgewood Services, Inc.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ronald M. Petnuch Vice President, --
Federated Investors Tower Edgewood Services, Inc.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas P. Schmitt Vice President
Federated Investors Tower Edgewood Services, Inc. --
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas P. Sholes Vice President --
Federated Investors Tower Edgewood Services, Inc.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Edgewood Services, Inc.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
S. Elliott Cohan Secretary, --
Federated Investors Tower Edgewood Services, Inc.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
Thomas J. Ward Assistant Secretary, --
Federated Investors Tower Edgewood Services, Inc.
1001 Liberty Avenue
Pittsburgh, PA 15222-3779
</TABLE>
-12-
<PAGE>
Kenneth W. Pegher, Jr. Treasurer,
Federated Investors Tower Edgewood Services, Inc.
1001 Liberty Avenue
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, 5800 Corporate
Drive, Pittsburgh, PA 15237-5829 (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).
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 Post-Effective Amendment No. 30 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. certifies that it meets
---------------------------
all of the requirements for effectiveness for this Post-Effective Amendment
- ---------------------------
No. 31 to its Registration Statement pursuant to Rule 485 (b) under the 1933 Act
- --------------------------------------------------------------------------------
and has duly caused this Post-Effective Amendment No. 31 to its Registration
- --------------------------------------------------------
Statement on Form N-1A to be signed on its behalf by the undersigned, therunto
duly authorized, in the city of Philadelphia and the Commonwealth of
Pennsylvania on the 13th day of March, 1998.
---- -----------
* 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. 31 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, March 13, 1998
President and Treasurer
* Donald L. Campbell
- --------------------- Director March 13, 1998
Donald L. Campbell
* Joseph H. Dugan
- -----------------
Joseph H. Dugan Director March 13, 1998
* Wolfe J. Frankl
- -----------------
Wolfe J. Frankl Director March 13, 1998
* Robert A. Robinson
- --------------------
Robert A. Robinson Director March 13, 1998
* Alfred Tannachion Director March 13, 1998
- -------------------
Alfred Tannachion
* W. Wallace McDowell, Jr. Director March 13, 1998
- --------------------------
W. Wallace McDowell, Jr.
* Jonathan Piel Director March 13, 1998
- ---------------
Jonathan Piel
* Rodman L. Drake Director March 13, 1998
- -----------------
Rodman L. Drake
*By: /s/ W. Bruce McConnel, III
---------------------------
W. Bruce McConnel, III, Attorney-in-Fact
-14-
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description
- ----------- -----------
(1)(a) Articles of Incorporation of Registrant dated August 1, 1984.
(1)(b) Articles Supplementary of Registrant dated October 29, 1985.
(1)(c) Articles Supplementary of Registrant dated September 30, 1986.
(1)(d) Articles Supplementary of Registrant dated April 10, 1987.
(1)(e) Articles Supplementary of Registrant dated April 27, 1990.
(1)(f) Articles Supplementary of Registrant dated October 26, 1990.
(1)(g) Articles Supplementary of Registrant dated January 29, 1991.
(1)(h) Articles Supplementary of Registrant dated December 23, 1992.
(1)(l) Articles Supplementary of Registrant dated December 22, 1997.
(5)(c) Amendment No. 2 dated November 14, 1997 to the Investment
Advisory Agreement dated May 16, 1997 among Registrant, U.S.
Trust Company of Connecticut and United States Trust Company of
New York.
(6)(b) Amended Exhibit A dated November 14, 1997 to the Distribution
Contract dated August 1, 1995.
(8)(b) Amended Exhibit A dated November 28, 1997 to the Custody
Agreement dated September 1, 1995 (as amended and restated on
August 1, 1997).
(9)(c) Exhibit A dated November 14, 1997 to the Administration Agreement
dated May 16, 1997.
(9)(d) Exhibit B dated November 14, 1997 to the Administration Agreement
dated May 16, 1997.
(9)(f) Letter Agreement dated September 11, 1997 with respect to the
Mutual Funds Transfer Agency Agreement dated September 1, 1995.
<PAGE>
(9)(g) Letter Agreement dated November 14, 1997 with respect to the
Mutual Funds Transfer Agency Agreement dated September 1, 1995.
(9)(i) Letter Agreement dated September 11, 1997 with respect to the
Mutual Funds Sub-Transfer Agency Agreement dated September 1,
1995.
(9)(j) Letter Agreement dated November 14, 1997 with respect to the
Mutual Funds Sub-Transfer Agency Agreement dated September 1,
1995.
(10) Opinion of Drinker Biddle & Reath LLP.
(11) Consent of Drinker Biddle & Reath LLP.
(13)(a) Purchase Agreement between Registrant and Shearson Lehman
Brothers Inc. dated February 6, 1985.
(13)(b) Purchase Agreement between Registrant and UST Distributors, Inc.
dated December 29, 1992.
(13)(e) Purchase Agreement between Registrant and Edgewood Services, Inc.
dated December 30, 1997.
(27)(a) Financial Data Schedule-Large Cap Growth Fund.
(b) Financial Data Schedule-Real Estate Fund.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000751200
<NAME> EXCELSIOR FUNDS, INC.
<SERIES>
<NUMBER> 22
<NAME> LARGE CAP GROWTH FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Other
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 30,695,150
<INVESTMENTS-AT-VALUE> 35,189,563
<RECEIVABLES> 7,926
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 43,834
<TOTAL-ASSETS> 35,241,323
<PAYABLE-FOR-SECURITIES> 926,686
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 53,325
<TOTAL-LIABILITIES> 980,011
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,992,512
<SHARES-COMMON-STOCK> 4,181,181
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> (11,597)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (214,016)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,494,413
<NET-ASSETS> 34,261,312
<DIVIDEND-INCOME> 37,318
<INTEREST-INCOME> 30,716
<OTHER-INCOME> 0
<EXPENSES-NET> (79,631)
<NET-INVESTMENT-INCOME> (11,597)
<REALIZED-GAINS-CURRENT> (214,016)
<APPREC-INCREASE-CURRENT> 4,494,413
<NET-CHANGE-FROM-OPS> 4,268,800
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (0)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 4,278,369
<NUMBER-OF-SHARES-REDEEMED> (97,188)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 34,261,312
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 56,879
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (92,668)
<AVERAGE-NET-ASSETS> 18,136,672
<PER-SHARE-NAV-BEGIN> 7.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 1.19
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.19
<EXPENSE-RATIO> 1.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000751200
<NAME> EXCELSIOR FUNDS, INC.
<SERIES>
<NUMBER> 23
<NAME> REAL ESTATE FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> Other
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> FEB-28-1998
<INVESTMENTS-AT-COST> 38,809,494
<INVESTMENTS-AT-VALUE> 37,996,801
<RECEIVABLES> 1,679
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 30,634
<TOTAL-ASSETS> 38,029,114
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 47,410
<TOTAL-LIABILITIES> 47,410
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 38,460,702
<SHARES-COMMON-STOCK> 5,495,232
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 165,267
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 168,428
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (812,693)
<NET-ASSETS> 37,981,704
<DIVIDEND-INCOME> 519,868
<INTEREST-INCOME> 56,847
<OTHER-INCOME> 0
<EXPENSES-NET> (126,370)
<NET-INVESTMENT-INCOME> 450,345
<REALIZED-GAINS-CURRENT> 168,428
<APPREC-INCREASE-CURRENT> (812,693)
<NET-CHANGE-FROM-OPS> (193,920)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (285,078)
<DISTRIBUTIONS-OF-GAINS> (0)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,533,324
<NUMBER-OF-SHARES-REDEEMED> (38,295)
<SHARES-REINVESTED> 203
<NET-CHANGE-IN-ASSETS> 37,981,704
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 105,457
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (146,990)
<AVERAGE-NET-ASSETS> 25,236,103
<PER-SHARE-NAV-BEGIN> 7.00
<PER-SHARE-NII> 0.10
<PER-SHARE-GAIN-APPREC> (0.12)
<PER-SHARE-DIVIDEND> (0.07)
<PER-SHARE-DISTRIBUTIONS> (0.07)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 6.91
<EXPENSE-RATIO> 1.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
EXHIBIT (1) (a)
ARTICLES OF INCORPORATION
OF
U.S.T. MASTER FUNDS, INC.
* * * *
ARTICLE I
THE UNDERSIGNED, Barbara G. Fraser, whose post office address is 1100
Philadelphia National Bank Building, Philadelphia, Pennsylvania 19107, being at
least eighteen years of age, does hereby act as an incorporator, under and by
virtue of the General Laws of the State of Maryland authorizing the formation of
corporations and with the intention of forming a corporation.
ARTICLE II
The name of the Corporation is:
U.S.T. MASTER FUNDS, INC.
ARTICLE III
The purpose for which the Corporation is formed is to act as management
investment company under the Investment Company Act of 1940.
ARTICLE IV
The Corporation is expressly empowered as follows:
(1) To hold, invest and reinvest its assets in securities and other
investments or to hold part or all of its assets in cash.
(2) To issue and sell shares of its capital stock in such amounts and on
such terms and conditions and for such
<PAGE>
purposes and for such amount or kind of consideration as may now or hereafter by
permitted by law.
(3) To redeem, purchase or otherwise acquire, hold, dispose of, resell,
transfer, reissue or cancel (all without the vote or consent of the stockholders
of the Corporation) shares of its capital stock, in any manner and to the extent
now or hereafter permitted by law and by the Charter of the Corporation.
(4) To enter into a written contract or contracts with any person or
persons providing for a delegation of the management of all or part of the
Corporation's securities portfolio(s) and also for the delegation of the
performance of various administrative or corporate functions, subject to the
direction of the Board of Directors. Any such contract or contracts may be made
with any person even though such person may be an officer, other employee,
director or stockholder of this Corporation or a corporation, partnership, trust
or association in which any such officer, other employee, director or
stockholder may be interested.
(5) To enter into a written contract or contracts appointing one or more
distributors or agenda or both for the sale of the shares of the Corporation on
such terms and conditions as the Board of Directors of this Corporation may deem
reasonable and proper, and to allow such person or persons a commission on the
sale of such shares. Any such contract or contracts may be made with any person
even though such person may be an officer, other employee, director or
stockholder of this Corporation or a corporation, partnership, trust or
association in which any such officer, other employee, director or stockholder
may be interested.
(6) To enter into a written contract or contracts employing such custodian
or custodians for the safekeeping of the property of the Corporation and of its
shares, such dividend disbursing agent or agents, and such transfer agent or
agents and registrar or registrars for its shares, on such terms and conditions
as the Board of Directors of the Corporation may deem reasonable and proper for
the conduct of the affairs of the Corporation, and to pay the fees and
disbursements of such custodians, dividend disbursing agents, transfer agents,
and registrars out of the income and/or any other property of the Corporation.
Notwithstanding any other provision of these Articles of Incorporation or the
By-Laws of the Corporation, the Board of Directors may cause any or all of the
property of the Corporation to be transferred to, or to be acquired and held in
the name of, any custodian so appointed or any nominee or nominees of the
Corporation or nominee or nominees of such custodian satisfactory to the Board
of Directors.
-2-
<PAGE>
(7) To employ the same person in any multiple capacity under Sections (4),
(5) and (6) of this Article IV who may receive compensation from the Corporation
in as many capacities in which such person shall serve the Corporation.
(8) To do any and all such further acts or things and to exercise any and
all such further powers or rights as may be necessary, incidental, relative,
conducive, appropriate or desirable for the accomplishment, carrying out or
attainment of the purposes stated in Article III hereof.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations by the
General Laws of the State of Maryland now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE V
The post office address of the principal office of the Corporation in the
State of Maryland is c/o The Corporation Trust Incorporated, 32 South Street,
Baltimore, Maryland 21202. The name of the resident agent of the Corporation in
this State is The Corporation Trust Incorporated, a corporation of this State,
and the post office address of the resident agent is 32 South Street, Baltimore,
Maryland 21202.
ARTICLE VI
(1) The total number of shares of capital stock which the Corporation
shall have authority to issue is Four Billion (4,000,000,000) shares, of the par
value of One Mill ($0.001) per share and of the aggregate par value of Four
Million Dollars ($4,000,000).
(2) Any fractional share shall carry proportionately all the rights of a
whole share, excepting any right to receive a certificate evidencing such
fractional share, but including, without limitation, the right to vote and the
right to receive dividends.
(3) All persons who shall acquire stock in the Corporation shall acquire
the same subject to the provisions of the Charter and the By-Laws of the
Corporation.
(4) Except to the extent otherwise provided by applicable law, the Board
of Directors shall have authority by resolution to classify and reclassify any
authorized but unissued shares of capital stock from time to time by setting or
changing
-3-
<PAGE>
in any one or more respects the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption of the capital stock. The power of the Board of
Directors to classify or reclassify any of the shares of capital stock shall
include, without limitation, authority to classify or reclassify any such stock
into one or more classes and to divide and classify shares of any class into one
or more series of such class.
Subject to the Board of Directors' authority to classify and reclassify any
authorized but unissued shares as hereinabove provided, Two Billion Five Hundred
Million (2,500,000,000) shares of capital stock of the Corporation (of the
aggregate par value of Two Million, Five Hundred Thousand Dollars ($2,500,000))
are classified and designated as Class A Common Stock; One Billion
(1,000,000,000) shares of capital stock of the Corporation (of the aggregate par
value of One Million Dollars ($1,000,000)) are classified and designated as
Class B Common Stock and Five Hundred Million (500,000,000) shares of capital
stock of the Corporation (of the aggregate par value of Five Hundred Thousand
Dollars ($500,000)) are classified and designated as Class C Common Stock.
(5) Subject to the power of the Board of Directors to classify and
reclassify any authorized but unissued shares of capital stock pursuant to
Section (4) of this Article VI, shares of capital stock of the Corporation shall
have the following preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption:
(A) Assets Belonging to a Class. All consideration received by the
----------------------------
Corporation for the issue or sale of stock of any class of capital stock,
together with all income, earnings, profits and proceeds thereof, including
any proceeds derived from the sale, exchange or liquidation thereof, any
funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, and any general assets of the Corporation
not belonging to any particular class which the Board of Directors may, in
its sole discretion, allocate to a class, shall irrevocably belong to the
class of shares of capital stock with respect to which such assets,
payments or funds were received or allocated for all purposes, subject only
to the rights of creditors, and shall be so handled upon the books of
account of the Corporation. Such assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any assets derived from any reinvestment of such
proceeds in whatever form, are herein referred to as "assets belonging to"
such class.
-4-
<PAGE>
(B) Liabilities Belonging to a Class. The assets belonging to any
--------------------------------
class of capital stock shall be charged with the liabilities in respect to
such class, and shall also be charged with such class's proportionate share
of the general liabilities of the Corporation as determined by comparing,
before the allocation of the general liabilities of the Corporation, the
net asset value of such class with the aggregate net asset value of all of
the several classes of capital stock of the Corporation. The liabilities so
allocated to a class are herein referred to as "liabilities belonging to"
such class.
(C) Dividends and Distributions. Shares of each class of capital
---------------------------
stock shall be entitled to such dividends and distributions, in stock or in
cash or both, as may be declared from time to time by the Board of
Directors, acting in its sole discretion, with respect to such class;
provided, however, that dividends and distributions on shares of a class of
capital stock shall be paid only out of the lawfully available assets
belonging to such class as such phrase is defined in Section (5)(A) of this
Article VI.
(D) Liquidating Dividends and Distributions. In the event of the
---------------------------------------
liquidation or dissolution of the Corporation, stockholders of each class
of capital stock shall be entitled to receive, as a class, out of the
assets of the Corporation available for distribution to stockholders, but
other than general assets not belonging to any particular class of stock,
the assets belonging to such class; and the assets so distributable to the
stockholders of any class of capital stock shall be distributed among such
stockholders in proportion to the number of shares of such class held by
them and recorded on the books of the Corporation. In the event that there
are any general assets of the Corporation not belonging to any particular
class of stock and available for distribution, the stockholders of each
class of the Corporation's capital stock shall receive a proportionate
share of such general assets as determined by comparing, before the
allocation of such general assets, the net asset value of such class with
the aggregate net asset value of all of the several classes of capital
stock of the Corporation.
(E) Voting. Each stockholder of each class of capital stock shall
------
be entitled to one vote for each share of capital stock, irrespective of
the class, then standing in his name on the books of the Corporation, and
on any matter submitted to a vote of stockholders, all shares of capital
stock then issued and outstanding and entitled to vote shall be voted in
the aggregate and not by class except that: (i) when expressly required by
law, or when otherwise permitted by the Board of Directors acting in its
sole discretion,
-5-
<PAGE>
shares of capital stock shall be voted by individual class and (ii) only
shares of capital stock of the respective class or classes affected by a
matter shall be entitled to vote on such matter.
(F) Redemption. To the extent the Corporation has funds or other
----------
property legally available therefor, each holder of shares of capital stock
of the Corporation shall be entitled to require the Corporation to redeem
all or any part of the shares of capital stock of the Corporation standing
in the name of such holder on the books of the Corporation, and all shares
of capital stock issued by the Corporation shall be subject to redemption
by the Corporation, at the redemption price of such shares as in effect
from time to time and in the manner determined by the By-Laws or the Board
of Directors of the Corporation in accordance with the provisions hereof,
subject to the right of the Board of Directors of the Corporation to
suspend the right of redemption of shares of capital stock of the
Corporation or postpone the date or payment of such redemption price in
accordance with provisions of applicable law. Without limiting the
generality of the foregoing, the Corporation shall, to the extent permitted
by applicable law, have the right at any time to redeem the shares owned by
any holder of capital stock of the Corporation (i) if such redemption is,
in the opinion of the Board of Directors of the Corporation, desirable in
order to prevent the Corporation from being deemed a "personal holding
company" within the meaning of the Internal Revenue Code of 1954, as
amended, (ii) if the value of such shares in the account maintained by the
Corporation or its transfer agent: for any class of capital stock is less
than Five Hundred Dollars ($500.00); provided, however, that each
stockholder shall be notified that the value of his account is less than
Five Hundred Dollars ($500.00) and allowed sixty (60) days to make
additional purchases of shares before such redemption is processed by the
Corporation, or (iii) if it should be appropriate to carry out the
Corporation's responsibilities under the Investment Company Act of 1940, as
amended, subject to such further terms and conditions as the Board of
Directors of the Corporation may from time to time adopt. The redemption
price of shares of any class of capital stock of the Corporation shall,
except as otherwise provided in this Section (5)(F), be the net asset value
thereof as determined by the Board of Directors of the Corporation from
time to time in accordance with the provisions of applicable law, less such
redemption fee or other charge, if any, as may be fixed by resolution of
the Board of Directors of the Corporation. Payment of the redemption price
shall be made in cash by the Corporation at such time and in such manner as
may be determined from time to time by the Board of Directors of the
Corporation unless, in the opinion of the
-6-
<PAGE>
Board of Directors, which shall be conclusive, conditions exist which make
payment wholly in cash unwise or undesirable; in such event the Corporation
may make payment wholly or partly by securities or other property included
in the assets belonging or allocable to the class of the shares redemption
of which is being sought, the value of which shall be determined as
provided herein. When the net income with respect to any particular class
of capital stock is negative or whenever deemed appropriate by the Board of
Directors in order to carry out the Corporation's responsibilities under
the Investment Company Act of 1940, as amended, the Corporation may,
without payment of monetary compensation but in consideration of the
interest of the Corporation and the stockholders in maintaining a constant
net asset value per share of such class, redeem pro rata from each
stockholder of record on such day, such number of full and fractional
shares of the Corporation's capital stock of such class, as may be
necessary to reduce the aggregate number of outstanding shares in order to
permit the net asset value thereof to remain constant.
(G) Conversion. Each holder of any class of capital stock of the
----------
Corporation, who surrenders his share certificate in good delivery form to
the Corporation or, if the shares in question are not represented by
certificates, who delivers to the Corporation a written request in good
order signed by the stockholder, shall, to the extent permitted by the By-
Laws or by resolution of the Board of Directors, be entitled to convert the
shares in question on the basis hereinafter set forth, into shares of any
other class of capital stock of the Corporation with respect to which
conversion is permitted by applicable law. The Corporation shall determine
the net asset value, as provided herein, of the shares to be converted and
may deduct therefrom a conversion cost, in an amount determined within the
discretion of the Board of Directors. Within five (5) business days after
such surrender and payment of any conversion cost, the Corporation shall
issue to the stockholder such number of shares of stock of the class
desired as, taken at the net asset value thereof determined as provided
herein in the same manner and at the same time as that of the shares
surrendered, shall equal the net asset value of the shares surrendered,
less any conversion cost as aforesaid. Any amount representing a fraction
of a share may be paid in cash at the option of the Corporation. Any
conversion cost may be paid and/or assigned by the Corporation to the
underwriter and/or to any other agency, as it may elect.
(H) Restrictions on Transferability. If, in the opinion of the
--------------------------------
Board of Directors of the Corporation, concentration in the ownership of
shares of capital stock
-7-
<PAGE>
might cause the Corporation to be deemed a personal holding company within
the meaning of the Internal Revenue Code, an now or hereafter in force, the
Corporation may at any time and from time to time refuse to give effect on
the books of the Corporation to any transfer or transfers of any share or
shares of capital stock in an effort to prevent such personal holding
company status.
(I) Termination of a Class. Without the vote of the shares of any
-----------------------
class of capital stock of the Corporation then outstanding (unless
stockholder approval is otherwise required by applicable law), the
Corporation may, if so determined by the Board of Directors:
(1) Sell and convey the assets belonging to a class of capital
stock to another trust or corporation that is a management investment
company (as defined in the investment Company Act of 1940) and is organized
under the laws of any state of the United States for consideration which
may include the assumption of all outstanding obligations, taxes and other
liabilities, accrued or contingent, belonging to such class and which may
include securities issued by such trust or corporation. Following such sale
and conveyance, and after making provision for the payment of any
liabilities belonging to such class that are not assumed by the purchaser
of the assets belonging to such class, the Corporation may, at its option,
redeem all outstanding shares of such class at the net asset value thereof
as determined by the Board of Directors in accordance with the provisions
of applicable law, less such redemption fee or other charge, if any, as may
be fixed by resolution of the Board of Directors. Notwithstanding any other
provision of the Charter of the Corporation to the contrary, the redemption
price may be paid in any combination of cash or other assets belonging to
the Class, including but not limited to the distribution of the securities
or other consideration received by the Corporation for the assets belonging
to such class upon such conditions as the Board of Directors deems, in its
sole discretion, to be appropriate consistent with applicable law and the
Charter of the Corporation;
(2) Sell and convert the assets belonging to a class of capital
stock into money and, after making provision for the payment of all
obligations, taxes and other liabilities, accrued or contingent, belonging
to such class, the Corporation may, at its option, (i) redeem all
outstanding shares of such class at the net asset value thereof as
determined by the Board of Directors in accordance with the provisions of
applicable law, less such redemption fee or other charge, if any, as may be
fixed by resolution of the Board of Directors upon such conditions as
-8-
<PAGE>
the Board of Directors deems, in its sole discretion, to be appropriate
consistent with applicable law and the Charter of the Corporation, or (ii)
combine the assets belonging to such class following such sale and
conversion with the assets belonging to any one or more other classes of
capital stock of the Corporation pursuant to and in accordance with Section
(5)(I)(3) of this Article VI; or
(3) Combine the assets belonging to a class of capital stock
with the assets belonging to any one or more other classes of capital stock
of the Corporation if the Board of Directors reasonably determines that
such combination will not have a material adverse effect on the
stockholders of any class of capital stock of the Corporation participating
in such combination. In connection with any such combination of assets the
shares of any class of capital stock of the Corporation then outstanding
may, if so determined by the Board of Directors, be converted into shares
of any other class or classes of capital stock of the Corporation with
respect to which conversion is permitted by applicable law, or may be
redeemed, at the option of the Corporation, at the net asset value thereof
as determined by the Board of Directors in accordance with the provisions
of applicable law, less such redemption fee or other charge, or conversion
cost, if any, as may be fixed by resolution of the Board of Directors upon
such conditions as the Board of Directors deems, in its sole discretion, to
be appropriate consistent with applicable law and the Charter of the
Corporation. Notwithstanding any other provision of these Articles of
Incorporation to the contrary, any redemption price, or part thereof, paid
pursuant to this Section (5)(I)(3) may be paid in shares of any other
existing or future class or classes of capital stock of the Corporation.
ARTICLE VII
(1) The number of initial directors of the Corporation shall be
three (3) provided that: (A) The number of directors of the Corporation may be
increased or decreased pursuant to the By-Laws of the Corporation but shall
never be less than three (3), except as provided in this Article VII; (B) if
there is no capital stock of the Corporation outstanding the number of directors
may be less than three (3) but not less than one (1); and (C) if there is
capital stock of the Corporation outstanding and so long as there are less than
three (3) stockholders of the Corporation, the number of directors may be less
than three (3) but not less than the number of stockholders. The names of the
directors who shall act until the first annual
-9-
<PAGE>
meeting of stockholders or until their successors are duly elected and qualify
are:
Donald L. Campbell
Joseph H. Dugan
Karen A. C. Loud
(2) No holder of stock of the Corporation shall, as such holder,
have any right to purchase or subscribe for any shares of the capital stock of
the Corporation or any other security of the Corporation which it may issue or
sell (whether out of the number of shares authorized by the Charter, or out of
any shares of the capital stock of the Corporation acquired by it after the
issue thereof, or otherwise) other than such right, if any, as the Board of
Directors, in its discretion, may determine.
(3) Each director and each officer of the Corporation shall be
indemnified by the Corporation to the full extent permitted the Investment
Company Act of 1940 and applicable state corporation law, now or hereafter in
force, including advance of related expenses.
ARTICLE VIII
Any determination made in good faith and, so far as accounting
matters are involved in accordance with generally accepted accounting
principles, by or pursuant to the direction of the Board of Directors as to the
amount and value of assets, obligations or liabilities of the Corporation, as to
the amount of net income of the Corporation from dividends and interest for any
period or amounts at any time legally available for the payment of dividends, as
to the amount of any reserves or charges set up and the propriety thereof, as to
the time of or purpose for creating reserves or as to the use, alteration or
cancellation of any reserves or charges (whether or not any obligation or
liability for which such reserves or charges shall have been created shall have
been paid or discharged or shall be then or thereafter required to be paid or
discharged), as to the value of any security owned by the Corporation, as to the
allocation of any assets or liabilities to a class or classes of capital stock,
as to the times at which shares of any class of capital stock shall be deemed to
be outstanding or no longer outstanding, or as to any other matters relating to
the issuance, sale, redemption or other acquisition or disposition of securities
or shares of capital stock of the Corporation, and any reasonable determination
made in good faith by the Board of Directors as to whether any transaction
constitutes a purchase of securities on "margin," a sale of securities "short,"
or an underwriting of the sale of, or a participation in any underwriting or
selling group in connection with the public distribution of, any securities,
shall be final and conclusive,
-10-
<PAGE>
and shall be binding upon the Corporation and all holders of its capital stock,
past, present and future, and shares of the capital stock of the Corporation are
issued and sold on the condition and understanding, evidenced by the purchase of
shares of capital stock or acceptance of share certificates, that any and all
such determinations shall be binding as aforesaid. No provision of the Charter
of the Corporation shall be effective to (i) require a waiver of compliance with
any provision of the Securities Act of 1933, as amended, or the Investment
Company Act of 1940, as amended, or of any valid rule, regulation or order of
the Securities and Exchange Commission thereunder or (ii) protect or purport to
protect any director or officer of the Corporation against any liability to the
Corporation or its security holders to which he 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.
ARTICLE IX
The duration of the Corporation shall be perpetual.
ARTICLE X
(1) The Corporation reserves the right from time to time to make
any amendments to its Charter which may now or hereafter be authorized by law,
including any amendments changing the terms or contract rights, as expressly set
forth in its Charter, of any of its outstanding stock by classification,
reclassification or otherwise, but no such amendment which changes such terms or
contract rights of any of its outstanding stock shall be valid unless such
amendment shall have been authorized by not less than a majority of the
aggregate number of the votes entitled to be cast thereon by a vote at a
meeting.
(2) Notwithstanding any provision of the General Laws of the
State of Maryland requiring any action to be taken or authorized by the
affirmative vote of the holders of a designated proportion of the votes of all
classes or of any class of stock of the Corporation, such action shall be
effective and valid if taken or authorized by the affirmative vote of the
holders of a majority of the total number of shares outstanding and entitled to
vote thereon, except as otherwise required by applicable law or otherwise
provided herein.
(3) So long permitted by Maryland law, the books of the
Corporation may be Kept outside of the State of Maryland at such place or places
as may be designated from time to time by the Board of Directors or in the By-
Laws of the Corporation.
-11-
<PAGE>
(4) In furtherance, and not in limitation, of the powers conferred by
the laws of the State of Maryland, the Board of Directors is expressly
authorized:
(A) To make, alter or repeal the By-Laws of the Corporation, except
where such power is reserved by the By-Laws to the stockholders, and except
as otherwise required by the Investment Company Act of 1940, as amended.
(B) From time to time to determine whether and to what extent and at
what times and places and under what conditions and regulations the books
and accounts of the Corporation, or any of them other than the stock
ledger, shall be open to the inspection of the stockholders, and no
stockholder shall have any right to inspect any account or book or document
of the Corporation, except as conferred by law or authorized by resolution
of the Board of Directors or of the stockholders.
(C) Without the assent or vote of the stockholders, to authorize the
issuance from time to time of shares of the stock of any class of the
Corporation, whether now or hereafter authorized, and securities
convertible into shares of its stock of any class or classes, whether now
or hereafter authorized, for such consideration as the Board of Directors
may deem advisable.
(D) Without the assent or vote of the stockholders, to authorize and
issue obligations of the Corporation, secured and unsecured, as the Board
of Directors may determine, and to authorize and cause to be executed
mortgages and liens upon the property of the Corporation, real or personal.
(E) Notwithstanding anything in these Articles of Incorporation to
the contrary, to establish in its absolute discretion in accordance with
the provisions of applicable law the basis or method for determining the
value of the assets belonging to any class, the amount of the liabilities
belonging to any class, the allocation of any assets or liabilities to any
class, the net asset value of any class, the times at which shares of any
class shall be deemed to be outstanding or no longer outstanding and the
net asset value of each share of any class of capital stock of the
Corporation for purposes of sales, redemptions, repurchases of shares or
otherwise.
(F) To determine in accordance with generally accepted accounting
principles and practices what constitutes net profits, earnings, surplus or
net assets in excess of capital, and to determine what accounting periods
shall be used by the Corporation for any purpose, whether annual or any
other period, including daily; to set apart out of any
-12-
<PAGE>
funds of the Corporation such reserves for such purposes as it shall
determine and to abolish the same; to declare and pay any dividends and
distributions in cash, securities or other property from surplus or any
funds legally available therefor, at such intervals (which may be as
frequently as daily) or on such other periodic basis, as it shall
determine; to declare such dividends or distributions by means of a formula
or other method of determination, at meetings held less frequently than the
frequency of the effectiveness of such declarations; to establish payment
dates for dividends or any other distributions on any basis, including
dates occurring less frequently than the effectiveness of declarations
thereof; and to provide for the payment of declared dividends on a date
earlier or later than the specified payment date in the case of
stockholders of the Corporation redeeming their entire ownership of shares
of any class of the Corporation.
(G) In addition to the powers and authorities granted herein and by
statute expressly conferred upon it, the Board of Directors is authorized
to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provisions of Maryland law, these Articles of Incorporation and the By-Laws
of the Corporation.
IN WITNESS WHEREOF, the undersigned incorporator of U.S.T. MASTER
FUNDS, INC. hereby executes the foregoing Articles of Incorporation and
acknowledges the same to be his act.
Dated as of the 1st day of August, 1984.
/s/ Barbara G. Fraser
-----------------------------
Barbara G. Fraser
-13-
<PAGE>
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
301 West Preston Street, Baltimore, Maryland 21201
THIS IS TO CERTIFY THAT the within instrument is a true copy of the ARTICLES
OF INCORPORATION OF U.S.T. MASTER FUNDS, INC. as approved and received for
record by the State Department of Assessments and Taxation of Maryland, August
02, 1984 at 10:06 o'clock A.M.
AS WITNESS my hand and official seal of
the said Department at Baltimore this 24th
day of August, 1984
/s/ Dean W. Kitchen
-------------------------
DEAN W. KITCHEN
CORPORATE ADMINISTRATOR
-14-
<PAGE>
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
U.S.T. MASTER FUNDS, INC.
THE ARTICLES OF INCORPORATION OF U.S.T. MASTER FUNDS, INC. HAVE BEEN RECEIVED
AND APPROVED BY THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION THIS 2ND DAY OF
AUGUST, 1984, AT 10:06 A.M. AND WILL BE RECORDED
By: Dean W. Kitchen
------------------------
Corporate Administrator
<TABLE>
<CAPTION>
FEE CO. DOCUMENT
FEE PAID CODE AMOUNT CODE REFERENCE
- -------- ---- ------ ---- ---------
<S> <C> <C> <C> <C>
RECORDING FEE 61 38 74
BONUS TAX 20 360
</TABLE>
-15-
<PAGE>
EXHIBIT (1)(b)
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
U.S.T. MASTER FUNDS, INC.
U.S.T. MASTER FUNDS, INC., a Maryland corporation having its principal
office in the City of Baltimore, Maryland (hereinafter called the "Fund"),
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 Fund has re-classified Five Hundred Million
(500,000,000) of the authorized and unissued Class A Common Stock of the Fund
(par value One Mill ($.001) per share) as Class D Common Stock pursuant to the
following resolutions adopted by a majority of the Directors of the Fund at a
meeting duly held on October 28, 1985:
RESOLVED, that pursuant to Article VI of the Articles of Incorporation
of the Corporation, ("Articles of Incorporation"), 500,000,000 authorized
and unissued shares of Class A Common Stock (of the par value of One Mill
($.001) per share and of the aggregate par value of $500,000) be, and
hereby are, reclassified into a fourth class of shares of capital stock and
designated as Class D Common Stock;
FURTHER RESOLVED, that each share of Class D Common Stock shall have
all of the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption that are set forth in the Articles of
<PAGE>
Incorporation of the Corporation with respect to its shares of capital
stock;
SECOND: The shares of Portfolio A Class Common Stock of the Fund
reclassified pursuant to the resolutions set forth in Article FIRST of these
Articles Supplementary have been re-classified by the Fund's Board of Directors
under the authority contained in the Charter of the Corporation.
IN WITNESS WHEREOF, U.S.T. MASTER 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 hereunto affixed and attested by its Secretary on this 29th day of
October, 1985.
U.S.T. MASTER FUNDS, INC.
[SEAL] By: /s/ Karen A. G. Loud
--------------------------------
Karen A. G. Loud, President
Attest:
/s/ W. Bruce McConnel, III
- --------------------------------
W. Bruce McConnel, III
Secretary
-2-
<PAGE>
CERTIFICATE
-----------
THE UNDERSIGNED, President of U.S.T. MASTER FUNDS, INC. who executed
on behalf of said Corporation the attached Articles Supplementary to Articles of
Incorporation 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 her knowledge, information and belief the matters
and facts set forth in the attached Articles Supplementary with respect to
authorization are true in all material respects, under the penalties for
perjury.
/s/ Karen A. G. Loud
------------------------------
Karen A. G. Loud, President
-3-
<PAGE>
MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
TO WHOM IT MAY CONCERN:
This is to advise you that your Articles of SUPPLEMENTARY for U.S.T.
MASTER FUNDS, INC. were received and approved for record on OCTOBER 30, 1985 at
10:28 a.m.
The official acknowledgement will be forthcoming from this Department.
Very truly yours
/s/ Paul B. Anderson
---------------------------
Charter Specialist
$29.00 FEE PAID
301 West Preston Street, Baltimore, Maryland 21201/Phone 301-383-2560
-4-
<PAGE>
Exhibit (1)(c)
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
U.S.T MASTER FUNDS, INC.
U.S.T MASTER FUNDS, INC., a Maryland corporation having its principal
office in the City of Baltimore, Maryland (hereinafter called the "Fund"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: Pursuant to Section 2-208 of the Maryland General Corporation Law,
the Board of Directors of the Fund has reclassified Five Hundred Million
(500,000,000) of the authorized and unissued shares of Class A Common Stock of
the Fund (of the par value of one Mil ($.001) per share and of the aggregate par
value of Five Hundred Thousand Dollars ($500,000)) as Class E Common Stock
pursuant to the following resolutions adopted by a majority of the Directors of
the Fund at a meeting duly held on April 28, 1986:
RESOLVED, that pursuant to Article VI of the Articles of
Incorporation of the Corporation ("Articles of Incorporation"),
500,000,000 authorized and unissued shares of Class A Common Stock (of
the par value of One Mil ($.001) per share and of the aggregate par
value of Five Hundred Thousand Dollars ($500,000)) be, and hereby are
reclassified into a fifth class of shares of capital stock and
designated as Class E Common Stock;
FURTHER RESOLVED, that each share of Class E Common Stock shall
have all of the preferences, conversion and other rights, voting
powers, restrictions,
<PAGE>
limitations as to dividends, qualifications and terms and condition of
redemption that are set forth in the Charter of the Corporation with
respect to its shares of capital stock; and
FURTHER RESOLVED, that the officers of the Corporation be, and
each of them hereby is, authorized and empowered to execute, seal and
deliver any and all documents, instruments, papers and writings,
including but not limited to Articles Supplementary to be filed with
the State Department of Assessments and Taxation of Maryland, and to
any and all other acts, in the name of the Corporation and on its
behalf, as may be necessary or desirable in connection with or in
furtherance of the foregoing resolutions.
SECOND: The shares of Class A Common Stock of the Fund reclassified
pursuant to the resolutions set forth in Article FIRST of these Articles
Supplementary have been reclassified by the Fund's Board of Directors under the
authority contained in the Charter of the Corporation.
IN WITNESS WHEREOF, U.S.T. MASTER 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 hereunto affixed and attested by its Secretary on this 30th day of
September, 1986.
U.S.T MASTER FUNDS, INC.
(SEAL)
BY /s/ Karen A. G. Loud
------------------------------
Karen A. G. Loud, President
Attest:
/s/ W. Bruce McConnel, III
- -------------------------------
W. Bruce McConnel, III
Secretary
-2-
<PAGE>
CERTIFICATE
-----------
THE UNDERSIGNED, President of U.S.T. MASTER FUNDS, INC. who executed on
behalf of said Corporation the attached Articles Supplementary to Articles of
Incorporation 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 a said Corporation, and
certifies that to the best of her 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/ Karen A. G. Loud
-----------------------------
Karen A. G. Loud, President
-3-
<PAGE>
DOCUMENT CODE 16 _______ BUSINESS CODE ________ COUNTY ________
# D1750454 P.A.____Religious ___________ Close stock ______ Nonstock
----------------
<TABLE>
<CAPTION>
<S> <C>
Merging Surviving
(Transferor)___________________ (Transferee)_____________________
_______________________________ _________________________________
_______________________________ _________________________________
_______________________________ _________________________________
CODE AMOUNT FEE REMITTED
- ---- ------ ------------
(New Name)______________
________________________
________________________
20 ______ Organ. & Capitalization
61 ______ Rec. Fee (Arts. Of Inc.) ______Change of Name
______Change of Principal Office
62 20 Rec. Fee (Amendment) ______Change of Resident Agent
------ ______Change of Resident Agent Address
63 ______ Rec. Fee (Merger of Consol.)
64 ______ Rec. Fee (Transfer)
65 ______ Rec. Fee (Dissolution)
66 ______ Rec. Fee (Revival )
52 ______ Foreign Qualification
50 ______ Cert. of Qual or Reg.
51 ______ Foreign Name Registration
13 15 2 Certified Copy 8
------ -
56 ______ Foreign Penalty
54 ______ For. Supplemental Cert.
73 ______ Certificate of Conveyance
__________________________
__________________________
75 ______ Special Fee
80 ______ For. Limited Partnership
83 ______ Cert. Limited Partnership
84 ______ Amendment to Limited Partnership
85 ______ Termination of Limited Partnership
21 ______ Recordation Tax
22 ______ State Transfer Tax
23 ______ Local Transfer Tax
31 ______ _____ Corp. Good Standing
NA ______ Foreign Corp. Registration
87 ______ _____ Limited Part. Good Standing
71 ______ Financial
</TABLE>
CODE______
ATTENTION:___________
-4-
<PAGE>
Other_______________ MAIL TO ADDRESS:
____________________ Venable Baetjer & Howard
Other_______________ 1800 Mercantile Bank Trust Bldg.
____________________ 2 Hopkins Plaza
Baltimore, Maryland 21201
TOTAL ____
FEES
35 Check ____ Cash Note:
-- ----
___ Documents on ___ Checks
APPROVED BY: A
-----
-5-
<PAGE>
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
THE ARTICLES SUPPLEMENTARY OF U.S.T. MASTER FUNDS, INC. HAVE BEEN RECEIVED
AND APPROVED BY THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION THIS 17TH DAY
OF DECEMBER, 1986 AT 3:53 P.M. AND WILL BE RECORDED.
By: /s/ Dean W. Kitchen
-----------------------------
Corporate Administrator
FEE CO. DOCUMENT
FEE PAID CODE AMOUNT CODE REFERENCE
- -------- ---- ------ ---- ---------
-6-
<PAGE>
Exhibit (1)(d)
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
U.S.T. MASTER FUNDS, INC.
U.S.T. MASTER FUNDS, INC., a Maryland corporation having its principal
office in the City of Baltimore, Maryland (hereinafter called the "Fund"),
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 Fund has reclassified 125,000,000 of the
authorized and unissued shares of Class C Common Stock (of par value of One Mil
($.001) per share and of the aggregate par value of One Hundred Twenty-Five
Thousand Dollars ($125,000)), 125,000,000 of the authorized and unissued shares
of Class D Common Stock (of par value of One Mil ($.001) per share and of the
aggregate par value of One Hundred Twenty-Five Thousand Dollars ($125,000), and
125,000,000 of the authorized and unissued shares of Class E Common Stock (of
the par value of One Mil ($.001) per share and of the aggregate par value of
One Hundred Twenty-Five Thousand Dollars ($125,000)) as Class F Common Stock
pursuant to the following
<PAGE>
resolutions adopted by a majority of the Directors of the Fund at a meeting duly
held on January 30, 1987:
RESOLVED, that pursuant to Article VI of the Articles of Incorporation
of the Company (the "Charter"), 125,000,000 shares currently classified as
Class C Common Stock (of the par value of One Mil ($.001) per share and of
the aggregate par value of One Hundred Twenty-Five Thousand Dollars
($125,000)), 125,000,000 shares currently classified as Class D Common
Stock (of the par value of one Mil ($.001) per share and of the aggregate
par value of one Hundred Twenty-Five Thousand Dollars ($125,000)), and
125,000,000 shares currently classified as Class E Common Stock (of the par
value of One Mil ($.001) per share and of the aggregate par value of one
Hundred Twenty-Five Thousand Dollars ($125,000)) be, and hereby are
reclassified into a sixth class of shares of capital stock and designated
as Class F Common Stock;
FURTHER RESOLVED, that each share of Class F Common Stock shall have
all of the preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption that are set forth in the Chapter of the Company
with respect to its shares of capital stock; and
FURTHER RESOLVED, that the officers of the Company be, and each of
them hereby is, authorized and empowered to execute, seal, and deliver any
and all documents, instruments, papers, and writings, including but not
limited to Articles Supplementary to be filed with the State Department of
Assessments and Taxation of Maryland, and to do any and all other acts, in
the name of the Company and on its behalf, as may be necessary or desirable
in connection with or in furtherance of the foregoing resolutions.
SECOND: The shares of Class C, D, and E Common Stock of the Fund
reclassified pursuant to the resolutions set forth in Article FIRST of these
Articles Supplementary have been reclassified by the Fund's Board of Directors
under the authority contained in the Charter of the Corporation.
IN WITNESS WHEREOF, U.S.T. MASTER FUNDS, INC. has caused these presents to
be signed in its name and on its behalf by its
-2-
<PAGE>
President and its corporate seal to be hereunto affixed and attested by its
Secretary on this 10th day of April, 1987.
U.S.T. MASTER FUNDS, INC.
[SEAL]
By: /s/ Karen A. G. Loud
---------------------------
Karen A. G. Loud, President
Attest:
/s/ W. Bruce McConnel, III
- --------------------------
W. Bruce McConnel, III
Secretary
-3-
<PAGE>
DOCUMENT CODE 16 BUSINESS CODE 03 COUNTY _____
---- ----
# D1750454 P.A. Religious _____ Close _____ Stock _____ Nonstock
--------
<TABLE>
Merging
(Transferor)______________________ Surviving
__________________________________ (Transferee)_____________________
__________________________________ _________________________________
__________________________________ _________________________________
_________________________________
<CAPTION>
CODE AMOUNT FEE REMITTED
- ---- ------ ------------
<S> <C> <C> <C>
20 ______ Organ. & Capitalization Name Change
(New Name)____________
______________________
______________________
61 ______ Rec. Fee (Arts. of Inc.) _____ Change of Name
_____ Change of Principal Office
62 20 Rec. Fee (Amendment) _____ Change of Resident Agent
------ _____ Change of Resident Agent Address
63 ______ Rec. Fee (Merger or Consolidation)
64 ______ Rec. Fee (Transfer)
65 ______ Rec. Fee (Dissolution)
66 ______ Rec. Fee (Revival)
52 ______ Foreign Qualification
50 ______ Cert. of Qual. or Reg.
51 ______ Foreign Name Registration
13 15 2 Certified Copy 8P
------ - --
56 ______ Foreign Penalty
54 ______ For. Supplemental Cert.
73 ______ Certificate of conveyance
_________________________
_________________________
______ Special Fee
80 ______ For. Limited Partnership
83 ______ Cert. Limited Partnership
84 ______ Amendment to Limited Partnership
85 ______ Termination of Limited Partnership
21 ______ Recordation Tax
22 ______ State Transfer Tax
23 ______ Local Transfer Tax
31 ______ _____ Corp. Good Standing
NA ______ Foreign Corp. Registration
71 ______ Financial
Code__________
</TABLE>
-4-
<PAGE>
ATTENTION:______________________
________________________________
________________________________
Other_______________ MAIL TO ADDRESS: Leah R. Schuman
c/o Venable Baetjer & Howard
1800 Mercantile Bank Trust Bldg.
Other_______________ 2 Hopkins Plaza
Baltimore, Maryland 21201
TOTAL
FEES 35
------
X Check ____ Cash Note:
----- ----
___ Documents on ___ Checks
APPROVED BY: DTC
-------
-5-
<PAGE>
CERTIFICATE
-----------
THE UNDERSIGNED, President of U.S.T. MASTER FUNDS, INC., who executed
on behalf of said Corporation the attached Articles Supplementary to Articles of
Incorporation 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 her 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/ Karen A. G. Loud
------------------------
Karen A. G. Loud
President
<PAGE>
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
THE ARTICLES SUPPLEMENTARY OF U.S.T MASTER FUNDS, INC. HAVE BEEN RECEIVED
AND APPROVED BY THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION THIS 23rd DAY
OF APRIL, 1987 AT 3:19 P.M. AND WILL BE RECORDED.
By: /s/ Dean W. Kitchen
--------------------------
Corporate Administrator
FEE CO. DOCUMENT
FEE PAID CODE AMOUNT CODE REFERENCE
- -------- ---- ------ ---- ---------
-7-
<PAGE>
EXHIBIT (1)(E)
UST MASTER FUNDS, INC.
ARTICLES SUPPLEMENTARY
UST Master 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 has reclassified the unissued shares
of the Company's Class A Common Stock, Class B Common Stock and Class D Common
Stock pursuant to the following resolutions:
RESOLVED, that pursuant to Article VI of the Articles of
Incorporation of UST Master Funds, Inc. (the "Charter"), (1)
500,000,000 authorized and unissued shares currently classified as
Class A Common Stock (of the par value of One Mill ($.001) per share
and of the aggregate par value of Five Hundred Thousand Dollars
($500,000)), be, and hereby are, reclassified into a separate series
of such Class to be known as Class A Common Stock - Special Series 1;
(2) 250,000,000 authorized and unissued shares currently classified as
Class B Common Stock (of the par value of One Mill ($.001) per share
and of the aggregate par value of Two Hundred Fifty Thousand Dollars
($250,000)), be, and hereby are, reclassified into a separate series
of such Class to be known as Class B Common Stock - Special Series 1;
and (3) 175,000,000 authorized and unissued shares currently
classified as Class D Common Stock (of the par value of One Mill
($.001) per share and of the aggregate par value of One Hundred
Seventy Five Thousand Dollars ($175,000)), be, and hereby are,
reclassified into a separate series of such Class to be known as Class
D Common Stock Special Series 1;
<PAGE>
Class A Common Stock
--------------------
FURTHER RESOLVED, that all consideration received by the Company for
the issue or sale of each share of Special Series 1 of Class A Common Stock
shall be invested or reinvested with the consideration received by the
Company for the issue and sale of all other shares now or hereafter
authorized of Class A Common Stock (irrespective of whether said shares
have been designated as part of a series of said Class and, if so
designated, irrespective of the particular series designation), together
with all income, earnings, profits and proceeds derived from the sale,
exchange or liquidation thereof, any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and any
general assets of the Company allocated to the shares of such Special
Series 1 (or to such other shares) by the Board of Directors of the Company
in accordance with the Company's Charter;
FURTHER RESOLVED, that the assets belonging to Class A Common Stock,
including Class A Common Stock - Special Series 1, and any other series of
Class A Common Stock hereafter authorized, shall be charged with the
expenses and liabilities of the Company in respect of Class A Common Stock,
Class A Common Stock - Special Series 1 and any other series of Class A
Common Stock hereafter authorized, and in respect of any general expenses
and liabilities of the Company allocated to Class A Common Stock by the
Board of Directors in accordance with the Company's Charter, except that
only shares of Special Series 1 of Class A Common Stock shall bear: (x) the
expenses and liabilities of payments to institutions under any agreement
entered into by or on behalf of the Company which provides for services
exclusively for customers of such institution who beneficially own shares
of such Special Series 1, and (y) any other liabilities and expenses which
the Board of Directors determines are directly attributable to shares of
such Special Series 1 and which are to be borne solely by such Special
Series 1 shares;
FURTHER RESOLVED, that income, earnings, gain or loss on the assets
belonging to Class A Common Stock (including Class A Common Stock -Special
Series 1 and any other series of Class A Common Stock hereafter authorized)
shall be allocated among Class A Common Stock, Class A Common Stock -
Special Series 1 and any other series of Class A Common Stock hereafter
authorized pro rata in accordance with the number of shares outstanding of
Class A Common Stock, Class A
-2-
<PAGE>
Common Stock - Special Series 1 and any other new series of Class A Common
Stock hereafter authorized;
FURTHER RESOLVED, that dividends on shares of Class A Common Stock,
Class A Common Stock - Special Series 1 and any other series of Class A
Common Stock hereafter authorized, shall be paid only out of the assets
allocable to such respective series less the liabilities and expenses
allocable to such series in accordance with the preceding resolutions;
FURTHER RESOLVED, that in the event of the liquidation or dissolution
of the Company's portfolio consisting of Class A Common Stock, Class A
Common Stock - Special Series 1 and any other series of Class A Common
Stock hereafter authorized, the stockholders of each such series shall be
entitled to receive, out of the assets of this portfolio available for
distribution, only the assets allocable to each such series, respectively;
FURTHER RESOLVED, that each share of Special Series 1 of Class A
Common Stock shall otherwise have the same preferences, conversion and
other rights, voting powers, restrictions, limitations, qualifications and
terms and conditions of redemption as each other share of such Special
Series 1 and all other shares now or hereafter authorized of Class A Common
Stock (irrespective of whether said shares have been designated as part of
a series of said Class and, if so designated, irrespective of the
particular series designation), except that on any matter that pertains to
the agreements or any of the liabilities or expenses referred to in the
immediately preceding resolution and that is submitted to a vote of
shareholders, only shares of Special Series 1 of Class A Common Stock
bearing such liabilities and expenses shall be entitled to vote, except
that (i) if said matter affects shares of the Company other than shares of
such Special Series 1, such other affected shares shall also be entitled to
vote, and in such case shares of Special Series 1 of Class A Common Stock
shall be voted in the aggregate together with such other affected shares
and not by class or series except where otherwise required by law or
permitted by the Board of Directors of the Company; and (ii) if said matter
does not affect shares of Special Series 1 of Class A Common Stock bearing
such liabilities and expenses, said shares shall not be entitled to vote
(except where required by law or permitted by the Board of Directors) even
though the matter is submitted to a vote of the holders of shares other
than shares of such Special Series 1;
-3-
<PAGE>
Class B Common Stock
--------------------
FURTHER RESOLVED, that all consideration received by the Company for
the issue or sale of each share of Special Series 1 of Class B Common Stock
shall be invested or reinvested with the consideration received by the
Company for the issue and sale of all other shares now or hereafter
authorized of Class B Common Stock (irrespective of whether said shares
have been designated as part of a series of said Class and, if so
designated, irrespective of the particular series designation), together
with all income, earnings, profits and proceeds derived from the sale,
exchange or liquidation thereof, any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and any
general assets of the Company allocated to the shares of such Special
Series 1 (or to such other shares) by the Board of Directors of the Company
in accordance with the Company's Charter;
FURTHER RESOLVED, that the assets belonging to Class B Common Stock,
including Class B Common Stock - Special Series 1, and any other series of
Class B Common Stock hereafter authorized, shall be charged with the
expenses and liabilities of the Company in respect of Class B Common Stock,
Class B Common Stock - Special Series 1 and any other series of Class B
Common Stock hereafter authorized, and in respect of any general expenses
and liabilities of the Company allocated to Class B Common Stock by the
Board of Directors in accordance with the Company's Charter, except that
only shares of Special Series 1 of Class B Common Stock shall bear: (x) the
expenses and liabilities of payments to institutions under any agreement
entered into by or on behalf of the Company which provides for services
exclusively for customers of such institution who beneficially own shares
of such Special Series 1, and (y) any other liabilities and expenses which
the Board of Directors determines are directly attributable to shares of
such Special Series 1 and which are to be borne solely by such Special
Series 1 shares;
FURTHER RESOLVED, that income, earnings, gain or loss on the assets
belonging to Class B Common Stock (including Class B Common Stock -Special
Series 1 and any other series of Class B Common Stock hereafter authorized)
shall be allocated among Class B Common Stock, Class B Common Stock -
Special Series 1 and any other series of Class B Common Stock hereafter
authorized pro rata in accordance with the number of shares outstanding of
Class B Common Stock, Class B
-4-
<PAGE>
Common Stock - Special Series 1 and any other new series of Class B Common
Stock hereafter authorized;
FURTHER RESOLVED, that dividends on shares of Class B Common Stock,
Class B Common Stock - Special Series 1 and any other series of Class B
Common Stock hereafter authorized, shall be paid only out of the assets
allocable to such respective series less the liabilities and expenses
allocable to such series in accordance with the preceding resolutions;
FURTHER RESOLVED, that in the event of the liquidation or dissolution
of the Company's portfolio consisting of Class B Common Stock, Class B
Common Stock - Special Series 1 and any other series of Class B Common
Stock hereafter authorized, the stockholders of each such series shall be
entitled to receive, out of the assets of this portfolio available for
distribution, only the assets allocable to each such series, respectively;
FURTHER RESOLVED, that each share of Special Series 1 of Class B
Common Stock shall otherwise have the same preferences, conversion and
other rights, voting powers, restrictions, limitations, qualifications and
terms and conditions of redemption as each other share of such Special
Series 1 and all other shares now or hereafter authorized of Class B Common
Stock (irrespective of whether said shares have been designated as part of
a series of said Class and, if so designated, irrespective of the
particular series designation), except that on any matter that pertains to
the agreements or any of the liabilities or expenses referred to in the
immediately preceding resolution and that is submitted to a vote of
shareholders, only shares of Special Series 1 of Class B Common Stock
bearing such liabilities and expenses shall be entitled to vote, except
that (i) if said matter affects shares of the Company other than shares of
such Special Series 1, such other affected shares shall also be entitled to
vote, and in such case shares of Special Series 1 of Class B Common Stock
shall be voted in the aggregate together with such other affected shares
and not by class or series except where otherwise required by law or
permitted by the Board of Directors of the Company; and (ii) if said matter
does not affect shares of Special Series 1 of Class B Common Stock bearing
such liabilities and expenses, said shares shall not be entitled to vote
(except where required by law or permitted by the Board of Directors) even
though the matter is submitted to a vote of the holders of shares other
than shares of such Special Series 1;
-5-
<PAGE>
Class D Common Stock
--------------------
FURTHER RESOLVED, that all consideration received by the Company for
the issue or sale of each share of Special Series 1 of Class D Common Stock
shall be invested or reinvested with the consideration received by the
Company for the issue and sale of all other shares now or hereafter
authorized of Class D Common Stock (irrespective of whether said shares
have been designated as part of a series of said Class and, if so
designated, irrespective of the particular series designation), together
with all income, earnings, profits and proceeds derived from the sale,
exchange or liquidation thereof, any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and any
general assets of the Company allocated to the shares of such Special
Series 1 (or to such other shares) by the Board of Directors of the Company
in accordance with the Company's Charter;
FURTHER RESOLVED, that the assets belonging to Class D Common Stock,
including Class D Common Stock - Special Series 1, and any other series of
Class D Common Stock hereafter authorized, shall be charged with the
expenses and liabilities of the Company in respect of Class D Common Stock,
Class D Common Stock - Special Series 1 and any other series of Class D
Common Stock hereafter authorized, and in respect of any general expenses
and liabilities of the Company allocated to Class D Common Stock by the
Board of Directors in accordance with the Company's Charter, except that
only shares of Special Series 1 of Class D Common Stock shall bear: (x) the
expenses and liabilities of payments to institutions under any agreement
entered into by or on behalf of the Company which provides for services
exclusively for customers of such institution who beneficially own shares
of such Special Series 1, and (y) any other liabilities and expenses which
the Board of Directors determines are directly attributable to shares of
such Special Series 1 and which are to be borne solely by such Special
Series 1 shares;
FURTHER RESOLVED, that income, earnings, gain or loss on the assets
belonging to Class D Common Stock (including Class D Common Stock - Special
Series 1 and any other series of Class D Common Stock hereafter authorized)
shall be allocated among class D Common Stock, Class D Common Stock -
Special Series 1 and any other series of Class D Common Stock hereafter
authorized pro rata in accordance with the number of shares outstanding of
Class D Common Stock, Class D
-6-
<PAGE>
Common Stock - Special Series 1 and any other new series of Class D Common
Stock hereafter authorized;
FURTHER RESOLVED, that dividends on shares of Class D Common Stock,
Class D Common Stock - Special Series 1 and any other series of Class D
Common Stock hereafter authorized, shall be paid only out of the assets
allocable to such respective series less the liabilities and expenses
allocable to such series in accordance with the preceding resolutions;
FURTHER RESOLVED, that in the event of the liquidation or dissolution
of the Company's portfolio consisting of Class D Common Stock, Class D
Common Stock - Special Series 1 and any other series of Class D Common
Stock hereafter authorized, the stockholders of each such series shall be
entitled to receive, out of the assets of this portfolio available for
distribution, only the assets allocable to each such series, respectively;
FURTHER RESOLVED, that each share of Special Series 1 of Class D
Common Stock shall otherwise have the same preferences, conversion and
other rights, voting powers, restrictions, limitations, qualifications and
terms and conditions of redemption as each other share of such Special
Series 1 and all other shares now or hereafter authorized of Class D Common
Stock (irrespective of whether said shares have been designated as part of
a series of said Class and, if so designated, irrespective of the
particular series designation), except that on any matter that pertains to
the agreements or any of the liabilities or expenses referred to in the
immediately preceding resolution and that is submitted to a vote of
shareholders, only shares of Special Series 1 of Class D Common Stock
bearing such liabilities and expenses shall be entitled to vote, except
that (i) if said matter affects shares of the Company other than shares of
such Special Series 1, such other affected shares shall also be entitled to
vote, and in such case shares of Special Series 1 of Class D Common Stock
shall be voted in the aggregate together with such other affected shares
and not by class or series except where otherwise required by law or
permitted by the Board of Directors of the Company; and (ii) if said matter
does not affect shares of Special Series 1 of Class D Common Stock bearing
such liabilities and expenses, said shares shall not be entitled to vote
(except where required by law or permitted by the Board of Directors) even
though the matter is submitted to a vote of the holders of shares other
than shares of such Special Series 1.
-7-
<PAGE>
SECOND: The shares of Class A, B and D Common Stock of the Company
reclassified pursuant to the resolutions set forth in Article FIRST of these
Articles Supplementary have been reclassified by the Company's Board of
Directors under the authority contained in the Charter of the Company.
IN WITNESS WHEREOF, UST Master 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 hereunto affixed and attested to by its Secretary as of April 27, 1990.
UST MASTER FUNDS, INC.
(SEAL)
Attest: /s/ Karen A. G. Loud
-----------------------------------
Karen A. G. Loud, President
/s/ W. Bruce McConnel, III
---------------------------
W. Bruce McConnel, III
Secretary
-8-
<PAGE>
CERTIFICATE
-----------
THE UNDERSIGNED, President of U.S.T. MASTER FUNDS, INC., who executed on
behalf of said Corporation the attached Articles Supplementary to Articles of
Incorporation 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 her 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/ Karen A. G. Loud
------------------------
Karen A. G. Loud
President
-9-
<PAGE>
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
Gene L. Burner, Director
<TABLE>
<CAPTION>
<S> <C> <C>
DOCUMENT CODE 16 BUSINESS CODE 03 COUNTY 74
------- ------- -------
# D1750454 P.A. _____ Religious ____ Close X Stock ____
---------------------- ----
Nonstock
Merging Surviving
(Transferor)_____________________ (Transferee)____________________
_________________________________ ________________________________
_________________________________ ________________________________
_________________________________ ________________________________
CODE AMOUNT FEE REMITTED
- ---- ------ ------------
10 70 Expedited Fee Name Change
------
20 ______ Organ. & Capitalization (New Name)________________
61 ______ Rec. Fee (Arts. of Inc.) __________________________
62 20 Rec. Fee (Amendment) __________________________
------
63 ______ Rec. Fee (Merger or Consolidation) _____ Change of Name
64 ______ Rec. Fee (Transfer) _____ Change of Principal Office
65 ______ Rec. Fee (Dissolution) _____ Change of Resident Agent
66 ______ Rec. Fee (Revival) _____ Change of Resident Agent Address
52 ______ Foreign Qualification _____ Resignation of Resident Agent
50 ______ Cert. of Qual. or Reg. _____ Designation of Resident Agent and
Resident Agent's Address
51 ______ Foreign Name Registration _____ Other Change _____________
__________________________
13 27 2 Certified Copy 20 p
------ ----- -----
56 ______ Penalty
54 ______ For. Supplemental Cert.
53 ______ Foreign Resolution
73 ______ Certificate of Conveyance
_________________________
_________________________
76 ______ Certificate of Merger/Transfer
_________________________
_________________________
75 ______ Special Fee
80 ______ For. Limited Partnership
83 ______ Cert. Limited Partnership
84 ______ Amendment to Limited Partnership
85 ______ Termination of Limited Partnership
</TABLE>
-10-
<PAGE>
<TABLE>
<S> <C> <C>
21 ______ Recordation Tax
22 ______ State Transfer Tax
23 ______ Local Transfer Tax
31 ______ ____ Corp. Good Standing
NA ______ Foreign Corp. Registration
87 ______ _____ Limited Part. Good Standing
71 ______ Financial
600 ______ _______________ Personal Code 063
---------
Property Reports and
__________________ late filing
penalties
70 ______ Change of P.O., R.A. or R.A.A. ATTENTION: Craig Spencer
------------------------
__________________________________
__________________________________
91 ______ Amend/Cancellation, For. Limited
Part.
__ ______ Other _____________________ MAIL TO ADDRESS:__________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__ ______ Other______________________
TOTAL
FEES 117
------
X Check _______ Cash NOTE:
-------
Documents on _____ checks
APPROVED BY: JS
-------------------
</TABLE>
-11-
<PAGE>
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
DATE: JUNE 01, 1990
THIS IS TO ADVISE YOU THAT YOUR ARTICLES SUPPLEMENTARY FOR U.S.T. MASTER
FUNDS, INC. WERE RECEIVED AND APPROVED FOR RECORD ON JUNE 1, 1990 AT 2:14 PM.
FEE PAID: 117.00
JOSEPH V. STEWART
CHARTER SPECIALIST
-12-
<PAGE>
EXHIBIT (1)(F)
UST MASTER FUNDS, INC.
ARTICLES SUPPLEMENTARY
UST Master 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 2-105(c) of the Maryland General
Corporation Law, the Board of Directors of the Company, an open-end investment
company registered under the Investment Company Act of 1940, has increased the
total number of shares of capital stock which the Company shall have authority
to issue pursuant to the following resolution:
RESOLVED, that the total number of shares of capital stock which UST
Master Funds, Inc. (the "Company") shall have authority to issue be
increased to Ten Billion (10,000,000,000) shares of Common Stock of the par
value of One Mill ($0.001) per share, and of the aggregate par value of Ten
Million Dollars ($10,000,000);
SECOND: The Board of Directors of the Company has classified the
unissued and unclassified capital stock of the Company, authorized under the
immediately preceding resolution, pursuant to the following resolution:
FURTHER RESOLVED, that the six billion unclassified shares of Common
Stock authorized pursuant to the preceding resolution be classified
hereinafter as follows: Five Hundred Million (500,000,000) shares of the
par value of One Mill ($0.001) per share and of the aggregate par value of
Five Hundred Thousand Dollars ($500,000) to be classified as, and added to
the previously authorized and classified shares of, Class A Common Stock;
Five Hundred Million
<PAGE>
(500,000,000) shares of the par value of one Mill ($0.001) per share and of
the aggregate par value of Five Hundred Thousand Dollars ($500,000) to be
classified as, and added to the previously authorized and classified shares
of, Class A Common Stock - Special Series 1; Seven Hundred Fifty Million
(750,000,000) shares of the par value of One Mill ($0.001) per share and of
the aggregate par value of Seven Hundred Fifty Thousand Dollars ($750,000)
to be classified as, and added to the previously authorized and classified
shares of, Class B Common Stock; Seven Hundred Fifty Million (750,000,000)
shares of the par value of One Mill ($0.001) per share and of the aggregate
par value of Seven Hundred Fifty Thousand Dollars ($750,000) to be
classified as, and added to the previously authorized and classified shares
of, Class B Common Stock -Special Series 1; One Hundred Seventy-Five
Million (175,000,000) shares of the par value of One Mill ($0.001) per
share and of the aggregate par value of One Hundred Seventy-Five Thousand
Dollars ($175,000) to be classified as, and added to the previously
authorized and classified shares of, Class D Common Stock; Two Hundred
Million (200,000,000) shares of the par value of one Mill ($0.001) per
share and of the aggregate par value of Two Hundred Thousand Dollars
($200,000) to be classified as, and added to the previously authorized and
classified shares of, Class D Common Stock -Special Series 1; and the
remaining Three Billion one Hundred Twenty-Five Million (3,125,000,000)
shares of the par value of One Mill ($0.001) per share and of the aggregate
par value of Three Million One Hundred Twenty-Five Thousand Dollars
($3,125,000) shall remain unclassified;
FURTHER RESOLVED, that each new share of Class A Common Stock, Class A
Common Stock - Special Series 1, Class B Common Stock, Class B Common
Stock -Special Series 1, Class D Common Stock, and Class D Common Stock -
Special Series 1, authorized and classified pursuant to the foregoing
resolution, shall have all of the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption as each other share of its
respective class or series; and
THIRD: Immediately before the increase set forth in Article FIRST, the
Company was authorized to issue Four Billion shares of Common Stock of the par
value of One Mill ($0.001) per share, and of the aggregate par value of Four
Million Dollars ($4,000,000), classified as follows:
-2-
<PAGE>
Class A Common Stock: 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 A Common Stock - Special Series 1: Five Hundred Million
---------------------------------------
(500,000,000) shares of the total 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 B Common Stock: Seven Hundred Fifty Million (750,000,000) 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 Seven Hundred Fifty Thousand
Dollars ($750,000);
Class B Common Stock - Special Series 1: Two Hundred Fifty Million
---------------------------------------
(250,000,000) 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 Two Hundred
Fifty Thousand Dollars ($250,000);
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 D Common Stock: Two Hundred Million (200,000,000) 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 Two Hundred Thousand Dollars
($200,000);
Class D Common Stock - Special Series 1: One Hundred Seventy Five
---------------------------------------
Million (175,000,000) 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
Hundred Seventy Five Thousand Dollars ($175,000);
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); and
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).
-3-
<PAGE>
There were no authorized and unclassified shares of capital stock of the Company
as of immediately before such increase.
FOURTH: Immediately following the increase set forth in Article FIRST,
the Company was authorized to issue Ten Billion shares of Common Stock of the
par value of One Mill ($0.001) per share and of the aggregate par value of Ten
Million Dollars ($10,000,000), classified 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 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
-4-
<PAGE>
share and of the aggregate par value of Three Hundred Seventy Five Thousand
Dollars ($375,000);
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); and
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);
The total number of authorized and unclassified shares of capital stock of the
Company remaining after the actions described above is Three Billion One Hundred
Twenty Five Million (3,125,000,000) shares of capital stock of the par value of
One Mill ($0.001) and of the aggregate par value of Three Million one Hundred
Twenty Five Thousand Dollars ($3,125,000).
FIFTH: the shares of Class A Common Stock, Class A Common Stock -
Special Series 1, Class B Common Stock, Class B Common Stock - Special Series 1,
Class D Common Stock and Class D Common Stock - Special Series 1 of the Company,
classified pursuant to the resolutions set forth in Article SECOND of these
Articles Supplementary, have been classified by the Company's Board of Directors
under the authority contained in the Charter of the Company.
IN WITNESS WHEREOF, UST Master Funds, Inc. has caused these presents
to be signed in its name and on its behalf by its
-5-
<PAGE>
President and its corporate seal to be hereunto affixed and attested to by its
Secretary as of October 26, 1990.
[SEAL] UST MASTER FUNDS, INC.
Attest:
/s/ W. Bruce McConnel, III By: /s/ Karen A. G. Loud
- -------------------------- --------------------
W. Bruce McConnel, III, Karen A. G. Loud,
Secretary President
-6-
<PAGE>
CERTIFICATE
THE UNDERSIGNED, President of UST MASTER 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
her 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/Karen A. G. Loud
------------------------
Karen A. G. Loud
President
Dated as of: October 26, 1990
-7-
<PAGE>
DOCUMENT CODE 16 BUSINESS CODE 03 COUNTY 74
------ ------ ------
# D1750454 P.A. _____ Religious ____ Close ____ Stock ____ Nonstock
- ---------------
Merging Surviving
(Transferor)_____________________ (Transferee)____________________
_________________________________ ________________________________
_________________________________ ________________________________
_________________________________ ________________________________
<TABLE>
<CAPTION>
CODE AMOUNT FEE REMITTED
- ---- ------ ------------
<S> <C> <C> <C>
10 ------ Expedited Fee Name Change
-----------
(New Name)________________
20 130 Organ. & Capitalization --------------------------
------- --------------------------
61 ------- Rec. Fee (Arts. of Inc.) _____ Change of Name
_____ Change of Principal Office
62 20 Rec. Fee (Amendment) _____ Change of Resident Agent
------- _____ Change of Resident Agent Address
63 ------- Rec. Fee (Merger or Consolidation) _____ Resignation of Resident Agent
64 ------- Rec. Fee (Transfer) _____ Designation of Resident Agent and
Resident Agent's Address
65 ------- Rec. Fee (Dissolution) _____ Other Change _____________
__________________________
66 _______ Rec. Fee (Revival)
52 _______ Foreign Qualification
50 _______ Cert. of Qual. or Reg.
51 _______ Foreign Name Registration
13 21 2 Certified Copy 14p
------- - ---
56 _______ Penalty
54 _______ For. Supplemental Cert.
53 _______ Foreign Resolution
73 _______ Certificate of Conveyance
_________________________
_________________________
76 _______ Certificate of Merger/Transfer
_________________________
_________________________
75 _______ Special Fee
80 _______ For. Limited Partnership
83 _______ Cert. Limited Partnership
84 _______ Amendment to Limited Partnership
85 _______ Termination of Limited Partnership
21 _______ Recordation Tax
22 _______ State Transfer Tax
23 _______ Local Transfer Tax
31 _______ ____ Corp. Good Standing
NA _______ Foreign Corp. Registration
87 _______ _____ Limited Part. Good Standing
</TABLE>
-8-
<PAGE>
<TABLE>
<S> <C> <C> <C>
71 _______ Financial
600 _______ _______________ Personal Code 063
------------
Property Reports and
__________________ late filing
penalties
70 _______ Change of P.O., R.A. or R.A.A. ATTENTION: Leah Schuman
------------------------
__________________________________
__________________________________
91 _______ Amend/Cancellation, For. Limited
Part.
__ _______ Other _____________________ MAIL TO ADDRESS:__________________
__________________________________
__________________________________
__ _______ Other______________________ __________________________________
__________________________________
__________________________________
TOTAL 171
FEES ------
</TABLE>
X Check _______ Cash NOTE:
------- ----
_______ Documents on _____ checks
APPROVED BY: JS
--------------
-9-
<PAGE>
EXHIBIT (1)(G)
ARTICLES SUPPLEMENTARY
UST Master 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, an open-end investment company
registered under the investment Company Act of 1940, has classified the unissued
and unclassified capital stock of the Company, pursuant to the following
resolution.
RESOLVED, that pursuant to Section VI of the Articles of Incorporation
of the Company, of the three billion one hundred twenty-five million
(3,125,000,000) previously authorized and unclassified shares of Common
Stock of the Company, Five Hundred Million (500,000,000) shares of the par
value of One Mill ($0.001) per share and of the aggregate par value of Five
Hundred Thousand Dollars ($500,000) shall be hereinafter classified as
Class G Common Stock; Five Hundred Million (500,000,000) shares of the par
value of One Mill ($0.001) per share of the aggregate par value of five
Hundred Thousand Dollars ($500,000) shall be hereinafter classified as
Class G Common Stock - Special Series 1; and the remaining Two Billion One
Hundred Twenty-Five Million (2,125,000,000) shares of the par value of one
Mill ($0.001) per share and of the aggregate par value of Two Million One
Hundred Twenty-Five Thousand Dollars ($2,125,000) shall remain
unclassified;
FURTHER RESOLVED, that all Class G Common Stock shares and all Class G
Common Stock - Special Series 1 shares, will represent, when issued, pro
rate interests in the Treasury Money Fund of the Company;
FURTHER RESOLVED, that all consideration received by the Company for
the issue or sale of shares of Special Series 1 of Class G Common Stock
shall be invested or reinvested with the consideration received by the
Company for the issue and sale of all other shares now or
<PAGE>
hereinafter designated as Class G Common Stock (irrespective of whether
said shares have been designated as part of a series of said Class and, if
so designated, irrespective of the particular series designation), together
with all income, earnings, profits and proceeds derived from the sale,
exchange or liquidation thereof, any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and any
general assets of the Company allocated to the shares of such Special
Shares 1 (or to such other shares) by the Board of Directors of the Company
in accordance with the Company's Charter;
FURTHER RESOLVED, that the assets belonging to Class G Common Stock,
including Class G Common Stock - Special Series 1, and any other series of
Class G Common Stock hereafter authorized, shall be charged with the
expenses and liabilities of the Company in respect of Class G Common Stock,
Class G Common Stock - Special Series 1 and other series of Class G Common
Stock hereafter authorized, and in respect of any general expenses and
liabilities of the Company allocated to Class G Common Stock by the Board
of Directors in accordance with the Company's Charter, except that only
shares of Special Series 1 of Class G Common Stock shall bear (a) the
expenses and liabilities of payments to institutions under any agreement
entered into by or on behalf of the Company which provides for services
exclusively for customers of such institutions who beneficially own shares
of such Special Series 1, and (b) any other liabilities and expenses which
the Board of Directors determines are directly attributable to shares of
such Special Series 1 and which are to be borne solely by shares of such
Special Series 1;
FURTHER RESOLVED, that each share of Special Series 1 of Class G
Common Stock shall otherwise have the same preferences, conversion and
other rights, voting powers, restrictions, limitations, qualifications and
terms and conditions of redemption as each other share of such Special
Series 1 and all other shares now or hereafter authorized of Class G Common
Stock (irrespective of whether said shares have been designated as part of
a series of said Class and, if so designated, irrespective of the
particular series designation), except that on any matter that pertains to
the agreements or any of the liabilities or expenses referred to in the
immediately preceding resolution that is submitted to a vote of
shareholders, only shares of Special Series 1 of Class G Common Stock shall
be entitled to vote, except that, (i) if said matter affects shares of the
Company other than shares of such Special Series 1, such other affected
shares shall also be entitled to vote, and in such case shares of Special
Series 1 of Class G Common Stock shall be voted in the aggregate together
with such other affected shares and
-2-
<PAGE>
not by class or series except where otherwise required by law or permitted
by the Board of Directors of the Company; and (ii) if said matter does not
affect shares of Special Series 1 of Class G Common Stock, said shares
shall not be entitled to vote (except where required by law or permitted by
the Board of Directors) even though the matter is submitted to a vote of
the holders of shares other than shares of such Special Series.
FURTHER RESOLVED, that income, earnings, gain or loss on the assets
belonging to Class G Common Stock (including Class G Common Stock- Special
Series 1 and any other series of Class G Common Stock hereafter authorized)
shall be allocated among Class G Common Stock, Class G Common Stock -
Special Series 1 and any other series of Class G Common Stock hereafter
authorized pro rata in accordance with the number of shares outstanding of
Class G Common Stock, Class G Common Stock - Special Series 1 and only
other new series of Class C Common Stock hereafter authorized;
FURTHER RESOLVED, that dividends on shares of Class G Common Stock,
Class G Common Stock - Special Series 1 and any other series of Class G
Common Stock hereafter authorized, shall be paid only out of the assets
allocable to such respective series less the liabilities and expenses
allocable to such series in accordance with the preceding resolutions; and
FURTHER RESOLVED, that in the event of the liquidation or dissolution
of the Company's portfolio consisting of Class G Common Stock, Class G
Common Stock - Special Series 1 and any other series of Class G Common
Stock hereafter authorized, the stockholders of each such series shall be
entitled to receive, out of the assets of this portfolio available for
distribution, only the net assets allocable to such series, respectively.
SECOND: The shares of Class G Common Stock and Class G Common Stock-
Special Series 1 of the Company, classified pursuant to the resolutions set
forth in Article FIRST of these Articles Supplementary, have been classified by
the Company's Board of Directors under the authority contained in the Charter of
the Company.
-3-
<PAGE>
IN WITNESS WHEREOF, UST Master 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 hereunto affixed and attested to by its Secretary as of January 29,
1991.
Attest: UST MASTER FUNDS, INC.
/s/ W. Bruce McConnel, III By: /s/ Karen A. G. Loud
- -------------------------- --------------------
W. Bruce McConnel, III, Karen A. G. Loud,
Secretary President
-4-
<PAGE>
CERTIFICATE
-----------
THE UNDERSIGNED, President of U.S.T. MASTER FUNDS, INC., who executed
on behalf of said Corporation the attached Articles Supplementary to Articles of
Incorporation 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 her 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/ Karen A. G. Loud
-------------------------
Karen A. G. Loud
President
Dated as of: January 29, 1991
-5-
<PAGE>
DOCUMENT CODE 16 BUSINESS CODE 03 COUNTY 74
---- ---- -----
# D1750454 P.A. Religious Close Stock Nonstock
- ----------- ______ _____ _____ _____
Merging Surviving
(Transferor)__________________ (Transferee)______________________
______________________________ __________________________________
______________________________ __________________________________
______________________________ __________________________________
<TABLE>
<CAPTION>
CODE AMOUNT FEE REMITTED
- ---- ----- ------------
<S> <C>
10 30 Expedited Fee Name Change
----- -----------
20 _____ Organ. & Capitalization (New Name)_____________________
61 _____ Rec. Fee (Arts. of Inc.) _______________________________
62 20 Rec. Fee (Amendment) _______________________________
-----
63 _____ Rec. Fee (Merger or Consolidation)
64 _____ Rec. Fee (Transfer) ___ Change of Name
65 _____ Rec. Fee (Dissolution) ___ Change of Principal of Office
66 _____ Rec. Fee (Revival) ___ Change of Resident Agent
52 _____ Foreign Qualification ___ Change of Resident Agent Address
50 _____ Cert. of Qual. or Reg. ___ Resignation of Resident Agent
51 _____ Foreign Name Registration ___ Designation of Resident Agent and
Resident Agent's Address
13 17 2 Certified Copy 10p ___ Other Change _____________
----- - --- __________________________
56 _____ Penalty
54 _____ For. Supplemental Cert.
53 _____ Foreign Resolution
73 _____ Certificate of Conveyance
=========================
76 _____ Certificate of Merger/Transfer
_____ _________________________
_________________________
75 _____ Special Fee
80 _____ For. Limited Partnership
83 _____ Cert. Limited Partnership
84 _____ Amendment to Limited Partnership
85 _____ Termination of Limited Partnership
21 _____ Recordation Tax
22 _____ State Transfer Tax
23 _____ Local Transfer Tax
31 _____ ___ Corp. Good Standing
NA _____ Foreign Corp. Registration
87 _____ ___ Limited Part. Good Standing
</TABLE>
-6-
<PAGE>
71 _____ Financial
600 _____ ___________ Personal Code 063
Property Reports and -------
___________ late filing
penalties
70 _____ Change of P.O., R.A or R.A.A. ATTENTION : Leah Schuman
-------------------
_______________________________
_______________________________
91 _____ Amend/Cancellation, For Limited
part.
__ _____ Other ________________ MAIL TO ADDRESS:______________
______________________________
______________________________
__ _____ Other ________________ ______________________________
______________________________
______________________________
TOTAL
FEES 67
-----
X
------ Check ______ Cash NOTE:
----
_____ Documents on _____ checks
APPROVED BY: JS
---------
-7-
<PAGE>
EXHIBIT (1)(H)
STATE OF MARYLAND
DEPARTMENT OF ASSESSMENTS AND TAXATION
301 West Preston Street Baltimore, Maryland 21201
DATE: DECEMBER 24, 1992
THIS IS TO ADVISE YOU THAT THE ARTICLES SUPPLEMENTARY FOR UST MASTER FUNDS,
INC. WERE RECEIVED AND APPROVED FOR RECORD ON DECEMBER 24, 1992 AT 10:55 A.M.
FEE PAID: 625.00
JOYCE M. THOMPSON
LEGAL OFFICER
<PAGE>
UST MASTER FUNDS, INC.
ARTICLES SUPPLEMENTARY
UST Master 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 Sections 2-105(c) and 2-208 of the Maryland General
Corporation Law, the Board of Directors of the Company has increased the total
number of shares of capital stock which the Company shall have authority to
issue from Ten Billion (10,000,000,000) to Thirty-Five Billion(35,000,000,000)
shares of Common Stock of the par value of One Mil ($0.001) per share, and of
the aggregate par value of Thirty-Five Million Dollars ($35,000,000):
RESOLVED, that the total number of shares of capital stock which the
Company shall have authority to issue be increased from Ten Billion
(10,000,000,000) to Thirty-Five Billion (35,000,000,000) shares of Common
Stock of the par value of One Mil ($0.001) per share ("Shares"), with a
resulting aggregate par value of Thirty-Five Million Dollars ($35,000,000).
SECOND: The Board of Directors of the Company has classified the
unissued and unclassified capital stock of the Company, authorized under the
immediately preceding resolution, pursuant to the following resolution:
FURTHER RESOLVED, that Twenty-Four Billion Five Hundred Million Shares
of the Twenty-Five Billion unclassified shares authorized pursuant to the
preceding resolution be classified hereinafter as follows: Five Hundred
Million (with an aggregate par value of Five Hundred Thousand Dollars
($500,000) classified to each of the following
<PAGE>
Series: Class A Common Stock - Special Series 2; Class B Common Stock -
Special Series 2; Class C Common Stock - Special Series 1; Class C Common
Stock - Special Series 2; Class D Common Stock - Special Series 2; Class E
Common Stock - Special Series 1; Class E Common Stock - Special Series 2;
Class F Common Stock - Special Series 1; Class F Common Stock - Special
Series 2; Class G Common Stock - Special Series 2; Class H Common Stock;
Class H Common Stock - Special Series 1; Class H Common Stock - Special
Series 2; Class I Common Stock; Class I Common Stock - Special Series 1;
Class I Common Stock - Special Series 2; Class J Common Stock; Class J
Common Stock - Special Series 1; Class J Common Stock - Special Series 2;
Class K Common Stock; Class K Common Stock - Special Series 1; Class K
Common Stock - Special Series 2; Class L Common Stock; Class L Common
Stock - Special Series 1; Class L Common Stock - Special Series 2; Class M
Common Stock; Class M Common Stock - Special Series 1; Class M Common
Stock - Special Series 2; Class N Common Stock; Class N Common Stock -
Special Series 1; Class N common Special Series 2; Class O Common Stock;
Class O Common Stock - Special Series 1; Class O Common Stock - Special
Series 2; Class P Common Stock; Class P Common Stock - Special Series 1;
Class P Common Stock - Special Series 2; Class Q Common Stock; Class Q
Common Stock - Special Series 1; Class Q Common Stock - Special Series 2;
Class R Common Stock; Class R Common Stock -Special Series 1; Class R
Common Stock -Special Series 2; Class S Common Stock; Class S Common
Stock - Special Series 1; Class S Common Stock -Special Series 2; Class T
Common Stock; Class T Common Stock -Special Series 2; Class T Common Stock;
Class T Common Stock -Special Series 1; and Class T Common Stock - Special
Series 2;
FURTHER RESOLVED, that all consideration received by the Company for the
issue or sale of all shares of Common Stock with the same alphabetical
designation and all shares of any Special Series of said Common Stock
(irrespective of the particular series designation) (collectively "Common
Stock Group") shall be invested and reinvested with the consideration
received by the Company for the issue and sale of all other shares of that
Common stock Group, together with all income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, and any general assets of
the Company allocated to shares of that Common Stock Group by the Board of
Directors in accordance with the Company's Articles of Incorporation, and
each share of that Common Stock Group shall share equally and with such
other shares in such consideration and other assets, income, earnings,
profits and proceeds thereof, including any proceeds derived from the sale,
exchange or liquidation thereof, and any assets derived from
-2-
<PAGE>
exchange or liquidation thereof, and any assets derived from any
reinvestment of such proceeds in whatever form;
FURTHER RESOLVED, that each share in each particular Common Stock
Group shall be charged in proportion to its respective net asset value with
each other share now or hereafter designated as the particular Common Stock
Group (irrespective of whether said share has been designated as part of a
series of said Common Stock Group and, if so designated as a part of a
series, irrespective of the particular series designation) with the
expenses and liabilities of the Company in respect of the Common Stock
Group, and in respect of any general expenses and liabilities of the
Company allocated to the Common Stock Group in accordance with the
Company's Articles of Incorporation except that to the extent permitted by
rule or order of the Securities and Exchange Commission and as may be from
time to time determined by the Board of Directors;
(a) only shares of Class A, B, C, D, E, F, G, H, I, J, K, L, M,
N, O, P, Q, R, S, and T, Common Stock shall bear all
expenses and liabilities: (1) arising from transfer agency
services that are directly attributable to those shares; and
(2) any other expenses and liabilities which the Board of
Directors determines should be borne solely by such shares;
(b) only shares of Class A, B, C, D, E, F, G, H, I, J, K, L, M,
N, O, P, Q, R, S, and T, Common Stock - Special Series 1
shall bear all expenses and liabilities: (1) of payments to
service organizations that are directly attributable to
such Special Series under the Company's servicing
arrangements relating to that Special Series; (2) arising
from transfer agency services that are directly attributable
to such Special Series; and (3) any other expenses and
liabilities which the Board of Directors determines should
be borne solely by shares of such Special Series;
(c) only shares of Class A, B, C, D, E, F, G, H, I, J, K, L, M,
N, O, P, Q, R, S, and T, Common Stock - Special Series 2
shall bear all expenses and liabilities: (1) of payments to
the Company's distributor that are directly attributable to
such Special Series under the Company's distribution
arrangements relating to that Special Series; (2) arising
from transfer agency services that are directly
-3-
<PAGE>
attributable to that Special Series; and (3) any other
expenses and liabilities which the Board of Directors
determines should be borne solely by such shares; and
FURTHER RESOLVED, that except as otherwise provided by these
resolutions, each share of a Common Stock Group shall have all the preferences,
conversion and other rights, voting powers, restrictions, limitations,
qualifications and terms and conditions of redemption as set forth in the
Company's Articles of Incorporation and shall also have the same preferences,
conversion and other rights, voting powers, restrictions, limitations,
qualifications and terms and conditions of redemption as each other share of the
particular Common Stock Group, except that on any matter that pertains to the
expenses and liabilities described in these resolutions (or to any agreement,
plan or other document relating to said expenses or liabilities) and is
submitted to a vote of stockholders, only shares of the particular class and/or
series affected thereby shall be entitled to vote, except that : (i) if such
matter affects more than one class or series, the shares of all other affected
classes or series shall also be entitled to vote, and in such case all shares
of affected classes or series shall be voted in the aggregate without regard to
class or series except where otherwise required by law or permitted by the Board
of Directors; and (ii) if said matter does not affect a particular class or
series, shares of such class or series shall not be entitled to vote (except
where required by law or permitted by the Board of Directors) even though the
matter is submitted to a vote of the holders of shares of other classes or
series.
THIRD: The shares classified pursuant to the resolutions set forth in
Article SECOND of these Articles Supplementary, have been classified by the
Company's Board of Directors under the authority contained in the Charter of the
Company.
FORTH: Immediately before the increase set forth in Article FIRST, the
Company was authorized to issue Ten Billion shares of Common Stock of the par
value of One Mill ($0.001) per share and of the aggregate par value of Ten
Million Dollars ($10,000,000), classified as follows:
-4-
<PAGE>
Class A Common Stock: One Billion 500 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: Three Hundred Fifty Million
---------------------------------------
(350,000,000) 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
Fifty Thousand Dollars ($350,000);
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 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);
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 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);
-5-
<PAGE>
Class G Common Stock: Five Hundred Million (500,000,000) shares of
--------------------
capital stock of the Company of the par value of One Mil ($0.001) per share
and of the aggregate par value of Five Hundred Thousand Dollars ($500,000);
and
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 Mil ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000).
There were Two Billion One Hundred Twenty-Five Million (2,125,000,000)
authorized and unclassified shares of capital stock of the Company as of
immediately before such increase.
FIFTH: Immediately following the increase set forth in Article FIRST,
the Company was authorized to issue Thirty-Five Billion shares of Common 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 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 Mil ($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 Mil ($0.001)
per share and of the aggregate par value of One Million Dollars
($1,000,000);
Class A Common Stock - Special Series 2: Five Hundred Million
---------------------------------------
(500,000,000) shares of capital stock of the Company of the par value of
One Mil ($0.001) per share and of the aggregate par value of Five Hundred
Thousand Dollars ($500,000);
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 Mil ($0.001)
per share and of the aggregate par value of One Million Five Hundred
Thousand Dollars ($1,500,000);
-6-
<PAGE>
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 B Common Stock - Special Series 2: 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 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 C Common Stock - Special Series 2: 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);
Class D Common Stock - Special Series 2: 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 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);
-7-
<PAGE>
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 E Common Stock - Special Series 2: 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 F Common Stock - Special Series 2: 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 G Common Stock - Special Series 2: 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
-8-
<PAGE>
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 H Common Stock - Special Series 2: 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 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 I Common Stock - Special Series 2: 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 J Common Stock - Special Series 2: 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);
-9 -
<PAGE>
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 K Common Stock - Special Series 2: 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 L Common Stock - Special Series 2: 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);
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 M Common Stock - Special Series 2: 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
-10-
<PAGE>
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 N Common Stock - Special Series 2: 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 O Common Stock - Special Series 2: 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);
-11-
<PAGE>
Class P Common Stock - Special Series 2: 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 O Common Stock - Special Series 2: 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: - 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 R Common Stock - Special Series 2: 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
-12-
<PAGE>
aggregate par value of Five Hundred Thousand Dollars ($500,000);
Class S Common Stock - Special Series 2: 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); and
Class T Common Stock - Special Series 2: 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);
The total number of authorized and unclassified shares of capital
stock of the Company remaining after the actions described above is Two Billion
Six Hundred Twenty-Five Million (2,625,000,000) shares of capital stock of par
value of One Mill ($0.001) and of the aggregate par value of Two Million Six
Hundred Twenty-Five Thousand Dollars ($2,625,000).
IN WITNESS WHEREOF, UST Master Funds, Inc. has caused these presents
to be signed in its name and on its behalf by its
-13-
<PAGE>
President and its Corporate Seal to be herewith affixed and attested to by its
Secretary as of December 23, 1992.
[SEAL] UST MASTER FUNDS, INC.
Attest:
/s/ W. Bruce McConnel, III By: /s/ Alfred Tannachion
- -------------------------- --------------------------------
W. Bruce McConnel, III Alfred Tannachion
Secretary President
-14-
<PAGE>
DOCUMENT CODE 16 BUSINESS CODE 03 COUNTY 74
------ ---- ------
# D1750454 P.A. Religious _____ Close X Stock _____ Nonstock
---------- -----
Merging Surviving
(Transferor)______________________ (Transferee)_____________________
__________________________________ _________________________________
__________________________________ _________________________________
__________________________________ _________________________________
<TABLE>
<CAPTION>
CODE AMOUNT FEE REMITTED
- ---- ------ ------------
<S> <C> <C> <C>
10 70 Expedited Fee Name Change
------ (New Name)____________
______________________
______________________
500 Organ. Capitalization
20 ------
61 ______ Rec. Fee (Arts. of Inc.) _____ Change of Name
_____ Change of Principal Office
62 20 Rec. Fee (Amendment) _____ Change of Resident Agent
------ _____ Change of Resident Agent Address
_____ Resignation of Resident Agent
63 ______ Rec. Fee (Merger or Consol.) _____ Designation of Resident Agent and
Resident Agent's Address
64 ______ Rec. Fee (Transfer) X Other Change Increase Stock
----- --------------
65 ______ Rec. Fee (Dissolution)
66 ______ Rec. Fee (Revival)
52 ______ Foreign Qualification
50 ______ Cert. of Qual. or Reg.
51 ______ Foreign Name Registration
13 35 2 Certified Copy 14
------ --- ----
56 ______ Penalty
54 ______ For. Supplemental Cert.
53 ------ Foreign Resolution
73 ______ Certificate of Conveyance
_________________________
_________________________
76 ______ Certificate of Merger/Transfer
_________________________
_________________________
15 ______ Special Fee
80 ______ For. Limited Partnership
83 ______ Cert. Limited Partnership
84 ______ Amendment to Limited Partnership
85 ______ Termination of Limited Partnership
21 ______ Recordation Tax
22 ______ State Transfer Tax
23 ______ Local Transfer Tax
31 ______ _____ Corp. Good Standing
NA ______ Foreign Corp. Registration
87 ______ _____ Limited Part. Good Standing
71 ______ Financial
</TABLE>
-15-
<PAGE>
600 _____ ___________ Personal Code 063
Property Reports and -------
___________ late filing
penalties
70 _____ Change of P.O., R.A or R.A.A. ATTENTION: Leah Schuman
-------------------
91 _____ Amend/Cancellation, For. Limited
part.
99 _____ Art. of Organization (LLC)
98 _____ LLC Amend, Diss, Continuation
97 _____ LLC Cancellation
96 _____ Reg. Foreign LLC
94 _____ Foreign LLC Supplemental
92 _____ _____ LLC Good Standing (short)
__ _____ Other _______________ MAIL TO ADDRESS:______________
______________________________
______________________________
______________________________
______________________________
______________________________
TOTAL
FEES 625
-----
X
----- Check ______ Cash NOTE:
X ----
_____ Document on 2 checks (28.00 + 597.00)
---
APPROVED BY: JMT
---------
-16-
<PAGE>
CERTIFICATE
-----------
THE UNDERSIGNED, President of UST MASTER 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 her 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/ Alfred Tannachion
-----------------------------------
Alfred Tannachion
President
Dated as of: December 23, 1992
-17-
<PAGE>
Exhibit (1)(l)
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 W 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 November 14, 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 W Common Stock (with an aggregate par value of
Five Hundred Thousand Dollars ($500,000)); and
FURTHER RESOLVED, that each share of Class W 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 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
<PAGE>
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);
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);
-2-
<PAGE>
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 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
-3-
<PAGE>
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);
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);
-4-
<PAGE>
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 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
-5-
<PAGE>
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);
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); and
Class W 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 One
Hundred Twenty-Five Million (11,125,000,000) shares of capital stock of the par
value of One Mill ($0.001) per share and of the aggregate par value of Eleven
Million One Hundred Twenty-Five Thousand Dollars ($11,125,000).
-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 December 22, 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: December 22, 1997
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
DOCUMENT CODE 16 BUSINESS CODE 03 COUNTY 74
------ ------ ------
# D1750454 P.A. _____ Religious ____ Close ____ Stock ____ Nonstock
- ---------------
Merging Surviving
(Transferor)_____________________ (Transferee)____________________
_________________________________ ________________________________
_________________________________ ________________________________
_________________________________ ________________________________
CODE AMOUNT FEE REMITTED Name Change
- ---- ------ ------------
10 70 Expedited Fee (New Name)_______________________________
------
_________________________________________
61 ______ Rec. Fee (Arts. of Inc.) _________________________________________
20 ______ Organ. & Capitalization
________ Change of Name
62 20 Rec. Fee (Amendment) ________ Change of Principal Office
------
________ Change of Resident Agent
63 ______ Rec. Fee (Merger or Consolidation) ________ Change of Resident Agent Address
________ Resignation of Resident Agent
64 ______ Rec. Fee (Transfer) ________ Designation of Resident Agent and
Resident Agent's Address
65 ______ Rec. Fee (Revival) ________ Change of Business Code
________________________________
66 ______ Rec. Fee (Dissolution) ________ Adoption of Assumed Name
________________________________
________ Other Change(s) ________________
________________________________
75 ______ Special Fee
73 ______ Certificate of Conveyance
_______________________________
_______________________________
_______________________________
21 ______ Recordation Tax
22 ______ State Transfer Tax
23 ______ Local Transfer Tax
70 ______ Change of P.O. Box, R.A. or R.A.A.
31 ______ _______ Corp. Good Standing
600 ______ Returns
- ------------------------------------------------------------
52 ______ Foreign Qualification
NA ______ Foreign Registration
51 ______ Foreign Name Registration
53 ______ Foreign Resolution
54 ______ For. Supplemental Cert.
56 ______ Penalty
50 ______ Cert. of Qual. or Req.
- ------------------------------------------------------------
83 ______ Cert. Limited Partnership
84 ______ Amended to Limited Partnership
85 ______ Termination of Limited Partnership
80 ______ For. Limited Partnership
91 ______ Amend/Cancellation, For. Limited Part.
87 ______ _____ Limited Part. Good Standing
- ------------------------------------------------------------
67 ______ Cert. Limited Liability Partnership
68 ______ LLP Amended - Domestic
69 ______ Foreign Limited Liability Partnership
74 ______ LLP Amended - Foreign
- ------------------------------------------------------------
99 ______ Art. of Organization (LLC)
98 ______ LLC Amend. Diss. Continuation
97 ______ LLC Cancellation
96 ______ Registration Foreign LLC
94 ______ Foreign LLC Supplement
______ LLC Good Standing (short)
92 ______ Organ. & Capitalization
- ------------------------------------------------------------
Code 063
---------
</TABLE>
<PAGE>
ATTENTION: J. Sidle
------------------------
__________________________________
__________________________________
MAIL TO ADDRESS:__________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
13 25 2 Certified Copy 18
---- ----
____ ______ Other __________
TOTAL
FEES 115
----
X Check _______ Cash NOTE:
------ ----
_______ Documents on _____ checks
APPROVED BY: WM
--------------
<PAGE>
EXHIBIT (5)(C)
EXCELSIOR FUNDS, INC.
AMENDMENT NO. 2
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 Emerging Markets Fund as an
investment portfolio 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 Emerging Markets Fund;
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, Blended Equity Fund, Small Cap
Fund, Energy and Natural Resources Fund, Value and Restructuring Fund,
Latin America Fund, Pacific/Asia Fund, Pan European Fund, Short-Term
Government Securities Fund, Intermediate-Term Managed Income Fund,
Real Estate Fund, Large Cap Growth Fund and Emerging Markets Fund
portfolios (collectively, the "Funds"), and the Investment Adviser is
willing to so render such services;
2. Paragraph No. 7 shall henceforth read:
7. 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 each of the Blended Equity Fund and the
Large Cap Growth Fund; .60% of the average daily net assets of each of
the Small Cap Fund, the Energy and Natural Resources Fund and the
Value and Restructuring Fund; 1%
<PAGE>
of the average daily net assets of each of the Latin America Fund, the
Pacific/Asia Fund, the Pan European Fund and the Real Estate Fund;
1.25% of the average daily net assets of the Emerging Markets 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 November 14, 1997.
EXCELSIOR FUNDS, INC.
By: /s/ Frederick S. Wonham
-----------------------------
Title: President
--------------------------
UNITED STATES TRUST COMPANY OF
NEW YORK
By: /s/ Kenneth G. Walsh
-----------------------------
Title: Executive Vice President
--------------------------
U.S. TRUST COMPANY OF
CONNECTICUT
By: /s/ W. Michael Funck
-----------------------------
Title: 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
Emerging Markets Fund
In consideration of the mutual covenants set forth in the Distribution
Contract dated August 1, 1995 and last approved as of November 14, 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 14th day of November, 1997.
EXCELSIOR FUNDS, INC.
/s/ Frederick S. Wonham
------------------------
Name: Frederick S. Wonham
Title: President
EDGEWOOD SERVICES, INC.
/s/ K. Pegher, Jr.
--------------------------
Name: K. Pegher, Jr.
Title:
<PAGE>
EXHIBIT (8)(B)
AMENDED EXHIBIT A
-----------------
Portfolios covered by the Custody Agreement effective as of September 1,
1995 (as amended and restated on August 1, 1997) 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
Emerging Markets Fund
THE CHASE MANHATTAN BANK
By: /s/ Donald P. Hearn
-----------------------------
EXCELSIOR FUNDS, INC.
By: /s/ F.S. Wonham
-----------------------------
Dated: November 28, 1997
<PAGE>
Exhibit (9)(c)
Exhibit A
to the
Administration Agreement
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
Value and Restructuring Fund
Small Cap Fund
International Fund
Latin America Fund
Pacific/Asia Fund
Pan European Fund
Large Cap Growth Fund
Real Estate Fund
Emerging Markets Fund
In consideration of the mutual covenants set forth in the Administration
Agreement dated as of May 16, 1997 among Excelsior Funds, Inc. (the "Company"),
Chase Global Funds Services Company ("CGFSC"), Federated Administrative Services
("FAS") and U.S. Trust Company of Connecticut ("U.S. Trust"), Excelsior Funds,
Inc. executes and delivers this Exhibit on behalf of the Funds, and with respect
to any class or series thereof, first set forth in this Exhibit.
Pursuant to Section 3 of the Agreement, FAS agrees to provide facilities,
equipment, and personnel to carry out the following administrative services to
the Funds, with the understanding that CGFSC will provide all other services and
duties set forth in said Section 3 but not otherwise listed below:
(a) Performing a due diligence review of SEC required reports and notices
to shareholders of record and to the SEC including, without limitation, Semi-
Annual and Annual Reports to Shareholders, Semi-Annual Reports on Form N-SAR,
Proxy Statements and SEC share registration notices;
(b) Reviewing the Company's Registration Statement on Form N-1A or any
replacement therefor;
<PAGE>
(c) Reviewing and filing with the National Association of Securities
Dealers, Inc. all sales literature (advertisements, brochures and shareholder
communications) for each of the Funds and any class or series thereof;
(d) Preparing distributor's reports to the Company's Board of Directors;
(e) Performing internal audit examinations in accordance with a charter to
be adopted by FAS and the Company;
(f) Upon request, providing individuals reasonably acceptable to the
Company's Board of Directors for nomination, appointment, or election as
officers of the Company, who will be responsible for the management of certain
of the Funds' affairs as determined by the Company;
(g) Consulting with the Funds and the Company's Board of Directors, as
appropriate, on matters concerning the distribution of Funds;
(h) Monitoring the Company's arrangements with respect to services provided
by certain organizations ("Organizations") under its Amended and Restated
Distribution Plan. With respect to Organizations, FAS shall specifically
monitor and review the services rendered under the Amended and Restated
Distribution Plan by Organizations to their customers who are the beneficial
owners of shares, pursuant to agreements between the Company and such
Organizations ("Agreements"), including, without limitation, reviewing the
qualifications of financial institutions wishing to be Organizations, assisting
in the execution and delivery of Agreements, reporting to the Company's Board of
Directors with respect to the amounts paid or payable by the Company from time
to time under the Agreements and the nature of the services provided by
Organizations, and maintaining appropriate records in connection with such
duties;
(i) Monitoring the Company's arrangements with respect to services
provided by certain organizations ("Service Organizations") under its Amended
and Restated Administrative Services Plan, provided that FAS will only be
responsible for monitoring arrangements with Service Organizations with whom FAS
has established the servicing relationship on behalf of the Company. With
respect to such Service Organizations, FAS shall specifically monitor and review
the services rendered by Service Organizations to their customers who are the
beneficial owners of shares, pursuant to agreements between the Company and such
Service Organizations ("Servicing Agreements"), including, without limitation,
reviewing the qualifications of financial institutions wishing to be Service
Organizations, assisting in the execution and delivery of Servicing Agreements,
reporting to the Company's Board of Directors with respect to the amounts paid
-2-
<PAGE>
or payable by the Company from time to time under the Servicing Agreements and
the nature of the services provided by Service Organizations, and maintaining
appropriate records in connection with such duties; and
(j) Consulting with CGFSC and the Company regarding the jurisdictions in
which the Company's shares shall be registered or qualified for sale and, in
connection therewith, reviewing and monitoring the actions of CGFSC in
maintaining the registration or qualification of shares for sale under the
securities laws of any state. Payment of share registration fees and any fees
for qualifying or continuing the qualification of any Fund as a dealer or
broker, if applicable, shall be made by that Fund.
This Exhibit A may be executed in one or more counterparts and all such
counterparts will constitute one and the same instrument.
Witness the due execution hereof this 14th day of November, 1997.
EXCELSIOR FUNDS, INC.
/s/ Frederick S. Wonham
--------------------------------
Name: Frederick S. Wonham
Title: President
FEDERATED ADMINISTRATIVE SERVICES
/s/ Joseph A. Machi
-------------------------------------
Name: Joseph A. Machi
Title:
CHASE GLOBAL FUNDS SERVICES COMPANY
/s/ Donald P. Hearn
----------------------------------------
Name: Donald P. Hearn
Title: Chairman & CEO
-3-
<PAGE>
Exhibit (9)(d)
Exhibit B
to the
Administration Agreement
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
Value and Restructuring Fund
Small Cap Fund
International Fund
Latin America Fund
Pacific/Asia Fund
Pan European Fund
Large Cap Growth Fund
Real Estate Fund
Emerging Markets Fund
In consideration of the mutual covenants set forth in the Administration
Agreement dated as of May 16, 1997 among Excelsior Funds, Inc. (the "Company"),
Chase Global Funds Services Company ("CGFSC"), Federated Administrative Services
("FAS") and U.S. Trust Company of Connecticut ("U.S. Trust"), Excelsior Funds,
Inc. executes and delivers this Exhibit on behalf of the Funds, and with respect
to any class or series thereof, first set forth in this Exhibit.
Pursuant to Section 3 of the Agreement, U.S. Trust agrees to provide
facilities, equipment, and personnel to carry out the following administrative
services to the Funds:
(a) Providing guidance and assistance in the preparation of SEC required
reports and notices to shareholders of record and to the SEC including, without
limitation, Semi-Annual and Annual Reports to Shareholders, Semi-Annual Reports
on Form N-SAR, Proxy Statements and SEC share registration notices;
(b) Reviewing the Company's Registration Statement on Form N-1A or any
replacement therefor;
(c) Consulting with the Funds and the Company's Board of Directors, as
appropriate, on matters concerning the administration and operation of the
Funds;
-1-
<PAGE>
(d) Monitoring the Company's arrangements with respect to services
provided by certain organizations ("Service Organizations") under its Amended
and Restated Administrative Services Plan, provided that U.S. Trust will only be
responsible for monitoring arrangements with Service Organizations with whom
U.S. Trust has established the servicing relationship on behalf of the Company.
With respect to such Service Organizations, U.S. Trust shall specifically
monitor and review the services rendered by Service Organizations to their
customers who are the beneficial owners of shares, pursuant to agreements
between the Company and such Service Organizations ("Servicing Agreements"),
including, without limitation, reviewing the qualifications of financial
institutions wishing to be Service Organizations, assisting in the execution and
delivery of Servicing Agreements, reporting to the Company's Board of Directors
with respect to the amounts paid or payable by the Company from time to time
under the Servicing Agreements and the nature of the services provided by
Service Organizations, and maintaining appropriate records in connection with
such duties.
This Exhibit B may be executed in one or more counterparts and all such
counterparts will constitute one and the same instrument.
Witness the due execution hereof this 14th day of November, 1997.
EXCELSIOR FUNDS, INC.
/s/ Frederick S. Wonham
----------------------------------
Name: Frederick S. Wonham
Title: President
U.S. TRUST COMPANY OF CONNECTICUT
/s/W. Michael Funck
----------------------------------
Name: W. Michael Funck
Title: President & CEO
-2-
<PAGE>
EXHIBIT (9)(F)
EXCELSIOR FUNDS, INC.
73 Tremont Street
Boston, MA 02108-3913
September 11, 1997
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Gentlemen:
Excelsior Funds, Inc., formerly UST Master Funds, Inc. (the "Company"), and
United States Trust Company of New York ("U.S. Trust") are parties to a Mutual
Funds Transfer Agency Agreement made as of September 1, 1995 (the "Agreement").
The Company has established classes of shares for two new portfolios, the
Large Cap Growth Fund and the Real Estate Fund (the "New Funds"). This letter
shall serve as written notice that the Company desires to retain U.S. Trust to
serve as transfer agent, registrar and dividend disbursing agent under and in
accordance with the terms of the Agreement, whereupon the New Funds shall be
subject to the provisions of the Agreement to the same extent as the funds
currently covered by the Agreement.
Please sign below to signify U.S. Trust's agreement 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 the New Funds for the period and on
the terms set forth in the Agreement.
Very truly yours,
EXCELSIOR FUNDS, INC.
By: /s/ Frederick S. Wonham
-----------------------------------
Frederick S. Wonham
President and Treasurer
Agreed to and Accepted intending
to be legally bound hereby
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/ Kenneth G. Walsh
-------------------------------------
Name: Kenneth G. Walsh
------------------------------------
Title: Executive Vice President
------------------------------------
<PAGE>
EXHIBIT (9)(G)
EXCELSIOR FUNDS, INC.
73 Tremont Street
Boston, MA 02108-3913
November 14,1997
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
Gentlemen:
Excelsior Funds, Inc., formerly UST Master FUnds, Inc. (the "Company"), and
United States Trust Company of New York ("U.S. Trust") are parties to a Mutual
Funds Transfer Agency Agreement made as of September 1, 1995 (the "Agreement).
The Company has established a class of shares for a new portfolio, the
Emerging Markets Fund (the "New Fund"). This letter shall serve as written
notice that the Company desires to retain U.S. Trust to serve as transfer agent,
registrar and dividend disbursing agent under and in accordance with the terms
of the Agreement, whereupon the New Fund shall be subject to the provisions of
the Agreement to the same extent as the funds currently covered by the
Agreement.
Please sign below to signify U.S. Trust's agreement 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 the New Fund for the period and on
the terms set forth in the Agreement.
Very truly yours,
EXCELSIOR FUNDS, INC.
By: /s/ Frederick S. Wonham
----------------------------
Frederick S. Wonham
President and Treasurer
Agreed to and Accepted intending
to be legally bound hereby
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/ Kenneth G. Walsh
------------------------------
Name: Kenneth G. Walsh
------------------------------
Title: Executive Vice President
------------------------------
<PAGE>
EXHIBIT (9)(I)
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 11, 1997
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108-3913
Gentlemen:
United States Trust Company of New York ("U.S. Trust"), and Chase Global
Funds Services Company ("CGFSC"), are parties to a Mutual Funds Sub-Transfer
Agency Agreement made as of September 1, 1995 (the "Agreement"). Excelsior
Funds, Inc. (the "Company"), has retained U.S. Trust to serve as the Company's
transfer agent, registrar and dividend disbursing agent. U.S. Trust, by way of
the Agreement, has assigned its duties and obligations to CGFSC.
The Company has established classes of shares for two new portfolios, the
Large Cap Growth Fund and the Real Estate Fund (the "New Funds"). This letter
shall serve as written notice that U.S. Trust desires to retain CGFSC to serve
as sub-transfer agent, sub-registrar and sub-dividend disbursing agent under and
in accordance with the terms of the Agreement, whereupon the New Funds shall be
subject to the provisions of the Agreement to the same extent as the funds
currently covered by the Agreement.
Please sign below to signify CGFSC's agreement 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 the New Funds for the
period and on the terms set forth in the Agreement.
Very truly yours,
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/ Kenneth G. Walsh
---------------------------------
Name: Kenneth G. Walsh
---------------------------------
Title: Executive Vice President
---------------------------------
Agreed to and Accepted intending
to be legally bound hereby
CHASE GLOBAL FUNDS SERVICES COMPANY
By: /s/ Donald P. Hearn
--------------------------------
Name: Donald P. Hearn
--------------------------------
Title: Chairman & CEO
--------------------------------
<PAGE>
EXHIBIT (9)(J)
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
November 14, 1997
Chase Global Funds Services Company
73 Tremont Street
Boston, MA 02108-3913
Gentlemen:
United States Trust Company of New York ("U.S. Trust"), and Chase Global
Funds Services Company ("CGFSC"), are parties to a Mutual Funds Sub-Transfer
Agency Agreement made as of September 1, 1995 (the "Agreement"). Excelsior
Funds, Inc. (the "Company"), has retained U.S. Trust to serve as the Company's
transfer agent, registrar and dividend disbursing agent. U.S. Trust, by way of
the Agreement, has assigned its duties and obligations to CGFSC.
The Company has established a class of shares for a new portfolio, the
Emerging Markets Fund (the "New Fund"). This letter shall serve as written
notice that U.S. Trust desires to retain CGFSC to serve as sub-transfer agent,
sub-registrar and sub-dividend disbursing agent under and in accordance with the
terms of the Agreement, whereupon the New Fund shall be subject to the
provisions of the Agreement to the same extent as the funds currently covered by
the Agreement.
Please sign below to signify CGFSC's agreement 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 the New Fund for the
period and on the terms set forth in the Agreement.
Very truly yours,
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/ Kenneth G. Walsh
------------------------------------
Name: Kenneth G. Walsh
-----------------------------------
Title: Executive Vice President
----------------------------------
Agreed to and Accepted intending
to be legally bound hereby
CHASE GLOBAL FUNDS SERVICES COMPANY
By: /s/ Donald P. Hearn
--------------------------------------
Name: Donald P. Hearn
------------------------------------
Title: Chairman & CEO
-----------------------------------
<PAGE>
EXHIBIT (10)
LAW OFFICES
DRINKER BIDDLE & REATH LLP
PHILADELPHIA NATIONAL BANK BUILDING
1345 CHESTNUT STREET
PHILADELPHIA, PA 19107-3496
Telephone: (215) 988-2700
Fax: (215) 988-2757
March 16, 1998
Excelsior Funds, Inc.
73 Tremont Street
Boston, MA 02108
Re: Post-Effective Amendment No. 31 to Registration
Statement on Form N-1A of Excelsior Funds, Inc.
------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Excelsior Funds, Inc. (the "Company"), a
Maryland corporation, in connection with the registration by the Company of its
shares of common stock, par value $.001 per share. The Articles of Incorporation
of the Company authorize the issuance of 35,000,000,000 shares of common stock,
which are divided into 43 classes, two of which are designated as Class U and
Class V. The Board of Directors of the Company (the "Board") has previously
authorized the issuance of shares of Class U common stock (the "Class U Common
Stock") and Class V common stock (the "Class V Common Stock") to the public.
You have asked for our opinion on certain matters relating to the Class U Common
Stock and Class V Common Stock.
We have reviewed the Company's Articles of Incorporation and Bylaws,
resolutions of the Company's Board, certificates of public officials and of the
Company's officers and such other legal and factual matters as we have deemed
appropriate. We have also reviewed the Company's Registration Statement on Form
N-1A under the Securities Act of 1933 (the "Registration Statement"), as amended
through Post-Effective Amendment No. 31 thereto. This opinion is based
exclusively on the Maryland General Corporation Law and the federal law of the
United States of America.
We have also assumed the following for purposes of this opinion:
<PAGE>
Excelsior Funds, Inc.
March 16, 1998
Page 2
1. The shares of Class U Common Stock and Class V Common Stock have been,
and will continue to be, issued in accordance with the Articles of Incorporation
and Bylaws of the Company and the resolutions of the Company's Board and
shareholders relating to the creation, authorization and issuance of Class U
Common Stock and Class V Common Stock.
2. The Board will not change the number of shares of Class U Common Stock
and Class V Common Stock, or the preferences, limitations or relative rights of
the Class U Common Stock and Class V Common Stock after such shares are issued.
Based on the foregoing, we are of the opinion that the shares of Class U
Common Stock and Class V Common Stock will be, when issued in accordance with,
and sold for the consideration described in, the Registration Statement
(provided that (i) the price of such shares is not less than the par value
thereof and (ii) the number of shares of each of the Class U Common Stock and
Class V Common Stock issued does not exceed the authorized number of shares of
each of the Class U Common Stock and Class V Common Stock as of the date of
issuance of the shares), validly issued, fully paid and non-assessable by the
Company.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as part of Post-Effective Amendment No. 31 to the Company's
Registration Statement on Form N-1A.
Very truly yours,
/s/ Drinker Biddle & Reath LLP
------------------------------
DRINKER BIDDLE & REATH LLP
<PAGE>
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. 31 and Amendment No. 33 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
March 13, 1998
<PAGE>
Exhibit (13)(a)
PURCHASE AGREEMENT
------------------
U.S.T. Master Funds, Inc. (the "Fund"), a Maryland corporation, and
Shearson Lehman, Brothers Inc. ("Shearson"), a Delaware corporation, hereby
agree with each other as follows:
1. The Fund hereby offers Shearson and Shearson hereby purchases
65,000 shares of Class A Common Stock (par value $.001 per share) of the Fund
(the "Class A Shares") at a price of $1.00 per share, 25,000 shares of Class B
Common Stock (par value $.001 per share) at a price of $1.00 per share and 1,250
shares of Class C Common Stock (par value $.001 per share) of the Fund at a
price of $8.00 per share (collectively, the "Shares"). Shearson hereby
acknowledges receipt of one certificate representing the Class A Shares, one
certificate representing the Class B Shares and one certificate representing the
Class C Shares, and the Fund hereby acknowledges receipt from Shearson of funds
in the amount of $100,000 in full payment for the Shares.
2. Shearson represents and warrants to the Fund that the Shares are
being acquired for investment purposes and not with a view to the distribution
thereof.
3. Shearson agrees that if it or any direct or indirect transferee
of any of the Shares redeems any of the Shares prior to the fifth anniversary of
the date the Fund begins its investment activities, Shearson will pay to the
Fund an amount equal to the number resulting from multiplying the Fund's total
unamortized organizational expenses by a fraction, the numerator of which is
equal to the number of Shares redeemed by Shearson or such transferee and the
denominator of which is equal to the number of Shares outstanding as of the date
of such redemption, as long as the administrative position of the staff of the
Securities and Exchange Commission requires such reimbursement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the 6th day of February, 1985.
(SEAL) U.S.T. MASTER FUNDS, INC.
Attest:
/s/ W. Bruce McConnel, III By: /s/ Karen A Loud
- ----------------------------- ---------------------------
(SEAL) SHEARSON LEHMAN BROTHERS, INC.
Attest:
/s/ W. Bruce McConnel, III By: /s/ signature illegible
- ----------------------------- ---------------------------
<PAGE>
EXHIBIT (13) (B)
PURCHASE AGREEMENT
------------------
UST Master Funds, Inc. (the "Company"), a Maryland corporation, and UST
Distributors, Inc. ("Distributor"), a Delaware corporation, hereby agree with
each other as follows:
1. The Company hereby offers Distributor and Distributor hereby purchases
one Plan Share, one Distribution Share and one Non-Plan Share of each
of the following investment portfolios of the Company at $10 per
share: 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 and Intermediate-Term Managed
Income Fund (collectively, the "New Fund Shares"). The Company hereby
acknowledges receipt from Distributor of funds in the total amount of
$390 in full payment for the New Fund Shares.
2. Distributor represents and warrants to the Company that the New Fund
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 29th day of December 1992.
UST MASTER FUNDS, INC,
By: /s/ A. C. Tannachion
------------------------------
its President
UST DISTRIBUTORS, INC.
By: /s/ signature illegible
------------------------------
its President
<PAGE>
EXHIBIT (13) (E)
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 the Emerging Markets Fund of the Company at $10 per Share.
The Company hereby acknowledges receipt from Edgewood of funds in the
total amount of $20 in full payment for the Shares.
2. Edgewood represents and warrants to the Company that the Shares are
being acquired for investment purposed 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 30th day of December, 1997.
EXCELSIOR FUNDS, INC.
By: /s/ F. S. Wonham
-----------------
Title: President
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EDGEWOOD SERVICES, INC.
By: /s/ K. Pegher, Jr.
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Title: Treasurer
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