<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Under Rule 14a-12
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- ------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- ------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- ------------------------------------------------------------------------------
<PAGE>
(4) Proposed maximum aggregate value of transaction:
- ------------------------------------------------------------------------------
(5) Total fee paid:
- ------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
- ------------------------------------------------------------------------------
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- ------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- ------------------------------------------------------------------------------
(3) Filing Party:
- ------------------------------------------------------------------------------
(4) Date Filed:
- ------------------------------------------------------------------------------
<PAGE>
[LOGO OF EXCELSIOR FUNDS]
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
73 Tremont Street
Boston, Massachusetts 02108-3913
Dear Shareholder:
You are cordially invited to attend the Special Meetings of Shareholders of
Excelsior Funds, Inc., Excelsior Tax-Exempt Funds, Inc. and Excelsior
Institutional Trust (each a "Company" and, together, the "Companies") to be
held on Wednesday, May 3, 2000 at 10:00 a.m., Eastern time, at the offices of
United States Trust Company of New York, 114 West 47th Street, New York, New
York 10036.
At the Meetings, shareholders will be asked to vote on the following
matters: (1) election of trustees of Excelsior Institutional Trust by
shareholders of that Company; (2)(a) approval of investment advisory
agreements between each Company and United States Trust Company of New York
and U.S. Trust Company; and (2)(b) approval by the shareholders of the
California Tax-Exempt Income Fund of the sub-advisory agreement between United
States Trust Company of New York, U.S. Trust Company and U.S. Trust Company,
N.A.
Whether or not you plan to be present at a Meeting, your vote is needed. If
you do not plan to be present at the relevant Meeting, please complete, sign
and return the enclosed proxy card(s) promptly. A postage paid envelope is
enclosed for this purpose.
We look forward to seeing you at the Meetings or receiving your proxy
card(s) so your shares may be voted at the Meetings.
Sincerely yours,
/s/ Frederick S. Wonham
Frederick S. Wonham
President
SHAREHOLDERS ARE URGED TO SIGN AND RETURN THE ENCLOSED PROXY
CARD(S) IN THE ENCLOSED ENVELOPE.
<PAGE>
[Excelsior Funds Logo]
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
March 22, 2000
To the Shareholders of Excelsior Funds, Inc.,
Excelsior Tax-Exempt Funds, Inc. and
Excelsior Institutional Trust:
Special Meetings of shareholders of Excelsior Funds, Inc., Excelsior Tax-
Exempt Funds, Inc. and Excelsior Institutional Trust (each a "Company" and,
together, the "Companies") will be held on Wednesday, May 3, 2000 at 10:00
a.m. Eastern time, at the offices of United States Trust Company of New York,
114 West 47th Street, New York, New York 10036.
The Funds ("Funds") of each Company are as follows:
Company Fund
- ------- ----
Excelsior Funds, Inc. Blended Equity Fund
Large Cap Growth Fund
Small Cap Fund
Value and Restructuring Fund
Energy and Natural Resources Fund
Real Estate Fund
International Fund
Latin America Fund
Pacific/Asia Fund
Pan European Fund
Emerging Markets Fund
Intermediate-Term Managed Income Fund
Short-Term Government Securities Fund
Managed Income Fund
Money Fund
Government Money Fund
Treasury Money Fund
Excelsior Tax-Exempt Funds, Inc. Tax-Exempt Money Fund
New York Tax-Exempt Money Fund
Long-Term Tax-Exempt Fund
Intermediate-Term Tax-Exempt Fund
Short-Term Tax-Exempt Securities Fund
New York Intermediate-Term Tax-Exempt Fund
California Tax-Exempt Income Fund
Excelsior Institutional Trust Value Equity Fund
Optimum Growth Fund
Equity Fund
Income Fund
Total Return Bond Fund
International Equity Fund
<PAGE>
The Meetings will be held for the following purposes:
(1) To elect Messrs. Wonham, Tannachion, Campbell, Dugan, Frankl,
Robinson, Drake and Piel as trustees of Excelsior Institutional
Trust;
(2)(a) With respect to each Fund, to approve a new investment advisory
agreement between the relevant Company and United States Trust
Company of New York and U.S. Trust Company;
(2)(b) With respect to the California Tax-Exempt Income Fund only, to
approve a new sub-advisory agreement among United States Trust
Company of New York, U.S. Trust Company and U.S. Trust Company,
N.A.; and
(3) The transaction of such other business as may properly come before
the Meetings or any adjournments thereof.
The proposals referred to above are discussed in the Joint Proxy Statement
attached to this Notice. Each shareholder is invited to attend the relevant
Special Meeting(s) of Shareholders in person. Shareholders of record at the
close of business on March 6, 2000 have the right to vote at the Meetings. If
you cannot be present at a Meeting, we urge you to fill in, sign and promptly
return the enclosed proxy in order that the Meetings can be held and a maximum
of shares may be voted.
By Order of the Boards of Directors
of Excelsior Funds, Inc. and
Excelsior Tax-Exempt Funds, Inc.
and the Board of Trustees of
Excelsior Institutional Trust
W. Bruce McConnel, III
Secretary
2
<PAGE>
WE NEED YOUR PROXY VOTE IMMEDIATELY
A SHAREHOLDER MAY THINK HIS OR HER VOTE IS NOT IMPORTANT, BUT IT IS VITAL.
BY LAW, A SPECIAL MEETING OF SHAREHOLDERS SCHEDULED FOR MAY 3, 2000 WILL HAVE
TO BE ADJOURNED WITHOUT CONDUCTING ANY BUSINESS IF LESS THAN A MAJORITY OF THE
SHARES ELIGIBLE TO VOTE ARE REPRESENTED AT A MEETING. IN THAT EVENT, A COMPANY
WOULD CONTINUE TO SOLICIT VOTES IN AN ATTEMPT TO ACHIEVE A QUORUM. CLEARLY,
YOUR VOTE COULD BE CRITICAL IN ALLOWING A COMPANY TO HOLD THE MEETING AS
SCHEDULED, SO PLEASE RETURN YOUR PROXY CARD IMMEDIATELY.
3
<PAGE>
EXCELSIOR FUNDS, INC.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
EXCELSIOR INSTITUTIONAL TRUST
73 Tremont Street
Boston, Massachusetts 02108-3913
JOINT PROXY STATEMENT
This Joint Proxy Statement is furnished in connection with the solicitation
of proxies by the Boards of Directors of Excelsior Funds, Inc. and Excelsior
Tax-Exempt Funds, Inc. and the Board of Trustees of Excelsior Institutional
Trust (together with Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds,
Inc., the "Companies" and each individually, a "Company"). The Special
Meetings will be held at the offices of United States Trust Company of New
York, 114 West 47th Street, New York, New York 10036 on Wednesday, May 3, 2000
at 10:00 a.m. Eastern time (such meetings and any adjournments thereof are
referred to collectively as the "Meetings" and individually as a "Meeting").
The Funds ("Funds") of each Company are as follows:
Company Fund
- ------- ----
Excelsior Funds, Inc. Blended Equity Fund
Large Cap Growth Fund
Small Cap Fund
Value and Restructuring Fund
Energy and Natural Resources Fund
Real Estate Fund
International Fund
Latin America Fund
Pacific/Asia Fund
Pan European Fund
Emerging Markets Fund
Intermediate-Term Managed Income Fund
Short-Term Government Securities Fund
Managed Income Fund
Money Fund
Government Money Fund
Treasury Money Fund
Excelsior Tax-Exempt Funds, Inc.
Tax-Exempt Money Fund
New York Tax-Exempt Money Fund
Long-Term Tax-Exempt Fund
Intermediate-Term Tax-Exempt Fund
Short-Term Tax-Exempt Securities Fund
New York Intermediate-Term Tax-Exempt Fund
California Tax-Exempt Income Fund
Excelsior Institutional Trust Value Equity Fund
Optimum Growth Fund
Equity Fund
Income Fund
Total Return Bond Fund
International Equity Fund
- 1 -
<PAGE>
It is expected that the solicitation of proxies will be primarily by mail.
The Companies' officers and investment advisers and administrators may also
solicit proxies by telephone, telegraph, facsimile, personal interview or the
Internet. In connection with the solicitation of certain shareholders, U.S.
Trust and the Companies' administrators have retained D.F. King & Co., Inc. to
assist in the solicitation of proxies at a cost of approximately $30,000. If
the Companies record votes by telephone or by Internet, they will use
procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that their instructions have been properly
recorded. United States Trust Company of New York will bear the proxy
solicitation costs. Any shareholder giving a proxy may revoke it at any time
before it is exercised by submitting to the relevant Company a written notice
of revocation or a subsequently executed proxy or by attending the relevant
Meeting and electing to vote in person. Proxies voted by telephone or by
Internet may be revoked at any time before they are voted in the same manner
that proxies by mail may be revoked. This Joint Proxy Statement is being used
in order to reduce the preparation, printing, handling and postage expenses
that would result from the use of a separate proxy statement for each Company.
This Joint Proxy Statement and the enclosed Proxy are expected to be
distributed to shareholders on or about March 22, 2000.
The following table summarizes the proposals to be voted on at the Meetings
and indicates those shareholders who are being solicited with respect to each
proposal.
<TABLE>
<CAPTION>
Proposal Shareholders Solicited
-------- ----------------------
<S> <C>
1. To elect Messrs. Frederick S. The shareholders of Excelsior Institutional
Wonham, Alfred Tannachion, Don- Trust will vote together as a single class.
ald Campbell, Joseph H. Dugan,
Wolfe J. Frankl, Robert A. Rob-
inson, Rodman L. Drake and Jon-
athan Piel as trustees of Ex-
celsior Institutional Trust.
2(a). To approve a new Investment The shareholders of each Fund of each Com-
Advisory Agreement between pany will vote separately on a Fund-by-Fund
each Company and United basis on the new Investment Advisory Agree-
States Trust Company of New ment, and all classes of the same Fund will
York and U.S. Trust Company. vote together.
2(b). To approve a new Sub-Advi-
sory Agreement among United
States Trust Company of New The shareholders of the California Tax-Ex-
York, U.S. Trust Company and empt Income Fund will vote separately on
U.S. Trust Company, N.A. the new Sub-Advisory Agreement.
</TABLE>
A Proxy is enclosed with respect to the shares you own in a Company. If the
Proxy is executed properly and returned, the shares represented by it will be
voted at the Meetings in accordance with the instructions thereon. Each full
share is entitled to one vote and each fractional share to a proportionate
fractional vote.
Shareholders who do not expect to be present at a Meeting and who wish to
have their shares voted are requested to complete the enclosed proxy(s) and
return it in the enclosed envelope. No postage is required if mailed in the
United States. Shareholders may also vote by telephone or the Internet as
described herein.
Each Company will furnish, without charge, copies of such Company's annual
and semi-annual reports to shareholders dated March 31, 1999 and September 30,
1999, respectively, to any shareholder upon request. Each Company's annual and
semi-annual reports to shareholders may be obtained from such Company by
writing to the Company at 73 Tremont Street, Boston, Massachusetts 02108-3913,
by calling (800) 446-1012 (from overseas, call (617) 557-8280) or by the
Internet: http://www.excelsiorfunds.com
THE BOARDS OF EXCELSIOR FUNDS, INC., EXCELSIOR
TAX-EXEMPT FUNDS, INC. AND EXCELSIOR INSTITUTIONAL TRUST
RECOMMEND A VOTE FOR THE APPROVAL OF EACH PROPOSAL APPLICABLE
TO SUCH COMPANY DESCRIBED IN THIS JOINT PROXY STATEMENT.
- 2 -
<PAGE>
INTRODUCTION
On January 12, 2000, The Charles Schwab Corporation ("Schwab") and U.S.
Trust Corporation entered into a definitive agreement to merge (the "Merger").
After the merger, U.S. Trust Corporation will be a wholly-owned subsidiary of
Schwab. The Merger is anticipated to close by July 2000; however, it is
subject to a number of conditions, including certain regulatory and
shareholder approvals.
United States Trust Company of New York ("U.S. Trust NY") and U.S. Trust
Company ("U.S. Trust Co." and together with U.S. Trust NY, "U.S. Trust" or the
"Investment Adviser"), subsidiaries of U.S. Trust Corporation and the
investment advisers to the Companies, will continue to serve as investment
advisers to the Companies after the Merger. U.S. Trust Company, N.A. ("U.S.
Trust NA" or the "Sub-Adviser") will continue to serve as sub-adviser to the
California Tax-Exempt Income Fund after the Merger. The Merger, however,
represents a change in ownership of the parent corporation of U.S. Trust NY,
U.S. Trust Co. and U.S. Trust NA and, as such, may have the effect under the
Investment Company Act of 1940 (the "1940 Act") of terminating the existing
advisory agreements between the Companies and U.S. Trust NY and U.S. Trust Co.
and the sub-advisory agreement among U.S. Trust NY, U.S. Trust Co. and U.S.
Trust NA (collectively, the "Existing Agreements") at the date of the
consummation of the Merger.
As a consequence of the Merger and in order to provide continuity of
investment advisory services, each of the Boards of Directors of Excelsior
Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. and the Board of Trustees of
Excelsior Institutional Trust (together, the "Boards" and, individually, a
"Board") has proposed for the approval of its respective shareholders new
advisory agreements with U.S. Trust. The Board of Directors of Excelsior Tax-
Exempt Funds, Inc. has also proposed for the approval of the shareholders of
the California Tax-Exempt Income Fund a new sub-advisory agreement among U.S.
Trust and U.S. Trust NA. Except as described below, the terms of the new
investment advisory and sub-advisory agreements are substantially the same as
those in the existing agreements. In addition, the advisory and sub-advisory
fees provided for in the existing agreements will remain the same and not
change in the new advisory and sub-advisory agreements. The election of
Trustees of Excelsior Institutional Trust is also on the agenda for the
Meeting for Excelsior Institutional Trust.
- 3 -
<PAGE>
PROPOSAL 1: ELECTION OF TRUSTEES
(EXCELSIOR INSTITUTIONAL TRUST)
The first proposal to be considered at the Meeting of Excelsior
Institutional Trust is the election of Trustees of Excelsior Institutional
Trust.
At the Meeting, shareholders of Excelsior Institutional Trust will be asked
to consider the election of eight board members who will constitute the entire
Board of Trustees of Excelsior Institutional Trust. Each Board member so
elected will hold office until his successor is elected and qualifies, or
until his term as a Trustee is terminated as provided in the Company's By-
Laws. The persons named as proxies in the accompanying Proxy have been
designated by the Company's Board and intend to vote for the nominees named
below. All nominees are incumbent Trustees who are standing for re-election.
All nominees, except Mr. Wonham, were most recently elected as Trustees of
Excelsior Institutional Trust at a Special Meeting of Shareholders held on
November 15, 1995. Mr. Wonham was elected Trustee of Excelsior Institutional
Trust at a regular meeting of the Board of Trustees held on December 15, 1995.
All shares represented by valid Proxies will be voted in the election of
Trustees for each nominee named below unless authority to vote for a
particular nominee is withheld. With respect to the Company, the eight
nominees who receive the highest number of votes cast at the Meeting will be
elected as Trustees. Cumulative voting is not permitted. Should any nominee
withdraw from the election or otherwise be unable to serve, the named proxies
will vote for the election of such substitute nominee as the Board of Trustees
may recommend unless a decision is made to reduce the number of Trustees. The
following table sets forth certain information about each of the nominees:
<TABLE>
<CAPTION>
Trustee Principal Occupation During
Name Age Since Past 5 Years and Other Affiliations
- ---- --- ------- -----------------------------------
<S> <C> <C> <C>
Frederick S. Wonham/1/ 68 12/95 Retired; Chairman of the Boards (since 1997), and
President, Treasurer and Director (since 1995) of
Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds,
Inc.; Chairman of the Boards (since 1997), President,
Treasurer and Trustee (since 1995) of Excelsior Funds and
Excelsior Institutional Trust; Vice Chairman of U.S.
Trust Corporation and U.S. Trust New York (from February
1990 until September 1995); and Chairman, U.S. Trust
Company (from March 1993 to May 1997).
Donald L. Campbell 73 11/95 Retired; Director of Excelsior Funds, Inc. and Excelsior
Tax-Exempt Funds, Inc. (since 1984); Director of UST
Master Variable Series, Inc. (from 1994 to June 1997);
Trustee of Excelsior Institutional Trust (since 1995);
and Director, Royal Life Insurance Co. of New York (since
1991).
Rodman L. Drake 56 6/94 Director of Excelsior Funds, Inc. and Excelsior Tax-
Exempt Funds, Inc. (since 1996); Trustee of Excelsior
Institutional Trust and Excelsior Funds (since 1994);
Director, Parsons Brinkerhoff, Inc. (engineering firm)
(since 1995); President, Continuation Investments Group,
Inc. (since 1997); President, Mandrake Group (investment
and consulting firm) (1994-1997); Chairman, MetroCashcard
International, Inc. (since 1999); Director, Hotelvision,
Inc. (since 1999); Director, Alliance Group Services,
Inc. (since 1998); Director, Hyperion Total Return Fund,
Inc. and three other funds for which Hyperion Capital
Management, Inc. serves as investment adviser (since
1991); Co-Chairman, KMR Power Corporation (power plants)
(from 1993 to 1996); Director, The Latin America Smaller
Companies Fund, Inc. (from 1993 to 1998); Member of
Advisory Board, Argentina Private Equity Fund L.P. (from
1992 to 1996) and Garantia L.P. (Brazil) (from 1993 to
1996); and Director, Mueller Industries, Inc. (from 1992
to 1994).
</TABLE>
- 4 -
<PAGE>
<TABLE>
<CAPTION>
Trustee Principal Occupation During
Name Age Since Past 5 Years and Other Affiliations
- ---- --- ------- -----------------------------------
<S> <C> <C> <C>
Joseph H. Dugan 74 11/95 Retired; Director of Excelsior Funds, Inc. and Excelsior
Tax-Exempt Funds, Inc. (since 1984); Director of UST
Master Variable Series, Inc. (from 1994 to June 1997);
and Trustee of Excelsior Institutional Trust (since
1995).
Wolfe J. Frankl 79 11/95 Retired; Director of Excelsior Funds, Inc. and Excelsior
Tax-Exempt Funds, Inc. (since 1986); Director of UST
Master Variable Series, Inc. (from 1994 to June 1997);
Trustee of Excelsior Institutional Trust (since 1995);
Director, Deutsche Bank Financial, Inc. (since 1989);
Director, The Harbus Corporation (since 1951); and
Trustee, HSBC Funds Trust and HSBC Mutual Funds Trust
(since 1988).
Jonathan Piel 60 6/94 Director of Excelsior Funds, Inc. and Excelsior Tax-
Exempt Funds, Inc. (since 1996); Trustee of Excelsior
Institutional Trust and Excelsior Funds (since 1994);
Vice President and Editor, Scientific American, Inc.
(from 1986 to 1994); Director, Group for The South Fork,
Bridgehampton, New York (since 1993); and Member,
Advisory Committee, Knight Journalism Fellowships,
Massachusetts Institute of Technology (since 1984).
Robert A. Robinson 73 11/95 Director of Excelsior Funds, Inc. and Excelsior Tax-
Exempt Funds, Inc. (since 1987); Director of UST Master
Variable Series, Inc. (from 1994 to June 1997); Trustee
of Excelsior Institutional Trust (since 1995); President
Emeritus, The Church Pension Fund and its affiliated
companies (since 1966); Trustee, H.B. and F.H. Bugher
Foundation and Director of its wholly owned subsidiaries
-- Rosiclear Lead and Flourspar Mining Co. and The Pigmy
Corporation (since 1984); Director, Morehouse Publishing
Co. (1974-1998); Trustee, HSBC Funds Trust and HSBC
Mutual Funds Trust (since 1982); and Director, Infinity
Funds, Inc. (since 1995).
Alfred C. Tannachion/2/ 73 11/95 Retired; Director of Excelsior Funds, Inc. and Excelsior
Tax-Exempt Funds, Inc. (since 1985); Chairman of the
Board of Excelsior Funds, Inc. and Excelsior Tax-Exempt
Funds, Inc. (1991-1997) and Excelsior Institutional Trust
(1996-1997); President and Treasurer of Excelsior Funds,
Inc. and Excelsior Tax-Exempt Funds, Inc. (1994-1997) and
Excelsior Institutional Trust (1996-1997); Chairman of
the Board, President and Treasurer of UST Master Variable
Series, Inc. (1994-1997); and Trustee of Excelsior
Institutional Trust (since 1995).
</TABLE>
- --------
1 This Trustee is considered to be an "interested person" of the Company as
defined in the 1940 Act. As of December 31, 1999, Mr. Wonham owned 52,997
shares of U.S. Trust Corporation common stock; owned 95,242 "phantom shares"
in U.S. Trust Corporation's Deferred Income Account; possessed voting
control of an additional 3,435 shares of U.S. Trust Corporation; and owned
33,675 shares of Chase Manhattan Corporation common stock.
2 This Trustee is considered to be an "interested person" of the Company as
defined in the 1940 Act. As of December 3, 1999, Mr. Tannachion owned 1,414
shares of Chase Manhattan Corporation and 2,000 shares of U.S. Trust
Corporation.
In the fiscal year of the Company ended March 31, 1999, the Trustees met
four times. Each of the current Trustees attended all of the meetings of the
Board.
The Board of Excelsior Institutional Trust has a Nominating Committee
consisting of Messrs. Drake, Piel and Robinson. The Nominating Committee is
responsible for considering candidates for election to the Board of the
Company in the event a position is vacated or created. The Nominating
Committee of the Company was constituted in March 2000 and, therefore, did not
meet during the fiscal year ended March 31, 1999. The Nominating Committee
will consider nominees recommended by the Company's shareholders. Shareholders
who wish to recommend a nominee should send nominations to the Secretary of
the Company.
- 5 -
<PAGE>
Excelsior Institutional Trust does not have audit or compensation
committees.
Each Trustee of Excelsior Institutional Trust receives an annual fee of
$4,000 plus a meeting fee of $250 for each meeting attended and is reimbursed
for expenses incurred in connection with service as a Trustee. Each Director
of Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. receives an
annual fee of $9,000 per Company plus a per Company meeting fee of $1,500 for
each meeting attended and is reimbursed for expenses for attending meetings.
The Chairman of the Boards of each of the Companies receives an additional
$5,000 per annum with respect to each Company for services in this capacity.
The members of the Nominating Committee each receive $2,000 per Company for
services with respect to Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds,
Inc. and $1,000 per annum with respect to Excelsior Institutional Trust.
As of March 6, 2000, the Board members and officers of Excelsior
Institutional Trust as a group owned beneficially less than 1% of the
outstanding shares of each Fund of each Company, and less than 1% of the
outstanding shares of all Funds of the Company in the aggregate.
The following chart provides certain information about the fees received by
the Company's Trustees in the fiscal year ended March 31, 1999.
<TABLE>
<CAPTION>
Total Compensation
Aggregate Pension or Retirement from the Companies
Compensation from Benefits Accrued as and Fund Complex*
Name of Excelsior Part of Paid to
erson/PositionP Institutional Trust Fund Expenses Directors/Trustees
- --------------- ------------------- --------------------- ------------------
<S> <C> <C> <C>
Donald L. Campbell $4,750 None $33,250(3)**
Director/Trustee
Rodman L. Drake $5,000 None $41,250(4)**
Director/Trustee
Joseph H. Dugan $5,000 None $36,500(3)**
Director/Trustee
Wolfe J. Frankl $5,000 None $36,500(3)**
Director/Trustee
W. Wallace McDowell, $3,500 None $28,000(4)**
Jr.***
Director/Trustee
Jonathan Piel $5,000 None $41,500(4)**
Director/Trustee
Robert A. Robinson $5,000 None $36,500(3)**
Director/Trustee
Alfred C. Tannachion $5,000 None $36,500(3)**
Director/Trustee
Frederick S. Wonham $5,000 None $51,500(4)**
Chairman of the Boards,
President and Treasurer
</TABLE>
- --------
* The "Fund Complex" consists of Excelsior Funds, Inc., Excelsior Tax-Exempt
Funds, Inc., Excelsior Funds and Excelsior Institutional Trust. As of
December 16, 1999, the sole portfolio of Excelsior Funds, the Institutional
Money Fund, was merged into Excelsior Funds, Inc.'s Money Fund. Excelsior
Funds, which is a Delaware business trust, has ceased operations and is in
the process of being deregistered as an investment company.
** Number of investment companies in the Fund Complex for which each
individual served as Director or Trustee.
*** Mr. McDowell resigned from the Companies on May 21, 1999.
- 6 -
<PAGE>
PROPOSALS 2(a) and 2(b): APPROVAL OF INVESTMENT ADVISORY
AND SUB-ADVISORY AGREEMENTS
(WITH RESPECT TO PROPOSAL 2(a) AND THE INVESTMENT ADVISORY AGREEMENT, ALL
FUNDS)
(WITH RESPECT TO PROPOSAL 2(b) AND THE SUB-ADVISORY AGREEMENT, THE CALIFORNIA
TAX-EXEMPT
INCOME FUND ONLY)
At the Meetings, shareholders of each of the Funds will be asked to vote on
the approval of a new investment advisory agreement for their respective Fund
or Funds (such agreements, collectively, the "New Advisory Agreements") and
shareholders of the California Tax-Exempt Income Fund will also be asked to
vote on the approval of a new sub-advisory agreement for such Fund (such
agreement, the "New Sub-Advisory Agreement," and together with the New
Advisory Agreements, collectively, the "New Agreements"). The principal terms
of the New Agreements are summarized below.
A copy of each of the New Agreements is attached to this Proxy Statement as
an Appendix. The following chart indicates the relevant Appendix for each
Fund.
<TABLE>
<CAPTION>
Fund Appendix
- ---- --------
<S> <C>
EXCELSIOR FUNDS, INC.
International Fund, Latin America Fund, Pacific Asia Fund, Pan
European Fund and Emerging Markets Fund.............................. A
Money Fund, Government Money Fund, Blended Equity Fund, Small Cap
Fund, Energy and Natural Resources Fund, Value and Restructuring
Fund, Treasury Money Fund, Managed Income Fund, Short-Term Government
Securities Fund, Intermediate-Term Managed Income Fund, Real Estate
Fund and Large Cap Growth Fund....................................... B
EXCELSIOR TAX-EXEMPT FUNDS, INC.
Tax-Exempt Money Fund, Intermediate-Term Tax-Exempt Fund, Long-Term
Tax-Exempt Fund, New York Tax-Exempt Money Fund, New York
Intermediate-Term Tax-Exempt Fund, Short-Term Tax-Exempt Fund and
California Tax-Exempt Income Fund.................................... C
EXCELSIOR INSTITUTIONAL TRUST
Equity Fund, Income Fund, Total Return Bond Fund, Value Equity Fund
and Optimum Growth Fund.............................................. D
International Equity Fund............................................. E
</TABLE>
A copy of the New Sub-Advisory Agreement is attached to this Proxy Statement
as Appendix F. The description of the New Advisory and Sub-Advisory Agreements
that follows is qualified in its entirety by reference to Appendices A through
F.
U.S. Trust NY and U.S. Trust Co. are the investment advisers of the Funds,
and U.S. Trust NA is the sub-investment adviser of the California Tax-Exempt
Income Fund. U.S. Trust Corporation is the parent corporation of U.S. Trust
NY, U.S. Trust Co. and U.S. Trust NA.
Through its principal subsidiary Charles Schwab & Co., Inc., Schwab is the
nation's fourth largest financial services firm and the nation's largest
electronic brokerage firm, in each case measured by customer assets. At
December 31, 1999, Schwab served 6.6 million active accounts with $725 billion
in customer assets through 340 branch offices, four regional customer
telephone service centers and automated telephonic and online channels.
Approximately 30% of Schwab's customer assets and approximately 13% of its
customer accounts are managed by the 5,800 independent, fee-based investment
advisors served by Schwab's institutional investor segment.
Charles R. Schwab is the founder, Chairman and Co-Chief Executive Officer
and a Director and significant shareholder of Schwab. As a result of his
positions and share ownership, Mr. Schwab may be deemed to be a controlling
person of Schwab and its subsidiaries.
- 7 -
<PAGE>
The Merger is subject to Federal Reserve Board and other regulatory
approvals and to approval by U.S. Trust Corporation's shareholders. The
transaction is expected to close by July 2000.
As required by the 1940 Act, the existing investment advisory agreements
between each Company and U.S. Trust (each such agreement, an "Existing
Advisory Agreement") and the existing sub-advisory agreement between U.S.
Trust NA and U.S. Trust (the "Existing Sub-Advisory Agreement," and together
with the Existing Advisory Agreements, the "Existing Agreements") provide for
their automatic termination upon "assignment." Consummation of the Merger may
be deemed to be an assignment (as defined in the 1940 Act) of the Existing
Agreements resulting in the termination of the Existing Agreements in
accordance with their terms. In anticipation of the consummation of the
Merger, and to provide continuity in investment advisory services, the Board
of Directors and Trustees, as the case may be, of each of the Companies,
including, in each case, a majority of the Board members who are not
"interested persons" (as defined in the 1940 Act), at concurrent meetings held
on March 3, 2000, approved and directed that there be submitted to the
shareholders of each Fund, for approval, new investment advisory agreements
between such Company and U.S. Trust. In addition, the Board of Directors of
Excelsior Tax-Exempt Funds, Inc., including a majority of the Board members
who are not "interested persons" (as defined in the 1940 Act), at a meeting
held on March 3, 2000, approved and directed that there be submitted to the
shareholders of the California Tax-Exempt Income Fund, for approval, a new
sub-advisory agreement between U.S. Trust and U.S. Trust NA.
If the Merger is not completed but the proposed advisory agreements (and
sub-advisory agreement with respect to the California Tax-Exempt Income Fund)
are approved by the shareholders, U.S. Trust will operate under the New
Advisory Agreements and U.S. Trust and U.S. Trust NA will operate under the
New Sub-Advisory Agreement with respect to the California Tax-Exempt Income
Fund. If the Merger is not completed, the New Agreements would become
effective upon termination of the definitive merger agreement. In the event
the proposed advisory agreement with respect to any Fund (or sub-advisory
agreement with respect to the California Tax-Exempt Income Fund) is not
approved by shareholders of such Fund and the Merger is completed, the Board
of such Company will promptly seek to enter into new advisory arrangements for
such Fund, subject to any required approval by the shareholders of such Fund.
If the new Agreements are not approved and the Merger is not completed, the
Companies will continue to operate under the Existing Agreements.
Compliance With Section 15(f) Of The 1940 Act
Section 15(f) of the 1940 Act provides that when a change in the control of
an investment adviser occurs, the investment adviser or any of its affiliated
persons may receive any amount or benefit in connection therewith as long as
two conditions are satisfied. First, no "unfair burden" may be imposed on the
investment company as a result of the transaction relating to the change of
control, or any express or implied terms, conditions or understandings
applicable thereto. Second, during the three-year period immediately following
consummation of the transaction, at least 75% of the investment company's
board of directors must not be "interested persons" of the investment adviser
within the meaning of the 1940 Act.
With respect to the first condition, the term "unfair burden," as defined in
the 1940 Act, includes any arrangement during the two-year period after the
change in control whereby the investment adviser (or predecessor or successor
adviser), or any interested person of any such adviser, receives or is
entitled to receive any compensation, directly or indirectly, from the
investment company or its security holders (other than fees for bona fide
investment advisory or other services) or from any person in connection with
the purchase or sale of securities or other property to, from, or on behalf of
the investment company (other than fees for bona fide principal underwriting
services). No Company is aware of any such compensation arrangements insofar
as any of their respective Funds is concerned.
With respect to the second condition, two of the Directors/Trustees are
currently interested persons of U.S. Trust Corporation and will become
interested persons of Schwab upon consummation of the Merger. Since at least
75% of the Directors/Trustees will not be interested persons of Schwab upon
consummation of the Merger, each of the Companies expects to comply with this
condition of Section 15(f).
- 8 -
<PAGE>
Description Of The Existing And New Agreements
The Existing Agreements were last approved by shareholders as follows:
<TABLE>
<CAPTION>
Date of Date of Shareholder
Fund Agreement Approval*
- ---- ----------------- ---------------------
<S> <C> <C>
Excelsior Funds, Inc.
Money Fund May 16, 1997 July 29, 1988/1/
Government Money Fund May 16, 1997 July 29, 1988/1/
Blended Equity Fund May 16, 1997 July 29, 1988/1/
Small Cap Fund May 16, 1997 December 29, 1992/2/
Energy and Natural Resources Fund May 16, 1997 December 29, 1992/2/
Value and Restructuring Fund May 16, 1997 December 29, 1992/2/
Latin America Fund May 16, 1997 December 29, 1992/2/
Pacific/Asia Fund May 16, 1997 December 29, 1992/2/
Pan European Fund May 16, 1997 December 29, 1992/2/
Short-Term Government Securities Fund May 16, 1997 December 29, 1992/2/
Intermediate-Term Managed Income Fund May 16, 1997 December 29, 1992/2/
Large Cap Growth Fund
(Amendment No.1) July 25, 1997 September 25, 1997/2/
Real Estate Fund
(Amendment No. 1) July 25, 1997 September 25, 1997/2/
Emerging Markets Fund
(Amendment No. 2) November 14, 1997 December 30, 1997/2/
Managed Income Fund May 16, 1997 July 29, 1988/1/
International Fund May 16, 1997 July 29, 1988/1/
Treasury Money Fund May 16, 1997 November 20, 1991/1/
Excelsior Tax-Exempt Funds, Inc.
Tax-Exempt Money Fund May 16, 1997 November 20, 1991/1/
Intermediate-Term Tax-Exempt Fund May 16, 1997 November 20, 1991/1/
Long-Term Tax-Exempt Fund May 16, 1997 November 20, 1991/1/
New York Intermediate-Term Tax-Exempt
Fund May 16, 1997 November 20, 1991/1/
Short-Term Tax-Exempt Securities Fund May 16, 1997 December 29, 1992/2/
California Tax-Exempt Income Fund (Ad-
visory Agreement) May 16, 1997 September 25, 1996/2/
California Tax-Exempt Income Fund
(Sub-Advisory Agreement) May 16, 1997 September 25, 1996/2/
New York Tax-Exempt Money Fund
(Amendment No. 1) July 31, 1998 August 3, 1998/2/
Excelsior Institutional Trust
Equity Fund May 16, 1997 November 15, 1995/3/
Income Fund May 16, 1997 November 15, 1995/3/
Total Return Bond Fund May 16, 1997 November 15, 1995/3/
Value Equity Fund May 16, 1997 May 1, 1996/2/
Optimum Growth Fund May 16, 1997 May 1, 1996/2/
International Equity Fund December 28, 1998 December 28, 1998/4/
</TABLE>
- --------
* The Existing Agreements were approved by the relevant Company's Board as of
the dates indicated in the column captioned "Date of Agreement." The
Existing Agreements dated May 16, 1997 were entered into as a result of a
restructuring of U.S. Trust that did not involve a change of control of the
entity; consequently shareholder approval of these Existing Agreements was
not required by the 1940 Act. The dates in the column captioned "Date of
Shareholder Approval" represent the dates of shareholder approval of the
investment advisory and sub-advisory agreement (the "Previous Agreements")
that pre-dated the Existing Agreements. The Previous Agreements were
substantially similar to the Existing Agreements.
1 These Agreements were submitted to shareholders for purposes of approval of
amendments in connection with certain undertakings of the investment
adviser.
2 Consent of Sole Shareholder (initial approval).
3 These Agreements were submitted to shareholders in connection with the
withdrawal of the Funds from a master-feeder structure.
4 This Agreement was submitted to shareholders for purposes of approving U.S.
Trust as investment adviser to the Fund.
- 9 -
<PAGE>
Terms and Conditions. As previously noted, the terms and conditions of each
of the New Advisory Agreements are substantially the same as those of its
corresponding Existing Advisory Agreement and the terms and conditions of the
New Sub-Advisory Agreement are substantially the same as those of the Existing
Sub-Advisory Agreement, except that:
. each New Advisory Agreement and the New Sub-Advisory Agreement will be
dated as of the date of the Merger if the Merger is completed, or upon
termination of the definitive merger agreement if the Merger is not
completed;
. each New Advisory Agreement and Sub-Advisory Agreement provides that
each of U.S. Trust and U.S. Trust NA, as the case may be, could provide
advisory services through its own employees or the employees of an
affiliated company as long as such employees function as part of an
organized group of persons, the use of such employees does not result in
a change of actual control or management of the Investment Adviser or
Sub-Adviser, as the case may be under the 1940 Act, and the use of such
employees has been approved by the Board of the relevant Company;
. each New Advisory and Sub-Advisory Agreement provides that an affiliate
may assume the obligations of U.S. Trust and U.S. Trust NA, as the case
may be, under the New Advisory or Sub-Advisory Agreement, as the case
may be, so long as:
. the affiliate is qualified to act as an investment adviser to the
relevant Company under applicable law;
. the assumption will not result in a change of actual control or
management of U.S. Trust or U.S. Trust NA, as the case may be, under
the 1940 Act; and
. the assumption of U.S. Trust's and U.S. Trust NA's obligations has
been approved by the Board of the relevant Company.
. the New Advisory Agreement for each of the Latin America Fund, Pacific
Asia Fund, Pan European Fund and Emerging Markets Fund of Excelsior
Funds, Inc. provide that U.S. Trust may appoint a sub-adviser to perform
the Investment Adviser's obligations, subject to certain restrictions.
. the New Advisory Agreement for each Fund provides that they may be
amended by a vote of the Board of each Company if the amendment does not
require shareholder approval under the 1940 Act. The Existing Agreements
for Excelsior Institutional Trust already have this provision.
Unless a difference is specifically discussed above, the terms of the New
Agreements are substantially the same as those in the Existing Agreements and
there are no other material differences. The advisory and sub-advisory fees
provided for in the Existing Agreements will remain the same and not change in
the New Agreements.
Each Existing and New Advisory Agreement with respect to the Funds of
Excelsior Funds, Inc. (other than the International Fund) and Excelsior Tax-
Exempt Funds, Inc., provides that, subject to the supervision of the Board of
Directors of such Company, U.S. Trust will, among other things, (1) provide a
continuous investment program for the Funds that are the subject of the
agreement, including investment research and management with respect to all
securities, investments, cash and cash equivalents in the Funds that are the
subject of such agreement; (2) determine from time to time what securities and
other investments will be purchased, retained or sold by the Funds that are
the subject of the agreement; (3) provide the services rendered by it in
accordance with the investment objectives and policies as stated in the
prospectus of the Funds that are the subject of the agreement; (4) place
orders pursuant to its investment determinations for the Funds that are the
subject of the agreement either directly with the issuer or with any broker or
dealer selected by it; (5) maintain books and records with respect to the
securities transactions relating to the Funds that are the subject of the
agreement; and (6) render to such Company's Board of Directors such periodic
and special reports as the Board may request.
- 10 -
<PAGE>
The Existing and New Advisory Agreement between U.S. Trust and Excelsior
Funds, Inc. with respect to the International Fund, and the New Advisory
Agreement with respect to the Latin America Fund, Pacific Asia Fund, Pan
European Fund and Emerging Markets Fund permits the appointment of a sub-
adviser to the Funds and provides that U.S. Trust will, among other things,
(1) subject to the supervision of the Board of Directors of the Company,
provide continuous investment advisory assistance and portfolio management
advice for the Funds in accordance with the Funds' investment objectives and
policies as stated in the prospectus; (2) advise the sub-adviser with respect
to U.S. economic factors and trends; (3) assist and consult with the sub-
adviser in connection with the Funds' continuous investment program; (4)
approve lists of foreign countries recommended by the sub-adviser for
investments of the Funds; (5) place orders with respect to purchases and sales
of the securities of U.S. issuers as described in the prospectus of the Funds;
(6) manage, in cooperation with the sub-adviser, the Funds' short-term cash
balance positions denominated in U.S. dollars to preserve required liquidity
of the Funds' assets (including placing of orders for U.S. money market
instruments); (7) monitor the sub-adviser's investment procedures; and (8)
periodically review, evaluate and report to the Company's Board of Directors
with respect to the performance of the sub-adviser under the sub-advisory
agreement. Under the Agreement, U.S. Trust must remain fully responsible for
the provision of the sub-adviser's services. The New Advisory Agreement for
the International Fund of Excelsior Institutional Trust contains identical
provisions to those discussed above.
Each Existing and New Advisory Agreement with respect to the Value Equity
Fund, Optimum Growth Fund, Equity Fund, Income Fund and Total Return Bond Fund
of Excelsior Institutional Trust provides that, subject to the general
supervision of the Company's Board of Trustees, U.S. Trust will, among other
things, (1) prepare (or otherwise obtain) and evaluate on both a macroeconomic
and microeconomic level any pertinent research, statistical, financial and
economic data, and other information necessary or appropriate for the
performance of its duties under such agreement; (2) formulate and continuously
review, supervise, and administer an investment program for the Funds that are
the subject of such agreement; (3) determine the securities to be purchased by
the Funds that are the subject of such agreement, and continuously monitor
such securities and the issuers thereof to determine whether and when to sell,
exchange, or take any other action concerning such securities; (4) determine
whether and how to exercise warrants, voting rights, or other rights with
respect to the securities of the Funds that are the subject of such agreement;
(5) provide valuations with respect to the securities held by the Funds that
are the subject of such agreement (if so requested by the Board); (6) render
regular reports to the Company's officers and the Company's Board concerning
the investment performance of the Funds that are the subject of such
agreement, the discharge by U.S. Trust of its responsibilities under such
agreement, and any other subject that the Company's officers or Board
reasonably may request; and (7) assist the Company's officers in connection
with the operation of the Company and perform any further acts that may be
necessary to effectuate the purposes of such agreement.
The Existing and New Advisory Agreements with respect to the Value Equity
Fund, Optimum Growth Fund, Equity Fund, Income Fund and Total Return Bond Fund
of Excelsior Institutional Trust also authorizes U.S. Trust to employ one or
more sub-advisers to perform any or all of the advisory services described
above under the supervision of U.S. Trust.
Pursuant to the Existing and New Sub-Advisory Agreement, U.S. Trust will
employ U.S. Trust NA with respect to the California Tax-Exempt Income Fund.
Under such Existing and New Sub-Advisory Agreement, U.S. Trust NA will (1)
subject to the supervision of the Board of Directors of Excelsior Tax-Exempt
Funds, Inc. and the oversight of U.S. Trust, provide a continuous investment
program for the Fund, including investment research and management with
respect to all securities and investments of the Fund; (2) determine, subject
to U.S. Trust's approval, what securities and other investments will be
purchased, retained or sold by the Fund, including, with the assistance of
U.S. Trust if required, the Fund's investments in futures; (3) provide the
services rendered by it in accordance with the Fund's investment objectives
and policies as stated in the Fund's prospectus; (4) manage the Fund's overall
cash positions; (5) place orders pursuant to its investment determinations for
the Fund either directly with the issuer or with any broker or dealer selected
by it; (6) maintain books and records with respect to the securities and other
investment transactions entered into pursuant to the agreement; and (7) render
to U.S. Trust and the Board of Directors of Excelsior Tax-Exempt Funds, Inc.
such periodic and special reports as they may request. In exchange for the
services provided by U.S. Trust NA under
- 11 -
<PAGE>
the Existing and New Sub-Advisory Agreement, U.S. Trust will pay U.S. Trust NA
a fee out of the investment advisory fee U.S. Trust receives from the
California Tax-Exempt Income Fund.
Each Existing and New Advisory Agreement provides that U.S. Trust will
furnish at its own expense all office space, office facilities, equipment and
personnel necessary or appropriate to the performance of its duties under such
Existing and New Advisory Agreement. U.S. Trust will also pay the salaries and
fees of all personnel of the Company or U.S. Trust performing services related
to U.S. Trust's duties under each such Existing and New Advisory Agreement.
The Existing and New Sub-Advisory Agreement provides that U.S. Trust will pay
all expenses incurred by U.S. Trust NA in connection with the activities of
U.S. Trust NA under the Existing and New Sub-Advisory Agreement, other than
the costs of securities, commodities and other investments purchased for the
California Tax-Exempt Income Fund.
Each Existing and New Advisory Agreement also provides that U.S. Trust may
place orders for portfolio securities either directly with the issuer or with
any broker or dealer selected by U.S. Trust. The Existing and New Sub-Advisory
Agreement makes similar provision with respect to U.S. Trust NA in relation to
the California Tax-Exempt Income Fund. In placing orders with brokers and/or
dealers under such Agreements, U.S. Trust and U.S. Trust NA are obligated to
use their best efforts to obtain the best net price and most favorable
execution of their orders, after taking into account all factors they deem
relevant, including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of the broker
and/or dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. Consistent with this
obligation, U.S. Trust and U.S. Trust NA may, to the extent permitted by law,
purchase and sell portfolio securities from and to brokers who provide
brokerage and research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934) to or for the benefit of the Company and/or
other accounts over which U.S. Trust or U.S. Trust NA, as the case may be,
exercises investment discretion. U.S. Trust and U.S. Trust NA are each
authorized under the respective agreements to pay a broker who provides such
brokerage and research services a commission for effecting a securities
transaction which is in excess of the amount of the commission another broker
would have charged for effecting that transaction, if U.S. Trust or U.S. Trust
NA, as the case may be, determines in good faith that such commission was
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 U.S. Trust or U.S. Trust NA, as the case
may be, with respect to the accounts as to which it exercises investment
discretion.
Under the Existing and New Advisory Agreements between U.S. Trust and
Excelsior Institutional Trust, U.S. Trust may execute transactions through
itself and its affiliates on a securities exchange provided that the
commissions paid by the Company are "reasonable and fair" compared to
commissions received by other brokers having comparable execution capability
and provided that the transactions are effected pursuant to procedures
established by the Board of the relevant Company. In each case, an affiliated
broker may transmit, clear and settle transactions for the Company that are
executed on a securities exchange provided that the affiliated broker arranges
for unaffiliated brokers to execute the transactions.
In addition, the Board of Trustees, in its discretion, may instruct U.S.
Trust to effect all or a portion of its securities transactions with one or
more brokers and/or dealers selected by the Board of Trustees, if the Board of
Trustees determines that the use of such brokers and/or dealers is in the best
interest of the Company. The New Advisory Agreements with respect to the Funds
of Excelsior Funds, Inc. and Excelsior Tax-Exempt Funds, Inc. prohibit U.S.
Trust from purchasing or selling portfolio securities to itself, the Fund's
principal underwriter, and, in the case of the International Fund, the sub-
adviser, or any affiliated person of any of the foregoing, except as permitted
by the Securities and Exchange Commission.
Under the Existing and New Advisory Agreements between U.S. Trust and
Excelsior Institutional Trust, when U.S. Trust deems the purchase or sale of a
security to be in the best interest of the Company as well as other customers,
U.S. Trust may, to the extent permitted by applicable law, aggregate the
securities to be so sold or purchased in order to obtain the best execution or
lower brokerage commissions. Under such agreements, U.S. Trust may also
purchase or sell a particular security for one or more customers in different
amounts. Allocation
- 12 -
<PAGE>
of the securities purchased or sold in either manner, as well as the expenses
incurred in the transactions, will be made by U.S. Trust in a manner that such
entity believes is equitable and consistent with applicable law and
regulations and with its fiduciary obligations to the Company and to such
other customers.
The Existing and New Advisory Agreement between U.S. Trust and Excelsior
Institutional Trust requires U.S. Trust to give the Company the benefit of its
best judgment and efforts in rendering services to the Company. Under all of
the Existing and New Agreements, neither U.S. Trust nor, with respect to the
Existing and New Sub-Advisory Agreement, U.S. Trust NA will be liable to the
Company or to any shareholder of any of the Company's Funds, for any act or
omission in the course of, or connected with, rendering services under such
agreement or for any losses that may be sustained in the purchase, holding or
sale of any security, in each case, in the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations or duties
under such Existing and New Agreement. The liability of U.S. Trust under each
New Advisory Agreement will be joint, but not several.
Effective Date of New Agreements. If approved by a majority of the
outstanding shares (as defined below) of each Company's Funds and the Merger
is completed, each New Advisory Agreement and the New Sub-Advisory Agreement
will become effective at the time of the consummation of the Merger, and will
continue in effect until July 31, 2001 (unless terminated sooner). If each New
Advisory and Sub-Advisory Agreement is approved by a majority of each Fund's
outstanding Shares, but the Merger is not completed, the New Advisory and Sub-
Advisory Agreements will be dated as of the date of termination of the
definitive merger agreement. Thereafter, if not terminated, each such New
Agreement will continue in effect for successive annual periods, provided that
such continuance is specifically approved at least annually by the vote of a
majority of those members of the Board who are not parties to such New
Advisory Agreement or "interested persons" (as defined in the 1940 Act) of any
such party, and either: (i) the vote of a majority of the outstanding shares
of the Company's Funds; or (ii) the vote of a majority of the full Board of
the Company.
Termination. Each Existing and New Advisory Agreement provides that it may
be terminated at any time, without the payment of any penalty, either by: (i)
the Company, by action of the Board or by the vote of a majority of the Fund's
outstanding shares, on 60 days' written notice to U.S. Trust; or (ii) U.S.
Trust, on 90 days' written notice to the relevant Company. The Existing and
New Sub-Advisory Agreements provides that they may be terminated at any time,
without the payment of any penalty, either by: (i) U.S. Trust or Excelsior
Tax-Exempt Funds, Inc. (by action of the Board or by the vote of a majority of
the outstanding shares of the California Tax-Exempt Income Fund), on 60 days'
written notice to U.S. Trust NA; or (ii) U.S. Trust NA, on 90 days' written
notice to both Excelsior Tax-Exempt Funds, Inc. and U.S. Trust. The Existing
and New Sub-Advisory Agreements also provide that they will terminate
automatically upon the termination of the investment advisory agreement
between U.S. Trust and Excelsior Tax-Exempt Funds, Inc., with respect to the
California Tax-Exempt Income Fund. Each Existing and New Advisory Agreement
provides that they will terminate upon an "assignment" as defined by the 1940
Act.
Fees. For the services provided and the expenses assumed pursuant to the
Existing and New Agreements for Excelsior Funds, Inc., U.S. Trust is entitled
to a fee, computed daily and payable monthly, at the following annual rates:
0.25% of the average daily net assets of each of the Money Fund and the
Government Money Fund; 0.30% of the average daily net assets of each of the
Treasury Money Fund and the Short-Term Government Securities Fund; 0.35% of
the average daily net assets of the Intermediate-Term Managed Income Fund;
0.60% 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; 0.75%
of the average daily net assets of each of the Blended Equity Fund, Managed
Income Fund and Large Cap Growth Fund; 1.00% of the average daily net assets
of each of the International Fund, Latin America Fund, Pacific/Asia Fund, Pan
European Fund and Real Estate Fund; and 1.25% of the average daily net assets
of the Emerging Markets Fund.
For the services provided and the expenses assumed pursuant to the Existing
and New Agreements for Excelsior Tax-Exempt Funds, Inc., U.S. Trust is
entitled to a fee, computed daily and payable monthly, at the following annual
rates: 0.25% of the average daily net assets of the Tax-Exempt Money Fund;
0.30% of the
- 13 -
<PAGE>
average daily net assets of the Short-Term Tax-Exempt Securities Fund; 0.35%
of the average daily net assets of the Intermediate-Term Tax-Exempt Fund;
0.50% of the average daily net assets of each of the Long-Term Tax-Exempt
Fund, New York Intermediate-Term Tax-Exempt Fund, California Tax-Exempt Income
Fund and the New York Tax-Exempt Money Fund.
For the services provided and the expenses assumed pursuant to the Existing
and New Agreements for Excelsior Institutional Trust, U.S. Trust is entitled
to a fee, computed daily and payable monthly, at the following annual rates:
0.65% of the average daily net assets of each of the Equity Fund, Value Equity
Fund, Optimum Growth Fund, Income Fund and Total Return Bond Fund and 1.00% of
the average daily net assets of the International Equity Fund.
For the fiscal year or period ended March 31, 1999, Excelsior Funds, Inc.,
Excelsior Tax-Exempt Funds, Inc. and Excelsior Institutional Trust paid U.S.
Trust net advisory fees and U.S. Trust voluntarily waived advisory fees in the
following amounts:
<TABLE>
<CAPTION>
Total
Advisory Total Fee
Funds Fee Paid Waived
- ----- ---------- ---------
<S> <C> <C>
Excelsior Funds, Inc.
Blended Equity $4,320,430 $360,040
Large Cap Growth Fund $ 803,946 $ 44,157
Small Cap Fund $ 241,815 $ 51,882
Value and Restructuring Fund $2,624,874 $639,405
Energy and Natural Resources Fund $ 219,983 $ 41,522
Real Estate Fund $ 295,825 $ 86,406
International Fund $1,935,661 $203,778
Latin America Fund $ 374,039 $ 40,751
Pacific/Asia Fund $ 255,375 $ 26,291
Pan European Fund $1,868,811 $142,822
Emerging Markets Fund $ 26,108 $ 48,466
Intermediate-Term Managed Income Fund $ 317,118 $ 74,201
Short-Term Government Securities Fund $ 98,059 $ 40,855
Managed Income Fund $1,287,808 $272,533
Money Fund $1,475,748 $358,360
Government Money Fund $1,381,779 $184,188
Treasury Money Fund $1,403,045 $151,843
Excelsior Tax-Exempt Funds, Inc.
Tax-Exempt Money Fund $2,696,982 $827,107
New York Tax-Exempt Money Fund $ 277,593 $532,521
Long-Term Tax-Exempt Fund $ 690,785 $150,919
Intermediate-Term Tax-Exempt Fund $ 844,392 $186,350
Short-Term Tax-Exempt Securities Fund $ 92,164 $ 28,715
New York Intermediate-Term Tax-Exempt Fund $ 696,284 $ 33,685
California Tax-Exempt Income Fund -0- $240,924
Excelsior Institutional Trust
Value Equity Fund $ 135,038 $ 91,255
Optimum Growth Fund $ 304,737 $155,809
Equity Fund $ 684,933 $298,579
Income Fund $ 150,590 $262,853
Total Return Bond Fund $ 530,461 $781,974
International Equity Fund $ 135,769 $ 84,911
</TABLE>
Evaluation By The Boards Of The Companies.
The New Advisory Agreements relating to each Company's Funds were
unanimously approved by the Board of each such Company and by a majority of
those members of each such Board who were not "interested
- 14 -
<PAGE>
persons" (as that term is defined in the 1940 Act) of any party to such
Company's New Advisory Agreements at the concurrent meetings held on March 3,
2000. The New Sub-Advisory Agreement was unanimously approved by the Board of
Excelsior Tax-Exempt Funds, Inc. and by a majority of those members of the
Board who are not interested persons of any party to the New Sub-Advisory
Agreement at the concurrent meetings held on March 3, 2000. Each Board
considered the Merger, that the New Advisory Agreements for the Company are
substantially the same as the Company's Existing Advisory Agreements (except
as noted above) and that the contractual advisory fee rate payable by each
Fund under the New Advisory Agreement for the Company would be identical to
that payable under the Company's Existing Advisory Agreements. Each Board also
considered the benefits that U.S. Trust may derive from the New Advisory
Agreements, including but not limited to soft dollar arrangements. With
respect to the provisions of the New Agreements regarding use of employees and
affiliates of U.S. Trust, each Board considered that such provisions would
allow U.S. Trust to use the best talent within its organization to operate the
Funds. The Board of Excelsior Funds, Inc. also considered that the provision
permitting U.S. Trust to appoint a sub-adviser for the Latin America Fund,
Pacific/Asia Fund, Pan European Fund and Emerging Markets Fund would enable
U.S. Trust to appoint a third party to manage those Funds if it thought it was
in the Funds' best interest to do so and the appointment received Board
approval. Finally, the Boards of Excelsior Funds, Inc. and Excelsior Tax-
Exempt Funds, Inc. considered that the provision permitting the Boards of such
Companies to approve an amendment to the New Agreements unless shareholder
approval was required under the 1940 Act was permitted by current law and
would provide the Companies with the flexibility to make non-material changes
to the agreements without the expense of a shareholder vote. Based on its
evaluation, each Board concluded that approval of the New Advisory Agreements
relating to such Company's Funds would be in the best interests of the Company
and its shareholders.
The Board of Directors of Excelsior Tax-Exempt Funds, Inc. also undertook
similar consideration with respect to the New Sub-Advisory Agreement. Based on
its evaluation, the Board of Excelsior Tax-Exempt Funds, Inc., concluded that
approval of the New Sub-Advisory Agreement would be in the best interests of
the Company and its shareholders.
Information About the Proposed Co-Investment Advisers. U.S. Trust NY, which
has its principal offices at 114 West 47th Street, New York, New York 10036,
is a New York State-chartered bank and trust company and a member bank of the
Federal Reserve System. U.S. Trust Co., which has its principal offices at 225
High Ridge Road, East Building, Stamford, Connecticut 06905, is an FDIC-
insured Connecticut state bank and trust company. U.S. Trust NY and U.S. Trust
Co. serve as co-investment advisers to the Companies under the Existing
Advisory Agreements and are wholly owned subsidiaries of the U.S. Trust
Corporation, a registered bank holding company, which has its principal
offices at 114 West 47th Street, New York, New York 10036. U.S. Trust provides
wealth management, fiduciary and banking services to individuals, corporations
and institutions, both nationally and internationally, including investment
management and consulting, trust and estate services, financial and estate
planning, corporate trust and agency services, custodial services and personal
and corporate banking. On December 31, 1999, U.S. Trust had approximately
$55.0 billion in aggregate assets under management.
The principal executive officers and directors of U.S. Trust NY and their
principal occupations as of December 31, 1999 are set forth in Annex I hereto.
The principal executive officers and directors of U.S. Trust Co. and their
principal occupations as of December 31, 1999 are set forth in Annex II
hereto.
U.S. Trust currently serves as investment adviser to the following
registered investment company portfolios, which have investment objectives
similar to the Funds. These portfolios, their approximate net assets (as of
October 31, 1999, except for Excelsior Income Shares, Inc. for which assets
are given as of December 31, 1999), and the annual advisory fees payable by
these portfolios to U.S. Trust and fees waived by U.S. Trust are as follows:
- 15 -
<PAGE>
<TABLE>
<CAPTION>
Approximate Annual Net Advisory Fees Waived/
Name of Investment Company Net Assets Advisory Fees Expenses Reimbursed
- -------------------------- ------------ ------------- ---------------------
<S> <C> <C> <C>
UST Private Equity Investors
Fund, Inc. $ 40,295,269 $ 321,323 $146,907
Excelsior Private Equity Fund
II, Inc. 245,106,914 2,364,920 0
Excelsior Income Shares, Inc. 38,282,699 193,272 0
Bank Fiduciary (Equity Fund) 5,992,689 36,426 0
Bank Fiduciary (Fixed Income
Fund) 3,370,064 18,350 0
</TABLE>
No officer or director or trustee of any of the Companies is an officer,
employee, or general partner of U.S. Trust or U.S. Trust NA.
Information About the Proposed Sub-Investment Adviser. U.S. Trust NA, which
has its principal offices at 515 South Flower Street, Los Angeles, CA 90071,
is a national bank having trust powers. U.S. Trust NA serves as sub-investment
adviser to the Excelsior Tax-Exempt Funds, Inc., with respect to the
California Tax-Exempt Income Fund, under the Existing Sub-Advisory Agreement
and is a wholly-owned subsidiary of the U.S. Trust Corporation, a registered
bank holding company, which has its principal offices at 114 West 47th Street,
New York, New York 10036. U.S. Trust NA provides wealth management, fiduciary
and banking services to individuals, corporations and institutions, both
nationally and internationally, including investment management and
consulting, trust and estate services, financial and estate planning,
corporate trust and agency services, and personal and corporate banking. U.S.
Trust NA also provides specialized investment management, fiduciary and
consulting services to employee benefit plans with respect to plan holdings of
employee stock. On December 31, 1999, U.S. Trust NA had approximately $19.7
billion in assets under management.
The principal executive officers and directors of U.S. Trust NA and their
principal occupations as of December 31, 1999 are set forth in Annex III
hereto.
The approval of each New Advisory Agreement requires the affirmative vote of
the holders of a "majority of the outstanding shares" of each Fund to which it
would apply (as defined by the 1940 Act), which means the lesser of (a) the
holders of 67% or more of the shares of each Fund present at the Meetings if
the holders of more than 50% of the outstanding shares of such Fund are
present in person or by proxy or (b) more than 50% of the outstanding shares
of such Fund. This voting requirement is hereafter referred to as a "majority
of the outstanding shares." For more information, see "Voting Information--
Quorum."
If a New Advisory Agreement is approved by the shareholders of a Fund and
the Merger is completed, then the corresponding Existing Advisory Agreement
will terminate with respect to such Fund upon the consummation of the Merger.
If a New Advisory Agreement is not approved with respect to any Fund and the
Merger is consummated, then the Board of the relevant Company will promptly
seek to enter into a new advisory arrangement for the Fund, subject to any
required approval by the Fund's shareholders.
If the Merger is not completed and the New Advisory and Sub-Advisory
Agreements are approved by each Fund's shareholders, the Existing Advisory and
Sub-Advisory Agreements will terminate on the date that the definitive merger
agreement is terminated and the New Advisory and Sub-Advisory Agreements will
become effective on such date.
If the Merger is not completed and the New Advisory and Sub-Advisory
Agreements are not approved by each Fund's shareholders, U.S. Trust will
continue to operate under the Existing Advisory and Sub-Advisory Agreements.
The New Sub-Advisory Agreement must be approved by a "majority of the
outstanding shares" of the California Tax-Exempt Income Fund (as described
above). If the New Sub-Advisory Agreement is approved by shareholders of the
Fund and the Merger is completed, then the Existing Sub-Advisory Agreement
will terminate upon the execution of the New Sub-Advisory Agreement. If the
New Sub-Advisory Agreement is not approved with respect to the Fund and the
Merger is completed, then the Board will promptly seek to enter into a new
sub-advisory arrangement for the Fund, subject to any required approval by the
Fund's shareholders.
THE BOARD OF EACH COMPANY RECOMMEND THAT SHAREHOLDERS VOTE "FOR"
THE NEW ADVISORY AND SUB-ADVISORY AGREEMENTS
- 16 -
<PAGE>
VOTING INFORMATION
Record Date. Only shareholders of record at the close of business on March
6, 2000 will be entitled to vote at the Meetings. On that date, the number of
outstanding shares of each of the Funds were as follows:
<TABLE>
<CAPTION>
Number of
Outstanding
Company and Fund Shares
- ---------------- -------------
<S> <C>
Excelsior Funds, Inc.
Blended Equity Fund 19,231,318
Large Cap Growth Fund 25,181,955
Small Cap Fund 6,210,031
Value and Restructuring Fund 33,971,390
Energy and Natural Resources Fund 4,465,269
Real Estate Fund 6,406,483
International Fund 21,935,733
Latin America Fund 3,263,295
Pacific/Asia Fund 7,089,802
Pan European Fund 11,688,541
Emerging Markets Fund 2,172,534
Short-Term Government Securities Fund 8,400,278
Intermediate-Term Managed Income Fund 22,080,528
Managed Income Fund 25,566,644
Money Fund 1,669,324,956
Government Money Fund 771,728,942
Treasury Money Fund 566,241,555
Excelsior Tax-Exempt Funds, Inc.
Tax-Exempt Money Fund 1,889,279,216
New York Tax-Exempt Money Fund 410,398,214
Long-Term Tax-Exempt Fund 13,664,706
Intermediate-Term Tax-Exempt Fund 32,138,237
Short-Term Tax-Exempt Securities Fund 7,780,090
New York Intermediate-Term Tax-Exempt Fund 15,064,864
California Tax-Exempt Income Fund 9,237,909
Excelsior Institutional Trust
Value Equity Fund 2,602,773
Optimum Growth Fund 3,534,127
Equity Fund 12,131,360
Income Fund 14,909,437
Total Return Bond Fund 36,942,016
International Equity Fund 9,183,854
</TABLE>
All shares of Excelsior Institutional Trust will vote in the aggregate and
not by class or Fund at the Meeting with respect to Proposal 1. With respect
to Proposal 2(a) as to the approval of the New Advisory Agreements, each Fund
of each Company will vote separately on a Fund-by-Fund basis and all classes
of a Fund will vote together. With respect to Proposal 2(b) as to the approval
of the New Sub-Advisory Agreement, the shareholders of the California Tax-
Exempt Income Fund will vote separately as a single class.
If you do not plan to be present at a Meeting, you should send your vote in
by one of the following methods:
1. Complete, sign and return the enclosed proxy card(s) promptly in the
postage-paid envelope;
- 17 -
<PAGE>
2. Vote by phone by calling 1-800-690-6903. Enter the 12-digit control
number on your proxy card and follow the telephone instructions; or
3. Vote through the Internet at www.proxyvote.com. Enter the 12-digit
control number on your proxy card and follow the instructions on the
website.
Quorum. With respect to the election of Trustees of Excelsior Institutional
Trust, a quorum is constituted with respect to the Company by the presence in
person or by proxy of the holders of more than 50% of the outstanding shares
of the Company entitled to vote. A quorum is constituted with respect to each
Fund in the case of Proposal 2(a), and with respect to the California Tax-
Exempt Income Fund in the case of Proposal 2(b), by the presence in person or
by proxy of the holders of more than 50% of the outstanding shares of such
Fund entitled to vote at the meeting. For purposes of determining the presence
of a quorum, abstentions and broker "non-votes" (that is, proxies from brokers
or nominees indicating that such persons have not received instructions from
the beneficial owners or other persons entitled to vote shares on a particular
matter with respect to which the brokers or nominees do not have discretionary
power), will be treated as shares that are present at a Meeting. A vote cast
does not include an abstention or the failure to vote for or against a
proposal. Therefore, for purposes of determining the affirmative vote of a
"majority of the outstanding shares," an abstention or the failure to vote,
including a broker non-vote, will be the equivalent of voting against
Proposals 2(a) and 2(b) but will have no effect on the votes with respect to
Proposal 1.
In the event that a quorum is not present at a Meeting or at any adjournment
thereof, or in the event that a quorum is present at a Meeting but sufficient
votes to approve any of the proposals are not received, the persons named as
proxies, or their substitutes, may propose and vote for one or more
adjournments of a Meeting to permit the further solicitation of proxies. Any
such adjournment will require the affirmative vote of a majority of those
shares affected by the adjournment that are represented at a Meeting in person
or by proxy. If a quorum is present, the persons named as proxies will vote
those proxies which they are entitled to vote FOR any of the proposals in
favor of such adjournments, and will vote those proxies required to be voted
AGAINST all proposals against any such adjournments. A shareholder vote may be
taken with respect to a Company or one or more of such Company's Funds on any
of the Proposals prior to any such adjournment as to which sufficient votes
have been received for approval.
Other Shareholder Information. At the record date for the Meeting, U.S.
Trust and its affiliates held of record approximately the following
percentages of the outstanding shares of the Funds, as agent or custodian for
their customers:
<TABLE>
<CAPTION>
Company and Fund % Held as Agent or Custodian
- ---------------- ----------------------------
<S> <C>
Excelsior Funds, Inc.
Blended Equity Fund 70.70%
Large Cap Growth Fund 74.87%
Small Cap Fund 86.28%
Value and Restructuring Fund 39.12%
Energy and Natural Resources 57.97%
Real Estate Fund 98.50%
International Fund 90.89%
Latin American Fund 79.41%
Pacific/Asia Fund 88.91%
Pan European Fund 91.65%
Emerging Markets Fund 96.50%
Short-Term Government Securities Fund 74.38%
Intermediate-Term Managed Income Fund 94.86%
Managed Income Fund 84.05%
Money Fund 87.77%
Government Money Fund 90.60%
Treasury Money Fund 81.98%
</TABLE>
- 18 -
<PAGE>
<TABLE>
<CAPTION>
Company and Fund % Held as Agent or Custodian
- ---------------- ----------------------------
<S> <C>
Excelsior Tax-Exempt Funds, Inc.
Tax-Exempt Money Fund 95.20%
New York Tax-Exempt Money Fund 86.63%
Long-Term Tax-Exempt Fund 78.17%
Intermediate-Term Tax-Exempt Fund 92.56%
Short-Term Tax-Exempt Securities Fund 94.29%
New York Intermediate-Term Tax-Exempt Fund 91.19%
California Tax-Exempt Income Fund 98.79%
Excelsior Institutional Trust
Value Equity Fund 99.33%
Optimum Growth Fund 72.59%
Equity Fund 99.99%
Income Fund 100%
Total Return Bond Fund 97.24%
International Equity Fund 98.82%
</TABLE>
The name, address and share ownership of each person who may have possessed
sole or shared voting or investment power with respect to more than 5% of each
Fund's outstanding shares at the record date were:
<TABLE>
<CAPTION>
Number of Percent
Outstanding Shares of Class
------------------ --------
<S> <C> <C>
Excelsior Funds, Inc.
Blended Equity Fund
U.S. Trust Company of New York, 1,116,712 5.81%
Trustee
FBO U.S. Trust Place
Attn. Sandra Woolcock
4380 S.W. Macadam Ave.
Suite 450
Portland, OR 97201
UST Retirement Fund 1,783,463 9.27%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Small Cap Fund
UST Retirement Fund 847,476 13.65%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Value and Restructuring Fund
Charles Schwab & Co., Inc. 7,888,390 23.22%
Special Custody Account
Attn. Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
Energy and Natural Resources Fund
Charles Schwab & Co., Inc. 951,210 21.30%
Special Custody Account
Attn. Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
</TABLE>
- 19 -
<PAGE>
<TABLE>
<CAPTION>
Number of Percent
Outstanding Shares of Class
------------------ --------
<S> <C> <C>
Real Estate Fund
Eugene Higgens Resid. 494,065 7.71%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
UST Retirement Fund 639,627 9.98%
114 West 47th Street
New York, NY 10036
International Fund
UST Retirement Fund 1,833,806 8.36%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Latin America Fund
Charles Schwab & Co., Inc. 263,005 8.06%
Special Custody Account
Attn. Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
UST Retirement Fund 180,433 5.53%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Emerging Markets Fund
Dan Weiden 116,015 5.34%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Prudence Miller Agency 132,625 6.10%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
UST Retirement Fund 285,714 13.15%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Short-Term Government Securities Fund
Charles Schwab & Co., Inc. 556,530 6.63%
Special Custody Account
Attn. Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
Managed Income Fund
U.S. Trust Company of New York, 1,453,029 5.68%
Trustee
FBO U.S. Trust Place
Attn. Sandra Woolcock
4380 S.W. Macadam Ave.
Suite 450
Portland, OR 97201
</TABLE>
- 20 -
<PAGE>
<TABLE>
<CAPTION>
Number of Percent
Outstanding Shares of Class
------------------ --------
<S> <C> <C>
UST Retirement Fund 12,335,765 48.25%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Treasury Money Fund
Stephen Schwarzman 29,665,809 5.24%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Excelsior Tax-Exempt Funds, Inc.
New York Tax-Exempt Money Fund
Sara Wilford 30,129,008 7.34%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Long-Term Tax-Exempt Fund
Charles Schwab & Co., Inc. 922,254 6.75%
Special Custody Account
Attn. Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
California Tax-Exempt Income Fund
David & Suzanne Johnson 856,400 9.27%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Excelsior Institutional Trust
Optimum Growth Fund
U.S. Trust Company, Trustee 538,682 15.24%
FBO U.S. Trust Plan
U.S. Trust Co. of Pacific Northwest
4380 S.W. Macadam Avenue
Suite 450
Portland, OR 97201
UST Retirement Fund 1,479,279 41.86%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Equity Fund
Olympus America Pen Plan 671,105 5.53%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
PJM INTRCM DB Plan 1,110,591 9.15%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
</TABLE>
- 21 -
<PAGE>
<TABLE>
<CAPTION>
Number of Percent
Outstanding Shares of Class
------------------ --------
<S> <C> <C>
Income Fund
Planned Parenthood NY 1,371,144 9.20%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Persimmon Char Rem 2,276,176 15.27%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Eugene Higgens Resid. 8,398,998 56.33%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
Total Return Bond Fund
The Library Fund 4,110,389 11.13%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
The Florence Gould Fund 5,243,924 14.20%
c/o United States Trust Company of NY
114 West 47th Street
New York, NY 10036
</TABLE>
For purposes of the 1940 Act, any person who owns directly or through one or
more controlled companies more than 25% of the voting securities of a company
is presumed to "control" such company.
- 22 -
<PAGE>
ADDITIONAL INFORMATION
Officers. Officers of the Companies are elected by the Directors and
Trustees and hold office until they resign, are removed or are otherwise
disqualified to serve. The following table sets forth information about
certain of the Companies' officers:
<TABLE>
<CAPTION>
Principal Occupation
Position with During Past 5 Years and
Name and Address Each Company Other Affiliations
- ---------------- ------------- -----------------------
<S> <C> <C>
Frederick S. Wonham President and Treasurer Retired; Chairman of the Boards
c/o U.S. Trust Company (since 1997) President, Treasurer
of New York and Director (since 1995) of
114 West 47th Street Excelsior Funds, Inc. and Excelsior
New York, NY 10036 Tax-Exempt Fund; Chairman of the
Age: 65 Boards (since 1997) President,
Treasurer and 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 Company (from March 1993
to May 1997).
Patricia M. Leyne/1 Assistant Treasurer Vice President, Chase Global Funds
/ Chase Global Funds Services Company (since July 1999);
Services Company Assistant Vice President, Senior
73 Tremont Street Manager of Fund Administration,
Boston, MA 02108-3913 Chase Global Funds Services Company
Age: 32 (from July 1998 to July 1999);
Assistant Treasurer, Manager of Fund
Administration, Chase Global Funds
Services Company (from November 1996
to July 1998); Supervisor, Chase
Global Funds Services Company (from
September 1995 to November 1996);
Fund Administrator, Chase Global
Funds Services Company (from
February 1993 to September 1995).
</TABLE>
- --------
1 Ms. Leyne owns one share of U.S. Trust Co. She became Assistant Treasurer
of the Companies on July 30, 1999.
The employees of Chase Global Funds Services Company do not receive any
compensation from the Companies for acting as officers of the Companies. No
person who is currently an officer, director or employee of the Investment
Adviser or Sub-Adviser serves as an officer, director or employee of the
Companies.
- 23 -
<PAGE>
Payments to Affiliates. U.S. Trust Co. serves as one of the Companies'
administrators and will continue to do so after the New Agreements are approved
by shareholders. For the fiscal year ended March 31, 1999, the Companies paid
U.S. Trust Co. and U.S. Trust Co. waived, the following fees:
<TABLE>
<CAPTION>
Total
Administration Total Fees
Funds Fees Paid Waived
- ----- -------------- ----------
<S> <C> <C>
Excelsior Funds, Inc.
Blended Equity Fund $ 952,859 $ 1,957
Large Cap Growth Fund 171,488 1,525
Small Cap Fund 74,865 28
Value and Restructuring Fund 712,300 120,091
Energy and Natural Resources Fund 59,511 43
Real Estate Fund 58,438 379
International Fund 427,509 1,386
Latin America Fund 81,572 274
Pacific/Asia Fund 56,059
Pan European Fund 397,805 4,522
Emerging Markets Fund 11,814 0
Intermediate-Term Managed Income Fund 170,673 389
Short-Term Government Securities Fund 70,684 162
Managed Income Fund 316,445 1,864
Money Fund 1,122,463 11
Government Money Fund 958,200 172
Treasury Money Fund 792,993 0
Excelsior Tax-Exempt Funds, Inc.
Tax-Exempt Money Fund 2,156,742 0
New York Tax-Exempt Money Fund 248,317 0
Long-Term Tax-Exempt Fund 243,351 14,210
Intermediate-Term Tax-Exempt Fund 449,336 1,245
Short-Term Tax-Exempt Securities Fund 61,646 3
New York Intermediate-Term Tax-Exempt Fund 223,318 53
California Tax-Exempt Income Fund 73,723 0
Excelsior Institutional Trust
Value Equity Fund 53,266 0
Optimum Growth Fund 108,405 0
Equity Fund 231,504 0
Income Fund 97,318 0
Total Return Bond Fund 308,927 0
International Equity Fund 83,501 0
</TABLE>
- 24 -
<PAGE>
For the fiscal year ended March 31, 1999, affiliates of U.S. Trust received
the following fees relating to Shares and Institutional Shares of the
following Funds of the Companies pursuant to agreements with shareholder
organizations under the Administrative Services Plans adopted by the
Companies:
<TABLE>
<CAPTION>
Fees Paid To Affiliates Of
Fund U.S. Trust Company
- ---- --------------------------
<S> <C>
Excelsior Funds, Inc.
Blended Equity Fund Shares $223,499
Large Cap Growth Fund Shares 36,963
Small Cap Growth Fund Shares 51,808
Value and Restructuring Fund Shares 215,581
Energy and Natural Resources Fund Shares 15,896
Real Estate Fund Shares 37,231
International Fund Shares 202,445
Latin America Fund Shares 34,396
Pacific/Asia Fund Shares 24,951
Pan European Fund Shares 121,644
Emerging Markets Fund Shares 11,666
Intermediate-Term Managed Income Fund Shares 73,338
Managed Income Fund Shares 64,528
Excelsior Tax-Exempt Funds, Inc.
Tax-Exempt Money Fund Shares 827,104
Institutional Shares 0
New York Tax-Exempt Money Fund Shares 7,879
Institutional Shares 0
Long-Term Tax-Exempt Fund Shares 114,441
Intermediate-Term Tax-Exempt Fund Shares 182,945
New York Intermediate-Term Tax-Exempt Fund Shares 33,512
California Tax-Exempt Income Fund Shares 139,223
</TABLE>
For the fiscal year ended March 31, 1999, U.S. Trust and its affiliates
received no fees relating to Excelsior Funds, Inc.'s Distribution Plan.
For the fiscal year ended March 31, 1999, the Companies paid the following
brokerage commissions to UST Securities Corp., an affiliated broker of U.S.
Trust:
<TABLE>
<CAPTION>
Percentage of
Brokerage Broker
Commissions to Commissions paid
Company Fund Affiliated Brokers to Affiliated Broker
- ------- ---- ------------------ --------------------
<S> <C> <C> <C>
Excelsior Funds, Inc. Value and Restructuring Fund $525 0.19%
</TABLE>
The Companies make payments to Schwab in connection with the inclusion of
certain Funds in the Schwab One Source Program. The payments are based on a
fee of 0.35% of average daily net assets participating in the One Source
Program. Of this amount, 0.25% is paid by U.S. Trust through a waiver of its
investment advisory fees and 0.10% is paid from assets of the applicable
Funds. These payments are expected to continue after the Merger.
Principal Underwriter and Administrators. Edgewood Services, Inc., which is
located at 5800 Corporate Drive, Pittsburgh, Pennsylvania 15237-5829, is the
principal underwriter for the shares of the Companies' Funds. Edgewood
Services, Inc. is a wholly-owned subsidiary of Federated Investors, Inc. The
Companies' administrators are: U.S. Trust Co.; Chase Global Funds Services
Company, 73 Tremont Street, Boston, Massachusetts 02108-3913; and Federated
Administrative Services, Federated Investors Tower, Pittsburgh, Pennsylvania
15222-3779.
- 25 -
<PAGE>
OTHER MATTERS
The Companies do not intend to hold meetings of shareholders except to the
extent that such meetings may be required under the 1940 Act or state law.
Shareholders who wish to submit proposals for inclusion in the Proxy Statement
for a subsequent shareholder meeting should send their written proposals to
the Companies at their principal office within a reasonable time before such
meeting.
No business other than the matters described above is expected to come
before the Meetings, but should any other matter requiring a vote of
shareholders arise, including any question as to an adjournment of the
Meetings, the persons named in the enclosed Proxy will vote thereon according
to their best judgment in the interests of each Company.
Dated: March 22, 2000
- 26 -
<PAGE>
Annex I
<TABLE>
<CAPTION>
Position
with
U.S. Principal Type of
Trust NY Name; Address Occupation Business
-------- ------------- ---------- --------
<S> <C> <C> <C>
Director Eleanor Baum Dean of School Academic
4 Arleigh Road of Engineering,
Great Neck, NY 11021 The Cooper Union for
the Advancement
of Science & Art
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 Retired Chairman Venture
103 Horseshoe Road of Venrock, Inc. Capital
Mill Neck, NY 11765
Director Antonia M. Grumbach Partner in Patterson, Law Firm
Patterson, Belknap, Belknap, Webb
Webb & Tyler, LLP & Tyler
1133 Avenue of the
Americas
New York, NY 10036
Director, Chairman H. Marshall Schwarz Chairman of the Asset Management,
of
the Board Services United States Trust Board & Chief Executive Investment
and
Chief Executive Of- Company of New York Officer of U.S. Trust Fiduciary
ficer
114 West 47th Street Corporation and UST NY
New York, NY 10036
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 Robert E. Denham Partner in Manger, Law Firm
Manger, Tolls & Olson LLP Tolls & Olson LLP
355 South Grand Avenue
35th Floor
Los Angeles, CA 90071
Director John H. Stookey Chairman of Petrochemicals
Suburban Propane Pts. Suburban Propane Pts. and Propane
P.O. Box 455
Sheffield, MA 01257
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
</TABLE>
- 27 -
<PAGE>
<TABLE>
<CAPTION>
Position
with
U.S. Principal Type of
Trust NY Name; Address Occupation Business
-------- ------------- ---------- --------
<S> <C> <C> <C>
Director Peter L. Malkin Chairman of Law Firm
Wien & Malkin LLP Wien & Malkin LLP
Lincoln Building
60 East 42nd Street
New York, NY 10165
Director David A. Olsen Retired Chairman of Risk & Insurance
1120 Park Avenue Johnson & Higgins Services
New York, NY 10128
Director Carl H. Pforzheimer, II Managing Partner Broker-Dealer
Carl H. Pforzheimer & Co. Investment Adviser
650 Madison Avenue
New York, NY 10022
Director Ruth A. Wooden President & CEO of Not-for-
60 Gramercy Park North National Parenting Profit
Apt. 2M Association
New York, NY 10016
Executive Paul K. Napoli Executive Asset Management,
Vice United States Trust Vice President Investment and
Company of New York of U.S. Trust Private Banking
114 West 47th Street Corporation Fiduciary Services
New York, NY 10036 and U.S. Trust NY
Director and Maribeth S. Rahe Vice Chairman Asset Management,
Vice Chairman United States Trust of U.S. Trust Fiduciary Services
Company of New York Investment and
114 West 47th Street Corporation
New York, NY 10036 and U.S. Trust NY
Director, Vice Chairman Frederick B. Taylor Vice Chairman and Asset Management,
and Chief Investment United States Trust Chief Investment Of- Investment and
Officer Company of New York ficer of U.S. Trust Fiduciary Services
114 West 47th Street Corporation and
New York, NY 10036 U.S. Trust NY
New York, NY 10036
Director, President, and Jeffrey S. Maurer President and Asset Management,
Chief Operating Officer United States Trust Chief Operating Investment and
Company of New York Officer of U.S. Fiduciary Services
114 West 47th Street Trust Corporation
New York, NY 10036 and U.S. Trust NY
Executive Vice President John L. Kirby Executive Asset Management,
and Chief Financial United States Trust Vice President and Investment and
Officer Company of New York Chief Financial Fiduciary Services
114 West 47th Street Officer of U.S.
New York, NY 10036 Trust Corporation
and U.S. Trust NY
</TABLE>
- 28 -
<PAGE>
<TABLE>
<CAPTION>
Position
with
U.S. Principal Type of
Trust NY Name; Address Occupation Business
-------- ------------- ---------- --------
<S> <C> <C> <C>
Executive Vice President Kenneth G. Walsh Executive Asset Management,
United States Trust Vice President Investment and
Company of New York of U.S. Trust Fiduciary Services
114 West 47th Street Corporation and
New York, NY 10036 U.S. Trust NY
Director Philip L. Smith Corporate Director and Consumer Goods
P.O. Box 386 Trustee
Ponte Verde Beach, FL 32004
Executive Vice President John M. Deignan Executive Investment
United States Trust Vice President Management and
Company of New York Fiduciary Services;
114 West 47th Street Private Banking
New York, NY 10036
</TABLE>
- 29 -
<PAGE>
Annex II
<TABLE>
<CAPTION>
Position with U.S. Principal
Trust Co. Name; Address Occupation Type of Business
------------------ ------------- ---------- ----------------
<S> <C> <C> <C>
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 U.S. Trust NY Investment and
Company of New York Fiduciary Services
11 West 54th Street
New York, NY 10019
Director, Chairman Maribeth S. Rahe Vice Chairman, Asset Management,
of Board United States Trust U.S. Trust NY Investment and
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 U.S. Trust NY Investment and
Company of New York Fiduciary Services
114 West 47th Street
New York, NY 10036
Director Robert C. Bodine Chairman Asset Management
U.S. Trust Company Investment and
100 West Lancaster Avenue Fiduciary Services
Suite 200
Wayne, PA 19087
Director Howard E.N. Wilson Chairman Asset Management
U.S. Trust Company Investment and
100 West Lancaster Avenue Fiduciary Services
Suite 200
Wayne, PA 19087
</TABLE>
- 30 -
<PAGE>
<TABLE>
<CAPTION>
Position with U.S. Principal
Trust NY Name; Address Occupation Type of Business
------------------ ------------- ---------- ----------------
<S> <C> <C> <C>
Director Kenneth G. Walsh Executive Vice Asset Management,
United States Trust President, Investment and
Company of New York U.S. Trust NY Fiduciary Services
114 West 47th Street
New York, NY 10036
Director, Managing William V. Ferdinand Managing Director Asset Management,
Director & U.S. Trust of Connecticut & CIO Fiduciary Services
CIO, CT Offices 225 High Ridge Road & Private Banking
Stamford, CT 06905
Director, President & W. Michael Funck President & CEO Asset Management,
CEO, CT Offices U.S. Trust of Connecticut Fiduciary Services
225 High Ridge Road & Private Banking
Stamford, CT 06905
</TABLE>
- 31 -
<PAGE>
ANNEX III
<TABLE>
<CAPTION>
Position with U.S.
Trust NY Name; Address Principal Occupation Type of Business
------------------ ------------- -------------------- ----------------
<S> <C> <C> <C>
Director and Managing William R. Barrett, Jr. Managing Director Asset Management,
Director 515 So. Flower Street Investment and
Suite 2700 Fiduciary Services
Los Angeles, CA 90071
Director Thomas C. Clark Managing Director Asset Management,
11 W. 54th Street Investment
New York, NY 10019
Director Jeffrey Grubb Managing Director Asset Management,
4380 S.W. Macadam Ave. Director Investment and
Suite 450 Fiduciary Services
Portland, OR 97201
Director Peter K. Maier Managing Director Asset Management,
80 E. Sir Francis Director Investment and
Drake Blvd. Fiduciary Services
Larkspur, CA 94939
Director Jeffrey S. Maurer President and Chief Asset Management,
114 W. 47th Street Operating Investment and
New York, NY 10036 Officer Fiduciary Services
Director/Managing Robert M. Raney Managing Director Asset Management,
Director and Chief 515 So. Flower Street and Chief Investment and
Investment Officer Suite 2700 Investment Officer Fiduciary Services
Los Angeles, CA 90071
Director/President and Gregory F. Sanford President and Chief Asset Management,
Chief Executive Officer 515 So. Flower Street Executive Officer Investment and
Suite 2700 Fiduciary Services
Los Angeles, CA 90071
Director/Chairman of the Franklin E. Ulf Chairman of the Asset Management,
Board 515 So. Flower Street Board Investment and
Suite 2700 Fiduciary Services
Los Angeles, CA 90071
Director Jay S. Welker Managing Director Asset Management,
One Embarcadero Center Investment and
Suite 2050 Fiduciary Services
San Francisco, CA 94111
Director and Executive Charles E. Wert Executive Vice Asset Management,
Vice President 515 So. Flower Street President Investment and
Suite 2700 Fiduciary Services
Los Angeles, CA 90071
Director Maribeth S. Rahe Vice Chairman Asset Management,
114 W. 47th Street Investment and
New York, NY 10036 Fiduciary Services
</TABLE>
- 32 -
<PAGE>
<TABLE>
<CAPTION>
Position
with
U.S.
Trust NY Name; Address Principal Occupation Type of Business
- -------- ------------- -------------------- ----------------
<S> <C> <C> <C>
Director Ralph C. Rittenour Chairman & CEO Asset Management,
4380 S.W. Macadam Ave. Investment and
Suite 450 Fiduciary Services
Portland, OR 97201
Director Kenneth F. Siebel Managing Director Asset Management,
80 E. Sir Francis Investment and
Drake Blvd. Fiduciary Services
Larkspur, CA 94939
Director Charles J. Swindells Vice Chairman Asset Management,
4380 S.W. Macadam Ave. Investment and
Suite 450 Fiduciary Services
Portland, OR 97201
</TABLE>
- 33 -
<PAGE>
APPENDIX A
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of , 2000 by and among EXCELSIOR FUNDS, INC., a
Maryland corporation (herein called the "Company"), U.S. TRUST COMPANY
("UST"), a Connecticut state bank and trust company, and UNITED STATES TRUST
COMPANY OF NEW YORK ("USTNY"), a New York state-chartered bank and trust
company (together with UST, the "Investment Adviser").
WHEREAS, the Company is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Company desires to retain the Investment Adviser to render
investment advisory and other services to the Company for its Latin America
Fund, Pacific/Asia Fund, Pan European Fund, Emerging Markets Fund, and
International Fund portfolios (the "Funds"), and the Investment Adviser is
willing to so render such services;
NOW, THEREFORE, this Agreement
WITNESSETH:
In consideration of the premises and mutual covenants herein contained, it
is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints the Investment Adviser to act as
investment adviser to the Company for the Funds for the period and on the
terms set forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided. The Investment Adviser may, in its discretion,
provide such services through its own employees or the employees of one or
more affiliated companies that are qualified to act as investment adviser to
the Company under applicable law provided (i) that all persons, when providing
services hereunder, are functioning as part of an organized group of persons,
(ii) the use of an affiliate's employees does not result in a change of actual
control or management of the Investment Adviser under the 1940 Act; and (iii)
the use of an affiliate's employees has been approved by the Board of
Directors of the Company.
2. Sub-Adviser. It is understood that the Investment Adviser may from time
to time employ or associate with itself such person or persons as the
Investment Adviser believes to be fitted to assist it in the performance of
this Agreement; provided, however, that the compensation of such person or
persons shall be paid by the Investment Adviser and that the Investment
Adviser shall be as fully responsible to the Company for the acts and
omissions of any such person as it is for its own acts and omissions. Without
limiting the generality of the foregoing, it is agreed that the sub-advisory
services to the Funds shall be provided by person or persons agreeable to the
Investment Adviser and approved in accordance with the provisions of the
Investment Company Act of 1940. Such sub-adviser is hereinafter referred to as
the "Sub-Adviser."
3. Delivery of Documents. The Company has furnished or will furnish, as the
case may be, the Investment Adviser with copies properly certified or
authenticated of each of the following:
(a) Articles of Incorporation of the Company;
(b) By-Laws of the Company;
(c) Resolutions of the Board of Directors of the Company authorizing the
appointment of the Investment Adviser as investment adviser for the Funds and
the execution and delivery of this Agreement;
(d) Resolutions of the Board of Directors of the Company authorizing the
appointment of the Sub-Adviser for the Funds and the execution and delivery of
the Sub-Advisory Agreement between the Investment Adviser and the Sub-Adviser
relating to the Fund;
A-1
<PAGE>
(e) Registration Statement under the Securities Act of 1933, as amended, and
the 1940 Act on Form N-1A (No. 2-92665) relating to shares of the Company's
Class F Common Stock, $.001 par value, representing interests in the
International Fund; Class P Common Stock, $.001 par value, representing
interests in the Latin America Fund; Class Q Common Stock, $.001 par value,
representing interests in the Pacific/Asia Fund; Class R Common Stock, $.001
par value, representing interests in the Pan European Fund; and Class W Common
Stock, $.001 par value, representing interests in the Emerging Markets Fund
and all amendments thereto;
(f) Notification of Registration of the Company under the 1940 Act on Form
N-8A, as filed with the Securities and Exchange Commission on August 8, 1984,
and all amendments thereto; and
(g) Prospectuses and statements of additional information of the Company
relating to the Company's shares in effect under the Securities Act of 1933
(such prospectuses, statements of additional information and supplements
thereto, as presently in effect and as from time to time amended and
supplemented, herein called the "Prospectus").
The Company will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing, if any.
4. Management. Subject to the supervision of the Board of Directors of the
Company, the Investment Adviser will provide continuous investment advisory
assistance and portfolio management advice for the Funds in accordance with
the Funds' respective investment objective and policies as stated in the
Prospectus.
Investment Adviser's responsibilities include:
(i) Advising the Sub-Adviser with respect to U.S. economic factors and
trends;
(ii) Assisting and consulting with the Sub-Adviser in connection with the
Funds' continuous investment program;
(iii) Approving lists of foreign countries recommended by the Sub-Adviser
for investments of the Funds;
(iv) Placing orders with respect to purchases and sales of the securities
of U.S. issuers as described in the Prospectus;
(v) Managing, in cooperation with the Sub-Adviser, the Funds' short-term
cash balance positions denominated in U.S. dollars to preserve required
liquidity of the Funds' assets including placing of orders for U.S. money
market instruments;
(vi) Monitoring the Sub-Adviser's investment procedures; and
(vii) Periodically reviewing, evaluating and reporting to the Company's
Board of Directors with respect to the performance of the Sub-Adviser under
the Sub-Advisory Agreement.
The Investment Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations of the Securities
and Exchange Commission (herein called the "Rules"), and will in addition
conduct its activities under this Agreement in accordance with applicable law,
including but not limited to applicable banking law;
(b) will not make loans for the purpose of purchasing or carrying Fund
shares, or make loans to the Company;
(c) will place orders, if any, pursuant to its investment determinations for
the Funds either directly with the issuer or with any broker or dealer
selected by it. In placing orders with brokers and dealers, the Investment
A-2
<PAGE>
Adviser will use its reasonable best efforts to obtain the best net price and
the most favorable execution of its orders, after taking into account all
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 the reasonableness of the commission,
if any, both for the specific transaction and on a continuing basis.
Consistent with this obligation, the Investment Adviser may, to the extent
permitted by law, purchase and sell portfolio securities to and from brokers
and dealers who provide brokerage and research services (within the meaning of
Section 28(e) of the Securities Exchange Act of 1934) to or for the benefit of
any Fund and/or other accounts over which the Investment Adviser or any of its
affiliates exercises investment discretion. Subject to the review of the
Company's Board of Directors from time to time with respect to the extent and
continuation of the policy, the Investment Adviser is authorized to pay to a
broker or dealer who provides such brokerage and research services a
commission for effecting a securities transaction for any Fund which is in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if the Investment Adviser determines in good
faith that such commis-sion was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Investment Adviser with respect to the accounts as to which it exercises
investment discretion. In no instance will portfolio securities be purchased
from or sold to the Funds' principal underwriter, the Investment Adviser, Sub-
Adviser, or any affiliated person thereof except as permitted by the
Securities and Exchange Commission;
(d) will maintain books and records with respect to the Funds' securities
transactions and will render to the Company's Board of Directors such periodic
and special reports as the Board may request;
(e) will maintain a policy and practice of conducting its Asset Management
Group independently of its Banking Group. When the Investment Adviser makes
investment recommendations for the Funds, its Asset Management Group personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Funds' account are customers of the
Banking Group. In dealing with commercial customers, the Banking Group will
not inquire or take into consideration whether securities of those customers
are held by the Funds;
(f) will treat confidentially and as proprietary information of the Company
all records and other information relative to the Funds and prior, present or
potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Company,
which approval shall not be unreasonably withheld and may not be withheld
where the Investment Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information
by duly constituted authorities, or when so requested by the Company. Nothing
contained herein, however, shall prohibit the Investment Adviser from
advertising or soliciting the public generally with respect to other products
or services, regardless of whether such advertisement or solicitation may
include prior, present or potential shareholders of the Company.
5. Services Not Exclusive. The investment management services rendered by
the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to render similar services to others so long
as its services under this Agreement are not impaired thereby.
6. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Investment Adviser hereby agrees that all records
which it maintains for the Funds are the property of the Company and further
agrees to surrender promptly to the Company any of such records upon the
Company's request. The Investment Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 the records required to be maintained by Rule
31a-1 under the 1940 Act.
7. Expenses. During the term of this Agreement, the Investment Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities, and other
investments (including brokerage commissions and other transaction charges, if
any) purchased or sold for the Funds.
A-3
<PAGE>
In addition, if the expenses borne by any Fund in any fiscal year exceed the
applicable expense limitations imposed by the securities regulations of any
state in which its shares are registered or qualified for sale to the public,
the Investment Adviser shall reimburse such Fund for a portion of any such
excess in an amount equal to the proportion that the fees otherwise payable to
the Investment Adviser bear to the total amount of investment advisory and
administration fees otherwise payable by the Fund up to the amount of the fees
payable to the Investment Adviser during such fiscal year pursuant to
paragraph 8 hereof; provided, however, that notwithstanding the foregoing, the
Investment Adviser shall reimburse the Fund for a portion of such excess
expenses in an amount equal to the proportion that the fees otherwise payable
to the Investment Adviser bear to the total amount of investment advisory and
administration fees otherwise payable by the Fund regardless of the amount of
fees paid to the Investment Adviser during such fiscal year to the extent that
the securities regulations of any state in which the shares are registered or
qualified for sale so require.
8. 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: 1.00% of the average
daily net assets of each of the Latin America Fund, the Pacific/Asia Fund, the
Pan European Fund and the International Fund; and 1.25% of the average daily
net assets of the Emerging Markets Fund.
9. Limitation of Liability of the Investment Adviser. Subject to the
provisions of Paragraph 2 above, concerning the Investment Adviser's
responsibility for the acts and omissions of person's employed by or
associated with the Investment Adviser, the Investment Adviser shall not be
liable for any error of judgment or mistake of law or for any loss suffered by
the Company in connection with the matters to which this Agreement relates,
except 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 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 obligations
and duties under this Agreement.
10. Duration and Termination. This Agreement shall be effective as of the
date hereof and unless sooner terminated as provided herein, shall continue
until July 31, 2001. Thereafter, if not terminated, this Agreement shall
continue in effect as to a particular Fund for successive periods of 12 months
each, provided such continuance is specifically approved at least annually (a)
by the vote of a majority of those members of the Board of Directors of the
Company who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such approval, and (b) by the Board of Directors of the Company or by vote of
a majority of the outstanding voting securities of such Fund; provided,
however, that this Agreement may be terminated by the Company as to any Fund
at any time, without the payment of any penalty, by the Board of Directors of
the Company or, with respect to any Fund, by vote of a majority of the
outstanding voting securities of such Fund on 60 days' written notice to the
Investment Adviser, or by the Investment Adviser as to any Fund at any time,
without payment of any penalty, on 90 days' written notice to the Company.
This Agreement will immediately terminate in the event of its assignment. (As
used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
as such terms have in the 1940 Act.) An affiliate of the Investment Adviser
may assume the Investment Adviser's obligations under this Agreement provided
that (i) the affiliate is qualified to act as an investment adviser to the
Company under applicable law; (ii) the assumption will not result in a change
of actual control or management of the Investment Adviser; and (iii) the
assumption of the Investment Adviser's obligations by the affiliate is
approved by the Board of Directors of the Company.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall
be effective with respect to a Fund until approved by vote of a majority of
such Fund's outstanding voting securities, if such vote is required by the
1940 Act, or by the vote of a majority of the Board of Directors of the
Company who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such amendment.
A-4
<PAGE>
12. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by New York law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
EXCELSIOR FUNDS, INC.
Attest:
_____________________ By: ___________________
Secretary President
[Seal]
U.S. TRUST COMPANY
Attest:
_____________________ By: ___________________
UNITED STATES TRUST COMPANY
OF NEW YORK
Attest:
_____________________ By: ___________________
A-5
<PAGE>
APPENDIX B
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of , 2000 by and among EXCELSIOR FUNDS, INC., a
Maryland corporation (herein called the "Company"), U.S. TRUST COMPANY
("UST"), a Connecticut state bank and trust company, and UNITED STATES TRUST
COMPANY OF NEW YORK ("USTNY"), a New York state-chartered bank and trust
company (together with UST, the "Investment Adviser").
WHEREAS, the Company is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940 (the "1940 Act");
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, Treasury Money Fund, Managed
Income Fund, Short-Term Government Securities Fund, Intermediate-Term Managed
Income Fund, Real Estate Fund, and Large Cap Growth Fund portfolios (the
"Funds"), and the Investment Adviser is willing to so render such services;
NOW, THEREFORE, this Agreement
WITNESSETH:
In consideration of the premises and mutual covenants herein contained, it
is agreed between the parties hereto as follows:
1. Appointment. The Company hereby appoints the Investment Adviser to act as
investment adviser to the Company for the Funds for the period and on the
terms set forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided. The Investment Adviser may, in its discretion,
provide such services through its own employees or the employees of one or
more affiliated companies that are qualified to act as investment adviser to
the Company under applicable law provided (i) that all persons, when providing
services hereunder, are functioning as part of an organized group of persons,
(ii) the use of an affiliate's employees does not result in a change of actual
control or management of the Investment Adviser under the 1940 Act; and (iii)
the use of an affiliate's employees has been approved by the Board of
Directors of the Company.
2. Delivery of Documents. The Company has furnished the Investment Adviser
with copies properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Company;
(b) By-Laws of the Company;
(c) Resolutions of the Board of Directors of the Company authorizing the
appointment of the Investment Adviser and the execution and delivery of this
Agreement;
(d) Registration Statement under the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, on Form N-1A (No. 2-92665)
relating to shares ("Shares") of the Funds covered by this Agreement, and all
amendments thereto:
(e) Notification of Registration of the Company under the Investment Company
Act of 1940, as amended, on Form N-8A as filed with the Securities and
Exchange Commission on August 8, 1984, and all amendments thereto; and
(f) Prospectuses of the Company relating to the Shares in effect under the
Securities Act of 1933 (such prospectuses and supplements thereto, as
presently in effect and as from time to time amended and supplemented, herein
called the "Prospectus").
B-1
<PAGE>
The Company will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing, if any.
3. Management. Subject to the supervision of the Board of Directors of the
Company, the Investment Adviser will provide a continuous investment program
for the Funds, including investment research and management with respect to
all securities, investments, cash and cash equivalents in the Funds. The
Investment Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Company for the Funds.
The Investment Adviser will provide the services rendered by it hereunder in
accordance with the Funds' respective investment objectives and policies as
stated in the Prospectus. The Investment Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations of the Securities
and Exchange Commission (herein called the "Rules"), and will in addition
conduct its activities under this Agreement in accordance with applicable law,
including but not limited to applicable banking law;
(b) will not make loans for the purpose of purchasing or carrying Shares, or
make loans to the Company;
(c) will place orders pursuant to its investment determinations for the
Funds either directly with the issuer or with any broker or dealer selected by
it. In placing orders with brokers and dealers, the Investment Adviser will
use its reasonable best efforts to obtain the best net price and the most
favorable execution of its orders, after taking into account all 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 the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. Consistent with this
obligation, the Investment Adviser may, to the extent permitted by law,
purchase and sell portfolio securities to and from brokers and dealers who
provide brokerage and research services (within the meaning of Section 28(e)
of the Securities Exchange Act of 1934) to or for the benefit of any Fund
and/or other accounts over which the Investment Adviser or any of its
affiliates exercises investment discretion. Subject to the review of the
Company's Board of Directors from time to time with respect to the extent and
continuation of the policy, the Investment Adviser is authorized to pay to a
broker or dealer who provides such brokerage and research services a
commission for effecting a securities transaction for any Fund which is in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if the Investment Adviser determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Investment Adviser with respect to the accounts as to which it exercises
investment discretion. In no instance will portfolio securities be purchased
from or sold to the Funds' principal underwriter, the Investment Adviser or
any affiliated person thereof except as permitted by the Securities and
Exchange Commission;
(d) will maintain books and records with respect to the Funds' securities
transactions and will render to the Company's Board of Directors such periodic
and special reports as the Board may request;
(e) will maintain a policy and practice of conducting its Asset Management
Group independently of its Banking Group. When the Investment Adviser makes
investment recommendations for the Funds, its Asset Management Group personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Funds' account are customers of the
Banking Group. In dealing with commercial customers, the Banking Group will
not inquire or take into consideration whether securities of those customers
are held by the Funds;
(f) will treat confidentially and as proprietary information of the Company
all records and other information relative to the Funds and prior, present or
potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Company,
which approval shall not be unreasonably withheld and may not be withheld
where the Investment Adviser may be exposed to civil or criminal contempt
proceedings
B-2
<PAGE>
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Company. Nothing
contained herein, however, shall prohibit the Investment Adviser from
advertising or soliciting the public generally with respect to other products
or services, regardless of whether such advertisement or solicitation may
include prior, present or potential shareholders of the Company.
4. Services Not Exclusive. The investment management services rendered by
the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to render similar services to others so long
as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3 of
the Rules under the Investment Company Act of 1940, the Investment Adviser
hereby agrees that all records which it maintains for the Funds are the
property of the Company and further agrees to surrender promptly to the
Company any of such records upon the Company's request. The Investment Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 the
records required to be maintained by Rule 31a-1 of the Rules.
6. Expenses. During the term of this Agreement, the Investment Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions,
if any) purchased for the Funds.
In addition, if the expenses borne by any Fund in any fiscal year exceed the
applicable expense limitations imposed by the securities regulations of any
state in which the Shares are registered or qualified for sale to the public,
the Investment Adviser shall reimburse such Fund for a portion of any such
excess in an amount equal to the proportion that the fees otherwise payable to
the Investment Adviser bear to the total amount of investment advisory and
administration fees otherwise payable by the Fund up to the amount of the fees
payable to the Investment Adviser during such fiscal year pursuant to
paragraph 7 hereof; provided, however, that notwithstanding the foregoing, the
Investment Adviser shall reimburse the Fund for a portion of such excess
expenses in an amount equal to the proportion that the fees otherwise payable
to the Investment Adviser bear to the total amount of investment advisory and
administration fees otherwise payable by the Fund regardless of the amount of
fees paid to the Investment Adviser during such fiscal year to the extent that
the securities regulations of any state in which the Shares are registered or
qualified for sale so require.
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 the Blended Equity Fund and 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; 1.00% of the average daily net assets of the Real Estate Fund; .30% of
the average daily net assets of the Treasury Money Fund; .75% of the average
daily net assets of the Managed Income 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.
8. Limitation of Liability of the Investment Adviser. The Investment Adviser
shall not be liable for any error of judgment or mistake of law or for any
loss suffered by the Company in connection with the matters to which this
Agreement relates, except 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 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 obligations and duties under this Agreement.
9. Duration and Termination. This Agreement shall be effective as of the
date hereof and unless sooner terminated as provided herein, shall continue
until July 31, 2001. Thereafter, if not terminated, this Agreement shall
continue in effect as to a particular Fund for successive periods of 12 months
each, provided such continuance is specifically approved at least annually (a)
by the vote of a majority of those members of the
B-3
<PAGE>
Board of Directors of the Company who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the Board of Directors of
the Company or, with respect to any Fund, by vote of a majority of the
outstanding voting securities of such Fund; provided, however, that this
Agreement may be terminated by the Company as to any Fund at any time, without
the payment of any penalty, by the Board of Directors of the Company or, with
respect to any Fund, by vote of a majority of the outstanding voting
securities of such Fund on 60 days' written notice to the Investment Adviser,
or by the Investment Adviser as to any Fund at any time, without payment of
any penalty, on 90 days' written notice to the Company. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings as such
terms have in the Investment Company Act of 1940.) An affiliate of the
Investment Adviser may assume the Investment Adviser's obligations under this
Agreement provided that (i) the affiliate is qualified to act as an investment
adviser to the Company under applicable law; (ii) the assumption will not
result in a change of actual control or management of the Investment Adviser;
and (iii) the assumption of the Investment Adviser's obligations by the
affiliate is approved by the Board of Directors of the Company.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall
be effective with respect to a Fund until approved by vote of a majority of
such Fund's outstanding voting securities, if such vote is required by the
1940 Act, or by the vote of a majority of the Board of Directors of the
Company who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such amendment.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by New York law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
EXCELSIOR FUNDS, INC.
Attest:
_____________________ By: ___________________
Secretary President
U.S. TRUST COMPANY
Attest:
_____________________ By: ___________________
UNITED STATES TRUST COMPANY
OF NEW YORK
Attest:
_____________________
By: ___________________
B-4
<PAGE>
APPENDIX C
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of , 2000 by and among EXCELSIOR TAX-EXEMPT FUNDS,
INC., a Maryland corporation (herein called the "Company"), U.S. TRUST COMPANY
("UST"), a Connecticut state bank and trust company, and UNITED STATES TRUST
COMPANY OF NEW YORK ("USTNY"), a New York state-chartered bank and trust
company (together with UST, the "Investment Adviser").
WHEREAS, the Company is registered as an open-end, diversified, management
investment company under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Company desires to retain the Investment Adviser to render
investment advisory and other services to the Company for its New York
Intermediate-Term Tax-Exempt Fund, Short-Term Tax-Exempt Securities Fund,
California Tax-Exempt Income Fund, Tax-Exempt Money Fund, Intermediate-Term
Tax-Exempt Fund, Long-Term Tax-Exempt Fund and New York Tax-Exempt Fund
portfolios (the "Funds"), and the Investment Adviser is willing to so render
such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) The Company hereby appoints the Investment Adviser to act as investment
adviser to the Company for the Funds for the period and on the terms set forth
in this Agreement. The Investment Adviser accepts such appointment and agrees
to render the services herein set forth for the compensation herein provided.
The Investment Adviser may, in its discretion, provide such services through
its own employees or the employees of one or more affiliated companies that
are qualified to act as investment adviser to the Company under applicable law
provided (i) that all persons, when providing services hereunder, are
functioning as part of an organized group of persons, (ii) the use of an
affiliate's employees does not result in a change of actual control or
management of the Investment Adviser under the 1940 Act; and (iii) the use of
an affiliate's employees has been approved by the Board of Directors of the
Company.
(b) In the event that the Company establishes one or more additional
portfolios with respect to which it desires to retain the Investment Adviser
to act as investment adviser hereunder, it shall notify the Investment Adviser
in writing. If the Investment Adviser is willing to render such services under
this Agreement it shall notify the Company in writing whereupon such portfolio
shall become a Fund hereunder and shall be subject to the provisions of this
Agreement to the same extent as the Funds except to the extent that said
provisions (including those relating to the compensation payable by the Funds
to the Investment Adviser) are modified with respect to such Fund in writing
by the Company and the Investment Adviser at the time.
2. Delivery of Documents. The Company has furnished the Investment Adviser
with copies properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Company and any amendments thereto;
(b) By-Laws of the Company and any amendments thereto;
(c) Resolutions of the Board of Directors of the Company authorizing the
appointment of the Investment Adviser and the execution and delivery of this
Agreement;
(d) Registration Statement under the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, on Form N-1A (No. 2-93068)
relating to shares of the Company's Class A Common Shares, $.001 par value,
representing interests in the Tax-Exempt Money Fund; Class B Common Shares,
$.001
C-1
<PAGE>
par value, representing interests in the Intermediate-Term Tax-Exempt Fund;
Class C Common Shares, $.001 par value, representing interests in the Long-
Term Tax-Exempt Fund; Class D Common Shares, $.001 par value, representing
interests in the New York Intermediate-Term Tax-Exempt Fund; Class E Common
Shares, $.001 par value, representing interests in the California Tax-Exempt
Income Fund; Class F Common Shares, $.001 par value, representing interests in
the Short-Term Tax-Exempt Securities Fund and Class G Common Shares, $.001 par
value, representing interests in the New York Tax-Exempt Money Fund
("Shares"), and all amendments thereto;
(e) Notification of Registration of the Company under the Investment Company
Act of 1940, as amended, on Form N-8A as filed with the Securities and
Exchange Commission on August 31, 1984, and all amendments thereto; and
(f) The most recent prospectuses of the Company relating to the Funds (such
prospectuses and supplements thereto, as presently in effect and as from time
to time amended and supplemented, herein called the "Prospectuses").
The Company will furnish the Investment Adviser from time to time with
copies of all amendments of or supplements to the foregoing, if any.
3. Management. Subject to the supervision of the Board of Directors of the
Company, the Investment Adviser will provide a continuous investment program
for the Funds, including investment research and management with respect to
all securities, investments, cash and cash equivalents in the Funds. The
Investment Adviser will determine from time to time what securities and other
investments will be purchased, retained or sold by the Company for the Funds.
The Investment Adviser will provide the services rendered by it hereunder in
accordance with the Funds' respective investment objectives and policies as
stated in the Prospectuses. The Investment Adviser further agrees that it:
(a) will conform with all applicable Rules and Regulations of the Securities
and Exchange Commission (herein called the "Rules"), and will in addition
conduct its activities under this Agreement in accordance with applicable law,
including but not limited to applicable banking law;
(b) will not make loans for the purpose of purchasing or carrying Shares, or
make loans to the Company;
(c) will place orders pursuant to its investment determinations for the
Funds either directly with the issuer or with any broker or dealer selected by
it. In placing orders with brokers and dealers, the Investment Adviser will
use its reasonable best efforts to obtain the best net price and the most
favorable execution of its orders, after taking into account all 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 the reasonableness of the commission, if any, both for
the specific transaction and on a continuing basis. Consistent with this
obligation, the Investment Adviser may, to the extent permitted by law,
purchase and sell portfolio securities to and from brokers and dealers who
provide brokerage and research services (within the meaning of Section 28(e)
of the Securities Exchange Act of 1934) to or for the benefit of any Fund
and/or other accounts over which the Investment Adviser or any of its
affiliates exercises investment discretion. Subject to the review of the
Company's Board of Directors from time to time with respect to the extent and
continuation of the policy, the Investment Adviser is authorized to pay to a
broker or dealer who provides such brokerage and research services a
commission for effecting a securities transaction for any Fund which is in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if the Investment Adviser determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
the Investment Adviser with respect to the accounts as to which it exercises
investment discretion. In no instance will portfolio securities be purchased
from or sold to the Funds' principal underwriter, the Investment Adviser or
any affiliated person thereof except as permitted by the Securities and
Exchange Commission;
C-2
<PAGE>
(d) will maintain books and records with respect to the Funds' securities
transactions and will render to the Company's Board of Directors such periodic
and special reports as the Board may request;
(e) will maintain a policy and practice of conducting its Asset Management
Group independently of its Banking Group. When the Investment Adviser makes
investment recommendations for the Funds, its Asset Management Group personnel
will not inquire or take into consideration whether the issuer of securities
proposed for purchase or sale for the Funds' account are customers of the
Banking Group. In dealing with commercial customers, the Banking Group will
not inquire or take into consideration whether securities of those customers
are held by the Funds;
(f) will treat confidentially and as proprietary information of the Company
all records and other information relative to the Funds and prior, present or
potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Company,
which approval shall not be unreasonably withheld and may not be withheld
where the Investment Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information
by duly constituted authorities, or when so requested by the Company. Nothing
contained herein, however, shall prohibit the Investment Adviser from
advertising or soliciting the public generally with respect to other products
or services, regardless of whether such advertisement or solicitation may
include prior, present or potential shareholders of the Company.
4. Services Not Exclusive. The investment management services rendered by
the Investment Adviser hereunder are not to be deemed exclusive, and the
Investment Adviser shall be free to render similar services to others so long
as its services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3 of
the Rules under the Investment Company Act of 1940, the Investment Adviser
hereby agrees that all records which it maintains for the Funds are the
property of the Company and further agrees to surrender promptly to the
Company any of such records upon the Company's request. The Investment Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 the
records required to be maintained by Rule 31a-1 of the Rules.
6. Expenses. During the term of this Agreement, the Investment Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions,
if any) purchased for the Funds.
In addition, if the expenses borne by any Fund in any fiscal year exceed the
applicable expense limitations imposed by the securities regulations of any
state in which the shares of the Funds are registered or qualified for sale to
the public, the Investment Adviser shall reimburse such Fund for a portion of
any such excess in an amount equal to the proportion that the fees otherwise
payable to the Investment Adviser bear to the total amount of investment
advisory and administration fees otherwise payable by the Fund up to the
amount of the fees payable to the Investment Adviser during such fiscal year
pursuant to paragraph 7 hereof; provided, however, that notwithstanding the
foregoing, the Investment Adviser shall reimburse the Fund for a portion of
any such excess expenses in an amount equal to the proportion that the fees
otherwise payable to the Investment Adviser bear to the total amount of
investment advisory and administration fees otherwise payable by the Fund
regardless of the amount of fees paid to the Investment Adviser during such
fiscal year to the extent that the securities regulations of any state in
which Fund shares are registered or qualified for sale so require.
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: 0.25% of the average
daily net assets of the Tax-Exempt Money Fund; 0.35% of the average daily net
assets of the Intermediate-Term Tax-Exempt Fund; 0.50% of the average daily
net assets of the Long-Term Tax-Exempt Fund; 0.50% of the average daily net
assets of the New York Tax-Exempt Money Fund; 0.50% of the average daily net
assets of the New York Intermediate-Term Tax-Exempt Fund; 0.50% of the average
daily net assets of the California Tax-Exempt Income Fund; and 0.30% of the
average daily net assets of the Short-Term Tax-Exempt Securities Fund.
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<PAGE>
8. Limitation of Liability of the Investment Adviser. The Investment Adviser
shall not be liable for any error of judgment or mistake of law or for any
loss suffered by the Company in connection with the matters to which this
Agreement relates, except 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 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 obligations and duties under this Agreement.
9. Duration and Termination. This Agreement shall be effective as of the
date hereto with respect to the Funds named hereinbefore, and with respect to
any additional Fund, on the date of receipt by the Company of notice from the
Investment Adviser in accordance with Section 1(b) hereof that the Investment
Adviser is willing to serve as investment adviser with respect to such Fund,
provided that this Agreement (as supplemented by the terms specified in any
notice and agreement pursuant to Section l(b) hereof) shall have been approved
by the shareholders of the Funds in accordance with the requirements of the
1940 Act and unless sooner terminated as provided herein, shall continue in
effect until July 31, 2001. Thereafter, if not terminated, this Agreement
shall automatically continue in effect as to a particular Fund for successive
periods of 12 months each, provided such continuance is specifically approved
at least annually (a) by the vote of a majority of those members of the Board
of Directors of the Company who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the Board of Directors of
the Company or, with respect to any Fund, by vote of a majority of the
outstanding voting securities of such Fund; provided, however, that this
Agreement may be terminated by the Company as to any Fund at any time, without
the payment of any penalty, by the Board of Directors of the Company or, with
respect to any Fund, by vote of a majority of the outstanding voting
securities of such Fund on 60 days' written notice to the Investment Adviser,
or by the Investment Adviser as to any Fund at any time, without payment of
any penalty, on 90 days' written notice to the Company. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings as such
terms have in the Investment Company Act of 1940.) An affiliate of the
Investment Adviser may assume the Investment Adviser's obligations under this
Agreement to an affiliate provided that (i) the affiliate is qualified to act
as an investment adviser to the Company under applicable law; (ii) the
assumption will not result in a change of actual control or management of the
Investment Adviser; and (iii) the assumption of the Investment Adviser's
obligations by the affiliate is approved by the Board of Directors of the
Company.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall
be effective with respect to a Fund until approved by vote of a majority of
such Fund's outstanding voting securities, if such vote is required by the
1940 Act, or by the vote of a majority of the Board of Directors of the
Company who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on
such amendment.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by New York law.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
EXCELSIOR TAX-EXEMPT FUNDS, INC.
Attest:
_____________________ By: ___________________
Secretary President
U.S. TRUST COMPANY
Attest:
_____________________ By: ___________________
UNITED STATES TRUST COMPANY
OF NEW YORK
Attest:
_____________________ By: ___________________
C-5
<PAGE>
APPENDIX D
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of , 2000 by and among EXCELSIOR INSTITUTIONAL TRUST
(the "Trust"), a Delaware business trust registered as an open-end management
investment company under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), UNITED STATES TRUST COMPANY OF NEW YORK ("USTNY"),
a state-chartered bank and trust company, and U.S. TRUST COMPANY ("UST"), a
Connecticut state bank and trust company (UST and USTNY are collectively
referred to herein as the "Adviser").
In consideration of the promises and the mutual covenants herein contained,
the Trust and the Adviser agree as follows:
1. Appointment. The Trust appoints the Adviser to act as investment adviser
to the Trust with respect to the series of the Trust listed on Exhibit A
hereto (the "Series") for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to provide an
investment program for the compensation provided by this Agreement. In
providing the services and assuming the obligations set forth herein, the
Adviser may, at its own expense, employ one or more sub-advisers; provided
that the Adviser understands and agrees that it shall remain fully responsible
for the performance of all the duties set forth in this Agreement and that it
shall supervise the activities of each sub-adviser. Any agreement between the
Adviser and a sub-adviser shall be subject to the renewal, termination and
amendment provisions applicable to this Agreement.
The Investment Adviser may, in its discretion, provide such services through
its own employees or the employees of one or more affiliated companies that
are qualified to act as investment adviser to the Company under applicable law
and are under the common control of U.S. Trust Corporation provided (i) that
all persons, when providing services hereunder, are functioning as part of an
organized group of persons, (ii) the use of an affiliate's employees does not
result in a change of actual control or management of the Adviser under the
Investment Company Act; and (iii) the use of an affiliate's employees has been
approved by the Board of Directors of the Trust.
2. Duties of the Adviser. Subject to the direction and control of the Board
of Trustees of the Trust, the Adviser shall:
(a) prepare (or otherwise obtain) and evaluate on both a macroeconomic and
microeconomic level any pertinent research; statistical, financial and
economic data; and other information necessary or appropriate for the
performance of its duties under this Agreement;
(b) formulate and continuously review, supervise, and administer an
investment program for the Series;
(c) determine the securities to be purchased by the Series, and continuously
monitor such securities and the issuers thereof to determine whether and when
to sell, exchange, or take any other action concerning such securities;
(d) determine whether and how to exercise warrants, voting rights, or other
rights with respect to the Series' securities;
(e) provide valuations with respect to the securities held by the Series if
so requested by the Trustees of the Trust;
(f) render regular reports to the Trust's officers and the Board of Trustees
concerning the investment performance of the Trust, the Adviser's discharge of
its responsibilities under this Agreement, and any other subject as the
Trust's officers or Board of Trustees reasonably may request; and
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<PAGE>
(g) assist the Trust's officers in connection with the operation of the
Trust and perform any further acts that may be necessary to effectuate the
purposes of this Agreement.
3. Supervision and compliance. The activities of the Adviser shall be
subject at all times to the direction and control of the Board of Trustees of
the Trust and shall comply with: (a) the Trust Instrument and By-Laws of the
Trust; (b) the Registration Statement of the Trust, as it may be amended from
time to time, including the investment objectives and policies set forth
therein; (c) the Investment Company Act and the regulations thereunder; (d)
the Internal Revenue Code of 1986 and the regulations thereunder applicable to
regulated investment companies; (e) any other applicable laws or regulations;
and (f) such other limitations as the Board of Trustees may adopt.
4. Purchase and Sale of Securities. The Adviser shall, at its own expense,
place orders for the purchase, sale or loan of securities by the Trust either
directly with the issuer or with any broker and/or dealer who deals in such
securities.
(a) In placing orders with brokers and/or dealers, the Adviser shall use its
best efforts to obtain the best net price and the most favorable execution of
its orders, after taking into account all 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 and/or dealer, and
the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis.
Consistent with this obligation, the Adviser may, to the extent permitted by
law, purchase and sell portfolio securities to and from brokers who provide
brokerage and research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934) to or for the benefit of the Trust and/or
other accounts over which the Adviser exercises investment discretion. The
Adviser is authorized to pay a broker who provides such brokerage and research
services a commission for effecting a securities transaction which is in
excess of the amount of commission another broker would have charged for
effecting that transaction, if the Adviser determines in good faith that such
commission was reasonable in relation to the value of brokerage and research
services provided by such broker. This determination may be viewed in terms of
either that particular transaction or of the overall responsibilities of the
Adviser with respect to the accounts as to which it exercises investment
discretion.
(b) The Adviser may execute transactions through itself and its affiliates
on a securities exchange provided that the commissions paid by the Trust are
"reasonable and fair" compared to commissions received by other brokers having
comparable execution capability and provided that the transactions are
effected pursuant to procedures established by the Board of Trustees of the
Trust. An affiliated broker may transmit, clear and settle transactions for
the Trust that are executed on a securities exchange provided that the
affiliated broker arranges for unaffiliated brokers to execute the
transactions.
(c) Notwithstanding the foregoing, the Board of Trustees periodically shall
review the commissions paid by the Trust and determine whether those
commissions were reasonable in relation to the brokerage and research services
received. In addition, the Board of Trustees of the Trust, in its discretion,
may instruct the Adviser to effect all or a portion of its securities
transactions with one or more brokers and/or dealers selected by the Board of
Trustees, if it determines that the use of such brokers and/or dealers is in
the best interest of the Trust.
(d) When the Adviser deems the purchase or sale of a security to be in the
best interest of the Trust as well as other customers, the Adviser, to the
extent permitted by applicable law, may aggregate the securities to be so sold
or purchased in order to obtain the best execution or lower brokerage
commissions. The Adviser also may purchase or sell a particular security for
one or more customers in different amounts. Allocation of the securities
purchased or sold in either manner, as well as the expenses incurred in the
transactions, will be made by the Adviser in a manner that is equitable and
consistent with applicable law and regulations and with its fiduciary
obligations to the Trust and to such other customers.
D-2
<PAGE>
5. Expenses.
(a) The Adviser shall furnish at its own expense all office space, office
facilities, equipment and personnel necessary or appropriate to the
performance of its duties under this Agreement. The Adviser also shall pay the
salaries and fees of all personnel of the Trust or the Adviser performing
services related to the Adviser's duties under this Agreement.
(b) It is understood that the Trust will pay all of its expenses and
liabilities, including compensation of its independent Trustees; taxes and
governmental fees; interest charges; fees and expenses of the Trust's
independent auditors and legal counsel; trade association membership dues;
fees and expenses of any custodian (including safekeeping of funds and
securities, maintenance of books and accounts and calculation of the net asset
value of beneficial interests of the Series), transfer agent and registrar and
dividend disbursing agent of the Trust; expenses of preparing and mailing
reports to investors and regulatory agencies; expenses relating to the
issuance, registration and qualification of shares of the Series, and the
preparation, printing and mailing of prospectuses for such purposes; insurance
premiums; brokerage and other expenses of executing portfolio transactions;
expenses of investors' and Trustees' meetings; organization expenses; and
extraordinary expenses.
6. Compensation of the Adviser. In consideration of the services to be
rendered by the Adviser under this Agreement, the Trust shall pay the Adviser
a fee accrued daily and paid monthly from the Series at an annual rate equal
to that specified in Exhibit A to this Agreement for the Series' average daily
net assets. The fee for any period in which the Adviser serves as investment
adviser pursuant to this Agreement for less than one full month shall be paid
for that portion of the month accrued. For purposes of calculating fees, the
value of the net assets of the Series shall be computed in the manner
specified in its Registration Statement on Form N-1A.
7. Services to Others. The services of the Adviser to the Trust are not to
be deemed exclusive, and the Adviser is free to render services to others and
to engage in other activities, provided, however, that those services and
activities do not adversely affect the Adviser's ability to perform its
obligations under this Agreement.
8. Books, Records, and Information. The Adviser shall provide the Trust with
all records concerning the Adviser's activities that the Trust is required by
law to maintain. Any records required to be maintained and preserved pursuant
to the provisions of Rule 31a-l and Rule 31a-2 under the Investment Company
Act which are prepared or maintained by the Adviser on behalf of the Trust are
the property of the Trust and will be surrendered promptly to the Trust on
request. The Trust also shall comply with all reasonable requests for
information by the Trust's officers or Board of Trustees, including
information required for the Trust's filings with the Securities and Exchange
Commission and state securities commissions.
9. Limitations on Liability.
(a) The Adviser hereby is notified expressly of the limitation of
shareholder liability as set forth in the Trust Instrument and agrees that any
obligation of the Trust or the Series arising in connection with this
Agreement shall be limited in all cases to the Series and its assets, and the
Adviser shall not seek satisfaction of any such obligation from any Trustee or
shareholder of the Series.
(b) The Adviser shall give the Trust the benefit of its best judgment and
efforts in rendering services under this Agreement. In the absence of willful
malfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties hereunder on the part of the Adviser, the Adviser shall not be
liable to the Trust or to any shareholder of the Series for any act or
omission in the course of, or connected with, rendering services under this
Agreement or for any losses that may be sustained in the purchase, holding or
sale of any security. The liability of the Adviser hereunder shall be joint,
but not several.
10. Effective Date; Termination; Amendments.
(a) This Agreement shall be effective as of the date hereof and unless
terminated sooner as provided herein, shall continue until July 31, 2001.
Thereafter, unless terminated sooner as provided herein, this
D-3
<PAGE>
Agreement shall continue in effect as to the Series for successive annual
periods, provided that such continuance is specifically approved at least
annually by the vote of a majority of the Board of Trustees of the Trust who
are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
continuance, and either: (i) the vote of a majority of the outstanding voting
securities of the Series; or (ii) the vote of a majority of the full Board of
Trustees.
(b) This Agreement may be terminated at any time, without the payment of any
penalty, either by: (i) the Trust, by action of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Series, on 60
days' written notice to the Adviser; or (ii) the Adviser, on 90 days' written
notice to the Trust. This Agreement shall terminate immediately in the event
of its assignment. An affiliate of the Investment Adviser may assume the
Investment Adviser's obligations under this Agreement provided that (i) the
affiliate is qualified to act as an investment adviser to the Company under
applicable law; (ii) the assumption will not result in a change of actual
control or management of the Investment Adviser and (iii) the assumption of
the Investment Adviser's obligations by the affiliate is approved by the Board
of Trustees of the Company.
(c) This Agreement may be amended only if such amendment is approved by the
vote of a majority of the outstanding voting securities of the Series, if such
vote is required by the Investment Company Act, or by the vote of a majority
of the Board of Directors of the Company who are not parties to this Agreement
or interested persons of any such party, cast in person at a meeting called
for the purpose of voting on such amendment.
(d) As used in this Agreement, the terms "specifically approved at least
annually," "majority of the outstanding voting securities," "interested
persons" and "assignment" shall have the same meanings as such terms have in
the Investment Company Act and the regulations thereunder.
11. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Delaware without giving effect to the choice of law
provisions thereof, to the extent that such laws are consistent with
provisions of the Investment Company Act and the regulations thereunder.
12. Miscellaneous. The captions in this Agreement are included for the
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. Should any
part of this Agreement be held or made invalid by a court decision, statute,
regulation, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors, to the extent
permitted by law.
D-4
<PAGE>
IN WITNESS WHEREOF, the Trust and the Adviser have caused this Agreement to
be executed and delivered in their names and on their behalf by the
undersigned, duly authorized officers, all as of the day and year first above
written.
EXCELSIOR INSTITUTIONAL TRUST
By: ___________________
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
By: ___________________
Name:
Title:
U.S. TRUST COMPANY
By: ___________________
Name:
Title:
D-5
<PAGE>
EXHIBIT A TO INVESTMENT ADVISORY AGREEMENT
SCHEDULE OF SERIES AND FEES UNDER INVESTMENT ADVISORY AGREEMENT
<TABLE>
<CAPTION>
Annual Fee
(as a percentage
of the average
daily net assets
Series Names of the Series)
------------ ----------------
<S> <C>
Equity Fund 0.65%
Income Fund 0.65%
Total Return Bond Fund 0.65%
Value Equity Fund 0.65%
Optimum Growth Fund 0.65%
</TABLE>
D-6
<PAGE>
APPENDIX E
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of , 2000 by and among EXCELSIOR INSTITUTIONAL TRUST
(the "Trust"), a Delaware business trust registered as an open-end diversified
management investment company under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), U.S. TRUST COMPANY ("UST"), a
Connecticut state bank and trust company, and UNITED STATES TRUST COMPANY OF
NEW YORK ("USTNY"), a New York state-chartered bank and trust company
(together with UST, the "Adviser").
In consideration of the promises and the mutual covenants herein contained,
the Trust and the Adviser agree as follows:
1. Appointment. The Trust appoints the Adviser to act as investment adviser
to the Trust with respect to the series of the Trust listed on Exhibit A
hereto (the "Series") for the period and on the terms set forth in this
Agreement. The Adviser accepts such appointment and agrees to provide an
investment program for the compensation provided by this Agreement. In
providing the services and assuming the obligations set forth herein, the
Adviser may, at its own expense, employ one or more sub-advisers; provided
that the Adviser understands and agrees that it shall remain fully responsible
for the performance of all the duties set forth in this Agreement and that it
shall supervise the activities of each sub-adviser. Any agreement between the
Adviser and a sub-adviser shall be subject to the renewal, termination and
amendment provisions applicable to this Agreement.
The Investment Adviser may, in its discretion, provide such services through
its own employees or the employees of one or more affiliated companies that
are qualified to act as investment adviser to the Company under applicable law
and are under the common control of U.S. Trust Corporation provided (i) that
all persons, when providing services hereunder, are functioning as part of an
organized group of persons, (ii) the use of an affiliate's employees does not
result in a change of actual control or management of the Adviser under the
Investment Company Act; and (iii) the use of an affiliate's employees has been
approved by the Board of Directors of the Trust.
2. Sub-Adviser. It is understood that the Investment Adviser may from time
to time employ or associate with itself such person or persons as the
Investment Adviser believes to be fitted to assist it in the performance of
this Agreement; provided, however, that the compensation of such person or
persons shall be paid by the Investment Adviser and that the Investment
Adviser shall be as fully responsible to the Company for the acts and
omissions of any such person as it is for its own acts and omissions. Without
limiting the generality of the foregoing, it is agreed that the sub-advisory
services to the Series shall be provided by person or persons agreeable to the
Investment Adviser and approved in accordance with the provisions of the
Investment Company Act of 1940. Such sub-adviser is hereinafter referred to as
the "Sub-Adviser."
3. Duties of the Adviser. Subject to the direction and control of the Board
of Trustees of the Trust, the Adviser's responsibilities include:
(i) Advising the Sub-Adviser with respect to U.S. economic factors and
trends;
(ii) Assisting and consulting with the Sub-Adviser in connection with the
Series' continuous investment program;
(iii) Approving lists of foreign countries recommended by the Sub-Adviser
for investments of the Series;
(iv) Placing orders with respect to purchases and sales of the securities of
U.S. issuers as described in the Prospectus;
E-1
<PAGE>
(v) Managing, in cooperation with the Sub-Adviser, the Fund's short-term
cash balance positions denominated in U.S. dollars to preserve required
liquidity of the Series' assets including placing of orders for U.S. money
market instruments;
(vi) Monitoring the Sub-Adviser's investment procedures; and
(vii) Periodically reviewing, evaluating and reporting to the Company's
Board of Directors with respect to the performance of the Sub-Adviser under
the Sub-Advisory Agreement.
The Adviser further agrees that it:
(a) will prepare (or otherwise obtain) and evaluate on both a macroeconomic
and microeconomic level any pertinent research; statistical, financial and
economic data; and other information necessary or appropriate for the
performance of its duties under this Agreement;
(b) will formulate and continuously review, supervise, and administer an
investment program for the Series;
(c) will determine the securities to be purchased by the Series, and
continuously monitor such securities and the issuers thereof to determine
whether and when to sell, exchange, or take any other action concerning such
securities;
(d) will determine whether and how to exercise warrants, voting rights, or
other rights with respect to the Series' securities;
(e) will provide valuations with respect to the securities held by the
Series if so requested by the Trustees of the Trust;
(f) will render regular reports to the Trust's officers and the Board of
Trustees concerning the investment performance of the Trust, the Adviser's
discharge of its responsibilities under this Agreement, and any other subject
as the Trust's officers or Board of Trustees reasonably may request; and
(g) will assist the Trust's officers in connection with the operation of the
Trust and perform any further acts that may be necessary to effectuate the
purposes of this Agreement.
4. Supervision and compliance. The activities of the Adviser shall be
subject at all times to the direction and control of the Board of Trustees of
the Trust and shall comply with: (a) the Trust Instrument and By-Laws of the
Trust; (b) the Registration Statement of the Trust, as it may be amended from
time to time, including the investment objectives and policies set forth
therein; (c) the Investment Company Act and the regulations thereunder; (d)
the Internal Revenue Code of 1986 and the regulations thereunder applicable to
regulated investment companies; (e) any other applicable laws or regulations;
and (f) such other limitations as the Board of Trustees may adopt.
5. Purchase and Sale of Securities. The Adviser shall, at its own expense,
place orders for the purchase, sale or loan of securities by the Trust either
directly with the issuer or with any broker and/or dealer who deals in such
securities.
(a) In placing orders with brokers and/or dealers, the Adviser shall use its
best efforts to obtain the best net price and the most favorable execution of
its orders, after taking into account all 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 and/or dealer, and
the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis.
Consistent with this obligation, the Adviser may, to the extent permitted by
law, purchase and sell portfolio securities to and from brokers who provide
brokerage and research services (within the meaning of Section 28(e)
E-2
<PAGE>
of the Securities Exchange Act of 1934) to or for the benefit of the Trust
and/or other accounts over which the Adviser exercises investment discretion.
The Adviser is authorized to pay a broker who provides such brokerage and
research services a commission for effecting a securities transaction which is
in excess of the amount of commission another broker would have charged for
effecting that transaction, if the Adviser determines in good faith that such
commission was reasonable in relation to the value of brokerage and research
services provided by such broker. This determination may be viewed in terms of
either that particular transaction or of the overall responsibilities of the
Adviser with respect to the accounts as to which it exercises investment
discretion.
(b) The Adviser may execute transactions through itself and its affiliates
on a securities exchange provided that the commissions paid by the Trust are
"reasonable and fair" compared to commissions received by other brokers having
comparable execution capability and provided that the transactions are
effected pursuant to procedures established by the Board of Trustees of the
Trust. An affiliated broker may transmit, clear and settle transactions for
the Trust that are executed on a securities exchange provided that the
affiliated broker arranges for unaffiliated brokers to execute the
transactions.
(c) Notwithstanding the foregoing, the Board of Trustees periodically shall
review the commissions paid by the Trust and determine whether those
commissions were reasonable in relation to the brokerage and research services
received. In addition, the Board of Trustees of the Trust, in its discretion,
may instruct the Adviser to effect all or a portion of its securities
transactions with one or more brokers and/or dealers selected by the Board of
Trustees, if it determines that the use of such brokers and/or dealers is in
the best interest of the Trust.
(d) When the Adviser deems the purchase or sale of a security to be in the
best interest of the Trust as well as other customers, the Adviser, to the
extent permitted by applicable law, may aggregate the securities to be so sold
or purchased in order to obtain the best execution or lower brokerage
commissions. The Adviser also may purchase or sell a particular security for
one or more customers in different amounts. Allocation of the securities
purchased or sold in either manner, as well as the expenses incurred in the
transactions, will be made by the Adviser in a manner that is equitable and
consistent with applicable law and regulations and with its fiduciary
obligations to the Trust and to such other customers.
6. Expenses.
(a) The Adviser shall furnish at its own expense all office space, office
facilities, equipment and personnel necessary or appropriate to the
performance of its duties under this Agreement. The Adviser also shall pay the
salaries and fees of all personnel of the Trust or the Adviser performing
services related to the Adviser's duties under this Agreement.
(b) It is understood that the Trust will pay all of its expenses and
liabilities, including compensation of its independent Trustees; taxes and
governmental fees; interest charges; fees and expenses of the Trust's
independent auditors and legal counsel; trade association membership dues;
fees and expenses of any custodian (including safekeeping of funds and
securities, maintenance of books and accounts and calculation of the net asset
value of beneficial interests of the Series), transfer agent and registrar and
dividend disbursing agent of the Trust; expenses of preparing and mailing
reports to investors and regulatory agencies; expenses relating to the
issuance, registration and qualification of shares of the Series, and the
preparation, printing and mailing of prospectuses for such purposes; insurance
premiums; brokerage and other expenses of executing portfolio transactions;
expenses of investors' and Trustees' meetings; organization expenses; and
extraordinary expenses.
7. Compensation of the Adviser. In consideration of the services to be
rendered by the Adviser under this Agreement, the Trust shall pay the Adviser
a fee accrued daily and paid monthly from the Series at an annual rate equal
to that specified in Exhibit A to this Agreement for the Series' average daily
net assets. The fee for any period in which the Adviser serves as investment
adviser pursuant to this Agreement for less than one full month shall be paid
for that portion of the month accrued. For purposes of calculating fees, the
value of the net assets of the Series shall be computed in the manner
specified in its Registration Statement on Form N-1A.
E-3
<PAGE>
8. Services to Others. The services of the Adviser to the Trust are not to
be deemed exclusive, and the Adviser is free to render services to others and
to engage in other activities, provided, however, that those services and
activities do not adversely affect the Adviser's ability to perform its
obligations under this Agreement.
9. Books, Records, and Information. The Adviser shall provide the Trust with
all records concerning the Adviser's activities that the Trust is required by
law to maintain. Any records required to be maintained and preserved pursuant
to the provisions of Rule 31a-l and Rule 31a-2 under the Investment Company
Act which are prepared or maintained by the Adviser on behalf of the Trust are
the property of the Trust and will be surrendered promptly to the Trust on
request. The Trust also shall comply with all reasonable requests for
information by the Trust's officers or Board of Trustees, including
information required for the Trust's filings with the Securities and Exchange
Commission and state securities commissions.
10. Limitations on Liability.
(a) The Adviser hereby is notified expressly of the limitation of
shareholder liability as set forth in the Trust Instrument and agrees that any
obligation of the Trust or the Series arising in connection with this
Agreement shall be limited in all cases to the Series and its assets, and the
Adviser shall not seek satisfaction of any such obligation from any Trustee or
shareholder of the Series.
(b) The Adviser shall give the Trust the benefit of its best judgment and
efforts in rendering services under this Agreement. In the absence of willful
malfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties hereunder on the part of the Adviser, the Adviser shall not be
liable to the Trust or to any shareholder of the Series for any act or
omission in the course of, or connected with, rendering services under this
Agreement or for any losses that may be sustained in the purchase, holding or
sale of any security. The liability of the Adviser hereunder shall be joint,
but not several.
11. Effective Date; Termination; Amendments.
(a) This Agreement shall be effective as of the date hereof, and, unless
terminated sooner as provided herein, shall continue until July 31, 2001.
Thereafter, unless terminated sooner as provided herein, this Agreement shall
continue in effect as to the Series for successive annual periods, provided
that such continuance is specifically approved at least annually by the vote
of a majority of the Board of Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such continuance, and either: (i)
the vote of a majority of the outstanding voting securities of the Series; or
(ii) the vote of a majority of the full Board of Trustees.
(b) This Agreement may be terminated at any time, without the payment of any
penalty, either by: (i) the Trust, by action of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Series, on 60
days' written notice to the Adviser; or (ii) the Adviser, on 90 days' written
notice to the Trust. This Agreement shall terminate immediately in the event
of its assignment. An affiliate of the Investment Adviser may assume the
Investment Adviser's obligations under this Agreement provided that (i) the
affiliate is qualified to act as an investment adviser to the Company under
applicable law; (ii) the assumption will not result in a change of actual
control or management of the Adviser; and (iii) the assumption of the
Adviser's obligations under this Agreement is approved by the Board of
Trustees of the Company.
(c) This Agreement may be amended only if such amendment is approved by the
vote of a majority of the outstanding voting securities of the Series, if such
vote is required by the Investment Company Act, or by vote of a majority of
the Board of Trustees of the Trust who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for
the purpose of voting on such amendment.
(d) As used in this Agreement, the terms "specifically approved at least
annually," "majority of the outstanding voting securities," "interested
persons" and "assignment" shall have the same meanings as such terms have in
the Investment Company Act and the regulations thereunder.
E-4
<PAGE>
12. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of Delaware without giving effect to the choice of law
provisions thereof, to the extent that such laws are consistent with
provisions of the Investment Company Act and the regulations thereunder.
13. Miscellaneous. The captions in this Agreement are included for the
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. Should any
part of this Agreement be held or made invalid by a court decision, statute,
regulation, or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective successors, to the extent
permitted by law.
IN WITNESS WHEREOF, the Trust and the Adviser have caused this Agreement to
be executed and delivered in their names and on their behalf by the
undersigned, duly authorized officers, all as of the day and year first above
written.
EXCELSIOR INSTITUTIONAL TRUST
Attest:
_____________________ By: ___________________
President
U.S. TRUST COMPANY
Attest:
_____________________ By: ___________________
UNITED STATES TRUST COMPANY
OF NEW YORK
Attest:
_____________________ By: ___________________
E-5
<PAGE>
EXHIBIT A TO INVESTMENT ADVISORY AGREEMENT
SCHEDULE OF SERIES AND FEES UNDER INVESTMENT ADVISORY AGREEMENT
<TABLE>
<CAPTION>
Annual Fee
(as a percentage
of the average
daily net assets
Series Names of the Series)
------------ ----------------
<S> <C>
International Equity Fund 1.00%
</TABLE>
E-6
<PAGE>
APPENDIX F
SUB-ADVISORY AGREEMENT
AGREEMENT made as of , 2000 by and among U.S. TRUST COMPANY ("UST"), a
Connecticut state bank and trust company, UNITED STATES TRUST COMPANY OF NEW
YORK ("USTNY"), a New York state-chartered bank and trust company (together
with UST, "U.S. Trust"), and U.S. Trust Company, N.A., a national bank
organized under the laws of the United States (herein called "U.S. Trust
California").
WHEREAS, Excelsior Tax-Exempt Funds, Inc. (the "Company") is registered as
an open-end, management investment company under the Investment Company Act of
1940 (the "1940 Act");
WHEREAS, U.S. Trust is the investment adviser to the Company's California
Tax-Exempt Income Fund (the "Fund");
WHEREAS, U.S. Trust desires to retain U.S Trust California to render
investment sub-advisory services to the Company for the Fund, and U.S. Trust
California is willing to so render such services;
NOW, THEREFORE, this Agreement
WITNESSETH:
In consideration of the premises and mutual covenants herein contained, it
is agreed between the parties hereto as follows:
1. Appointment. U.S. Trust hereby appoints U.S. Trust California to act as
investment sub-adviser to the Company for the Fund for the period and on the
terms set forth in this Agreement. U.S. Trust California accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided. U.S. Trust California may, in its discretion,
provide such services through its own employees or the employees of one or
more affiliated companies that are qualified to act as investment sub-adviser
to the Company under applicable law and are under the common control of U.S.
Trust Corporation provided (i) that all persons, when providing services
hereunder, are functioning as part of an organized group of persons, and (ii)
the use of an affiliate's employees does not result in a change of actual
control or management of U.S. Trust California under the 1940 Act; and (iii)
the use of an affiliate's employees has been approved by the Board of
Directors of the Company.
2. Delivery of Documents. U.S. Trust has furnished U.S. Trust California
with copies properly certified or authenticated of each of the following:
(a) Articles of Incorporation of the Company;
(b) By-Laws of the Company;
(c) Resolutions of the Board of Directors of the Company authorizing the
appointment of U.S. Trust as the investment adviser for the Fund and the
execution and delivery of the Investment Advisory Agreement with respect to
the Fund;
(d) Resolutions of the Board of Directors of the Company authorizing the
appointment of U.S. Trust California as the Fund's investment sub-adviser and
the execution and delivery of this Agreement;
(e) Post-Effective Amendment No. 19 to the Company's Registration Statement
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended (the "1940 Act"), on Form N-1A (No. 2-93068) relating to
the Company's shares representing interests in the Fund;
F-1
<PAGE>
(f) Notification of Registration of the Company under the 1940 Act, as
amended, on Form N-8A as filed with the Securities and Exchange Commission on
August 31, 1984, and all amendments thereto; and
(g) Prospectuses and statements of additional information of the Company
relating to the Company's shares representing interests in the Fund in effect
under the Securities Act of 1933 (such prospectuses, statements of additional
information and supplements thereto, as presently in effect and as from time
to time amended and supplemented, herein called the "Prospectus").
U.S. Trust will furnish U.S Trust California from time to time with copies
of all amendments of or supplements to the foregoing, if any.
3. Sub-Advisory Services. Subject to the supervision of the Board of
Directors of the Company and the oversight of U.S. Trust, U.S. Trust
California will provide a continuous investment program for the Fund,
including investment research and management with respect to all securities
and investments of the Fund. U.S. Trust California will determine, subject to
U.S. Trust's approval, what securities and other investments will be
purchased, retained or sold by the Company for the Fund including, with the
assistance of U.S. Trust if required, the Fund's investments in futures. U.S.
Trust California will provide the services rendered by it hereunder in
accordance with the Fund's investment objectives and policies as stated in the
Prospectus. U.S. Trust California further agrees that it:
(a) will conform with all applicable Rules and Regulations of the Securities
and Exchange Commission (herein called the "Rules"), and will in addition
conduct its activities under this Agreement in accordance with applicable law,
including but not limited to applicable banking law;
(b) will not make loans for the purpose of purchasing or carrying Fund
shares, or make loans to the Company;
(c) will manage the Fund's overall cash positions;
(d) will place orders pursuant to its investment determinations for the Fund
either directly with the issuer or with any broker or dealer selected by it.
In placing orders with brokers and dealers, U.S. Trust California will use its
reasonable best efforts to obtain the best net price and the most favorable
execution of its orders, after taking into account all 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 the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. Consistent with this
obligation, U.S. Trust California may, to the extent permitted by law,
purchase and sell portfolio securities to and from brokers and dealers who
provide brokerage and research services (within the meaning of Section 28(e)
of the Securities Exchange Act of 1934) to or for the benefit of the Fund
and/or other accounts over which U.S. Trust California or any of its
affiliates exercises investment discretion. Subject to the review of the
Company's Board of Directors from time to time with respect to the extent and
continuation of the policy, U.S. Trust California is authorized to pay to a
broker or dealer who provides such brokerage and research services a
commission for effecting a securities transaction for the Fund which is in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if U.S. Trust California determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the overall responsibilities of
U.S. Trust California with respect to the accounts as to which it exercises
investment discretion. In no instance will portfolio securities be purchased
from or sold to the Fund's principal underwriter, U.S. Trust, U.S. Trust
California or any affiliated person thereof except as permitted by the
Securities and Exchange Commission;
(e) will maintain books and records with respect to the securities and other
investment transactions entered into pursuant to this Agreement and will
render to U.S. Trust and the Company's Board of Directors such periodic and
special reports as they may request;
F-2
<PAGE>
(f) will treat confidentially and as proprietary information of the Company
all records and other information relative to the Company and prior, present
or potential shareholders, and will not use such records and information for
any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by the
Company, which approval shall not be unreasonably withheld and may not be
withheld where U.S. Trust California may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the
Company. Nothing contained herein, however, shall prohibit U.S. Trust
California from advertising or soliciting the public generally with respect to
other products or services, regardless of whether such advertisement or
solicitation may include prior, present or potential shareholders of the
Company.
4. Services Not Exclusive. The investment sub-advisory services rendered by
U.S. Trust California hereunder are not to be deemed exclusive, and U.S. Trust
California shall be free to render similar services to others so long as its
services under this Agreement are not impaired thereby.
5. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, U.S. Trust California hereby agrees that all records which
it maintains for the Fund are the property of the Company and further agrees
to surrender promptly to the Company any of such records upon the Company's
request. U.S. Trust California further agrees to preserve for the periods
prescribed by Rule 31a-2 the records required to be maintained by Rule 31a-1
under the 1940 Act.
6. Expenses. During the term of this Agreement, U.S. Trust California will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Fund.
In addition, U.S. Trust California will pay U.S. Trust an amount equal to
83% of each expense reimbursement made by U.S. Trust to the Company with
respect to the Fund under the second paragraph of Section 6 of the Investment
Advisory Agreement relating to the Fund.
7. Compensation. For the services provided and the expenses assumed pursuant
to this Agreement, U.S. Trust will pay U.S. Trust California and U.S. Trust
California will accept as full compensation therefor a fee, computed daily and
payable monthly, at the annual rate of .50% of the average daily net assets of
the Fund.
8. Limitation of Liability of the Sub-Adviser. U.S. Trust California shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Company in connection with the matters to which this Agreement
relates, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of U.S. Trust
California in the performance of its duties or from reckless disregard by it
of its obligations and duties under this Agreement.
9. Duration and Termination. This Agreement shall become effective upon its
execution as of the date first written above and, unless sooner terminated as
provided herein, shall continue until July 31, 2001. Thereafter, if not
terminated, this Agreement shall continue in effect as to the Fund for
successive periods of 12 months each, provided such continuance is
specifically approved at least annually by the vote of a majority of those
members of the Board of Directors of the Company who are not parties to this
Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and by the Board of
Directors of the Company or the vote of a majority of the outstanding voting
securities of the Fund; provided, however, that this Agreement may be
terminated as to the Fund at any time, without the payment of any penalty, by
U.S. Trust or by the Company (by the Board of Directors of the Company or by
vote of a majority of the outstanding voting securities of the Fund) on 60
days' written notice to U.S. Trust California, and will automatically
terminate upon the termination of the Investment Advisory Agreement between
U.S. Trust and the Company with respect to the Fund. This Agreement may be
terminated as to the Fund by U.S. Trust California at any time, without
payment of any penalty, on 90 days' written notice to the Company and U.S.
Trust. This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement,
F-3
<PAGE>
the terms "majority of the outstanding voting securities," "interested person"
and "assignment" shall have the same meanings as such terms have in the 1940
Act.) An affiliate of U.S. Trust California may assume U.S. Trust California's
obligations under this Agreement provided that (i) the affiliate is qualified
to act as an investment adviser to the Company under applicable law; (ii) the
assumption will not result in a change of actual control or management of the
Investment Adviser; and (iii) the assumption by the affiliate of U.S. Trust
California's obligations is approved by the Board of Directors of the Company.
An affiliate of U.S. Trust may assume U.S. Trust's obligations under this
Agreement provided that (w) the affiliate is qualified to act as investment
adviser to the Company under applicable law; (x) the assumption will not
result in a change of actual control or management of U.S. Trust; and (y) the
assumption by the affiliate of U.S. Trust's obligations is approved by the
Board of Directors of the Company.
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Agreement shall
be effective with respect to the Fund until approved by vote of a majority of
the Fund's outstanding voting securities, if such vote is required by the 1940
Act, or by the vote of a majority of the Board of Directors of the Company who
are not parties to this Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
amendment.
11. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by New York law.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
U.S. TRUST COMPANY
Attest:
_____________________ By: ___________________
President & CEO
UNITED STATES TRUST COMPANY
OF NEW YORK
Attest:
_____________________ By: ___________________
U.S. TRUST COMPANY, N.A.
Attest:
_____________________ By: ___________________
F-4
<PAGE>
[LOGO]
EXCELSIOR FUNDS, INC.
73 TREMONT STREET
BOSTON, MA 02108
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
EXCELSIOR FUNDS, INC.
(THE "COMPANY")
This proxy is solicited by the Board of the Company for use at a special
meeting of shareholders to be held on May 3, 2000, at 10:00 a.m. (Eastern time),
at the offices of United States Trust Company of New York, 114 West 47/th/
Street, New York, New York 10036.
The undersigned hereby appoints Frank Bruno, Mark Dari, Patricia Leyne,
Michael Malloy and Diana McCarthy, and each of them, with full power of
substitution, as proxies of the undersigned to vote at the above-stated special
meeting, and at all adjournments or postponements thereof, all shares
representing interests in the Funds of the Company held of record by the
undersigned on March 6, 2000, the record date for the meeting, upon the
following matters and upon any other matter that may come before the meeting, in
their discretion.
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign.
When signing as attorney or executor, administrator,
trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by
president or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
Every properly signed proxy will be voted in the manner specified thereon and,
in the absence of specification, will be treated as GRANTING authority to vote
FOR Proposal (2)(a).
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To Vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<PAGE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS.
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The proxies are authorized to vote in their discretion upon any other
business which may properly come before the Meeting and any adjournments
thereof.
VOTE ON PROPOSAL
(2)(a) Proposal to approve a new Investment Advisory Agreement among the
Company, United States Trust Company of New York and U.S. Trust
Company.
[_] For [_] Against [_] Abstain
If you own shares in more than one Fund and you wish to receive an individual
ballot for each Fund, check this box and separate proxy cards for each Fund in
which you hold shares will be sent to you. [ ]
- ---------------------------------- ---- ------------------------ ----
SIGNATURE (PLEASE SIGN WITHIN BOX) DATE SIGNATURE (JOINT OWNERS) DATE
<PAGE>
[LOGO]
EXCELSIOR TAX-EXEMPT FUNDS, INC.
73 TREMONT STREET
BOSTON, MA 02108
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF
EXCELSIOR TAX-EXEMPT FUNDS, INC.
(THE "COMPANY")
This proxy is solicited by the Board of the Company for use at a special
meeting of shareholders to be held on May 3, 2000, at 10:00 a.m. (Eastern time),
at the offices of United States Trust Company of New York, 114 West 47th
Street, New York, New York 10036.
The undersigned hereby appoints Frank Bruno, Mark Dari, Patricia Leyne,
Michael Malloy and Diana McCarthy, and each of them, with full power of
substitution, as proxies of the undersigned to vote at the above-stated special
meeting, and at all adjournments or postponements thereof, all shares
representing interests in the Funds of the Company held of record by the
undersigned on March 6, 2000, the record date for the meeting, upon the
following matters and upon any other matter that may come before the meeting, in
their discretion.
Please sign exactly as name appears hereon. When shares are held by joint
tenants, both should sign. When signing as attorney or executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
Every properly signed proxy will be voted in the manner specified thereon and,
in the absence of specification, will be treated as GRANTING authority to vote
FOR Proposal (2)(a) and, with respect to proxies of shareholders of the
California Tax-Exempt Income Fund, FOR Proposal 2(b).
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<PAGE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS.
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The proxies are authorized to vote in their discretion upon any other
business which may properly come before the Meeting and any adjournments
thereof.
Voting on Proposals
(2)(a) Proposal to approve a new Investment Advisory Agreement among the
Company, United States Trust Company of New York and U.S. Trust
Company.
[_]For [_]Against [_]Abstain
(2)(b) (For California Tax-Exempt Income Fund only) Proposal to approve a new
Sub-Advisory Agreement among United States Trust Company of New York,
U.S. Trust Company and U.S. Trust Company, N.A.
[_]For [_]Against [_]Abstain
If you own shares in more than one Fund and you wish to receive an individual
ballot for each Fund, check this box and separate proxy cards for each Fund in
which you hold shares will be sent to you. [_]
<TABLE>
<S> <C>
- --------------------------------------------------- ---------------------------------------------------
| | | | | |
- --------------------------------------------------- ---------------------------------------------------
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
</TABLE>
<PAGE>
[LOGO]
EXCELSIOR INSTITUTIONAL TRUST
73 TREMONT STREET
BOSTON, MA 02108
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES OF
EXCELSIOR INSTITUTIONAL TRUST
(THE "COMPANY")
This proxy is solicited by the Board of the Company for use at a special
meeting of shareholders to be held on May 3, 2000, at 10:00 a.m. (Eastern time),
at the offices of United States Trust Company of New York, 114 West 47th
Street, New York, New York 10036.
The undersigned hereby appoints Frank Bruno, Mark Dari, Patricia Leyne,
Michael Malloy and Diana McCarthy, and each of them, with full power of
substitution, as proxies of the undersigned to vote at the above-stated special
meeting, and at all adjournments or postponements thereof, all shares
representing interests in the Funds of the Company held of record by the
undersigned on March 6, 2000, the record date for the meeting, upon the
following matters and upon any other matter that may come before the meeting, in
their discretion.
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney or
executor, administrator, trustee or
guardian, please give full title as such.
If a corporation, please sign in full
corporate name by president or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
Every properly signed proxy will be voted in the manner specified thereon and,
in the absence of specification, will be treated as GRANTING authority to vote
FOR Proposal 1 and FOR Proposal 2(a).
PLEASE SIGN AND RETURN PROMPTLY IN
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED.
To vote by Telephone
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Call 1-800-690-6903.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
To vote by Internet
1) Read the Proxy Statement and have the Proxy card below at hand.
2) Go to Website www.proxyvote.com.
3) Enter the 12-digit control number set forth on the Proxy card and follow the
simple instructions.
<PAGE>
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS.
KEEP THIS PORTION FOR YOUR RECORDS
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The proxies are authorized to vote in their discretion upon any other
business which may properly come before the Meeting and any adjournments
thereof.
(1) Vote on Trustees
[ ] For All
[ ] Withhold All
[ ] For All except:
To withold authority to vote, mark "For All Except" and write the
nominee's number on the line below.
-----------------------------------
01)Frederick S. Wonham
02)Donald L. Campbell
03)Rodman L. Drake
04)Joseph H. Dugan
05)Wolfe J. Frankl
06)Jonathan Piel
07)Robert A. Robinson
08)Alfred C. Tannachion
VOTE ON PROPOSAL
(2)(a) Proposal to approve a new Investment Advisory Agreement among the
Company, United States Trust Company of New York and U.S. Trust
Company.
[ ]For [ ]Against [ ]Abstain
If you own shares in more than one Fund and you wish to receive an individual
ballot for each Fund, check this box and separate proxy cards for each Fund in
which you hold shares will be sent to you. [ ]
- ---------------------------------- ---- ------------------------ ----
SIGNATURE (PLEASE SIGN WITHIN BOX) DATE SIGNATURE (JOINT OWNERS) DATE