<PAGE>
Exhibit (P)(1)
EXCELSIOR TAX-EXEMPT FUNDS, INC.
(the "Company")
CODE OF ETHICS
--------------
I. Legal Requirement.
-----------------
Rule 17j-1(b) under the Investment Company Act of 1940, as amended (the
"1940 Act"), makes it unlawful for any officer or director of the Company in
connection with the purchase or sale by such person of a security "held or to be
acquired" by the Company:
1. To employ any device, scheme or artifice to defraud the Company;
2. To make to the Company any untrue statement of a material fact or
omit to state to the Company a material fact necessary in order to
make the statements made, in light of the circumstances under
which they are made, not misleading;
3. To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon the Company;
or
4. To engage in any manipulative practice with respect to the
Company's investment portfolios.
II. Purpose of the Code of Ethics.
-----------------------------
The Company expects that its officers and directors will conduct their
personal investment activities in accordance with (1) the duty at all times to
place the interests of the Company's shareholders first, (2) the requirement
that all personal securities transactions be conducted consistent with this Code
of Ethics and in such a manner as to avoid any actual or potential conflict of
interest or any abuse of an individual's position of trust and responsibility,
and (3) the fundamental standard that investment company personnel should not
take inappropriate advantage of their positions.
In view of the foregoing, the provisions of Section 17(j) of the 1940 Act,
the Securities and Exchange Commission's 1940 Act Release No. 23958 "Personal
Investment Activities of Investment Company Personnel" (August 24, 1999), the
"Report of the Advisory Group on Personal Investing" issued by the Investment
Company Institute on May 9, 1994 and the Securities and Exchange Commission's
September 1994 Report on "Personal Investment Activities of Investment Company
Personnel," the Company has determined to adopt this Code of Ethics on behalf of
the Company to specify a code of conduct for certain types of personal
securities transactions which might involve conflicts of interest or an
appearance of impropriety, and to establish reporting requirements and
enforcement procedures.
<PAGE>
III. Definitions.
-----------
A. An "Access Person" means: (1) each director or officer of the Company;
(2) each employee (if any) of the Company (or of any company in a
control relationship to the Company) who, in connection with his or her
regular functions or duties, makes, participates in, or obtains
information regarding the purchase or sale of a security by the Company
or whose functions relate to the making of any recommendations with
respect to such purchases or sales; and (3) any natural person in a
control relationship to the Company who obtains information concerning
recommendations made to the Company with regard to the purchase or sale
of a security.
For purposes of this Code of Ethics, an "Access Person" does not
include any person who is subject to the securities transaction pre-
clearance requirements and securities transaction reporting
requirements of the Codes of Ethics adopted by the Company's investment
adviser or principal underwriter in compliance with Rule 17j-1 under
the 1940 Act.
B. "Restricted Director" or "Restricted Officer" means each director or
officer of the Company who is not also a director, officer, partner,
employee or controlling person of the Company's investment adviser,
sub-adviser, administrator, custodian, transfer agent or distributor.
C. An Access Person's "immediate family" includes a spouse, minor children
and adults living in the same household as the Access Person.
D. A security is "held or to be acquired" if within the most recent 15
days it (1) is or has been held by the Company, or (2) is being or has
been considered by the Company, its investment adviser or sub-adviser
for purchase by the Company. A purchase or sale includes the writing of
an option to purchase or sell and any security that is exchangeable
for, or convertible into, any security that is held or to be acquired
by the Company.
E. An "Initial Public Offering" means an offering of securities registered
under the Securities Act of 1933, the issuer of which, immediately
before the registration, was not subject to the reporting requirements
of Sections 13 or 15(d) of the Securities Exchange Act of 1934.
F. "Investment Personnel" of the Company means:
a. Any employee of the Company (or of any company in a control
relationship to the Company) who, in connection with his or her
regular functions or duties, makes or participates in making
recommendations regarding the purchase or sale of securities by
the Company.
2
<PAGE>
b. Any natural person who controls the Company and who obtains
information concerning recommendations made to the Company
regarding the purchase or sale of securities by the Company.
G. A "Limited Offering" means an offering that is exempt from registration
under the Securities Act of 1933 pursuant to Section 4(2) or Section
4(6) or pursuant to Rule 504, Rule 505, or Rule 506 under the
Securities Act of 1933.
H. "Covered Security" means a security as defined in Section 2(a)(36) of
the 1940 Act, except that it does not include direct obligations of the
Government of the United States; banker's acceptances; bank
certificates of deposit; commercial paper; high quality short-term debt
instruments (any instrument having a maturity at issuance of less than
366 days and that is rated in one of the two highest rating categories
by a nationally recognized statistical rating organization), including
repurchase agreements; and shares of registered open-end investment
companies.
I. "De Minimis Security" means securities issued by any company included
in the Standard and Poor's 500 Stock Index and in an amount less than
[_______].
IV. Policies of the Company Regarding Personal Securities Transactions.
------------------------------------------------------------------
A. General Policy.
--------------
No Access Person of the Company shall engage in any act, practice or
course of business that would violate the provisions of Rule 17j-1(b)
set forth above, or in connection with any personal investment
activity, engage in conduct inconsistent with this Code of Ethics.
B. Specific Policies.
-----------------
1. Restrictions on Personal Securities Transactions By Access Persons
------------------------------------------------------------------
Other Than Restricted Directors and Restricted Officers.
-------------------------------------------------------
a. Except as provided below in paragraph IV.B.1.d, no Access
Person who is not a Restricted Director or Restricted Officer
may buy or sell Covered Securities for his or her personal
portfolio or the portfolio of a member of his or her immediate
family without obtaining oral authorization from the
Compliance Officer of the Company's investment adviser prior
-----
to effecting such security transaction.
A written authorization for such security transaction will be
provided by the investment adviser's Compliance Officer to the
person receiving the authorization (if granted) and to the
Company's administrator to memorialize the oral authorization
that was granted.
3
<PAGE>
Note: If an Access Person has questions as to whether
purchasing or selling a security for his or her personal
portfolio or the portfolio of a member of his or her
immediate family requires prior oral authorization, the
Access Person should consult the investment adviser's
Compliance Officer for clearance or denial of clearance
to trade prior to effecting any securities
-----
transactions.
b. Pre-clearance approval under paragraph (a) will expire at the
close of business on the trading day after the date on which
oral authorization is received, and the Access Person is
required to renew clearance for the transaction if the trade
is not completed before the authority expires.
c. No clearance will be given to an Access Person other than a
Restricted Director or Restricted Officer to purchase or sell
any Covered Security (1) on a day when any portfolio of the
Company has a pending "buy" or "sell" order in that same
Covered Security until that order is executed or withdrawn or
(2) when the Compliance Officer has been advised by the
investment adviser or sub-adviser that the same Covered
Security is being considered for purchase or sale for any
portfolio of the Company.
d. The pre-clearance requirements contained in paragraph
IV.B.1.a, above, shall not apply to the following securities
("Exempt Securities"):
(i) Securities that are not Covered Securities;
(ii) De Minimis Securities;
(iii) Securities purchased or sold in a transaction which is
non-volitional on the part of either the Access Person
or the Company;
(iv) Securities acquired as part of an automatic dividend
reinvestment plan;
(v) Securities acquired upon the exercise of rights issued
by an issuer pro rata to all holders of a class of its
--- ----
securities, to the extent such rights were acquired from
such issuer, and sales of such rights so acquired; and
(vi) Securities which the Company's investment portfolios are
not permitted to purchase under the investment
objectives and policies set forth in the Company's then
current
4
<PAGE>
prospectus(es) under the Securities Act of 1933
or the Company's registration statement on Form N-1A.
e. The pre-clearance requirement contained in paragraph IV.B.1.a,
above, shall apply to all purchases of a beneficial interest
in any security, through an Initial Public Offering or a
Limited Offering by any Access Person who is also classified
as Investment Personnel. A record of any decision and the
reason supporting such decision to approve the acquisition by
Investment Personnel of Initial Public Offerings or Limited
Offerings shall be made by the Compliance Officer.
2. Restrictions on Personal Securities Transactions by Restricted
--------------------------------------------------------------
Directors and Restricted Officers.
---------------------------------
The Company recognizes that a Restricted Director and a Restricted
Officer do not have on-going, day-to-day involvement with the
operations of the Company. In addition, it has been the practice
of the Company to give information about securities purchased or
sold by the Company or considered for purchase and sale by the
Company to Restricted Directors and Restricted Officers in
materials circulated more than 15 days after such securities are
purchased or sold by the Company or are considered for purchase or
sale by the Company. Accordingly, the Company believes that less
stringent controls are appropriate for Restricted Directors and
Restricted Officers, as follows:
a. The securities pre-clearance requirement contained in
paragraph IV.B.1.a. above shall only apply to a Restricted
Director or Restricted Officer if he or she knew or, in the
ordinary course of fulfilling his or her official duties as a
director or officer, should have known, that during the
fifteen day period before the transaction in a Covered
Security (other than an Exempt Security) or at the time of the
transaction that the Covered Security purchased or sold by him
or her other than an Exempt Security was also purchased or
sold by the Company or considered for the purchase or sale by
the Company.
b. If the pre-clearance provisions of the preceding paragraph
apply, no clearance will be given to a Restricted Director or
Restricted Officer to purchase or sell any Covered Security
(1) on a day when any portfolio of the Company has a pending
"buy" or "sell" order in that same Covered Security until that
order is executed or withdrawn or (2) when the Compliance
Officer has been advised by the investment adviser or sub-
adviser that the same Covered Security is being considered for
purchase or sale for any portfolio of the Company.
5
<PAGE>
V. Procedures.
----------
In order to provide the Company with information to enable it to
determine with reasonable assurance whether the provisions of this
Code are being observed by its Access Persons:
A. Each Access Person of the Company, other than a director who
is not an "interested person" of the Company (as defined in
the 1940 Act), shall submit to the administrator an Initial
Holdings Report in the form attached hereto as Exhibit A that
lists all Covered Securities beneficially owned /1/ by the
---
Access Person except as stated below. This report must be
submitted within 10 days of becoming an Access Person (or for
persons already designated as Access Persons within 10 days of
the adoption of this Code of Ethics), and must include the
title of each security, the number of shares held, and the
principal amount of the security. The Report must also include
a list of any securities accounts maintained with any broker,
dealer or bank.
B. Each Access Person of the Company other than a director who is
not an "interested person" of the Company (as defined in the
1940 Act) shall also submit to the administrator an Annual
Holdings Report attached hereto as Exhibit A no later than 30
days after the end of the calendar year. Except as stated
below, the Annual Holdings Report must list all Covered
---
Securities beneficially owned by the Access Person, the title
of each security, the number of shares held, and the principal
amount of the security, as well as a list of any securities
accounts maintained with any broker, dealer or banks.
________________________
/1/ You will be treated as the "beneficial owner" of a security under this
policy only if you have a direct or indirect pecuniary interest in the security.
(a) A direct pecuniary interest is the opportunity, directly or
indirectly, to profit, or to share the profit, from the
transaction.
(b) An indirect pecuniary interest is any nondirect financial
interest, but is specifically defined in the rules to include
securities held by members of your immediate family sharing the
same household; securities held by a partnership of which you are
a general partner; securities held by a trust of which you are the
settlor if you can revoke the trust without the consent of another
person, or a beneficiary if you have or share investment control
with the trustee; and equity securities which may be acquired upon
exercise of an option or other right, or through conversion.
For interpretive guidance on this test, you should consult
counsel.
6
<PAGE>
C. Each Access Person of the Company other than a Restricted
Director or Restricted Officer shall direct his or her broker
to supply to the Compliance Officer of the Company's
administrator, on a timely basis, duplicate copies of
confirmations of all securities transactions in which the
person has, or by reason of such transaction acquires any
direct or indirect beneficial ownership and copies of periodic
statements for all securities accounts.
D. Except as stated below, each Access Person of the Company,
other than a director who is not an "interested person" (as
defined in the 1940 Act), shall submit reports in the form
attached hereto as Exhibit B to the Company's administrator,
showing all transactions in Covered Securities in which the
person has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership, as well as all
accounts established with brokers, dealers or banks during the
quarter in which any Covered Securities were held for the
direct or indirect beneficial interest of the Access Person.
/2/ Such reports shall be filed no later than 10 days after
the end of each calendar quarter. An Access Person of the
Company need not make a quarterly transaction report under
this paragraph if all of the information required by this
paragraph D is contained in the brokerage confirmations or
account statements required to be submitted under paragraph
V.C and is received by the administrator in the time period
stated above.
E. Each director who is not an "interested person" of the Company
need not make an initial or annual holdings report but shall
submit the same quarterly report as required under paragraph
V.D. to the Company's administrator, but only for a
transaction in a Covered Security (except as stated below)
where he or she knew at the time of the transaction or, in the
ordinary course of fulfilling his or her official duties as a
director or officer, should have known that during the 15-day
period immediately preceding or after the date of the
transaction, such Covered Security is or was purchased or
sold, or considered for purchase or sale, by the Company.
F. The reporting requirements of this Section V do not apply to
securities transactions effected for, and any Covered
Securities held in any account over which an Access person
does not have any direct or indirect influence or control.
G. The Company's administrator shall notify each Access Person of
the Company who may be subject to the pre-clearance
requirement or required to make reports pursuant to this Code
of Ethics that such person is subject to the pre-clearance or
reporting requirements and shall deliver a copy of this Code
of Ethics to each such person.
H. The Company's administrator shall review the initial holdings
reports, annual holdings reports, and quarterly transaction
reports received, and as appropriate
_________________
/2/ See footnote 1 above.
7
<PAGE>
compare the reports with the pre-clearance authorization
received, and report to the Company's Board of Directors:
a. with respect to any transaction that appears to
evidence a possible violation of this Code of Ethics;
and
b. apparent violations of the reporting requirement
stated herein.
I. The Board shall consider reports made to it hereunder and
shall determine whether the policies established in Sections
IV and V of this Code of Ethics have been violated, and what
sanctions, if any, should be imposed on the violator,
including but not limited to a letter of censure, suspension
or termination of the employment of the violator, or the
unwinding of the transaction and disgorgement of any profits
to the Company. The Board shall review the operation of this
Code of Ethics at least once a year.
J. The Company's investment adviser, sub-advisers and principal
underwriter shall adopt, maintain and enforce separate codes
of ethics with respect to their personnel in compliance with
Rule 17j-1 under the 1940 Act, and shall forward to the
Company's administrator and the Company's counsel copies of
such codes and all future amendments and modifications
thereto. The Board of Directors, including a majority of the
directors who are not "interested persons" of the Company (as
defined in the 1940 Act), shall approve this Code of Ethics,
and the codes of ethics of each investment adviser and
principal underwriter of the Company, and any material
amendments to such codes. Such approval must be based on a
determination that such codes contain provisions reasonably
necesssary to prevent Access Persons of the Company from
engaging in any conduct prohibited under such codes and under
Rule 17j-1 under the 1940 Act. The Board shall review and
approve such codes at least once a year. Furthermore, any
material changes to an investment adviser's or principal
underwriter's code will be approved by the Board at the next
scheduled quarterly board meeting and in no case more than six
months after such change. Before approving any material
amendments to the investment adviser's, sub-adviser's, or
principal underwriter's code of ethics, the Board must receive
a certification from the investment adviser, sub-adviser or
principal underwriter that it has adopted procedures
reasonably necessary to prevent Access Persons from violating
its code of ethics and under Rule 17j-1 under the 1940 Act.
K. At each quarterly Board of Directors' meeting, the
administrator (on behalf of the Company), investment adviser,
sub-advisers and principal underwriter of the Company shall
provide a written report to the Company's Board of Directors
stating:
a. any reported securities transaction that occurred
during the prior quarter that may have been
inconsistent with the provisions of the codes of
ethics adopted by the Company's investment adviser,
sub-advisers or principal underwriter; and
8
<PAGE>
b. all disciplinary actions/3/ taken in response to
such violations.
L. At least once a year, the administrator shall provide to the
Board with respect to this Code of Ethics, and the Company's
investment adviser, sub-adviser, and principal underwriter
shall provide to the Board with respect to their codes of
ethics, a written report which contains: (a) a summary of
existing procedures concerning personal investing by advisory
persons and any changes in the procedures during the past
year; (b) an evaluation of current compliance procedures and a
report on any recommended changes in existing restrictions or
procedures based upon the Company's experience under this Code
of Ethics, industry practices, or developments in applicable
laws and regulations; (c) a description of any issues arising
under the Code of Ethics or procedures since the last report,
including but not limited to, information about material
violations of the code or procedures and sanctions imposed in
response to material violations; and (d) a certification that
the procedures which have been adopted are those reasonably
necessary to prevent Access Persons from violating the
respective Codes of Ethics.
M. This Code of Ethics, the codes of the investment adviser, sub-
advisers and principal underwriter, a record of any violation
of such codes and any action taken as a result of the
violation, a copy of each report by an Access Person, any
written report hereunder by the Company's administrator,
investment adviser, sub-advisers or principal underwriter,
records of approvals relating to Initial Public Offerings and
Limited Offerings, lists of all persons required to make
reports, and a list of all persons responsible for reviewing
such reports shall be preserved with the Company's records for
the period and the manner required by Rule 17j-1.
VI. Certification.
-------------
Each Access Person will be required to certify annually that he or she
has read and understood this Code of Ethics, and will abide by it. Each Access
Person will further certify that he or she has disclosed or reported all
personal securities transactions required to be disclosed or reported under the
Code of Ethics. A form of such certification is attached hereto as Exhibit B.
The Board of Directors of
Excelsior Tax-Exempt Funds, Inc.
_______________________________
/3/ Disciplinary action includes but is not limited to any action that has a
material financial effect upon the employee, such as fining, suspending, or
demoting the employee, imposing a substantial fine or requiring the disgorgement
of profits.
9
<PAGE>
Exhibit A
EXCELSIOR TAX-EXEMPT FUNDS, INC.
Holdings Report
For the Year/Period Ended____________________________
(month/day/year)
[ ] Check Here if this is an Initial Holdings Report
To: Chase Global Funds Service Company, as Co-Administrator of the above
listed Company
As of the calendar year/period referred to above, I have a direct or
indirect beneficial ownership interest in the securities listed below which are
required to be reported pursuant to the Code of Ethics of the Company:
Title of Number of Principal
Security Shares Amount
-------- ------ ------
The name of any broker, dealer or bank with whom I maintain an account
in which my securities are held for my direct or indirect benefit are as
follows:
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) excludes other transactions not
required to be reported, and (iii) is not an admission that I have or had any
direct or indirect beneficial ownership in the securities listed above.
Signature: ____________________
Print Name: ____________________
A-1
<PAGE>
Exhibit B
EXCELSIOR TAX-EXEMPT FUNDS, INC.
Securities Transaction Report
For the Calendar Quarter Ended____________________
(month/day/year)
To: Chase Global Funds Service Company, as Co-Administrator of the above
listed Company
During the quarter referred to above, the following transactions were
effect in securities of which I had, or by reason of such transaction acquired,
direct or indirect beneficial ownership, and which are required to be reported
pursuant to the Code of Ethics of the Company:
<TABLE>
<CAPTION>
Interest
Number of Rate and Nature of Broker/Dealer
Shares or Maturity Dollar Transaction or Bank
Title of Date of Principal Date (if Amount of (Purchase, Through Whom
Security Transaction Amount applicable) Transaction Sale, Other) Price Effected
-------- ----------- ---------- ---------- ----------- ------------- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
For each Access Person of the Company, other than a director who is
not an "interested person" (as defined in the 1940 Act), provide the following
information with respect to any account established by you during the quarter
referred to above in which securities were held during the quarter for your
direct or indirect benefit:
1. The name of the broker, dealer or bank with whom you established
the account
2. The date the account was established.
This report (i) excludes transactions with respect to which I had no
direct or indirect influence or control, (ii) excludes other transactions not
required to be reported, and (iii) is not an admission that I have or had any
direct or indirect beneficial ownership in the securities listed above.
Signature: _________________
Print Name: _________________
B-1
<PAGE>
Exhibit C
EXCELSIOR TAX-EXEMPT FUNDS, INC.
ANNUAL CERTIFICATE
Pursuant to the requirements of the Code of Ethics of Excelsior Tax-
Exempt Funds, Inc. (the "Company"), the undersigned hereby certifies as follows:
1. I have read the Company's Code of Ethics.
2. I understand the Code of Ethics and acknowledge that I am subject
to it.
3. Since the date of the last Annual Certificate (if any) given
pursuant to the Code of Ethics, I have reported all personal
securities transactions required to be reported under the
requirements of the Code of Ethics.
Date: ___________ _____________________________
Print Name
_____________________________
Signature
C-1
