As filed with the Securities and Exchange Commission on December 21, 1995
File Nos. 33-71306 and 811-8132
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
POST-EFFECTIVE AMENDMENT NO. 4
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 5
EXCELSIOR FUNDS
(Exact Name of Registrant as Specified in Charter)
6 St. James Avenue, Boston, Massachusetts 02116
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 617-423-0800
Thomas M. Lenz
6 St. James Avenue, Boston, Massachusetts 02116
(Name and Address of Agent for Service)
Copy To: Roger P. Joseph, Esq.
Bingham, Dana & Gould, 150 Federal Street, Boston, Massachusetts 02110
It is proposed that this filing will become effective (check appropriate box):
[ ] Immediately upon filing pursuant to paragraph (b)
[x] on January 2, 1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
The Registrant has previously registered an indefinite number of its shares
of Excelsior Institutional Money Fund under the Securities Act of 1933, as
amended, pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended (the "1940 Act"). The Registrant filed the notice required by Rule 24f-2
with respect to Excelsior Institutional Money Fund for the fiscal year ending
August 31, 1995 on October 23, 1995.
<TABLE>
<S> <C> <C> <C> <C>
Proposed Proposed
Title of Amount Being Maximum Maximum
Securities Registered Offering Aggregate Amount of
Being Under Rule Price Per Offering Registration
Registered 24e-2 Unit2 Price3 Fee
Excelsior
Institutional
Money Fund
Shares of
Beneficial
Interest
(par value
$0.00001 per share) 137,581,968 $1.00 $290,000 $100.00
<FN>
1 The shares being registered as set forth in this table are in addition to
the indefinite number of shares of beneficial interest which Registrant has
registered under the Securities Act of 1933, as amended (the "1933 Act"),
pursuant to Rule 24f-2 under the 1940 Act. Registrant filed the Notice required
by Rule 24f-2 on October 23, 1995 for its fiscal year ended August 31, 1995.
2 Based on Registrant's closing price of $1.00 on December 20, 1995 pursuant
to Rule 457(d) under the 1933 Act and Rule 24e-2(a) under the 1940 Act.
3 In response to Rule 24e-2(b) under the 1940 Act: (1) the calculation of the
maximum aggregate offering price is made pursuant to Rule 24e-2; (2)
$8,308,620,124 shares of beneficial interest were redeemed by the Registrant
during the fiscal year ended August 31, 1995; (3) $8,171,328,156 shares are
being used for reductions pursuant to Rule 24f-2 during the current fiscal year;
and (4) $137,291,968 shares are being used for reduction in this amendment
pursuant to Rule 24e-2(a).
</FN>
</TABLE>
Cash Reserves Portfolios has also executed this Registration Statement.
UST222.EDG
<PAGE>
EXPLANATORY NOTE
This Post-Effective Amendment No. 4 (the "Amendment") to the
Registrant's Registration Statement on Form N-1A is being filed with respect to
Excelsior Institutional Money Fund (the "Fund"), a series of shares of the
Registrant, for the purpose of updating the financial information contained in
the Prospectus and Statement of Additional Information which describe the Fund.
<PAGE>
EXCELSIOR INSTITUTIONAL TRUST
CROSS-REFERENCE SHEET
(As Required by Rule 495)
PART A ITEM NUMBER: Prospectus Headings.
1. COVER PAGE: Cover Page.
2. SYNOPSIS: Summary of Expenses.
3. CONDENSED FINANCIAL INFORMATION: Financial Highlights.
4. GENERAL DESCRIPTION OF REGISTRANT: Cover Page; Investment Objective
and Policies; Special Information Concerning Hub and Spoke(R) Structure.
5. MANAGEMENT OF THE FUND: Management of the Trust and the Portfolio.
5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE: Not applicable.
6. CAPITAL STOCK AND OTHER SECURITIES: Cover Page; Pricing of Shares;
How to Purchase and Redeem Shares; Net Income, Dividends and Distributions;
Taxes; Management of the Trust and the Portfolio; Description of Shares, Voting
Rights and Liabilities.
7. PURCHASE OF SECURITIES BEING OFFERED: How to Purchase and
Redeem Shares; Investor Programs.
8. REDEMPTION OR REPURCHASE: How to Purchase and Redeem Shares.
9. PENDING LEGAL PROCEEDINGS: Not applicable.
PART B ITEM NUMBER: Statement of Additional Information Headings.
10. COVER PAGE: Cover Page.
11. TABLE OF CONTENTS: Table of Contents.
12. GENERAL INFORMATION AND HISTORY: Not applicable.
13. INVESTMENT OBJECTIVES AND POLICIES: Investment Objective, Policies and
Restrictions.
14. MANAGEMENT OF THE FUND: Management of the Trust and the Portfolio.
15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES: Management of the
Trust and the Portfolio.
16. INVESTMENT ADVISORY AND OTHER SERVICES: Management of the Trust and
the Portfolio; Independent Accountants; see Prospectus -- "Management of the
Trust and the Portfolio".
17. BROKERAGE ALLOCATION AND OTHER PRACTICES: Securities Transactions.
18. CAPITAL STOCK AND OTHER SECURITIES: The Trust; Taxation;
Description of the Trust; Fund Shares; see Prospectus -- "Management of the
Trust and the Portfolio" and "Description of Shares, Voting Rights and
Liabilities".
19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES BEING OFFERED:
Determination of Net Asset Value; Valuation of Securities; Redemption in Kind;
Additional Purchase and Redemption Information.
20. TAX STATUS: Taxation; see Prospectus -- "Taxes".
21. UNDERWRITERS: Management of the Trust and the Portfolio; See
Prospectus -- "Management of the Trust and the Portfolio"
22. CALCULATIONS OF YIELD QUOTATIONS OF MONEY MARKET FUNDS: Yield
Information.
23. FINANCIAL STATEMENTS: Financial Statements.
PART C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this registration statement.
<PAGE>
EXCELSIOR INSTITUTIONAL MONEY FUND
- --------------------------------------------------------------------------------
EXCELSIOR FUNDS
6 ST. JAMES AVENUE, BOSTON, MASSACHUSETTS 02116
FOR INITIAL PURCHASE OR EXISTING ACCOUNT INFORMATION, CALL (800) 909-1989
(FROM OVERSEAS, CALL (617) 557-1755)
- --------------------------------------------------------------------------------
This Prospectus describes Excelsior Institutional Money Fund (the 'Fund'),
a mutual fund offered to institutional investors. The Fund is a separate series
of Excelsior Funds (the 'Trust'), an open-end diversified management investment
company.
The investment objective of the Fund is to provide shareholders with
liquidity and as high a level of current income as is consistent with the
preservation of capital. The Trust seeks to achieve the investment objective of
the Fund by investing all of the investable assets of the Fund in Cash Reserves
Portfolio (the 'Portfolio'), a diversified open-end management investment
company with the same investment objective as the Institutional Money Fund. Cash
Reserves Portfolio seeks to achieve this investment objective by investing in
U.S. dollar-denominated money market obligations with maturities of 397 days or
less issued by U.S. and non-U.S. issuers.
SHARES OF THE FUND ('SHARES') ARE NEITHER INSURED NOR GUARANTEED BY THE U.
S. GOVERNMENT. WHILE THE TRUST SEEKS TO MAINTAIN A STABLE NET ASSET VALUE OF
$1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT IT WILL BE ABLE TO DO SO ON A
CONTINUING BASIS.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND, FEDERAL RESERVE BOARD, OR
ANY OTHER GOVERNMENTAL AGENCY, AND INVOLVE POSSIBLE RISK TO PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
UNLIKE OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIOS OF SECURITIES, THE TRUST SEEKS TO ACHIEVE THE FUND'S INVESTMENT
OBJECTIVE BY INVESTING ALL OF THE FUND'S INVESTABLE ASSETS IN THE PORTFOLIO. THE
FUND INVESTS IN THE PORTFOLIO THROUGH SIGNATURE FINANCIAL GROUP, INC.'S TWO-TIER
STRUCTURE KNOWN AS THE HUB AND SPOKE'r' FINANCIAL SERVICES METHOD. THE HUB AND
SPOKE'r' INVESTMENT FUND STRUCTURE EMPLOYS A TWO-TIER MASTER/FEEDER FUND
STRUCTURE AND IS A REGISTERED SERVICE MARK OF SIGNATURE FINANCIAL GROUP, INC.
SEE 'SPECIAL INFORMATION CONCERNING HUB AND SPOKE'r' STRUCTURE' ON PAGE 7.
The Fund is distributed by Signature Broker-Dealer Services, Inc. ('SBDS').
The Portfolio is advised by Citibank, N.A. (the 'Investment Adviser'). The Fund
receives supplemental investment management services from United States Trust
Company of New York ('U.S. Trust').
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should consider before investing. Investors should read
this Prospectus carefully and retain it for future reference. Additional
information about the Fund is contained in a Statement of Additional
Information, which has been filed with the Securities and Exchange Commission
and is available without charge upon request by writing to the Trust at its
address shown above or by calling (617) 423-0800. The Statement of Additional
Information bears the same date as this Prospectus and is incorporated by
reference in its entirety into this Prospectus.
Prospectus dated January 2, 1996
<PAGE>
SUMMARY OF EXPENSES
The following table provides (i) a summary of expenses relating to
purchases and sales of Shares of the Fund, and the aggregate annual operating
expenses for the Fund and the Portfolio, expressed as a percentage of the
average net assets of the Fund, and (ii) an example illustrating the dollar cost
of such estimated expenses on a $1,000 investment in the Fund.
<TABLE>
<S> <C>
Shareholder Transaction Expenses................................................... None
Advisory Fees(1) (after fee waivers)............................................... 0.06%
12b-1 Fees......................................................................... None
Other Expenses
Administrative Services Fees (after fee waivers)................................. 0.01%
Shareholder Servicing Fees....................................................... 0.07%
Other Operating Expenses (after reimbursements).................................. 0.11%
-----
Total Fund Operating Expenses
(after fee waivers and reimbursements)........................................... 0.25%
-----
-----
</TABLE>
- ------------------------------
(1)Reflects fees incurred by the Portfolio for advisory services rendered by the
Investment Adviser. U.S. Trust receives no additional fee for providing
supplemental investment management services to the Fund. See 'Supplemental
Investment Management Services' below.
EXAMPLE
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return and (2) redemption of your investment at the end of the
following periods:
<TABLE>
<S> <C>
1 Year.................................................................................. $ 3
3 Years................................................................................. $ 8
5 Years................................................................................. $14
10 Years................................................................................ $32
</TABLE>
The example above should not be considered a representation of past or
future expenses or performance. Actual expenses and returns may be greater or
less than those shown. The purpose of the table is to assist investors in
understanding the various costs and expenses that shareholders of the Fund will
bear directly or indirectly. The Fund's administrator has voluntarily agreed to
reimburse the Fund for certain expenses, and the Investment Adviser and the
Portfolio's administrator have each voluntarily agreed to waive a portion of
their fees, such that, following such waivers and reimbursement, the total
operating expenses (including amortization of organization costs and the Fund's
allocated portion of the Portfolio's expenses, but exclusive of taxes, interest,
brokerage commissions, and extraordinary expenses) of the Fund on an annual
basis would be equal to 0.25% of the average daily net assets of the Fund. These
waivers and reimbursement are reflected in the expense table and example.
Without such waivers and reimbursement, the advisory fee of the Portfolio would
have been equal on an annual basis to 0.15% of the Portfolio's average daily net
assets, the administrative services fee of the Fund and the Portfolio would have
been equal on an annual basis to 0.06% of the average daily net assets of the
Fund, other operating expenses of the Fund would have been equal on an annual
basis to 0.47% of average daily net assets of the Fund, and total aggregate
operating expenses of the Fund, including its share of Portfolio expenses, would
have been equal on an annual basis to 0.68% of the average daily net assets of
1
<PAGE>
the Fund. For more information about the expenses of the Fund and the Portfolio,
see 'Management of the Trust and the Portfolio.'
The Trustees of the Trust believe that the aggregate per share expenses of
the Fund and the Portfolio will be less than or approximately equal to the
expenses which the Fund would incur if the Trust paid directly for the services
of an investment adviser and the assets of the Fund were invested directly in
the kinds of securities being held by the Portfolio.
FINANCIAL HIGHLIGHTS
The following selected data for a Share of the Fund outstanding for the
indicated periods should be read in conjunction with the financial statements
appearing in the Fund's annual report to shareholders, which are included in the
Statement of Additional Information. The financial statements and notes, as well
as the table below, have been audited by Price Waterhouse LLP, independent
accountants. Copies of the annual report may be obtained without charge upon
request from an investor's Shareholder Servicing Agent or the Distributor.
<TABLE>
<CAPTION>
FOR THE PERIOD
NOVEMBER 8, 1993
(COMMENCEMENT
FOR THE YEAR ENDED OF OPERATIONS TO
AUGUST 31, 1995 AUGUST 31, 1994
------------------ ----------------
<S> <C> <C>
Net asset value, beginning of period........................ $ 1.00 $ 1.00
Net investment income from operations....................... 0.0579 0.0308
Dividends from net investment income........................ (0.0579) (0.0308)
------- --------
Net asset value, end of period.............................. $ 1.00 $ 1.00
-------- --------
-------- --------
Total return................................................ 5.95% 3.87%(2)
Ratios:
Net investment income to average net assets(1)............ 5.59% 4.39%(2)
Expenses to average net assets(1)......................... 0.25% 0.19%(2)
Total net assets, end of period (000's omitted)............. $638,111 $770,658
</TABLE>
- ------------------------------
(1)Reflects the Fund's proportionate share of the Portfolio's expenses as well
as voluntary fee waivers. If the voluntary fee waivers had not been in place,
the ratios of net investment income and expenses to average net assets would
have been as follows:
<TABLE>
<S> <C> <C>
Net investment income to average net assets................. 5.16% 4.28%(2)
Expenses to average net assets.............................. 0.68% 0.31%(2)
</TABLE>
(2)Annualized.
2
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
INTRODUCTION
The Trust was organized as a business trust under the laws of the State of
Delaware, with the Fund established as separate series of the Trust, on October
25, 1993. Shares of the Fund are continuously sold only to institutional
investors.
INVESTMENT OBJECTIVE
The investment objective of the Fund is to provide shareholders with
liquidity and as high a level of current income as is consistent with the
preservation of capital. The Trust seeks to achieve the investment objective of
the Fund by investing all of the investable assets of the Fund in Cash Reserves
Portfolio, a diversified open-end management investment company with the same
investment objective as the Fund. Cash Reserves Portfolio seeks to achieve its
investment objective by investing in U.S. dollar-denominated money market
obligations with maturities of 397 days or less issued by U.S. and non-U.S.
issuers. The approval of the Fund's shareholders is not required to change its
investment objective and investment policies, and the approval of the investors
in the Portfolio is not required to change the Portfolio's investment objective
or any of the Portfolio's investment policies discussed below, except that the
concentration policy with respect to bank obligations described in paragraph (1)
below is fundamental. Any changes in the Fund's or the Portfolio's
non-fundamental investment objective or policies could result in the Fund having
investment objectives and policies different from those applicable at the time
of a shareholder's investment in the Fund.
INVESTMENT POLICIES AND STRATEGIES
Since the investment characteristics of the Fund are the same as those of
its corresponding Portfolio, the following is a discussion of the various
investment policies and strategies employed by the Portfolio. The Portfolio uses
the amortized cost method to value its securities, and has a dollar-weighted
portfolio maturity not exceeding 90 days.
Cash Reserves Portfolio seeks to achieve its investment objective through
investments limited to the following types of U.S. dollar-denominated money
market instruments. All investments by Cash Reserves Portfolio mature or are
deemed to mature within 397 days from the date of acquisition, and the average
maturity of the investments held by Cash Reserves Portfolio (on a
dollar-weighted basis) is 90 days or less. All investments by Cash Reserves
Portfolio are in securities of high quality (i.e., rated in the highest rating
category for short-term obligations by at least two nationally recognized
statistical rating organizations (each an 'NRSRO') assigning a rating to the
security or issuer or, if only one NRSRO assigns a rating, that NRSRO, or, in
the case of an investment which is not rated, of comparable quality as
determined by the Investment Adviser) and are determined by the Investment
Adviser to present minimal credit risks. Investments in high quality, short-term
instruments may, in many circumstances, result in a lower yield than would be
available from investments in instruments with a lower quality or a longer term.
The Trust will give shareholders of the fund at least sixty days prior written
notice before investments are made in commercial paper or other short-term debt
instruments rated below the highest rating category by an NRSRO or comparable
unrated instruments. Under the 1940 Act, the Fund and Cash Reserves Portfolio
are each classified as 'diversified,' although in the case of the Fund, all of
its investable assets are invested in the Portfolio. In accordance with the
portfolio diversification requirements of the 1940 Act and Rule 2a-7 thereunder,
Cash Reserves Portfolio must invest all of its assets in cash and cash items,
U.S. Government securities, investment company securities and other securities
limited as to any one issuer to not more than 5% of the total assets of the
investment company and not more than 10% of the voting securities of the issuer.
3
<PAGE>
(1) BANK OBLIGATIONS. Cash Reserves Portfolio invests at least 25% of its
assets, and may invest up to 100% of its assets, in bank obligations. This
concentration policy is fundamental and may not be changed without the approval
of the investors in Cash Reserves Portfolio. These obligations include, but are
not limited to, negotiable certificates of deposit, banker's acceptances and
fixed time deposits. Cash Reserves Portfolio limits its investments in U.S. bank
obligations (including their non-U.S. branches) to banks having total assets in
excess of $1 billion and which are subject to regulation by an agency of the
U.S. Government. Cash Reserves Portfolio may also invest in certificates of
deposit issued by banks the deposits in which are insured by the Federal Deposit
Insurance Corporation ('FDIC'), through either the Bank Insurance Fund or the
Savings Association Insurance Fund, having total assets of less than $1 billion,
provided that Cash Reserves Portfolio at no time owns more than $100,000
principal amount of certificates of deposit (or any higher principal amount
which in the future may be fully insured by FDIC insurance) of any one of those
issuers. Fixed time deposits are obligations which are payable at a stated
maturity date and bear a fixed rate of interest. Generally, fixed time deposits
may be withdrawn on demand by Cash Reserves Portfolio, but they may be subject
to early withdrawal penalties which vary depending upon market conditions and
the remaining maturity of the obligation. Although fixed time deposits do not
have a market, there are no contractual restrictions on Cash Reserves
Portfolio's right to transfer a beneficial interest in the deposit to a third
party.
Cash Reserves Portfolio limits its investments in non-U.S. bank obligations
(i.e., obligations of non-U.S. branches and subsidiaries of U.S. banks, and U.S.
and non-U.S. branches of non-U.S. banks) to U.S. dollar-denominated obligations
of banks which at the time of investment are branches or subsidiaries of U.S.
banks which meet the criteria in the preceding paragraph or are branches of non-
U.S. banks which (i) have more than $10 billion, or the equivalent in other
currencies, in total assets; (ii) in terms of assets are among the 75 largest
non-U.S. banks in the world; (iii) have branches or agencies in the United
States; and (iv) in the opinion of the Investment Adviser, are of an investment
quality comparable to obligations of U.S. banks which may be purchased by Cash
Reserves Portfolio. These obligations may be general obligations of the parent
bank, in addition to the issuing branch or subsidiary, but the parent bank's
obligations may be limited by the terms of the specific obligation or by
governmental regulation. Cash Reserves Portfolio also limits its investments in
non-U.S. bank obligations to banks, branches and subsidiaries located in Western
Europe (United Kingdom, France, Germany, Belgium, the Netherlands, Italy,
Switzerland), Scandinavia (Denmark, Norway, Sweden), Australia, Japan, the
Cayman Islands, the Bahamas and Canada.
Since Cash Reserves Portfolio invests at least 25% of its assets, and may
invest up to 100% of its assets, in bank obligations, an investment in the Fund
should be made with an understanding of the characteristics of the banking
industry and the risks which such an investment may entail. Banks are subject to
extensive governmental regulation which may limit both the amounts and types of
loans and other financial commitments which may be made and interest rates and
fees which may be charged. The profitability of this industry is largely
dependent on the availability and cost of capital funds for the purpose of
financing lending operations under prevailing money market conditions. Also,
general economic conditions play an important part in the operation of this
industry, and exposure to credit losses arising from possible financial
difficulties of borrowing might affect a bank's ability to meet its obligations.
Since Cash Reserves Portfolio may hold obligations of non-U.S. branches and
subsidiaries of U.S. banks, and U.S. and non-U.S. branches of non-U.S. banks, an
investment in the Fund involves certain additional risks. Such investment risks
include future political and economic developments, the possible imposition of
non-U.S. withholding taxes on interest income payable on such obligations held
by Cash
4
<PAGE>
Reserves Portfolio, the possible seizure or nationalization of non-U.S.
deposits, and the possible establishment of exchange controls or other non-U.S.
governmental laws or restrictions applicable to the payment of the principal of
and interest on certificates of deposit or time deposits that might affect
adversely such payment on such obligations held by Cash Reserves Portfolio. In
addition, there may be less publicly-available information about a non-U.S.
branch or subsidiary of a U.S. bank or a U.S. or non-U.S. branch of a non-U.S.
bank than about a U.S. bank, and such branches and subsidiaries may not be
subject to the same or similar regulatory requirements that apply to U.S. banks,
such as mandatory reserve requirements, loan limitations, and accounting,
auditing and financial record keeping standards and requirements. The Statement
of Additional Information includes more detailed information concerning U.S. and
non-U.S. bank obligations under the caption 'Investment Objective, Policies and
Restrictions -- Cash Reserves Portfolio.'
(2) OBLIGATIONS OF, OR GUARANTEED BY, NON-U.S. GOVERNMENTS. Cash Reserves
Portfolio limits its investments in non-U.S. government obligations to
obligations issued or guaranteed by the governments of Western Europe (United
Kingdom, France, Germany, Belgium, the Netherlands, Italy, Switzerland),
Scandinavia (Denmark, Norway, Sweden), Australia, Japan and Canada. Generally,
such obligations may be subject to the additional risks described in paragraph 1
above in connection with the purchase of non-U.S. bank obligations.
(3) COMMERCIAL PAPER or other short-term debt instruments rated Prime-1 by
Moody's Investors Service, Inc. ('Moody's') or A-1 by Standard & Poor's Ratings
Group ('Standard & Poor's') or, if not rated, determined to be of comparable
quality by the Investment Adviser, such as unrated commercial paper issued by
corporations having an outstanding unsecured debt issue currently rated Aaa by
Moody's or AAA by Standard & Poor's. For a description of these ratings see the
Appendix to this Prospectus.
(4) OBLIGATIONS OF, OR GUARANTEED BY, THE U.S. GOVERNMENT, ITS AGENCIES OR
INSTRUMENTALITIES. These include issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an Act of Congress. Some of
the latter category of obligations are supported by the 'full faith and credit'
of the United States, others are supported by the right of the issuer to borrow
from the U.S. Treasury, and still others are supported only by the credit of the
agency or instrumentality. Examples of each of the three types of obligations
described in the preceding sentence are (i) obligations guaranteed by the
Export-Import Bank of the United States, (ii) obligations of the Federal Home
Loan Mortgage Corporation, and (iii) obligations of the Student Loan Marketing
Association, respectively. Issues of the U.S. Treasury in which the Portfolio
may invest include Treasury Receipts, which are unmatured interest coupons of
U.S. Treasury bonds and notes which have been separated and resold in a
custodial receipt program administered by the U.S. Treasury.
(5) REPURCHASE AGREEMENTS, providing for resale within 397 days or less,
covering obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities which may have maturities in excess of 397 days. A repurchase
agreement arises when a buyer purchases an obligation and simultaneously agrees
with the vendor to resell the obligation to the vendor at an agreed-upon price
and time, which is usually not more than seven days from the date of purchase.
The resale price of a repurchase agreement is greater than the purchase price,
reflecting an agreed-upon market rate which is effective for the period of time
the buyer's funds are invested in the obligation and which is not related to the
coupon rate on the purchased obligation. Obligations serving as collateral for
each repurchase agreement are delivered to Cash Reserves Portfolio's custodian
either physically or in book entry form and the collateral is marked to market
daily to ensure that each repurchase agreement is
5
<PAGE>
fully collateralized at all times. A buyer of a repurchase agreement runs a risk
of loss if, at the time of default by the vendor, the value of the collateral
securing the agreement is less than the price paid for the repurchase agreement.
If the vendor of a repurchase agreement becomes bankrupt, Cash Reserves
Portfolio might be delayed, or may incur costs or possible losses of principal
and income, in selling the collateral. Cash Reserves Portfolio may enter into
repurchase agreements only with a vendor which is a member bank of the Federal
Reserve System or which is a 'primary dealer' (as designated by the Federal
Reserve Bank of New York) in U.S. Government obligations. The restrictions and
procedures described above which govern Cash Reserves Portfolio's investment in
repurchase obligations are designed to minimize Cash Reserves Portfolio's risk
of losses in making those investments.
(6) ASSET-BACKED SECURITIES, which may include securities such as
Certificates for Automobile Receivables ('CARS') and Credit Card Receivable
Securities ('CARDS'), as well as other asset-backed securities that may be
developed in the future. CARS represent fractional interests in pools of car
installment loans, and CARDS represent fractional interests in pools of
revolving credit card receivables. The rate of return on asset-backed securities
may be affected by early prepayment of principal on the underlying loans or
receivables. Prepayment rates vary widely and may be affected by changes in
market interest rates. It is not possible to accurately predict the average life
of a particular pool of loans or receivables. Reinvestment of principal may
occur at higher or lower rates than the original yield. Therefore, the actual
maturity and realized yield on asset-backed securities will vary based upon the
prepayment experience of the underlying pool of loans or receivables.
Cash Reserves Portfolio does not purchase securities which it believes, at
the time of purchase, will be subject to exchange controls or non-U.S.
withholding taxes; however, there can be no assurance that such laws may not
become applicable to certain of Cash Reserves Portfolio's investments. In the
event exchange controls or non-U.S. withholding taxes are imposed with respect
to any of Cash Reserves Portfolio's investments, the effect may be to reduce the
income received by Cash Reserves Portfolio on such investments.
LENDING OF PORTFOLIO SECURITIES: Consistent with applicable regulatory
requirements and in order to generate additional income, Cash Reserves Portfolio
may lend its portfolio securities to broker-dealers and other institutional
borrowers. Such loans must be callable at any time and continuously secured by
collateral (cash or U.S. Government securities) in an amount no less than the
market value, determined daily, of the securities loaned. It is intended that
the value of securities loaned by Cash Reserves Portfolio would not exceed
33 1/3% of the Portfolio's assets.
In the event of the bankruptcy of the other party to a securities loan,
Cash Reserves Portfolio could experience delays in recovering the securities
loaned. To the extent that, in the meantime, the value of the securities loaned
has increased, Cash Reserves Portfolio could experience a loss.
PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS. The Portfolio may invest up to
10% of its net assets in securities for which there is no readily available
market. These illiquid securities may include privately placed restricted
securities for which no institutional market exists. The absence of a trading
market can make it difficult to ascertain a market value for illiquid
investments. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for the
Portfolio to sell them promptly at an acceptable price.
* * *
The Statement of Additional Information includes further discussion of
investment policies and a listing of investment restrictions which govern the
investment activities of the Fund and Portfolio. Certain of these investment
restrictions may not be changed, in the case of the Fund, without the approval
of the Fund's shareholders or, in the case of the Portfolio, without the
approval of the
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investors in the Portfolio. If a percentage restriction (other than a
restriction as to borrowing) or a rating restriction on investment or
utilization of assets is adhered to at the time an investment is made or assets
are so utilized, a later change in percentage resulting from changes in the
value of the securities held by a Portfolio or a later change in the rating of a
security held by a Portfolio is not considered a violation of the policy or
restriction.
SPECIAL INFORMATION CONCERNING HUB AND SPOKE'r' STRUCTURE
Unlike other mutual funds which directly acquire and manage their own
portfolio securities, the Trust seeks to achieve the investment objective of the
Fund by investing all of the investable assets of the Fund in the Portfolio, a
separate registered investment company with the same investment objective. In
addition to selling a beneficial interest to the Fund, the Portfolio may sell
beneficial interests to other mutual funds or institutional investors. Such
investors will invest in the Portfolio on the same terms and conditions and will
pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to issue their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Investors in the Fund should be aware
that these differences may result in differences in returns experienced by
investors in the different funds that invest in the Portfolio. Such differences
in returns are also present in other mutual fund structures. Information
concerning other holders of interests in the Portfolio is available from SBDS at
(617) 423-0800. The Hub and Spoke'r' investment fund structure has been
developed relatively recently, so shareholders should carefully consider this
investment approach.
The investment objective of the Fund may be changed without the approval of
the Fund's shareholders, but not without written notice thereof to the Fund's
shareholders thirty days prior to implementing the change. If there were a
change in the Fund's investment objective, shareholders should consider whether
the Fund remains an appropriate investment in light of their then-current
financial position and needs. The investment objective of the Portfolio may be
changed without the approval of the investors in the Portfolio, but not without
written notice thereof to the investors in the Portfolio (and notice by the
Trust to Fund shareholders) thirty days prior to implementing the change. There
can, of course, be no assurance that the investment objective of either the Fund
or the Portfolio will be achieved. See 'Investment Restrictions' in the
Statement of Additional Information for a description of the fundamental
investment policies and restrictions of the Portfolio that cannot be changed
without approval by the holders of a 'majority of the outstanding voting
securities' (as defined in the 1940 Act) of the Portfolio. Except as stated
otherwise, all investment objectives, policies and restrictions described herein
and in the Statement of Additional Information are non-fundamental.
Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a large fund
withdraws from the Portfolio, the remaining funds may experience higher pro rata
operating expenses, thereby producing lower returns. Additionally, the Portfolio
may become less diverse, resulting in increased portfolio risk. (However, this
possibility also exists for traditionally structured funds which have large or
institutional investors.) Also, funds with a greater pro rata ownership in the
Portfolio could have effective voting control of the operations of the
Portfolio. Subject to exceptions that are not inconsistent with applicable rules
or policies of the Securities and Exchange Commission, whenever the Trust is
requested to vote on matters pertaining to the Portfolio, the Trust will hold a
meeting of shareholders of the Fund and will cast all of its votes in the same
proportion as the votes of the Fund's shareholders. Fund shareholders who do not
vote will not affect the Trust's votes at the Portfolio meeting. The percentage
of the Trust's votes representing Fund shareholders not voting will be voted by
the Trustees or officers of the Trust in the
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same proportion as Fund shareholders who do, in fact, vote. Certain changes in
the Portfolio's investment objective, policies or restrictions may require the
Trust to withdraw the Fund's investment in the Portfolio. Any such withdrawal
could result in a distribution in kind of portfolio securities (as opposed to a
cash distribution from the Portfolio). If securities are distributed, the Fund
could incur brokerage, tax or other charges in converting the securities to
cash. In addition, the distribution in kind may result in a less diversified
portfolio of investments or adversely affect the liquidity of the Fund.
Notwithstanding the above, there are other means for meeting shareholder
redemption requests, such as borrowing.
The Trust may withdraw the investment of the Fund from the Portfolio at any
time, if the Board of Trustees of the Trust determines that it is in the best
interest of the Fund to do so. Upon any such withdrawal, the Board of Trustees
of the Trust would consider what action might be taken, including the investment
of all the assets of the Fund in another pooled investment entity having the
same investment objective as the Fund or the retaining of an investment adviser
to manage the Fund's assets in accordance with the investment policies described
above with respect to the Portfolio.
For descriptions of the investment objective, policies and restrictions of
the Portfolio, see 'Investment Objective and Policies' herein and in the
Statement of Additional Information. For descriptions of the management of the
Portfolio, see 'Management of the Trust and the Portfolio' herein and in the
Statement of Additional Information. For descriptions of the expenses of the
Portfolios, see 'Management of the Trust and the Portfolio' below.
PRICING OF SHARES
The net asset value of the Fund is determined and the Shares of the Fund
are priced for purchases and redemptions as of 3 P.M. Eastern time on each day
the New York Stock Exchange is open for trading (a 'Business Day'). Currently,
the days on which the Fund is closed (other than weekends) are New Year's Day,
Martin Luther King, Jr. Day, Presidents Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving Day and
Christmas. Net asset value per Share for purposes of pricing sales and
redemptions is calculated by dividing the value of all securities and other
assets belonging to the Fund, less the liabilities charged to the Fund, by the
number of Shares of the Fund outstanding at the time the determination is made.
The assets in the Portfolio are valued based upon the amortized cost
method. The Trust seeks to maintain a net asset value per Share of $1.00 for the
Fund, although there can be no assurance the net asset value will not vary. See
'Net Income, Dividends and Distributions' below.
HOW TO PURCHASE AND REDEEM SHARES
PURCHASE OF SHARES
Shares of the Fund may be purchased without a sales charge on any Business
Day at the net asset value next determined after an order is transmitted to and
accepted by the Distributor. A 'Business Day' is each day the New York Stock
Exchange is open for trading. Except as provided under 'Investor Programs'
below, the minimum initial investment is $1,000. There is no minimum for
subsequent investments. Purchases will be effected on the same day provided the
order is received by 3 P.M. Eastern time. The Distributor, Signature
Broker-Dealer Services, Inc. ('SBDS'), has established procedures for purchasing
Shares in order to accommodate different types of investors (see 'Purchase
Procedures' below).
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Shares of the Fund may be purchased only in those states where they may be
lawfully sold. The Trust reserves the right to cease offering Shares for sale at
any time and the Distributor and the Trust each reserve the right to reject any
order for the purchase of Shares.
Purchase Procedures
Shares may be purchased directly only by institutional investors
('Institutional Investors'). Certain Institutional Investors (each a
'Shareholder Organization') may elect to hold of record Shares for their
customers ('Customers') and to record beneficial ownership of Shares on the
account statements provided to their Customers. In that case, it is each
Shareholder Organization's responsibility to transmit to the Distributor all
purchase orders for its Customers and to transmit, on a timely basis, payment
for such orders to Chase Global Funds Services Company ('CGFSC'), the
sub-transfer agent, in accordance with the procedures agreed to by the
Shareholder Organization and the Distributor. Confirmations of all such
purchases and redemptions by Shareholder Organizations for the benefit of their
customers will be sent by CGFSC to the particular Shareholder Organization. In
the alternative, a Shareholder Organization may elect to establish its
Customers' accounts of record with CGFSC. In this event, even if the Shareholder
Organization continues to place its Customers' purchase and redemption orders
with the Fund, CGFSC will send confirmations of such transactions and periodic
account statements directly to the Customers.
Customers may agree with a particular Shareholder Organization to make a
minimum purchase with respect to their accounts. Depending upon the terms of the
particular account, Shareholder Organizations may charge a Customer's account
fees for automatic investment and other cash management services provided.
Customers should contact their Shareholder Organization directly for further
information.
Purchases by Wire
Investors may purchase Shares by wiring federal funds to CGFSC. Prior to
making an initial investment by wire, an investor must telephone CGFSC at (809)
909-1989 (from overseas, please call (617) 557-1755) for instructions, including
a wire control number. Federal funds and registration instructions should be
wired through the Federal Reserve System to:
The Chase Manhattan Bank, N.A.
ABA #021000021
Excelsior Institutional Funds
Credit DDA #910-2-733046
[Account Registration]
[Account Number]
[Wire Control Number] *See Above*
It is intended that the Fund and the Portfolio will be as fully invested at
all times as is reasonably practicable in order to enhance the yield on their
respective assets. Accordingly, in order to make investments which will
immediately generate income, the Fund must have federal funds available. Shares
purchased by federal funds wire will be effected at the net asset value per
share next determined after acceptance of the order. Orders for Shares received
and accepted no later than 3 P.M. Eastern time will be entitled to dividends on
that Business Day, provided the federal funds wire has been received by the
Fund's bank on that Business Day. Purchase orders received and accepted after 3
P.M. Eastern time will be effected at the net asset value next determined and
will not receive the dividend declared that day even if the Fund receives
federal funds on that day.
9
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Investors making initial investments by wire must promptly complete the
application accompanying this Prospectus and forward it to CGFSC. No account
application is required for subsequent purchases. Completed applications should
be directed to:
Excelsior Institutional Funds
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
The application may also be sent via facsimile. Please contact CGFSC at
(800) 909-1989 for complete instructions. Redemptions by investors will not be
processed until the completed application for purchase of Shares has been
received and accepted by CGFSC. Investors making subsequent investments by wire
should follow the above instructions.
Purchases by Telephone
For investors who have previously selected the telephone purchase option, a
purchase order may be placed by calling CGFSC at (800) 909-1989 (from overseas,
please call (617) 557-1755). The purchase by telephone will be effected at the
net asset value per Share next determined after acceptance of the order. Orders
for Shares properly received and accepted no later than 3 P.M. Eastern time will
be entitled to dividends on that Business Day provided that the Fund's bank has
received federal funds on that Business Day.
By establishing the telephone purchase option, the investor authorizes
CGFSC and the Distributor to act upon telephone instructions believed to be
genuine. Excelsior Funds, CGFSC and the Distributor will not be held liable for
any loss, liability, cost or expense for acting upon such instructions.
Accordingly, investors will bear the risk of loss. The Trust will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine, including, without limitation, recording telephonic instructions and/or
requiring the caller to provide some form of personal identification. Failure to
employ reasonable procedures may make the Trust liable for any losses due to
unauthorized or fraudulent telephone instructions.
This service may be modified or terminated at any time. The Trust currently
does not charge a fee for this service, although some Shareholder Organizations
may charge their Customers additional fees. Customers should contact their
Shareholder Organization directly for further information.
Purchases by Mail
Investors may purchase Shares by completing the application for purchase of
Shares accompanying this Prospectus and mailing it, together with a check
payable to Excelsior Funds, to:
Excelsior Institutional Funds
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
Subsequent investments in an existing account in the Fund may be made at
any time by sending to the above address a check payable to Excelsior Funds
along with: (a) the detachable form that regularly accompanies the confirmation
of a prior transaction; (b) a subsequent order form which may be
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<PAGE>
obtained from CGFSC; or (c) a letter stating the amount of the investment, the
name of the Fund and the account number in which the investment is to be made.
Shares purchased by check will be effected at the net asset value next
determined after receipt and acceptance of the order by the Distributor. Such
Shares are entitled to earn dividends on that Business Day. Shares paid for by
check cannot be redeemed until the funds have been collected, which may take up
to fifteen days. Redemption delays may be avoided by purchasing Shares by
federal funds wire.
REDEMPTION PROCEDURES
Investors may redeem all or any portion of the Shares in their account at
the net asset value next determined after proper receipt in good form and
acceptance of an order for redemption. Proceeds from redemption orders received
and accepted by 3 P.M. Eastern time will normally be sent the next Business Day;
proceeds are sent in any event within five Business Days. Shares redeemed will
be entitled to dividends up to and including the Business Day prior to the day
of redemption.
It is necessary for investors to have on file appropriate documentation
authorizing redemptions by the institution or entity before a redemption request
is considered in proper form.
Customers of Shareholder Organizations holding Shares of record may redeem
all or part of their investments in the Fund in accordance with the procedures
governing their accounts at their Shareholder Organization. It is the
responsibility of the Shareholder Organizations to transmit redemption orders to
CGFSC and credit such Customer accounts with the redemption proceeds on a timely
basis.
An investor redeeming Shares through a registered investment adviser or
certified financial planner may incur transaction charges in connection with
such redemptions. Such investors should contact their registered investment
adviser or certified financial planner for further information on transaction
fees.
Investors may redeem all or part of their Shares in accordance with any of
the procedures described below. These procedures only apply to Customers of
Shareholders Organizations for whom individual accounts have been established
with CGFSC. Customers whose individual accounts are maintained by Shareholder
Organizations must contact their Shareholder Organization directly to redeem
Trust shares.
If any portion of the Shares to be redeemed represents an investment made
by check, the Trust and CGFSC reserve the right not to honor the redemption
until CGFSC is reasonably satisfied that the check has been collected in
accordance with the applicable banking regulations; such collection process may
take up to fifteen days. An investor who anticipates the need for more immediate
access to its investment should purchase Shares by federal funds or bank wire or
by certified or cashier's check. Banks normally impose a charge in connection
with the use of bank wires, as well as certified checks, cashier's checks and
federal funds. If a purchase check is not collected, the purchase will be
cancelled and CGFSC will charge a fee of $25.00 to the investor's account.
Redemption by Wire or Telephone
Investors who maintain an account at CGFSC and have so indicated on their
application, or have subsequently arranged in writing to do so, may redeem
Shares by instructing CGFSC, by wire or telephone, to wire the redemption
proceeds directly to the investor's predesignated bank account at
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<PAGE>
any commercial bank in the United States. Investors may have their Shares
redeemed by wire by instructing CGFSC at (800) 909-1989 (from overseas, please
call (617) 557-1755). No charge is imposed by Excelsior Funds for wiring
redemption payments to investors, although Shareholder Organizations may charge
their Customers for wiring or crediting such redemption payments to their
accounts. Information relating to such redemption services and charges, if any,
is available to Customers directly from their Shareholder Organizations.
In order to arrange for redemption by wire or telephone after an account
has been opened or to change the bank account designated to receive redemption
proceeds, an investor must send a written request to Excelsior Funds at the
address listed below under 'Redemption by Mail.' Such requests must be signed by
the investor, with signatures guaranteed (see 'Redemption by Mail' below for
details regarding signature guarantees). Further documentation may be requested.
CGFSC and the Distributor reserve the right to refuse a wire or telephone
redemption. Procedures for redeeming Shares by wire or telephone may be modified
or terminated at any time by the Trust or the Distributor. Excelsior Funds,
CGFSC and the Distributor will not be liable for any loss, liability, cost or
expense for acting upon telephone instructions believed to be genuine. See
'Purchases by Telephone' above.
Redemption by Mail
Shares may be redeemed by submitting a written request for redemption to:
Excelsior Institutional Funds
c/o Chase Global Funds Services Company
P.O. Box 2798
Boston, MA 02208-2798
A written request to CGFSC must (i) state the number of Shares to be
redeemed, (ii) identify the shareholder account number and tax identification
number, and (iii) be signed for each registered owner by its authorized officer
exactly as the Shares are registered.
A redemption request for an amount in excess of $5,000, or for any amount
if the proceeds are to be sent elsewhere than the address of record, must be
accompanied by signature guarantees from any eligible guarantor institution
approved by CGFSC in accordance with its Standards, Procedures and Guidelines
for the Acceptance of Signature Guarantees ('Signature Guarantee Guidelines').
Eligible guarantor institutions generally include banks, broker-dealers, credit
unions, national securities exchanges, registered securities associations,
clearing agencies and savings associations. All eligible guarantor institutions
must participate in the Securities Transfer Agents Medallion Program ('STAMP')
in order to be approved by CGFSC pursuant to the Signature Guarantee Guidelines.
Copies of the Signature Guarantee Guidelines and information on STAMP can be
obtained from CGFSC at (800) 909-1989 or at the address given above. CGFSC may
require additional supporting documents. A redemption request will not be deemed
to be properly received in good form until CGFSC receives all required documents
in proper form.
Questions with respect to the proper form for redemption requests should be
directed to CGFSC at (800) 909-1989 (from overseas, please call (617) 557-1755).
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<PAGE>
Other Redemption Information
Except as described in 'Investor Programs' below, investors may be required
to redeem Shares in the Fund after 60 days written notice if due to investor
redemptions the balance in the particular account with respect to the Fund
remains below $500. If a Customer has agreed with a particular Shareholder
Organization to maintain a minimum balance with respect to Shares of the Fund
and the balance in such account falls below that minimum, the Customer may be
required by the Shareholder Organization to redeem all or part of its Shares to
the extent necessary to maintain the required minimum balance.
INVESTOR PROGRAMS
RETIREMENT PLANS
Shares are available for purchase by investors in connection with the
following tax-deferred prototype retirement plans offered by U.S. Trust:
IRAs (including 'rollovers' from existing retirement plans) for individuals
and their spouses;
Profit Sharing and Money-Purchase Plans for corporations and self-employed
individuals and their partners to benefit themselves and their employees; and
Keogh Plans for self-employed individuals.
Institutional Investors or Customers of Shareholder Organizations investing
in Shares pursuant to a retirement plan are not subject to the minimum
investment and forced redemption provisions described above. Detailed
information concerning eligibility, service fees and other matters related to
these plans is available from the Trust by calling CGFSC at (800) 909-1989 (from
overseas, please call (617) 557-1755). Customers of Shareholder Organizations
may purchase Shares pursuant to retirement plans if such plans are offered by
their Shareholder Organizations.
UNIT INVESTMENT TRUST AUTOMATIC DIVIDEND REINVESTMENT PLANS
Shares are available for purchase by unitholders in unit investment trusts
sponsored by certain broker-dealers through automatic reinvestment of the
dividends paid by such trusts.
Institutional Investors or Customers of Shareholder Organizations
purchasing Shares pursuant to these plans are not subject to the minimum
investment and forced redemption provisions. Information concerning purchases of
Shares through the automatic reinvestment of such dividends is available from
CGFSC by calling (800) 909-1989 (from overseas, please call (617) 557-1755).
AUTOMATIC INVESTMENT PROGRAM
The Automatic Investment Program permits Institutional Investors or
Customers of Shareholder Organizations to purchase Shares (minimum of $100 per
transaction) at regular intervals selected by the investor. Provided the
purchaser's financial institution allows automatic withdrawals, Shares are
purchased by transferring funds from a checking, bank money market or NOW
account designated by the purchaser. At the purchaser's option, the account
designated will be debited in the specified amount, and Shares will be
purchased, once a month, on either the first or fifteenth day, or twice a month,
on both days.
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To establish an Automatic Investment account, an investor must complete the
supplemental application contained in this Prospectus and mail it to CGFSC. An
investor may cancel its participation in this Program (or a Shareholder
Organization may cancel the participation of a Customer) or change the amount of
purchase at any time, by mailing written notification to CGFSC, P.O. Box 2798,
Boston, Massachusetts 02208-2798, and notification will be effective three
Business Days following receipt. The Trust may modify or terminate this
privilege at any time or charge a service fee, although no such fee currently is
contemplated.
NET INCOME, DIVIDENDS AND DISTRIBUTIONS
The net income of the Portfolio is determined each Business Day (and on
such other days as are deemed necessary in order to comply with Rule 22c-1 under
the 1940 Act). This determination is made once during each such day as of 3 P.M.
Eastern time. All the net income of the Portfolio, as defined below, so
determined is allocated pro rata among the Fund and the other investors in the
Portfolio at the time of such determination.
For this purpose the net income of the Portfolio (from the time of the
immediately preceding determination thereof) consists of (i) all income accrued,
less the amortization of any premium, on the assets of the Portfolio, less (ii)
all actual and accrued expenses of the Portfolio determined in accordance with
generally accepted accounting principles. Interest income includes discount
earned (including both original issue and market discount) accrued ratably to
the date of maturity and any net realized gains or losses on the assets of the
Portfolio. Securities are valued at amortized cost, which the Trustees of the
Portfolio have determined in good faith constitutes fair value for the purpose
of complying with the 1940 Act. This method provides certainty in valuation, but
may result in periods during which the stated value of a security held by the
Portfolio is higher or lower than the price the Portfolio would receive if the
security were sold. This valuation method will continue to be used until such
time as the Trustees of the Portfolio determine that it does not constitute fair
value for such purposes.
The net income of the Fund is determined at the same time and on the same
days as the net income of the Portfolio is determined. Substantially all of the
net income of the Fund, as defined below, so determined is declared in Shares as
a dividend to shareholders of record at the time of such determination. Shares
begin accruing dividends on the Business Day they are purchased. Dividends are
distributed monthly on or about the last business day of each month. Unless a
shareholder elects to receive dividends in cash, dividends are distributed in
the form of additional full and fractional Shares at the rate of one Share for
each one dollar of dividends.
For this purpose the net income of the Fund (from the time of the
immediately preceding determination thereof) consists of (i) all income accrued
on the assets of the Fund (i.e., the Fund's pro rata share of the net income of
the Portfolio), less (ii) all actual and accrued expenses of the Fund determined
in accordance with generally accepted accounting principles.
Since substantially all of the net income of the Fund is declared as a
dividend each time net income is determined, the net asset value per Share of
the Fund (i.e., the value of the net assets of the Fund divided by the number of
Shares of the Fund outstanding) is expected to remain at $1.00 per Share
immediately after each such determination and dividend declaration. Any increase
in the value of a shareholder's investment in the Fund, representing the
reinvestment of dividends, is reflected by an increase in the number of Shares
of the Fund in its account.
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<PAGE>
It is expected that the Fund will have a positive net income at the time of
each determination thereof. If for any reason the net income of the Fund is a
negative amount, which could occur, for instance, upon default by an issuer of a
security held by the Portfolio, the Trust would first offset the negative amount
with respect to each shareholder account from the dividends declared during the
month with respect to each such account. If and to the extent that such negative
amount exceeds such declared dividends at the end of the month, the Trust would
reduce the number of outstanding Shares of the Fund by treating each shareholder
as having contributed to the capital of the Fund that number of full and
fractional Shares in the account of such shareholder which represents such
shareholder's proportion of the amount of such excess. Each shareholder would be
deemed to have agreed to such contribution in these circumstances by its
investment in the Fund. Thus, the net asset value per Share of the Fund will, to
the extent possible, be maintained at a constant $1.00.
TAXES
Each year, the Trust intends to qualify the Fund as a 'regulated investment
company' under the Internal Revenue Code of 1986, as amended (the 'Code').
Because the Fund intends to distribute all of its net investment income and net
realized capital gains to its shareholders in accordance with the timing
requirements imposed by the Code, it is not expected that the Fund will be
required to pay any federal income or excise taxes, although the Fund's non-U.S.
source income may be subject to non-U.S. withholding taxes. If the Fund fails to
qualify as a 'regulated investment company' in any year, the Fund would incur a
regular corporate federal income tax upon its taxable income and the Fund's
distributions would continue to be taxable as ordinary dividend income to
shareholders. The Portfolio believes that it will not be required to pay any
federal income or excise taxes.
Shareholders of the Fund normally will have to pay federal income taxes,
and any state or local taxes, on the dividends and realized net capital gains
distributions, if any, they receive from the Fund. Dividends from income and any
distributions from net short-term capital gains are taxable to shareholders as
ordinary income for federal income tax purposes. Distributions of net capital
gains, if any, are taxable to shareholders as long-term capital gains without
regard to the length of time the shareholders have held their shares. Dividends
declared in December of any year payable to shareholders of record on a
specified date in such months will be deemed to have been received by
shareholders and paid by the Fund on December 31 of such year in the event such
dividends are actually paid during January of the following year. Dividends and
capital gains distributions, if any, paid to shareholders will be treated in the
same manner for federal income tax purposes whether received in cash or
reinvested in additional shares of the Fund. After the end of each calendar
year, each shareholder will receive information for tax purposes on the
dividends and any realized net capital gains distributions received during that
calendar year including the portion taxable as ordinary income and the portion
taxable as capital gains.
The Trust may be required to withhold federal income tax at the rate of 31%
from all taxable distributions payable to shareholders who do not provide the
Trust with their correct taxpayer identification number or make required
certifications, or who have been notified by the Internal Revenue Service that
they are subject to backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder's federal
income tax liability.
The foregoing summarizes some of the important tax considerations generally
affecting the Fund and its shareholders and is not intended as a substitute for
careful tax planning. Accordingly, potential investors in the Fund should
consult their tax advisers with specific reference to their own tax situation.
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<PAGE>
FOREIGN SHAREHOLDERS. The Funds will withhold tax payments at a rate of 30%
(or any lower applicable tax treaty rate) on taxable dividens and other payments
subject to withholding taxes that are made to persons who are not citizens or
residents of the United States. Distributions received from the Funds by
non-U.S. persons also may be subject to tax under the laws of their own
jurisdiction.
MANAGEMENT OF THE TRUST AND THE PORTFOLIO
The Trust has retained the services of SBDS as administrator. Cash Reserves
Portfolio has retained the services of Signature Financial Group (Cayman), Ltd.
as administrator. Citibank is the investment adviser for the Portfolio. The
Trust seeks to achieve the investment objective of the Fund by investing all of
the investable assets of the Fund in the Portfolio. Therefore, the Trust relies
primarily on the investment advice which Citibank provides to the Portfolio. The
Trust has retained the services of U.S. Trust at no additional fee to perform
certain investment management functions. For biographical information relating
to each of the Trustees and officers of the Trust and the Portfolios, see
'Management of the Trust and the Portfolio' in the Statement of Additional
Information.
INVESTMENT ADVISER
The Investment Adviser manages the assets of the Portfolio pursuant to an
Investment Advisory Agreement with the Portfolio. Subject to such policies as
the Trustees of the Portfolio may determine, the Investment Adviser manages the
Portfolio, makes decisions with respect to and places orders for all purchases
and sales of portfolio securities, and maintains records relating to such
purchases and sales. The Investment Adviser maintains its principal offices at
153 East 53rd Street, New York, New York 10043, and is a wholly-owned subsidiary
of Citicorp, a registered bank holding company. The Investment Adviser offers a
wide range of banking and investment services to customers, and together with
its affiliates currently manages more than $73 billion in assets.
SUPPLEMENTAL INVESTMENT MANAGEMENT SERVICES
The Fund receives supplemental investment management services from U.S.
Trust pursuant to an investment advisory agreement between the Trust and U.S.
Trust (the 'Supplemental Advisory Agreement'). U.S. Trust receives no additional
fee or other compensation for its services under the Supplemental Advisory
Agreement. U.S. Trust makes no investment decisions with respect to the Fund or
the Portfolio. Under the Supplemental Advisory Agreement, U.S. Trust reviews
certain investment management and custody processes.
U.S. Trust is a state-chartered bank and trust company which provides trust
and banking services to individuals, corporations and institutions, both
nationally and internationally, including investment management, estate and
trust administration, financial planning, corporate trust and agency, and
personal and corporate banking. U.S. Trust is a member bank of the Federal
Reserve System and the Federal Deposit Insurance Corporation and is one of the
twelve members of the New York Clearing House Association. On June 30, 1995,
U.S. Trust's Asset Management Group had approximately $41.2 billion in assets
under management. U.S. Trust, which has its principal offices at 114 W. 47th
Street, New York, New York 10036-1532, is a subsidiary of U.S. Trust
Corporation, a registered bank holding company.
U.S. Trust also serves as investment adviser to Excelsior Funds, Inc. and
Excelsior Tax-Exempt Funds, Inc., which are registered investment companies
consisting of the following funds: Equity Fund;
16
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Income and Growth Fund; Long-Term Supply of Energy Fund; Productivity Enhancers
Fund; Environmentally-Related Products and Services Fund; Aging of America Fund;
Communication and Entertainment Fund; Business and Industrial Restructuring
Fund; Global Competitors Fund; Early Life Cycle Fund; International Fund;
Emerging Americas Fund; Pan European Fund; Pacific/Asia Fund; Money Fund;
Government Money Fund; Treasury Money Fund; Short-Term Government Securities
Fund; Intermediate-Term Managed Income Fund; Managed Income Fund; Tax Exempt
Money Fund; Short-Term Tax-Exempt Securities Fund; New York Intermediate-Term
Tax-Exempt Fund; Intermediate-Term Tax-Exempt Fund; and Long-Term Tax-Exempt
Fund. U.S. Trust also serves as investment adviser to the UST Variable Series,
Inc. and the Excelsior Institutional Trust family of funds.
ADMINISTRATIVE SERVICES PLAN
The Trust has adopted an Administrative Services Plan which provides that
the Trust may obtain the services of an administrator, a transfer agent, a
custodian and one or more shareholder servicing agents, and may enter into
agreements providing for the payment of fees for such services. Under the
Administrative Services Plan, the aggregate of the fees paid to the
administrator and to shareholder servicing agents from the Fund may not exceed
0.40% of the Fund's average daily net assets on an annualized basis for the
Fund's then-current fiscal year.
ADMINISTRATORS
Pursuant to Administrative Services Agreements, SBDS and Signature
Financial Group (Cayman), Ltd. (together with SBDS, the 'Administrators')
provide the Trust and Cash Reserves Portfolio, respectively, with general office
facilities and supervise the overall administration of the Trust and the
Portfolio, respectively, including, among other responsibilities, the
negotiation of contracts and fees with, and the monitoring of performance and
billings of, the independent contractors and agents of the Trust and the
Portfolio; the preparation and filing of all documents required for compliance
by the Trust and the Portfolio with applicable laws and regulations; the
preparation and distribution of materials in connection with meetings of
Trustees and investors; and arranging for the maintenance of books and records
of the Trust and the Portfolio. The Administrators provide persons satisfactory
to the Board of Trustees of the Trust and the Portfolio to serve as Trustees and
officers of the Trust and the Portfolio. Such officers and Trustees of the Trust
or the Portfolio may be directors, officers or employees of the Administrators
or their affiliates. For its services and facilities, SBDS receives from the
Trust a fee accrued daily and paid monthly at an annual rate equal to 0.01% of
the average daily net assets of the Fund, with an annual minimum payment of
$20,000, and Signature Financial Group (Cayman), Ltd. receives from Cash
Reserves Portfolio a fee accrued daily and paid monthly at an annual rate equal
to 0.05% of the aggregate average daily net assets of the Portfolio, in each
case on an annualized basis for the Trust's or the Portfolios' then-current
fiscal year. However, the Administrator for the Portfolio has voluntarily agreed
to waive the fee payable from the Portfolio on a month-to-month basis, and the
Administrator for the Fund has voluntarily agreed to reimburse the Fund for
certain expenses. SBDS is a registered broker-dealer. Each of the Administrators
is a subsidiary of Signature Financial Group, Inc.
SUB-ADMINISTRATORS
Pursuant to Sub-Administrative Services Agreement, Citibank performs such
sub-administrative duties for the Portfolio as are from time to time agreed upon
by Citibank and Signature Financial
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<PAGE>
Group (Cayman), Ltd. Citibank's sub-administrative duties may include providing
equipment and clerical personnel necessary for maintaining the organization of
the Portfolio, participation in the preparation of documents required for
compliance by the Portfolio with applicable laws and regulations, preparation of
certain documents in connection with meetings of Trustees of, and investors in,
the Portfolio, and other functions which would otherwise be performed by
Signature Financial Group (Cayman), Ltd. as set forth above. For its services as
sub-administrator, Citibank receives such compensation as from time to time is
agreed upon by Signature Financial Group (Cayman), Ltd. and Citibank, but not
more than 0.05% per annum of the average daily net assets of the Portfolio. All
such compensation will be paid by Signature Financial Group (Cayman), Ltd.
Pursuant to a Sub-Administrative Services Agreement, CGFSC performs such
sub-administrative duties for the Trust as may from time to time be agreed upon
by CGFSC and SBDS, including, among other matters, providing equipment and
clerical personnel necessary for maintaining the organization of the Trust,
preparing documents required for compliance by the Trust with applicable laws
and regulations, preparing documents in connection with meetings of Trustees or
shareholders, and other functions which would otherwise be performed by SBDS as
set forth above. The Agreement provides that CGFSC will receive such
compensation as from time to time may be agreed upon by SBDS and CGFSC. All such
compensation will be paid by SBDS.
SHAREHOLDER SERVICING AGENTS
The Trust has entered into Shareholder Servicing Agreements with each
shareholder servicing agent pursuant to which the shareholder servicing agent
will, as agent for its customers, among other things: answer customer inquiries
regarding account status and history, the manner in which purchases, exchanges
and redemptions of shares of the Fund may be effected and certain other matters
pertaining to the Fund; assist shareholders in designating and changing dividend
options, account designations and addresses; provide necessary personnel and
facilities to establish and maintain shareholder accounts and records; assist in
processing purchase, exchange and redemption transactions; arrange for the
wiring of funds; transmit and receive funds in connection with customer orders
to purchase, exchange or redeem Fund shares; verify and guarantee shareholder
signatures in connection with redemption orders and transfers and changes in
shareholders-designated accounts; provide periodic statements showing a
customer's account balances and, to the extent practicable, integrate such
information with other client transactions otherwise effected with or through
the shareholder servicing agent; furnish (either separately or on an integrated
basis with other reports sent to a shareholder by a shareholder servicing agent)
monthly and year-end statements and confirmations of purchases and redemptions;
transmit, on behalf of the Trust, prospectuses, proxy statements, annual
reports, updating prospectuses, if any, and other communications from the Trust
to shareholders of the Fund; receive, tabulate and transmit to the Trust proxies
executed by shareholders with respect to meetings of shareholders of the Fund;
and provide such other related services as the Trust or a shareholder may
request. For these services, each shareholder servicing agent will receive such
fee as may from time to time be agreed upon between such agent and the Trust;
such compensation is not expected to cause the total expense ratio of the Fund
to increase above what is described in this Prospectus in light of expected
waivers by the other service providers of the Trust and the Portfolio. See
'Summary of Expenses' above.
The Glass-Steagall Act prohibits certain financial institutions from
engaging in the business of underwriting securities of open-end investment
companies such as the Trust. The Trust may engage
18
<PAGE>
banks as shareholder servicing agents, but only to perform administrative and
shareholder servicing functions as described above. There is presently no
controlling precedent regarding the performance of shareholder servicing
activities by banks. State laws on this issue may differ from the
interpretations of relevant federal law and banks and financial institutions may
be required to register as dealers pursuant to state securities law. Future
changes in either federal statutes or regulations relating to the permissible
activities of banks, as well as future judicial or administrative decisions and
interpretations of present and future statutes and regulations, could prevent a
bank from continuing to perform all or part of its shareholder servicing
activities. If a bank were prohibited from so acting, its customers would be
permitted to remain Fund shareholders and alternative means for continuing the
servicing of such shareholders would be sought. In such event, changes in the
operation of the Fund might occur and a shareholder serviced by such bank might
no longer be able to avail himself of any automatic investment or other services
then being provided by such bank. The Trustees of the Trust do not expect that
shareholders of the Fund would suffer any adverse financial consequences as a
result of these occurrences.
CUSTODIANS AND TRANSFER AGENTS
U.S. Trust serves as custodian of the Fund's assets and as the Fund's
transfer and dividend disbursing agent. Communications to the custodian and
transfer agent should be directed to United States Trust Company of New York,
Mutual Funds Service Division, 770 Broadway, New York, New York 10003-9598. U.S.
Trust has entered into a sub-transfer agency arrangement with CGFSC (73 Tremont
Street, Boston, Massachusetts 02108-3913) pursuant to which CGFSC provides
certain transfer agency, dividend disbursement and registrar services to the
Fund.
Cash Reserves Portfolio has entered into a Transfer Agency and Service
Agreement with State Street Bank & Trust Company ('State Street'), pursuant to
which State Street (or its affiliate, State Street Canada, Inc.) acts as
transfer agent for Cash Reserves Portfolio. The transfer agent maintains an
account for each investor in the Portfolio and performs other transfer agency
functions. Pursuant to a Custodian Contract, State Street also acts as custodian
of the Portfolio's assets. See 'Management of the Trust and the
Portfolio -- Transfer Agents and Custodians' in the Statement of Additional
Information.
DISTRIBUTOR
Pursuant to a Distribution Agreement, SBDS acts as principal underwriter
for the Shares. SBDS and its affiliated entities serve as underwriters and
administrators to other mutual funds. SBDS receives no compensation for its
services under the Distribution Agreement.
EXPENSES
The respective expenses of the Trust and the Portfolio include the
compensation of their respective Trustees who are not affiliated with the
Investment Adviser or the Administrators; governmental fees; interest charges;
taxes; fees and expenses of independent auditors, of legal counsel and of any
transfer agent, custodian, registrar or dividend disbursing agent of the Trust
or the Portfolio; insurance premiums; and expenses of calculating the net asset
value of, and the net income on, interests in the Portfolio and shares of the
Fund.
Expenses of the Trust also include all fees under its Administrative
Services Agreement; expenses of distributing and redeeming shares and servicing
shareholder accounts; expenses of preparing, printing
19
<PAGE>
and mailing prospectuses, reports, notices, proxy statements and reports to
shareholders and to governmental officers and commissions; expenses of
shareholder and Trustee meetings; expenses relating to the issuance,
registration and qualification of shares of the Fund and the preparation,
printing and mailing of prospectuses for such purposes; and membership dues in
the Investment Company Institute allocable to the Trust.
Expenses of the Portfolio also include all fees under the Portfolio's
Administrative Services Agreement; the expenses connected with the execution,
recording and settlement of security transactions; fees and expenses of the
Portfolio's custodian for all services to the Portfolio, including safekeeping
of funds and securities and maintaining required books and accounts; expenses of
preparing and mailing reports to investors and to governmental officers and
commissions; expenses of meetings of investors and Trustees; and the advisory
fees payable to the Investment Adviser under the Advisory Agreement.
DESCRIPTION OF SHARES, VOTING RIGHTS AND LIABILITIES
The Trust Instrument of the Trust permits its Trustees to issue an
unlimited number of full and fractional shares of beneficial interest (par value
$0.00001 per share) and to divide or combine the shares into a greater or lesser
number of shares without thereby changing the proportionate beneficial interests
in the Fund. The Trust reserves the right to create and issue any number of
series, in which case investments in each series would participate equally in
the earnings, dividends and assets of the particular series. Currently, the
Trust has one active series: Excelsior Institutional Money Fund.
Each Share of the Fund represents an interest in the Fund that is
proportionate with the interest represented by each other Share. Shares have no
preference, preemptive, conversion or similar rights. Shares are fully paid and
nonassessable when issued, except as set forth below. Shareholders are entitled
to one vote for each Share held on matters on which they are entitled to vote.
The Trust is not required to and has no current intention to hold annual
meetings of shareholders, although the Trust will hold special meetings of
shareholders when in the judgment of the Board of Trustees of the Trust it is
necessary or desirable to submit matters for a shareholder vote. Shareholders
have the right to remove one or more Trustees of the Trust at a shareholders
meeting by vote of two thirds of the outstanding shares of the Trust.
Shareholders also have the right to remove one or more Trustees of the Trust
without a meeting by a declaration in writing by a specified number of
shareholders. Upon liquidation or dissolution of the Fund, shareholders of the
Fund would be entitled to share pro rata in the net assets of the Fund available
for distribution to shareholders.
Excelsior Funds is a business trust organized under the laws of the State
of Delaware. Under Delaware law, shareholders of Delaware business trusts are
entitled to the same limitation on personal liability extended to shareholders
of private for-profit corporations organized under the general corporation law
of the State of Delaware; the courts of other states may not apply Delaware law,
however, and shareholders may, under certain circumstances, be held personally
liable for the obligations of the Trust. The Trust Instrument contains an
express disclaimer of shareholder liability for acts or obligations of the Trust
and provides for indemnification and reimbursement of expenses out of Fund
property for any shareholder held personally liable for the obligations of a
Fund solely by reason of his being or having been a shareholder. The Trust
Instrument also provides for the maintenance, by or on behalf of the Trust and
the Fund, of appropriate insurance (for example, fidelity bonding and errors and
omissions insurance) for the protection of the Trust and the Fund, their
shareholders, Trustees, officers, employees and agents, covering possible tort
and other liabilities. Thus,
20
<PAGE>
the risk of a shareholder incurring financial loss as a result of shareholder
liability is limited to circumstances in which Delaware law did not apply,
inadequate insurance existed and a Fund itself was unable to meet its
obligations.
Shareholders of all series of the Trust will vote together to elect
Trustees of the Trust and for certain other matters. Under certain
circumstances, the shareholders of one or more series of the Trust could control
the outcome of these votes.
The Portfolio is organized as a trust under the laws of the State of New
York. The Portfolio's Declaration of Trust provides that the Fund and other
entities investing in the Portfolio (e.g., other investment companies, insurance
company separate accounts and common and commingled trust funds) will each be
liable for all obligations of the Portfolio. However, the Trustees of the Trust
believe that the risk of the Fund incurring financial loss on account of such
liability is limited to circumstances in which both inadequate insurance existed
and the Portfolio itself was unable to meet its obligations, and that neither
the Fund nor their shareholders will be exposed to a material risk of liability
by reason of the Fund's investment in the Portfolio. For more information
regarding the Trustees of the Trust and the Portfolio, see 'Management of the
Trust and the Portfolio' in the Statement of Additional Information.
YIELD INFORMATION
From time to time, in advertisements or in reports to shareholders, the
yield of the Fund may be quoted and compared to those of other mutual funds with
similar investment objectives and to stock or other relevant indices or to
rankings prepared by independent services or other financial or industry
publications that monitor the performance of mutual funds. For example, the
yield of the Fund may be compared to the applicable averages compiled by
Donoghue's Money Fund Report, a widely recognized independent publication that
monitors the performance of money market funds. The yield of the Fund may also
be compared to the average yields reported by the Bank Rate Monitor for money
market deposit accounts offered by the 50 leading banks and thrift institutions
in the top five standard metropolitan statistical areas.
Yield data as reported in national financial publications including, but
not limited to, Money Magazine, Forbes, Barron's, The Wall Street Journal and
The New York Times, or in publications of a local or regional nature, may also
be used in comparing the yield of the Fund.
The Fund may advertise a seven-day yield, which refers to the income
generated over a particular seven-day period identified in the advertisement by
an investment in the Fund. This income is annualized, i.e., the income during a
particular week is assumed to be generated each week over a fifty two week
period, and is then shown as a percentage of the investment. The Fund may also
advertise its 'effective yield', which is calculated similarly except that, when
annualized, income is assumed to be reinvested, thereby making the effective
yield slightly higher because of the compounding effect of the assumed
reinvestment. See 'Yield Information' in the Statement of Additional
Information.
Yields will fluctuate and any quotation of yield should not be considered
as representative of the future performance of the Fund. Since yields fluctuate,
yield data cannot necessarily be used to compare an investment in the Fund with
bank deposits, savings accounts and similar investment alternatives which often
provide an agreed or guaranteed fixed yield for a stated period of time.
Shareholders should remember that yield is generally a function of the kind and
quality of the instruments held in a portfolio, portfolio maturity, operating
expenses, and market conditions. Any fees
21
<PAGE>
charged by Shareholder Organizations with respect to accounts of Customers that
have invested in Shares will not be included in calculations of performance.
MISCELLANEOUS
Shareholders will receive unaudited semi-annual reports describing the
Fund's investment operations and annual financial statements audited by
independent accountants.
The Trust's Statement of Additional Information contains more detailed
information about the Fund and the Portfolio, including information related to
(i) the investment policies and restrictions of the Fund and the Portfolio, (ii)
the Trustees, officers, the Investment Adviser, the Administrators and the sub-
administrators, (iii) portfolio transactions and brokerage commissions, (iv) the
Fund's Shares, including rights and liabilities of shareholders, (v) additional
performance information, including the method used to calculate yield, (vi) the
determination of the net asset value of Shares of the Fund and (vii) the audited
financial statements of the Fund and the Portfolio at August 31, 1995.
22
<PAGE>
APPENDIX -- DESCRIPTION OF RATINGS
DESCRIPTION OF THE HIGHEST COMMERCIAL PAPER RATINGS
A commercial paper rating by Moody's Investors Service, Inc. ('Moody's') is
an opinion on the ability of issuers to repay punctually promissory obligations
not having an original maturity in excess of nine months. PRIME-1 is the highest
commercial paper rating employed by Moody's. Issuers rated Prime-1 (or related
supporting institutions) have a superior capacity for repayment of short-term
promissory obligation. Prime-1 repayment capacity will normally be evidenced by
the following characteristics. (1) leading market positions in well established
industries; (2) high rates of return on funds employed; (3) conservative
capitalization structures with moderate reliance on debt and ample asset
protection; (4) broad margins in earnings coverage of fixed financial charges
and high internal cash generation; and (5) well established access to a range of
financial markets and assured sources of alternate liquidity.
A commercial paper rating by Standard & Poor's Ratings Group ('Standard &
Poor's') is a current assessment of the likelihood of timely payment of debt
having an original maturity of no more than 365 days. A-1 is the highest
commercial paper rating employed by Standard & Poor's. Issues assigned an 'A'
rating are regarded as having the greatest capacity for timely payment, and an
issue designated with an A-1 rating is regarded as having either an overwhelming
or a very strong degree of safety with regard to timely payment. Those issues
determined to possess overwhelming safety characteristics are rated A-1+.
DESCRIPTION OF THE HIGHEST CORPORATE BOND RATINGS
Bonds rated Aaa by Moody's are judged by Moody's to be of the highest
quality by all standards. Together with bonds rated Aa (Moody's second highest
rating) they comprise what are generally known as high-grade bonds.
Debt rated AAA by Standard & Poor's is judged by Standard & Poor's to be
the highest grade obligation and to have an extremely strong capacity to pay
interest and repay principal.
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SUMMARY OF EXPENSES.................................. 1
FINANCIAL HIGHLIGHTS................................. 2
INVESTMENT OBJECTIVE AND POLICIES.................... 3
SPECIAL INFORMATION CONCERNING HUB AND SPOKE'r'
STRUCTURE.......................................... 7
PRICING OF SHARES.................................... 8
HOW TO PURCHASE AND REDEEM SHARES.................... 8
INVESTOR PROGRAMS.................................... 13
NET INCOME, DIVIDENDS AND DISTRIBUTIONS.............. 14
TAXES................................................ 15
MANAGEMENT OF THE TRUST AND THE PORTFOLIO............ 16
DESCRIPTION OF SHARES, VOTING RIGHTS AND
LIABILITIES........................................ 20
YIELD INFORMATION.................................... 21
MISCELLANEOUS........................................ 22
APPENDIX -- DESCRIPTION OF RATINGS................... A-1
</TABLE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY EXCELSIOR
FUNDS OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER BY
EXCELSIOR FUNDS OR ITS DISTRIBUTOR IN ANY JURISDICTION IN WHICH, OR TO ANY
PERSON TO WHOM, SUCH OFFER MAY NOT LAWFULLY BE MADE.
COU815A003
EXCELSIOR FUNDS
INSTITUTIONAL
MONEY FUND
PROSPECTUS
JANUARY 2, 1996
<PAGE>
UST223A
STATEMENT OF
ADDITIONAL INFORMATION
JANUARY 2, 1996
EXCELSIOR INSTITUTIONAL MONEY FUND
Excelsior Institutional Money Fund (the "Fund") is a series of
Excelsior Funds (the "Trust"). This Statement of Additional Information
describes the Fund only and no other series of the Trust.
TABLE OF CONTENTS PAGE
The Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Investment Objective, Policies and Restrictions . . . . . . . . 2
Securities Transactions . . . . . . . . . . . . . . . . . . . . 11
Yield Information . . . . . . . . . . . . . . . . . . . . . . . 12
Determination of Net Asset Value; Valuation of Securities;
Redemption in Kind . . . . . . . . . . . . . . . . . . . . . 13
Additional Purchase and Redemption Information . . . . . . . . . 14
Management of the Trust and the Portfolio . . . . . . . . . . 15
Independent Accountants . . . . . . . . . . . . . . . . . . . . 22
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Description of the Trust; Fund Shares . . . . . . . . . . . . . 25
Financial Statements . . . . . . . . . . . . . . . . . . . . . . 26
Excelsior Funds
6 St. James Avenue, Boston, Massachusetts 02116
(617) 423-0800
This Statement of Additional Information sets forth information which
may be of interest to investors but which is not necessarily included in the
Fund's Prospectus, dated January 2, 1996 (the "Prospectus"), as the same may be
amended from time to time. This Statement of Additional
<PAGE>
Information should be read only in conjunction with the Prospectus, a copy of
which may be obtained by an investor without charge by contacting the Fund's
Distributor at the address and telephone number shown above. Terms used but not
defined herein, which are defined in the Prospectus, are used herein as defined
in the Prospectus.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND THE SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, BANK INSURANCE FUND, FEDERAL RESERVE BOARD, OR
ANY OTHER GOVERNMENTAL AGENCY, AND INVOLVE POSSIBLE RISK TO PRINCIPAL.
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY AN EFFECTIVE PROSPECTUS.
2
<PAGE>
THE TRUST
The Trust is an open-end diversified management investment company
which was organized as a business trust under the laws of the State of Delaware
on October 25, 1993. Shares of the Trust have been divided into separate series.
The following series is described herein: Excelsior Institutional Money Fund
(the "Fund" or "Institutional Money Fund") . As of the date hereof, there are no
other active series , although new series may be added from time to time.
The Fund described herein is of a type of mutual fund commonly referred
to as a "money market fund". The net asset value of each of the shares of the
Fund is expected to remain constant at $1.00, although there can be no assurance
that the Trust will maintain a stable net asset value for the Fund on a
continuous basis. See "Determination of Net Asset Value" below.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS
The investment objective of the Institutional Money Fund is to provide
shareholders with liquidity and as high a level of current income as is
consistent with the preservation of capital. The Trust seeks to achieve the
investment objective of the Institutional Money Fund by investing all the
investable assets of the Fund in Cash Reserves Portfolio, a diversified open-end
management investment company with the same investment objective as the
Institutional Money Fund. Cash Reserves Portfolio seeks to achieve this
investment objective by investing in U.S. dollar-denominated money market
obligations with maturities of 397 days or less issued by U.S. and non-U.S.
issuers.
3
<PAGE>
Citibank, N.A. ("Citibank") is the investment adviser (the "Adviser")
of the Portfolio. The Adviser manages the investments of the Portfolio from day
to day in accordance with the Portfolio's investment objectives and policies.
The selection and management of investments for the Portfolio and the way it is
managed depend on the conditions and trends in the economy and the financial
marketplaces.
The following discussion supplements the information contained in the
Prospectus concerning the investment objectives, policies and restrictions of
the Fund. Since the investment characteristics of the Fund correspond directly
to those of the Portfolio, references below to the Portfolio's investment
objective, strategies and techniques also include the Fund.
The Trust may withdraw the Fund's investment from the Portfolio at any
time, if the Board of Trustees of the Trust determines that it is in the best
interests of the Fund to do so. Upon any such withdrawal, the Fund's assets
would be invested in accordance with the investment objective, policies and
restrictions described below and in the Prospectus with respect to the
Portfolio. The approval of the Institutional Money Fund's shareholders is not
required to change any of the Fund's investment policies or objective.
CASH RESERVES PORTFOLIO
The approval of the investors in Cash Reserves Portfolio is not
required to change Cash Reserves Portfolio's investment objective or any of the
Portfolio's investment policies discussed below, including those concerning
security transactions, other than the Portfolio's concentration policy with
respect to bank obligations described in paragraph (1) below, which is
fundamental and may not be changed without investor approval.
Cash Reserves Portfolio seeks to achieve its investment objective
through investments limited to the following types of U.S. dollar-denominated
money market instruments. All investments by Cash Reserves Portfolio mature or
will be deemed to mature within 397 days from the date of acquisition, and the
average maturity of the investments held by Cash Reserves Portfolio (on a
dollar-weighted basis) will be 90 days or less. All investments by Cash Reserves
Portfolio are in high quality securities (i.e., rated in the highest rating
category for short-term obligations by at least two nationally recognized
statistical rating organizations (each, an "NRSRO") assigning a rating to the
security or issuer, or if only one NRSRO assigned a rating, that NRSRO, or, in
the case of an investment which is not rated, of comparable quality as
determined by the Adviser, and
4
<PAGE>
are determined by the Adviser to present minimal credit risks. Investments in
high quality, short-term instruments may, in many circumstances, result in a
lower yield than would be available from investments in instruments with a lower
quality or a longer term. Under the 1940 Act the Institutional Money Fund and
Cash Reserves Portfolio are each classified as "diversified", although in the
case of the Fund, all of its assets are invested in the Portfolio. A
"diversified investment company" must invest at least 75% of its assets in cash
and cash items, U.S. Government securities, investment company securities and
other securities limited as to any one issuer to not more than 5% of the total
assets of the investment company and not more than 10% of the voting securities
of the issuer.
(1) BANK OBLIGATIONS. Cash Reserves Portfolio invests at least 25% of its
assets, and may invest up to 100% of its assets, in bank obligations. These
obligations include, but are not limited to, negotiable certificates of deposit,
bankers' acceptances and fixed time deposits. This concentration policy is
fundamental and may not be changed without the approval of the investors in Cash
Reserves Portfolio. Cash Reserves Portfolio limits its investments in U.S. bank
obligations (including their non-U.S. branches) to banks having total assets in
excess of $1 billion and which are subject to regulation by an agency of the
U.S. Government. Cash Reserves Portfolio may also invest in certificates of
deposit issued by banks the deposits in which are insured by the Federal Deposit
Insurance Corporation ("FDIC"), through either the Bank Insurance Fund or the
Savings Association Insurance Fund, having total assets of less than $1 billion,
provided that Cash Reserves Portfolio at no time owns more than $100,000
principal amount of certificates of deposit (or any higher principal amount
which in the future may be fully insured by FDIC insurance) of any one of those
issuers. Fixed time deposits are obligations which are payable at a stated
maturity date and bear a fixed rate of interest. Generally, fixed time deposits
may be withdrawn on demand by Cash Reserves Portfolio, but they may be subject
to early withdrawal penalties which vary depending upon market conditions and
the remaining maturity of the obligation. Although fixed time deposits do not
have a market, there are no contractual restrictions on Cash Reserves
Portfolio's right to transfer a beneficial interest in the deposit to a third
party.
U.S. banks organized under federal law are supervised and examined by
the Comptroller of the Currency and are required to be members of the Federal
Reserve System and to be insured by the FDIC. U.S. banks organized under state
law are supervised and examined by state banking authorities and are members of
the Federal Reserve System only if they elect to join. However, state banks
which are insured by the FDIC are subject to federal examination and to a
substantial body of federal law and regulation. As a result of federal and state
laws and regulations, U.S. branches of U.S. banks, among other things, are
generally required to maintain specified levels of reserves, and
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are subject to other supervision and regulation designed to promote
financial soundness.
Cash Reserves Portfolio limits its investments in non-U.S. bank
obligations (i.e., obligations of non-U.S. branches and subsidiaries of U.S.
banks, and U.S. and non-U.S. branches of non-U.S. banks) to U.S.
dollar-denominated obligations of banks which at the time of investment are
branches or subsidiaries of U.S. banks which meet the criteria in the preceding
paragraphs or are branches of non-U.S. banks which (i) have more than $10
billion, or the equivalent in other currencies, in total assets; (ii) in terms
of assets are among the 75 largest non-U.S. banks in the world; (iii) have
branches or agencies in the United States; and (iv) in the opinion of the
Adviser, are of an investment quality comparable with obligations of U.S. banks
which may be purchased by Cash Reserves Portfolio. These obligations may be
general obligations of the parent bank, in addition to the issuing branch or
subsidiary, but the parent bank's obligations may be limited by the terms of the
specific obligation or by governmental regulation. Cash Reserves Portfolio also
limits its investments in non-U.S. bank obligations to banks, branches and
subsidiaries located in Western Europe (United Kingdom, France, Germany,
Belgium, the Netherlands, Italy, Switzerland), Scandinavia (Denmark, Norway,
Sweden), Australia, Japan, the Cayman Islands, the Bahamas and Canada. Cash
Reserves Portfolio does not purchase any bank obligation of the Adviser or an
affiliate of the Adviser.
Since Cash Reserves Portfolio may hold obligations of non-U.S. branches
and subsidiaries of U.S. banks, and U.S. and non-U.S. branches of non-U.S.
banks, an investment in the Institutional Money Fund involves certain additional
risks. Such investment risks include future political and economic developments,
the possible imposition of non-U.S. withholding taxes on interest income payable
on such obligations held by Cash Reserves Portfolio, the possible seizure or
nationalization of non-U.S. deposits and the possible establishment of exchange
controls or other non-U.S. governmental laws or restrictions applicable to the
payment of the principal of and interest on certificates of deposit or time
deposits that might affect adversely such payment on such obligations held by
Cash Reserves Portfolio. In addition, there may be less publicly-available
information about a non-U.S. branch or subsidiary of a U.S. bank or a U.S. or
non-U.S. branch of a non-U.S. bank than about a U.S. bank and such branches and
subsidiaries may not be subject to the same or similar regulatory requirements
that apply to U.S. banks, such as mandatory reserve requirements, loan
limitations and accounting, auditing and financial record-keeping standards and
requirements.
The provisions of federal law governing the establishment and operation
of U.S. branches do not apply to non-U.S. branches of U.S. banks. However, Cash
Reserves Portfolio will purchase obligations only of those non-U.S. branches of
U.S. banks which were established with the approval of the Board of Governors of
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the Federal Reserve System (the "Board of Governors"). As a result of such
approval, these branches are subject to examination by the Board of Governors
and the Comptroller of the Currency. In addition, such non-U.S. branches of U.S.
banks are subject to the supervision of the U.S. bank, and creditors of the
non-U.S. branch are considered general creditors of the U.S. bank subject to
whatever defenses may be available under the governing non-U.S. law and to the
terms of the specific obligation. Nonetheless, Cash Reserves Portfolio generally
will be subject to whatever risk may exist that the non-U.S. country may impose
restrictions on payment of certificates of deposit or time deposits.
U.S. branches of non-U.S. banks are subject to the laws of the state in
which the branch is located or to the laws of the United States. Such branches
are therefore subject to many of the regulations, including reserve
requirements, to which U.S. banks are subject. In addition, Cash Reserves
Portfolio will purchase obligations only of those U.S. branches of non-U.S.
banks which are located in states which impose the additional requirement that
the branch pledge to a designated bank within the state an amount of its assets
equal to 5% of its total liabilities.
Non-U.S. banks in whose obligations Cash Reserves Portfolio may invest
may not be subject to the laws and regulations referred to in the preceding two
paragraphs.
(2) OBLIGATIONS OF, OR GUARANTEED BY, NON-U.S. GOVERNMENTS. Cash Reserves
Portfolio limits its investments in non-U.S. government obligations to
obligations issued or guaranteed by the governments of Western Europe (United
Kingdom, France, Germany, Belgium, the Netherlands, Italy, Switzerland),
Scandinavia (Denmark, Norway, Sweden), Australia, Japan and Canada. Generally,
such obligations may be subject to the additional risks described in paragraph 1
above in connection with the purchase of non-U.S. bank obligations.
(3) COMMERCIAL PAPER rated Prime-1 by Moody's Investors Service, Inc.
("Moody's") or A-1 by Standard & Poor's Ratings Group ("Standard & Poor's") or,
if not rated, determined to be of comparable quality by or on behalf of the
Board of Trustees of Cash Reserves Portfolio, such as unrated commercial paper
issued by corporations having an outstanding unsecured debt issue currently
rated Aaa by Moody's or AAA by Standard & Poor's. (For a description of these
ratings see the Appendix to the Prospectus.)
(4) OBLIGATIONS OF, OR GUARANTEED BY, THE U.S. GOVERNMENT, ITS AGENCIES OR
INSTRUMENTALITIES. These include issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an Act of Congress. Some of
the latter category of obligations are supported by the full faith and
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credit of the United States, others are supported by the right of the issuer to
borrow from the U.S. Treasury, and still others are supported only by the credit
of the agency or instrumentality. Examples of each of the three types of
obligations described in the preceding sentence are (i) obligations guaranteed
by the Export-Import Bank of the United States, (ii) obligations of the Federal
National Mortgage Association, and (iii) obligations of the Student Loan
Marketing Association, respectively.
(5) REPURCHASE AGREEMENTS, providing for resale within 397 days or less,
covering obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities which may have maturities in excess of 397 days. A repurchase
agreement arises when a buyer purchases an obligation and simultaneously agrees
with the vendor to resell the obligation to the vendor at an agreed-upon price
and time, which is usually not more than seven days from the date of purchase.
The resale price of a repurchase agreement is greater than the purchase price,
reflecting an agreed-upon market rate which is effective for the period of time
the buyer's funds are invested in the obligation and which is not related to the
coupon rate on the purchased obligation. Obligations serving as collateral for
each repurchase agreement are delivered to Cash Reserves Portfolio's custodian
either physically or in book entry form and the collateral is marked to the
market daily to ensure that each repurchase agreement is fully collateralized at
all times. A buyer of a repurchase agreement runs a risk of loss if, at the time
of default by the issuer, the value of the collateral securing the agreement is
less than the price paid for the repurchase agreement. If the vendor of a
repurchase agreement becomes bankrupt, Cash Reserves Portfolio might be delayed,
or may incur costs or possible losses of principal and income, in selling the
collateral. Cash Reserves Portfolio may enter into repurchase agreements only
with a vendor which is a member bank of the Federal Reserve System or which is a
"primary dealer" (as designated by the Federal Reserve Bank of New York) in U.S.
Government obligations. Cash Reserves Portfolio will not enter into any
repurchase agreements with the Adviser or an affiliate of the Adviser. The
restrictions and procedures described above which govern Cash Reserves
Portfolio's investment in repurchase agreements are designed to minimize Cash
Reserves Portfolio's risk of losses in making those investments.
(6) ASSET-BACKED SECURITIES, which may include securities such as Certificates
for Automobile Receivables ("CARS") and Credit Card Receivable Securities
("CARDS"), as well as other asset-backed securities that may be developed in the
future. CARS represent fractional interests in pools of car installment loans,
and CARDS represent fractional interests in pools of revolving credit card
receivables. The rate of return on asset-backed securities may be affected by
early prepayment of principal on the underlying loans or receivables. Prepayment
rates vary widely and may be affected by changes in market interest rates. It is
not possible to accurately predict the average life of a particular pool of
loans or receivables.
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Reinvestment of principal may occur at higher or lower rates than the original
yield. Therefore, the actual maturity and realized yield on asset-backed
securities will vary based upon the prepayment experience of the underlying pool
of loans or receivables. (See "Asset-Backed Securities" below.)
Cash Reserves Portfolio does not purchase securities which the
Portfolio believes, at the time of purchase, will be subject to exchange
controls or non-U.S. withholding taxes; however, there can be no assurance that
such laws may not become applicable to certain of Cash Reserves Portfolio's
investments. In the event exchange controls or non-U.S. withholding taxes are
imposed with respect to any of Cash Reserves Portfolio's investments, the effect
may be to reduce the income received by the Portfolio on such investments.
ASSET-BACKED SECURITIES: As set forth above, Cash Reserves Portfolio
may purchase asset-backed securities that represent fractional interests in
pools of retail installment loans, both secured (such as CARS) and unsecured, or
leases or revolving credit receivables, both secured and unsecured (such as
CARDS). These assets are generally held by a trust and payments of principal and
interest or interest only are passed through monthly or quarterly to certificate
holders and may be guaranteed up to certain amounts by letters of credit issued
by a financial institution affiliated or unaffiliated with the trustee or
originator of the trust.
Underlying automobile sales contracts, leases or credit card
receivables are subject to prepayment, which may reduce the overall return to
certificate holders. Nevertheless, principal repayment rates tend not to vary
much with interest rates and the short-term nature of the underlying loans,
leases or receivables tends to dampen the impact of any change in the prepayment
level. Certificate holders may also experience delays in payment on the
certificates if the full amounts due on underlying loans, leases or receivables
are not realized by Cash Reserves Portfolio because of unanticipated legal or
administrative costs of enforcing the contracts or because of depreciation or
damage to the collateral (usually automobiles) securing certain contracts, or
other factors. If consistent with its investment objectives and policies, Cash
Reserves Portfolio may invest in other asset-backed securities that may be
developed in the future.
LENDING OF PORTFOLIO SECURITIES: Consistent with applicable regulatory
requirements and in order to generate income, Cash Reserves Portfolio may lend
its securities to broker-dealers and other institutional borrowers. Such loans
will usually be made only to member banks of the Federal Reserve System and to
member firms of the New York Stock Exchange (and subsidiaries thereof). Loans of
securities would be secured continuously by collateral in cash, cash equivalents
or U.S. Treasury obligations maintained on a current basis at an amount at least
equal to the market value of the securities loaned. The
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cash collateral would be invested in high quality short-term instruments. The
Portfolio would have the right to call a loan and obtain the securities loaned
at any time on customary industry settlement notice (which will not usually
exceed five days). During the existence of a loan, the Portfolio would continue
to receive the equivalent of the interest or dividends paid by the issuer on the
securities loaned and would also receive compensation based on investment of the
collateral. The Portfolio would not, however, have the right to vote any
securities having voting rights during the existence of the loan, but would call
the loan in anticipation of an important vote to be taken among holders of the
securities or of the giving or withholding of their consent on a material matter
affecting the investment. As with other extensions of credit, there are risks of
delay in recovery or even loss of rights in the collateral should the borrower
fail financially. However, the loans would be made only to entities deemed by
the Adviser to be of good standing, and when, in the judgment of the Adviser,
the consideration which can be earned currently from loans of this type
justifies the attendant risk. If the Adviser determines to make loans, it is
intended that the value of the securities loaned by the Portfolio would not
exceed 33 1/3% of the value of its net assets.
INVESTMENT RESTRICTIONS
The Trust, on behalf of the Fund, and the Portfolio have each adopted
the following policies which may not be changed without approval by holders of a
"majority of the outstanding shares" of the Fund or the Portfolio, which as used
in this Statement of Additional Information means the vote of the lesser of (i)
67% or more of the outstanding "voting securities" of the Fund or the Portfolio,
respectively, present at a meeting, if the holders of more than 50% of the
outstanding "voting securities" of the Fund or the Portfolio, respectively, are
present or represented by proxy, or (ii) more than 50% of the outstanding
"voting securities" of the Fund or the Portfolio, respectively. The term "voting
securities" as used in this paragraph has the same meaning as in the 1940 Act.
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Except as described below, whenever the Fund is requested to vote on a
change in the investment restrictions of the Portfolio (or the concentration
policy described in paragraph (1) above), the Fund will hold a meeting of its
shareholders and will cast its vote proportionately as instructed by its
shareholders . However, subject to applicable statutory and regulatory
requirements, the Fund would not request a vote of its shareholders with respect
to (a) any proposal relating to the Portfolio, which proposal, if made with
respect to the Fund, would not require the vote of the shareholders of the Fund,
or (b) any proposal with respect to the Portfolio that is identical in all
material respects to a proposal that has previously been approved by
shareholders of the Fund. Any proposal submitted to holders in the Portfolio,
and that is not required to be voted on by shareholders of the Fund, would
nevertheless be voted on by the Trustees of the Trust on behalf of the Fund.
The Trust, on behalf of the Institutional Money Fund, and Cash Reserves
Portfolio may not:
(1) borrow money, except that as a temporary measure for extraordinary
or emergency purposes either the Trust or the Portfolio may borrow from
banks in an amount not to exceed one third of the value of the net
assets of the Fund or the Portfolio, respectively, including the amount
borrowed. Moreover, neither the Trust (on behalf of the Fund) nor the
Portfolio may purchase any securities at any time at which borrowings
exceed 5% of the total assets of the Fund or the Portfolio,
respectively (taken in each case at market value). It is intended that
the Portfolio would borrow money only from banks and only to
accommodate requests for the withdrawal of all or a portion of a
beneficial interest in the Portfolio while effecting an orderly
liquidation of securities); for additional related restrictions, see
clause (i) under the caption "State and Federal Restrictions" below;
(2) purchase any security or evidence of interest therein on margin,
except that either the Trust, on behalf of the Fund, or the Portfolio
may obtain such short term credit as may be necessary for the clearance
of purchases and sales of securities;
(3) underwrite securities issued by other persons, except that all the
assets of the Fund may be invested in the Portfolio and except insofar
as either the Trust or the Portfolio may technically be deemed an
underwriter under the Securities Act of 1933 in selling a security;
(4) make loans to other persons except (a) through the lending of
securities held by either the Fund or the Portfolio, but not in excess
of 33 1/3% of the Fund's or the
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Portfolio's net assets, as the case may be, (b) through the use of
fixed time deposits or repurchase agreements or the purchase of short
term obligations, or (c) by purchasing all or a portion of an issue of
debt securities of types commonly distributed privately to financial
institutions; for purposes of this paragraph 4 the purchase of short
term commercial paper or a portion of an issue of debt securities which
are part of an issue to the public shall not be considered the making
of a loan; for additional related restrictions, see clause (x) under
the caption "State and Federal Restrictions" below;
(5) purchase or sell real estate (including limited partnership
interests but excluding securities secured by real estate or interests
therein), interests in oil, gas or mineral leases, commodities or
commodity contracts in the ordinary course of business (the Fund and
the Portfolio reserve the freedom of action to hold and to sell real
estate acquired as a result of the ownership of securities by the Fund
or the Portfolio);
(6) concentrate its investments in any particular industry, but if it
is deemed appropriate for the achievement of its investment objective,
up to 25% of the assets of the Fund or the Portfolio, respectively
(taken at market value at the time of each investment) may be invested
in any one industry, except that the Portfolio will invest at least 25%
of its assets and may invest up to 100% of its assets in bank
obligations; provided that, if the Trust withdraws the investment of
the Fund from the Portfolio, the Trust will invest the assets of the
Fund in bank obligations to the same extent and with the same
reservation as the Portfolio; and provided further, that nothing in
this investment restriction is intended to affect the Fund's ability to
invest 100% of its assets in the Portfolio; or
(7) issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the
rules and regulations promulgated thereunder, except as appropriate to
evidence a debt incurred without violating Investment Restriction (1)
above.
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STATE AND FEDERAL RESTRICTIONS
In order to comply with certain state and federal statutes and
regulatory policies, the Trust, on behalf of the Fund, and the Portfolio will
not, as a matter of operating policy:
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(i) borrow money for any purpose in excess of 10% of the total assets
of the Fund or the Portfolio, respectively (taken in each case at
cost);
(ii) pledge, mortgage or hypothecate for any purpose in excess of 10%
of the net assets of the Fund or the Portfolio, respectively (taken in
each case at market value);
(iii) sell any security which it does not own unless by virtue of its
ownership of other securities it has at the time of sale a right to
obtain securities, without payment of further consideration, equivalent
in kind and amount to the securities sold; and provided, that if such
right is conditional the sale is made upon the same conditions;
(iv) invest for the purpose of exercising control or management, except
that all of the assets of the Fund may be invested in the Portfolio;
(v) purchase securities issued by any registered investment company,
except that all of the assets of the Fund may be invested in the
Portfolio, and except by purchase in the open market where no
commission or profit to a sponsor or dealer results from such purchase
other than the customary broker's commission, and except when such
purchase, though not made in the open market, is part of a plan of
merger or consolidation; provided, however, that the Trust (on behalf
of the Fund) and the Portfolio will not purchase the securities of any
registered investment company if such purchase at the time thereof
would cause more than 10% of the total assets of the Fund or the
Portfolio, respectively (taken in each case at the greater of cost or
market value), to be invested in the securities of such issuers or
would cause more than 3% of the outstanding voting securities of any
such issuer to be held by the Portfolio; and provided further, that the
Portfolio shall not purchase securities issued by any open-end
investment company;
(vi) taken together with any investments described in clause (x) below,
invest more than 10% of the net assets of the Fund or the Portfolio,
respectively, in securities that are not readily marketable, including
debt securities for which there is no established market (and fixed
time deposits and repurchase agreements maturing in more than seven
days), except that all the assets of the Fund may be invested in the
Portfolio;
(vii) purchase securities of any issuer if such purchase at the time
thereof would cause it to hold more than 10% of any class of securities
of such issuer, for which purposes all indebtedness of an issuer shall
be deemed a single class,
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<PAGE>
except that all the assets of the Fund may be invested in the
Portfolio;
(viii) purchase or retain any securities issued by an issuer any of
whose officers, directors, trustees or security holders is an officer
or Trustee of the Trust or the Portfolio, or is an officer or director
of the Adviser, if after the purchase of the securities of such issuer
by the Trust, on behalf of the Fund, or the Portfolio one or more of
such persons owns beneficially more than 1/2 of 1% of the shares or
securities, or both, all taken at market value, of such issuer, and
such persons owning more than 1/2 of 1% of such shares or securities
together own beneficially more than 5% of such shares or securities, or
both, all taken at market value;
(ix) write, purchase or sell any put or call option or any combination
thereof;
(x) taken together with any investments described in clause (vi) above,
invest in securities which are subject to legal or contractual
restrictions on resale (other than fixed time deposits and repurchase
agreements maturing in not more than seven days) if, as a result
thereof, more than 10% of the net assets of the Fund or the Portfolio,
respectively (in each case taken at market value), would be so invested
(including fixed time deposits and repurchase agreements maturing in
more than seven days), except that all the assets of the Fund may be
invested in the Portfolio;
(xi) purchase securities of any issuer if such purchase at the time
thereof would cause more than 10% of the voting securities of such
issuer to be held by the Fund or the Portfolio, respectively, except
that all the assets of the Fund may be invested in the Portfolio;
(xii) make short sales of securities or maintain a short position,
unless at all times when a short position is open it owns an equal
amount of such securities or securities convertible into or
exchangeable, without payment of any further consideration, for
securities of the same issue as, and equal in amount to, the securities
sold short, and unless not more than 10% of the net assets of the Fund
or the Portfolio, respectively (in each case taken at market value), is
held as collateral for such sales at any one time (the Portfolio does
not presently intend to make such sales); or
(xiii) purchase any security if as a result, the Fund would then have
more than 5% of its total assets invested in the securities of
companies (including predecessors) that have been in continuous
operation for fewer than three years.
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These policies are not fundamental and may be changed by the Trust with
respect to the Fund without approval by the Fund's shareholders or by the
Portfolio without approval by the Fund or the Portfolio's other investors, in
each case in response to changes in the various state and federal requirements.
PERCENTAGE AND RATING RESTRICTIONS: If a percentage restriction or a
rating restriction on investment or utilization of assets set forth above or
referred to in the Prospectus is adhered to at the time an investment is made or
assets are so utilized, a later change in percentage resulting from changes in
the value of the securities held by the Fund or the Portfolio or a later change
in the rating of a security held by the Fund or the Portfolio will not be
considered a violation of policy.
SECURITIES TRANSACTIONS
The Portfolio's purchases and sales of portfolio securities usually are
principal transactions. Portfolio securities are normally purchased directly
from the issuer or from an underwriter or market maker for the securities. There
usually are no brokerage commissions paid for such purchases. The Portfolio does
not anticipate paying brokerage commissions. Any transaction for which the
Portfolio pays a brokerage commission will be effected at the best price and
execution available. Purchases from underwriters of securities include a
commission or concession paid by the issuer to the underwriter, and purchases
from dealers serving as market makers include the spread between the bid and
asked price.
Allocation of transactions, including their frequency, to various
dealers is determined by the Adviser in its best judgment and in a manner deemed
to be in the best interest of investors in the Portfolio, rather than by any
formula. The primary consideration is prompt execution of orders in an effective
manner at the most favorable price.
Investment decisions for the Portfolio will be made independently from
those for any other account or investment company that is or may in the future
become managed by the Adviser or its affiliates. If, however, the Portfolio and
other investment companies or accounts managed by the Adviser are
contemporaneously engaged in the purchase or sale of the same security, the
transactions may be averaged as to price and allocated equitably to each
account. In some cases, this policy might adversely affect the price paid or
received by the Portfolio or the size of the position obtainable for the
Portfolio. In addition, when purchases or sales of the same security for the
Portfolio and for other investment companies managed by the Adviser occur
contemporaneously, the purchase or sale orders may be aggregated in order to
obtain any price advantages available to large denomination purchases or sales.
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No transactions are executed with the Adviser, or with any affiliate of
the Adviser, acting either as principal or as broker.
YIELD INFORMATION
Yield is computed in accordance with a standardized method which
involves determining the net change in the value of a hypothetical pre-existing
Fund account having a balance of one share at the beginning of a seven calendar
day period for which yield is to be quoted, dividing the net change by the value
of the account at the beginning of the period to obtain the base period return,
and annualizing the results (I.E., multiplying the base period return by 365/7).
The net change in the value of the account reflects the value of additional
shares purchased with dividends declared on the original share and any such
additional shares and fees that may be charged to shareholder accounts, in
proportion to the length of the base period and the Fund's average account size,
but does not include realized gains and losses or unrealized appreciation and
depreciation. Effective annualized yield is computed by adding 1 to the base
period return (calculated as described above), raising that sum to a power equal
to 365 divided by 7, and subtracting 1 from the result.
Yields will fluctuate and are not necessarily representative of future
results. The investor should remember that yield is a function of the type and
quality of the instruments held by the Portfolio, portfolio maturity and
operating expenses. An investor's principal in the Fund is not guaranteed. See
"Determination of Net Asset Value" for a discussion of the manner in which the
Fund's price per share is determined.
From time to time, the Trust in its advertising and sales literature
for the Fund may refer to the growth of assets managed or administered by the
Adviser over certain time periods. Comparative performance information may be
used from time to time in advertising or marketing the Fund's shares, including
data from Lipper Analytical Services, Inc., IBC/Donoghue's Money Fund Report and
other publications.
The annualized current seven-day yield of the Institutional Money Fund
for the period ended August 31, 1995 was 5.77%. For the same period the
annualized effective seven-day yield, based upon dividends declared daily and
reinvested monthly, of the Institutional Money Fund was 5.93%.
DETERMINATION OF NET ASSET VALUE; VALUATION
OF SECURITIES; REDEMPTION IN KIND
The Prospectus discusses when the net asset value of
17
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the Fund is determined for purposes of sales and redemptions. The net asset
value of the Fund's investment in the Portfolio is equal to the Fund's pro rata
share of the total assets of the Portfolio less the Fund's pro rata share of the
Portfolio's liabilities. The following is a description of the procedures used
by the Portfolio in valuing its assets.
The valuation of the Portfolio's securities is based on their amortized
cost, which does not take into account unrealized capital gains or losses.
Amortized cost valuation involves initially valuing an instrument at its cost
and thereafter assuming a constant amortization to maturity of any discount or
premium, generally without regard to the impact of fluctuating interest rates on
the market value of the instrument. Although this method provides certainty in
valuation, it may result in periods during which value, as determined by
amortized cost, is higher or lower than the price the Portfolio would receive if
it sold the instrument.
The Portfolio's use of the amortized cost method of valuing its
securities is permitted by a rule adopted by the SEC. The Portfolio will also
maintain a dollar-weighted average portfolio maturity of 90 days or less,
purchase only instruments having or deemed to have remaining maturities of 397
days or less (or instruments subject to a repurchase agreement having a duration
of 397 days or less), and invest only in securities determined by or under the
supervision of its Board of Trustees to be of high quality and to present
minimal credit risks.
Pursuant to the rule, the Board of Trustees of the Portfolio also has
established procedures designed to allow the Fund (and other investors in the
Portfolio) to stabilize, to the extent reasonably possible, the Fund's price per
share at $1.00, as computed for the purpose of sales and redemptions. These
procedures include review of the Portfolio's holdings by its Board of Trustees,
at such intervals as each Board deems appropriate, to determine whether the
value of the Portfolio's assets calculated by using available market quotations
or market equivalents deviates from such valuation based on amortized cost.
The rule also provides that the extent of any deviation between the
value of the Portfolio's assets based on available market quotations or market
equivalents and such valuation based on amortized cost must be examined by the
Portfolio's Board of Trustees. In the event the Portfolio's Board of Trustees
determines that a deviation exists that may result in material dilution or other
unfair results to new or existing investors, pursuant to the rule, the
Portfolio's Board of Trustees must cause the Portfolio to take such corrective
action as the Board of Trustees regards as necessary and appropriate, including:
selling portfolio instruments prior to maturity to realize capital gains or
losses or to shorten average portfolio maturity;
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<PAGE>
or valuing the Portfolio's assets by using available market quotations.
The Trust, on behalf of the Fund, and the Portfolio reserve the right,
if conditions exist which make cash payments undesirable, to honor any request
for redemption or repurchase order by making payment in whole or in part in
readily marketable securities chosen by the Trust or the Portfolio, as the case
may be, and valued as they are for purposes of computing the Fund's or the
Portfolio's net asset value, as the case may be (a redemption in kind). If
payment is made in securities by the Portfolio or the Fund, an investor,
including the Fund, may incur transaction expenses in converting these
securities into cash. The Trust will redeem in kind Fund shares only if it has
received a redemption in kind from the Portfolio and therefore shareholders of
the Fund that receive redemptions in kind will receive portfolio securities of
the Portfolio. The Portfolio has advised the Trust that it will not redeem in
kind except in circumstances in which the Fund is permitted to redeem in kind.
Each investor in the Portfolio, including the Fund, may add to or
reduce its investment in the Portfolio on each day that the New York Stock
Exchange (the "Exchange") is open for business. As of 3:00 P.M. Eastern time on
each such day, the value of each investor's interest in the Portfolio will be
determined by multiplying the net asset value of the Portfolio by the percentage
representing that investor's share of the aggregate beneficial interests in the
Portfolio. Any additions or reductions which are to be effected on that day will
then be effected. The investor's percentage of the aggregate beneficial
interests in the Portfolio will then be recomputed as the percentage equal to
the fraction (i) the numerator of which is the value of such investor's
investment in the Portfolio as of such time of valuation on such day plus or
minus, as the case may be, the amount of net additions to or reductions in the
investor's investment in the Portfolio effected on such day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of
such time of valuation on such day plus or minus, as the case may be, the amount
of the net additions to or reductions in the aggregate investments in the
Portfolio by all investors in the Portfolio. The percentage so determined will
then be applied to determine the value of the investor's interest in the
Portfolio as of the time of valuation on the following day the Exchange is open
for trading.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares are continuously offered for sale by Signature Broker-Dealer
Services, Inc. ("SBDS" or the "Distributor"), a wholly-owned subsidiary of
Signature Financial Group, Inc.
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("Signature"). As described in the Prospectus, Shares are offered for sale
directly only to institutional investors ("Institutional Investors"). Different
types of Customer accounts at certain Institutional Investors (a "Shareholder
Organization") may be used to purchase Shares, including eligible agency and
trust accounts. In addition, Shareholder Organizations may automatically "sweep"
a Customer's account not less frequently than weekly and invest amounts in
excess of a minimum balance agreed to by the Shareholder Organization and its
Customer in Shares selected by the Customer. Investors purchasing Shares may
include officers, directors, or employees of the particular Shareholder
Organization. Check writing privileges are available to investors upon request
to the Trust.
As stated in the Prospectus, no sales charge is imposed by the Trust on
the purchase of Shares or reinvestment of dividends or distributions.
The Trust may suspend the right of redemption or postpone the date of
payment for Shares for more than 7 days during any period when (a) trading on
the Exchange is restricted by applicable rules and regulations of the Securities
and Exchange Commission; (b) the Exchange is closed for other than customary
weekend and holiday closings; (c) the Securities and Exchange Commission has by
order permitted such suspension; or (d) an emergency exists as determined by the
Securities and Exchange Commission.
In the event that Shares are redeemed in cash at their net asset value,
a shareholder may receive in payment for such Shares an amount that is more or
less than the shareholder's original investment due to changes in the market
prices of the Fund's or its corresponding Portfolio's portfolio securities.
OTHER INVESTOR PROGRAMS
As described in the Prospectus, Shares of the Fund may be purchased in
connection with Unit Investment Trust Automatic Dividend Reinvestment Plans, the
Automatic Investment
Program, and certain Retirement Programs.
MANAGEMENT OF THE TRUST AND THE PORTFOLIO
The Trustees and officers of the Trust and the Portfolio and their
principal occupations during the past five years are set forth below. Their
titles may have varied during that period. Asterisks indicate those Trustees and
officers who are "interested persons" (as defined in the 1940 Act) of the Trust
or the Portfolio. Unless otherwise indicated below, the address of each Trustee
and officer is 6 St. James Avenue, Boston, Massachusetts.
TRUSTEES OF THE TRUST
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RODMAN L. DRAKE -- Director, Parsons Brinkerhoff, Inc., (engineering
firm) (since 1995); President, R.L. Drake & Co. Inc. (investment and consulting
firm) (since 1991); Trustee, Hyperion Total Return Fund, Inc., and three other
closed-end funds for which Hyperion Capital Management, Inc. is the investment
adviser; Co-Chairman, KMR Power Corporation (power plants) (since 1993);
Chairman, Car Rental Systems do Brasil S.A. (Hertz licensee for Brazil) (since
1994); Managing Director and Chief Executive Officer, Cresap, McCormick & Paget,
Inc. (subsequently, Cresap, a Towers Perrin Company) (from 1980 to 1990);
Director, Alex, Brown & Sons Inc. (1989 to 1991); Director, Muller Industries,
Inc. (1992 to 1994). His address is c/o KMR Power Corp., 30 Rockerfeller Plaza,
Suite 5425, New York, New York 10112.
W. WALLACE MCDOWELL -- Private Investor (since 1994); Managing
Director, Morgan Lewis Githens & Ahn (1991 to 1994); Chairman and Chief
Executive Officer, The Prospect Group, Inc. (1983 to 1990) and Director, U.S.
Homecare Corporation (since 1992), Grossman's, Inc. (since 1993), Children's
Discovery Centers (since 1984), Interactive Technologies, Inc. (since 1992) and
Jack Morton Productions (since 1987). His address is c/o Prospect Capital
Corporation, 43 Arch Street, Greenwich, Connecticut 06830.
JONATHAN PIEL -- President and Editor, Scientific American, Inc. (1969
to 1994; Director, Group for The South Fork, Bridgehampton, New York (since
October 1993); Member, Advisory Committee, Knight Journalism Fellowships, MIT.
His address is 558 East 87th Street, New York, New York 10128.
TRUSTEES OF THE PORTFOLIO
The Trustees of Cash Reserves Portfolio are:
ELLIOTT J. BERV -- Chairman and Director, Catalyst, Inc. (Management
Consultants) (since August 1992); President, Chief Operating Officer and
Director, Deven International, Inc. (International Consultants) (June 1991 to
July 1992); President and Director, Elliott J. Berv & Associates (Management
Consultants) (since May 1984). His address is 15 Stornoway Drive, Cumberland
Foreside, Maine 04110.
WALTER E. ROBB, III -- President, Benchmark Advisors, Inc. (Corporate
Financial Advisors) (since 1989); Trustee of certain registered investment
companies in the Landmark and MFS families of funds. His address is 35 Farm
Road, Sherborn, Massachusetts 01770.
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<PAGE>
MARK T. FINN -- President and Director, Delta Financial, Inc. (since
June 1983); Chairman of the Board and Chief Executive Officer, FX 500 Ltd.
(Commodity Trading Advisory Firm) (since April 1990); Director, Vantage
Consulting Group, Inc. (since October 1988). His address is 3500 Pacific Avenue,
P.O. Box 539, Virginia Beach, Virginia 23451.
PHILIP W. COOLIDGE* -- President of the Portfolio ; Chairman, Chief
Executive Officer and President, Signature (since December 1988) and SBDS (since
April 1989).
OFFICERS OF THE TRUST
In addition to Mr. Coolidge, who also serves as President of the Trust,
the officers of the Trust are:
JOHN R. ELDER -- Treasurer; Vice President , Signature (since April
1995); Treasurer, Phoenix Family of Mutual Funds (Phoenix Home Life Mutual
Insurance Company) (from 1983 to March 1995).
LINDA T. GIBSON -- Assistant Secretary; Legal Counsel and Assistant
Secretary, Signature (since June 1991); Assistant Secretary, SBDS (since
November 1992); law student, Boston University School of Law (prior to May
1992).
THOMAS M. LENZ -- Secretary; Vice President and Associate General
Counsel, Signature (since November 1989); Assistant Secretary, SBDS (since
February 1991); Attorney, Ropes & Gray (prior to November 1989).
MOLLY S. MUGLER -- Assistant Secretary; Legal Counsel and Assistant
Secretary, Signature (since December 1988); Assistant Secretary, SBDS (since
April 1989).
BARBARA M. O'DETTE -- Assistant Treasurer; Assistant Treasurer,
Signature (since December 1988) and SBDS (since April 1989).
ANDRES E. SALDANA -- Assistant Secretary; Legal Counsel and Assistant
Secretary, Signature (since November 1992); Assistant Secretary, SBDS (since
September 1993); Attorney, Ropes & Gray (September 1990 to November 1992); law
student, Yale Law School (September 1987 to May 1990).
OFFICERS OF THE PORTFOLIO
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In addition to Mss. Mugler and O'Dette and Messrs. Coolidge and Elder,
who hold similar positions with the Portfolio, the following person is an
officer of Cash Reserves Portfolio:
SUSAN JAKUBOSKI -- Assistant Secretary and Assistant Treasurer; Manager
and Senior Fund Administrator, Signature and Signature Financial Group (Grand
Cayman), Ltd. (since August 1994); Assistant Treasurer, SBDS (since September
1994); Fund Compliance Administrator, Concord Financial Group, Inc. (from
November 1990 to August 1994); Senior Fund Accountant, Neuberger & Berman
Management Incorporated (from February 1988 to November 1990); Customer Service
Representative, I.B.J. Schroder (prior to February 1988).
Mss. Gibson, Jakuboski, Mugler and O'Dette and Messrs. Coolidge, Elder,
Lenz and Saldana may also hold similar positions for other investment companies
for which SBDS or an affiliate serves as the principal underwriter.
As of November 30, 1995, U.S. Trust held of record approximately 44.45%
of the outstanding shares of the Institutional Money Fund, but did not own such
shares beneficially and did not have discretion to vote or invest such shares.
As of the same date, Pacific Gas & Electric and Inter-Tel, Inc. owned 5.11% and
6.50%, respectively, of the outstanding shares of the Institutional Money Fund.
The Trust has no knowledge of any other owners of record of 5% or more of the
outstanding shares of the Fund. As of the same date, all Trustees and officers
of the Trust and the Portfolio as a group owned less than 1% of the outstanding
shares of the Fund. Shareholders owning 25% or more of the outstanding shares of
the Fund may take actions without the approval of any other investor in the
Fund.
The Trust's Trust Instrument provides that it will indemnify its trustees and
officers against liabilities and expenses incurred in connection with litigation
in which they may be involved because of their offices with the Trust unless it
is finally adjudicated that they engaged in willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in their offices,
or unless it is finally adjudicated that they did not act in good faith in the
reasonable belief that their actions were in the best interests of the Trust. In
the case of settlement, such indemnification will not be provided unless it has
been determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by
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<PAGE>
vote of a majority of disinterested trustees, or in a written opinion of
independent counsel, that such officers or trustees have not engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of their duties.
The Declaration of Trust of the Portfolio provides for similar indemnification
of the trustees and officers of the Portfolio.
INVESTMENT ADVISERS
Citibank manages the assets of the Portfolio pursuant to an investment
advisory agreement (the "Advisory Agreement"). Subject to such policies as the
Portfolio's Board of Trustees may determine, the Adviser manages the securities
of the Portfolio and makes investment decisions for the Portfolio. The Adviser
furnishes at its own expense all services, facilities and personnel necessary in
connection with managing the Portfolio's investments and effecting securities
transactions for the Portfolio. The Advisory Agreement will continue in effect
as long as such continuance is specifically approved at least annually by the
Portfolio's Board of Trustees or by a vote of a majority of the outstanding
voting securities of the Portfolio, and, in either case, by a majority of the
Trustees of the Portfolio who are not parties to the Advisory Agreement or
interested persons of any such party, at a meeting called for the purpose of
voting on the Advisory Agreement.
The Advisory Agreement provides that the Adviser may render services to
others. The Advisory Agreement is terminable without penalty on not more than 60
days' nor less than 30 days' written notice by the Portfolio when authorized
either by vote of a majority of the outstanding voting securities of the
Portfolio or by a vote of a majority of the Portfolio's Board of Trustees, or by
the Adviser on not more than 60 days' nor less than 30 days' written notice, and
will automatically terminate in the event of its assignment. The Advisory
Agreement provides that neither the Adviser nor its personnel shall be liable
for any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of security transactions
for the Portfolio, except for willful misfeasance, bad faith, gross negligence
or reckless disregard of its or their obligations and duties under the Advisory
Agreement.
Cash Reserves Portfolio commenced investment operations on May 3, 1990
. The Institutional Money Fund commenced investment operations (and its
investments in the Portfolio) on November 8, 1993.
The Prospectus contains a description of the fees payable to the
Adviser under the Advisory
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<PAGE>
Agreement. For the fiscal years ended August 31, 1993 , 1994 and 1995 the fees
paid to the Adviser under the Advisory Agreement were $2,108,642 , $1,806,314
and $4,097,854 , respectively (of which $943,419 and $2,306,161 was voluntarily
waived for the fiscal years ended August 31, 1994 and 1995, respectively).
The Glass-Steagall Act prohibits certain financial institutions, such
as Citibank or U.S. Trust, from engaging in the business of underwriting
securities of open-end investment companies, such as the Trust or the Portfolio.
Based on advice of counsel, it is the position of Citibank that the investment
advisory services and the sub-administrative activities performed by Citibank
with respect to the Portfolio do not constitute underwriting activities and are
consistent with the requirements of the Glass-Steagall Act. In addition, counsel
for Citibank has advised Citibank that the combination of individually
permissible activities by Citibank is consistent with the Glass-Steagall Act and
other relevant federal or state legal and regulatory precedent. It is the
position of U.S. Trust that (a) the investment advisory services performed by
U.S. Trust with respect to the Trust do not constitute underwriting activities
and are consistent with the requirements of the Glass-Steagall Act, and (b) the
combination of individually permissible activities by U.S. Trust is consistent
with the Glass-Steagall Act and other relevant federal or state legal and
regulatory precedent. There is presently no controlling precedent regarding the
performance of the combination of investment advisory and sub-administrative
activities by banks. State laws on this issue may differ from applicable federal
laws and banks and financial institutions may be required to register as dealers
pursuant to state securities laws. Future changes in either federal or state
statutes or regulations relating to the permissible activities of banks, as well
as future judicial or administrative decisions and interpretations of present
and future federal or state statutes and regulations, could prevent Citibank or
U.S. Trust from continuing to perform such services for the Trust or the
Portfolio. If Citibank were to be prevented from acting as the Adviser or
sub-administrator for the Portfolio, or if U.S. Trust were to be similarly
prevented from providing supplemental investment advice to the Trust with
respect to the Fund, the Trust and the Portfolio would seek alternative means
for providing such services. The Trust does not expect that the Fund's
shareholders would suffer any adverse financial consequences as a result of any
such occurrence.
ADMINISTRATORS
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SBDS provides the Trust, and Signature Financial Group (Cayman), Ltd.
("SFG Cayman"; together with SBDS, the "Administrators") provides the Portfolio,
with general office facilities, equipment and clerical personnel. The
Administrators supervise the overall administration of the Trust and the
Portfolio. These administrative services include, among other responsibilities,
the negotiation of contracts and fees with, and the monitoring of performance
and billings of, the independent contractors and agents of the Trust and the
Portfolio; the preparation and filing of all documents required for compliance
by the Trust and the Portfolio with applicable laws and regulations; the
preparation and distribution of materials in connection with meetings of
Trustees and investors; and arranging for the maintenance of books and records
of the Trust and the Portfolio. The Administrators provide persons satisfactory
to the Boards of Trustees to serve as officers of the Trust and the Portfolio.
Such officers, as well as certain other employees and Trustees of the Trust and
the Portfolio, may be directors, officers or employees of the Administrators or
their affiliates.
Each Administrative Services Agreement provides that the Administrator
may render administrative services to others. Each Agreement terminates
automatically if it is assigned and may be terminated without penalty by vote of
a majority of the outstanding voting securities of the Trust or the Portfolios,
or by either party on not more than 60 days' nor less than 30 days' written
notice. Each Administrative Services Agreement also provides that neither the
Administrator nor its personnel shall be liable for any error of judgment or
mistake of law or for any act or omission in the administration or management of
the Trust or the Portfolio, except for willful misfeasance, bad faith or gross
negligence in the performance of its or their duties or by reason of reckless
disregard of its or their obligations and duties under said Administrative
Services Agreements.
The Administrators are wholly-owned subsidiaries of Signature.
The Prospectus contains a description of the fees payable to the
Administrators under the Administrative Services Agreements. INSTITUTIONAL MONEY
FUND: For the period ended August 31, 1994, the Fund accrued administration fees
totalling $22,578. For the fiscal year ended August 31, 1995, the Fund accrued
administration fees totalling $47,453. CASH RESERVES PORTFOLIO: For the fiscal
years ended August 31, 1993 , 1994 and 1995, the fee paid or payable to The
Landmark Funds Broker-Dealer Services, Inc. under a prior administrative
services agreement and to Signature Financial Group (Cayman), Ltd. under the
Administrative Services Agreement with the Portfolio were $702,881 , $602,105
and $1,365,951, respectively (of which
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<PAGE>
$596,227 was voluntarily waived in 1993 , $602,105 was voluntarily waived in
1994 , and $1,365,951 was voluntarily waived in 1995)
.
SUB-ADMINISTRATORS
Pursuant to Sub-Administrative Services Agreements, CGFSC performs such
subadministrative duties for the Trust, and Citibank performs such
sub-administrative duties for the Portfolio, as may from time to time be agreed
upon by CGFSC and SBDS with respect to the Trust, or by Citibank and Signature
Cayman with respect to the Portfolio. The terms of the Sub-Administrative
Services Agreements are described in the Prospectus.
ADMINISTRATIVE SERVICES PLANS
The Trust and the Portfolio have each adopted Administrative Services
Plans (each an "Administrative Plan") which provide that the Trust and the
Portfolios may obtain the services of an administrator, a transfer agent, and a
custodian, and one or more shareholder servicing agents in the case of the
Trust, and may enter into agreements providing for the payment of fees for such
services.
Each Administrative Plan continues in effect if such continuance is
specifically approved at least annually by a vote of both (i) a majority of
Trustees and (ii) a majority of Trustees who are not "interested persons" of the
Trust or the Portfolio, as the case may be, and who have no direct or indirect
financial interest in the operation of the Administrative Plan or in any
agreement related to such plan ("Qualified Trustees"). Each Administrative Plan
requires that the Trust or the Portfolio, as the case may be, provide to the
Board of Trustees
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<PAGE>
and the Board of Trustees review, at least quarterly, a written report of the
amounts expended (and the purposes therefor) under such plan. Each
Administrative Plan may be terminated at any time by a vote of (i) a majority of
Qualified Trustees, or, (ii) (A) in the case of the Trust, a majority of the
outstanding voting securities of the Fund, and (B) in the case of the Portfolio,
a majority of the investors in the Portfolio (with the vote of each being in
proportion to the value of its investment). Each Administrative Plan may not be
amended to increase materially the amount of permitted expenses thereunder
without the approval of, (i) in the case of the Trust, a majority of the
outstanding voting securities of the affected Fund, and (ii) in the case of the
Portfolio, a majority of the investors in the Portfolio (with the vote of each
being in proportion to the value of its investment), and may not be materially
amended in any case without a vote of the majority of both the Trustees and the
Qualified Trustees.
For the period November 8, 1993 (commencement of operations) through
August 31, 1994, the Trust's shareholder servicing agents received from the
Trust fees amounting to $70,263 for providing shareholder servicing to the Fund.
For the fiscal year ended August 31, 1995, the Trust's shareholder servicing
agents received from the Trust fees amounting to $444,522 for providing
shareholder servicing to the Fund.
TRANSFER AGENTS AND CUSTODIANS
U.S. Trust serves as custodian of the Fund's assets and as the Fund's
transfer and dividend disbursing agent pursuant to a Custody and Transfer Agency
Agreement between the Trust and U.S. Trust. U.S. Trust is a subsidiary of U.S.
Trust Corporation, a registered bank holding company.
Under such agreement and as the Fund's custodian, U.S. Trust has agreed
to (i) maintain a separate account or accounts for the Fund; (ii) make receipts
and disbursements of money on behalf of the Fund; (iii) collect and receive
income and other payments and distributions on account of the Fund's portfolio
securities; (iv) respond to correspondence from securities brokers and others
relating to its duties; (v) maintain certain financial accounts and records; and
(vi) make periodic reports to the Trust concerning the Fund's operations. As the
Fund's transfer agent and dividend disbursement agent, U.S. Trust has agreed to
(i) issue and redeem shares of the Fund; (ii) address and mail all
communications by the Fund to its shareholders, including reports to
shareholders, dividend and distribution notices, and proxy materials for their
meetings of shareholders; (iii) respond to correspondence by shareholders and
others relating to its duties; (iv) maintain shareholder accounts; and (v) make
periodic reports to the Trust concerning the
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<PAGE>
Fund's operations. For its custody, transfer agency and dividend disbursement
services, U.S. Trust is entitled to receive from the Trust such compensation as
may be agreed upon from time to time by the Trust and U.S. Trust. In addition,
U.S. Trust is entitled to be reimbursed for its out-of-pocket expenses for the
cost of forms, postage, processing purchase and redemption orders, handling of
proxies, and other similar expenses in connection with the above services.
U.S. Trust may, at its own expense, open and maintain custody accounts
with respect to the Fund with other banks or trust companies, and may delegate
its transfer agency obligations to another transfer agent registered or
qualified under applicable law, provided that U.S. Trust shall remain liable for
the performance of all of its custodial and transfer agency duties under the
Custody and Transfer Agency Agreement, notwithstanding any delegation. Pursuant
to this provision in such agreement, U.S. Trust has entered into a sub-transfer
agency arrangement with CGFSC with respect to accounts of shareholders who are
not customers of U.S. Trust. For the services provided by CGFSC, U.S. Trust has
agreed to pay CGFSC a fee as agreed upon from tine to time. CGFSC receives no
fee directly from the Trust for any of its sub-transfer agency services. The
principal business address of CGFSC is 126 High Street, Boston, MA 02110.
Cash Reserves Portfolio has entered into a Transfer Agency and Service
Agreement with State Street Bank & Trust Company ("State Street"), pursuant to
which State Street (or its affiliate State Street Canada, Inc.) acts as transfer
agent for Cash Reserves Portfolio. The transfer agent maintains an account for
each investor in the Portfolio and performs other transfer agency functions.
Pursuant to Custodian Contracts, State Street also acts as custodian (the
"Portfolio Custodian") of the Portfolio's assets. The Portfolio Custodian's
responsibilities include safeguarding and controlling the Portfolio's cash and
securities, handling the receipt and delivery of securities, determining income
and collecting interest on the Portfolio's investments, maintaining books of
original entry for Portfolio accounting and other required books and accounts,
and calculating the daily net asset value of beneficial interests in the
Portfolio. Securities held by the Portfolio may be deposited into the Federal
Reserve-Treasury Department Book Entry System or the Depositary Trust Company
and may be held by a sub-custodian bank if such arrangements are reviewed and
approved by the Trustees of the Portfolio. The Portfolio Custodian does not
determine the investment policies of the Portfolio or decide which securities
the Portfolio will buy or sell. The Portfolio may, however, invest in securities
of the Portfolio Custodian and may deal with the
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<PAGE>
Portfolio Custodian as principal in securities transactions. For its services to
the Portfolio, State Street receives such compensation as may from time to time
be agreed upon by State Street and the Portfolio. The principal business address
of State Street is 225 Franklin Street, Boston, Massachusetts 02110.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP and Price Waterhouse are the independent
accountants and chartered accountants for the Fund and Cash Reserves Portfolio ,
respectively. Price Waterhouse LLP provides audit services and assistance and
consultation with respect to the preparation of filings with the Securities and
Exchange Commission. The principal business address of Price Waterhouse LLP is
160 Federal Street, Boston, Massachusetts 02110. The principal business address
of Price Waterhouse is Suite 3000, Box 190, 1 First Canadian Place,
Toronto, Ontario M5X1H7.
TAXATION
TAXATION OF THE FUND
Each series of the Trust is treated as a separate entity for federal
income tax purposes under the Internal Revenue Code of 1986, as amended (the
"Code"). The Fund has elected and intends to qualify each year as a "regulated
investment company" under Subchapter M of the Code (a "RIC") by meeting all
applicable requirements of Subchapter M, including requirements as to the nature
of the Fund's gross income, the amount of the Fund's distributions, and the
composition and holding period of the Fund's portfolio assets. Because the Fund
intends to distribute all of its net investment income and net realized capital
gains to its shareholders in accordance with the timing requirements imposed by
the Code, it is not expected that the Fund will be required to pay any federal
income or excise taxes . If the Fund fails to qualify as a RIC in any year, the
Fund would incur a regular corporate federal income tax upon its taxable income,
and the Fund's distributions would continue to be taxable as ordinary dividend
income to shareholders.
Investment income received by the Fund from non-U.S. investments may be
subject to foreign income taxes withheld at the source; the Fund does not expect
to be able to pass through to shareholders any foreign tax credits with respect
to those foreign taxes. The United States has entered into tax treaties with
many foreign countries that may entitle the Fund to a
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<PAGE>
reduced rate of tax or an exemption from tax on these investments. It is not
possible to determine the Fund's effective rate of foreign tax in advance since
that rate depends upon the proportion of the Portfolio's assets ultimately
invested within various countries.
Under interpretations of the Internal Revenue Service, (1) the
Portfolio will be treated for federal income tax purposes as a partnership and
(2) for purposes of determining whether the Fund satisfies the income and
diversification requirements to maintain its status as a RIC, the Fund, as an
investor in the Portfolio, will be deemed to own a proportionate share of the
Portfolio's assets and will be deemed to be entitled to the Portfolio's income
attributable to that share. The Portfolio has advised the Trust that it intends
to conduct its operations so as to enable its investors, including the Fund, to
satisfy those requirements.
TAXATION OF THE PORTFOLIO
The Trust anticipates that the Portfolio will be treated as a
partnership for federal income tax purposes. As such, the Portfolio is not
subject to federal income taxation. Instead, the Fund must take into account, in
computing its federal income tax liability, its share of the Portfolio's income,
gains, losses, deductions, credits and tax preference items, without regard to
whether it has received any cash distributions from the Portfolio.
TAXATION OF DISTRIBUTIONS
Dividends from income and any distributions from net short-term capital
gains are taxable to shareholders as ordinary income for federal income tax
purposes. Distributions of net capital gains (the excess of net long-term
capital gain over net short-term capital loss), if any, are taxable to
shareholders as long-term capital gains without regard to the length of time the
shareholders have held their shares. The Fund's distributions are not expected
to qualify for the dividends-received deduction available to corporations.
Distributions are taxable as described above whether paid in cash or in
additional shares. Shareholders will be notified annually as to the federal tax
status of distributions.
Amounts not distributed on a timely basis in accordance with a calendar
year distribution requirement are subject to a nondeductible 4% excise tax. To
prevent imposition of the excise tax, the Trust must, and intends to, distribute
during each calendar year substantially all of the Fund's ordinary income for
that year and substantially all of its capital gain in excess of its capital
losses for that year, plus any undistributed ordinary income and capital gains
from previous
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years. For this and other purposes, a distribution will be treated as paid on
December 31 if it is declared in December with a record date in such a month and
paid by the Fund during January of the following calendar year. Accordingly,
those distributions will be taxable to shareholders for the taxable year in
which that December 31 falls.
Withdrawals by the Fund from the Portfolio generally will not result in
the Fund recognizing any gain or loss for federal income tax purposes, except
that to the extent the cash proceeds of any withdrawal or distribution exceed
the Fund's adjusted tax basis in its interest in the Portfolio, the Fund will
generally realize gain for federal income tax purposes. In addition, if, upon a
complete withdrawal (I.E., a redemption of its entire interest in its
corresponding Portfolio), the Fund's adjusted tax basis in its interest in the
Portfolio exceeds the proceeds of the withdrawal, the Fund will generally
realize a loss for federal income tax purposes. The Fund's adjusted tax basis in
its interest in its corresponding Portfolio will generally be the aggregate
price paid therefor, increased by the amounts of its distributive share of items
of realized net income (including income, if any, exempt from Federal income
tax) and gain, and reduced, but not below zero, by the amounts of its
distributive share of items of net loss and the amounts of any distributions
received by the Fund.
OTHER TAXATION
The Trust is organized as a Delaware business trust and, under current
law, neither the Trust nor the Fund are liable for any income or franchise tax
in the State of Delaware, provided that the Fund continues to qualify as a RIC
for federal income tax purposes. The investment by the Fund in the Portfolio
does not cause the Fund to be liable for any income or franchise tax in the
State of New York.
The Portfolio is organized as a New York trust. The Portfolio is not
subject to any income or franchise tax in the State of New York or the State of
Delaware.
Fund shareholders may be subject to state and local taxes on Fund
distributions to them by the Fund. Shareholders are advised to consult their own
tax advisers with respect to the particular tax consequences to them of an
investment in the Fund.
DESCRIPTION OF THE TRUST; FUND SHARES
The Trust is a Delaware business trust established under a Trust
Instrument dated October 25, 1993. Its authorized capital
32
<PAGE>
consists of an unlimited number of shares of beneficial interest of $0.00001 par
value, which may be issued in separate series. Currently, the Trust has one
active and thirteen inactive series, although additional series may be
established from time to time. Each share of each series represents an equal
proportionate interest in that series with each other share in that series.
The assets of the Trust received for the issue or sale of the shares of
each series and all income, earnings, profits and proceeds thereof, subject only
to the rights of creditors, are specifically allocated to such series and
constitute the underlying assets of such series. The underlying assets of each
series are segregated on the books of account, and are to be charged with the
liabilities in respect to such series and with such a share of the general
liabilities of the Trust. Expenses with respect to any two or more series are to
be allocated in proportion to the asset value of the respective series except
where allocations of direct expenses can otherwise be fairly made. The officers
of the Trust, subject to the general supervision of the Trustees, have the power
to determine which liabilities are allocable to a given series, or which are
general or allocable to two or more series. In the event of the dissolution or
liquidation of the Trust or any series, the holders of the shares of any series
are entitled to receive as a class the value of the underlying assets of such
shares available for distribution to shareholders.
The Trust's Trustees may amend the Trust Instrument without shareholder
approval, except shareholder approval is required for any amendment (a) which
affects the voting rights of shareholders under the Trust Instrument, (b) which
affects shareholders' rights to approve certain amendments to the Trust
Instrument, (c) required to be approved by shareholders by law or the
Registration Statement, or (d) submitted to shareholders for their approval by
the Trustees in their discretion. Pursuant to Delaware business trust law and
the Trust Instrument, the Trustees may, without shareholder approval, (x) cause
the Trust to merge or consolidate with one or more entities, if the surviving or
resulting entity is the Trust or another open-end management investment company
registered under the 1940 Act, or a series thereof, that will succeed to or
assume the Trust's registration under the 1940 Act, or (y) cause the Trust to
incorporate under the laws of the State of Delaware.
Shares of the Fund entitle their holder to one vote per share; however,
separate votes are taken by each series on matters affecting an individual
series. For example, a change in investment policy for a series would be voted
upon only by shareholders of the series involved.
The Trust's Trust Instrument provides that obligations of the Trust are
not binding upon the Trustees individually but only upon the property of the
Trust, that the Trustees and officers
33
<PAGE>
will not be liable for errors of judgment or mistakes of fact or law, and that
the Trust will indemnify its Trustees and officers against liabilities and
expenses incurred in connection with litigation in which they may be involved
because of their offices with the Trust unless it is finally adjudicated that
they engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless it is finally
adjudicated that they did not act in good faith in the reasonable belief that
their actions were in the best interests of the Trust. In the case of
settlement, such indemnification will not be provided unless it has been
determined by a court or other body approving the settlement or other
disposition, or by a reasonable determination, based upon a review of readily
available facts, by vote of a majority of disinterested Trustees, or in a
written opinion of independent counsel, that such officers or Trustees have not
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of their duties.
Under Delaware law, shareholders of a Delaware business trust are
entitled to the same limitation on personal liability which is extended to
shareholders of private for profit corporations organized under the general
corporation law of the State of Delaware; the courts of other states may not
apply Delaware law, however, and shareholders may, under certain circumstances,
be held personally liable for the obligations of the Trust. The Trust Instrument
contains an express disclaimer of shareholder liability for acts or obligations
of the Trust and provides for indemnification and reimbursement of expenses out
of Fund property for any shareholder held personally liable for the obligations
of the Fund solely by reason of his being or having been a shareholder. The
Trust Instrument also provides for the maintenance, by or on behalf of the Trust
and each Fund, of appropriate insurance (for example, fidelity bonding and
errors and omissions insurance) for the protection of the Trust and each Fund,
their shareholders, Trustees, officers, employees and agents, covering possible
tort and other liabilities. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability is limited to circumstances in which
Delaware law did not apply, inadequate insurance existed and the Fund itself was
unable to meet its obligations.
FINANCIAL STATEMENTS
The Fund's current report to shareholders filed with the SEC pursuant
to Section 30(b) of the 1940 Act and Rule 30b2-1 thereunder are hereby
incorporated herein by reference. A copy of such report will be provided,
without charge, to each person receiving this Statement of Additional
Information.
34
<PAGE>
ADMINISTRATOR AND DISTRIBUTOR OF THE FUND
Signature Broker-Dealer Services, Inc.
6 St. James Avenue
Boston, MA 02116
(617) 423-0800
INVESTMENT ADVISER OF THE PORTFOLIO
EXCELSIOR FUNDS
Citibank, N.A. EXCELSIOR INSTITUTIONAL
153 East 53rd Street MONEY FUND
New York, NY 10043
INVESTMENT MANAGER, CUSTODIAN AND
TRANSFER AGENT OF THE FUND
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
CUSTODIAN AND TRANSFER AGENT STATEMENT OF
OF THE PORTFOLIO ADDITIONAL INFORMATION
State Street Bank and Trust Company JANUARY 2, 1996
225 Franklin Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS OF THE FUND
Price Waterhouse LLP
160 Federal Street
Boston, MA 02110
INDEPENDENT ACCOUNTANTS OF THE PORTFOLIO
Price Waterhouse
Suite 3000, Box 190
1 First Canadian Place
Toronto, Ontario M5X1H7
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
The financial statements included in Part A are as follows:
Excelsior Institutional Money Fund: Financial Highlights.
The financial statements included in Part B are as follows:
Excelsior Institutional Money Fund
Statement of Assets and Liabilities at August 31, 1995
Statement of Operations for the fiscal year ended August 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements, August 31, 1995
Cash Reserves Portfolio
Portfolio of Investments at August 31, 1995
Statement of Assets and Liabilities at August 31, 1995
Statement of Operations for the fiscal year ended August 31, 1995
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements, August 31, 1995
(b) Exhibits
1. Trust Instrument of the Registrant.4
2. By-Laws of the Registrant.4
5. Investment Advisory Agreement between the Registrant and United States Trust
Company of New York ("U.S. Trust"), as investment advisor.4
6(a). Distribution Agreement between the Registrant and Signature Broker-Dealer
Services, Inc. ("SBDS"), as distributor.4
8(a). Custody and Transfer Agency Agreement between the Registrant and U.S.
Trust, as custodian and transfer agent.1
9(a). Administrative Services Agreement between the Registrant and SBDS, as
administrator.4
9(b). Shareholder Servicing Agreement with U.S. Trust, as shareholder servicing
agent.4
9(c). Shareholder Service Agreement with UST Distributors,Inc.4
9(d). Shareholder Servicing Agreement with Mid Atlantic Capital Corporation.4
9(e). Amended and Restated Servicing Plan.4
10. Opinion of Counsel.2
11. Consents of Independent Accountants.4
13. Investor Representation Letter of Initial Shareholder.2
16. Schedule for Computation of Performance Information.4
17. Financial Data Schedule.4
18. Powers of Attorney.3
1 Incorporated herein by reference from the Registrant's Registration Statement
on Form N-1A (the "Registration Statement") under the Investment Company Act of
1940, as amended (the "1940 Act") (File No. 811-8132), as filed with the
Securities and Exchange Commission (the "SEC") on November 4, 1993.
2 Incorporated herein by reference from Amendment No. 1 ("Amendment No. 1") to
the Registration Statement under the 1940 Act and Registrant's initial filing
under the Securities Act of 1933, as amended (File No. 33-71306), as filed with
the SEC on November 5, 1993.
3 Incorporated herein by reference from Exhibit 17 to Amendment No. 1 as filed
with the SEC on November 5, 1993.
4 Filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant.
Not applicable.
Item 26. Number of Holders of Securities.
As of November 30, 1995:
Title of Class Number of Record Holders
- -------------- ------------------------
Shares of Beneficial
Interest (par value $.00001)
Excelsior Institutional Money Fund 49
Item 27. Indemnification.
Reference is hereby made to Article IX of the Registrant's Trust
Instrument, filed as an exhibit to the Registration Statement.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the 1940 Act.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "1933 Act"), may be permitted to directors,
trustees, officers and controlling persons of the Registrant and the principal
underwriter pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the 1933 Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
trustee, officer, or controlling person of the Registrant and the principal
underwriter in connection with the successful defense of any action, suite or
proceeding) is asserted against the Registrant by such director, trustee,
officer or controlling person or principal underwriter in connection with the
shares being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser.
U.S. Trust is a full-service state-chartered bank located in New York,
New York. Set forth below are the names and principal businesses of the trustees
and certain senior executive officers of U.S. Trust, including those who are
engaged in any other business, profession, vocation, or employment of a
substantial nature.
SAMUEL C. BUTLER -- Trustee/Director; Cravath, Swaine & Moore,
Worldwide Plaza, 825 Eighth Avenue, New York, NY 10019 ; Partner in Cravath,
Swaine & Moore (law firm).
PETER O. CRISP -- Trustee/Director; Venrock Associates, Room 5600, 30
Rockefeller Plaza, New York, NY 10112 ; General Partner in Venrock Associates.
ANTONIA M. GRUMBACH -- Trustee/Director; Patterson, Belknap, Webb &
Tyler, 30 Rockefeller Plaza, New York, NY 10112 ; Partner in Patterson, Belknap,
Webb & Tyler (law firm).
H. MARSHALL SCHWARZ -- Trustee/Director; Chairman of the Board and
Chief Executive Officer; United States Trust Co. of New York, 114 West 47th
Street, New York, NY 10036; Chairman of the Board & Chief Executive Officer of
U.S. Trust Corp. and U.S. Trust Company of N.Y. (bank).
PHILIPPE DE MONTEBELLO -- Trustee/Director; Metropolitan Museum of Art,
1000 Fifth Avenue, New York, NY 10029-0198; Director of the Metropolitan Museum
of Art (art museum).
PAUL W. DOUGLAS -- Trustee/Director; 250 Park Avenue, Room 1900, New
York, NY , 10177.
FREDERIC C. HAMILTON -- Trustee/Director; Hamilton Oil Corp., 1560
Broadway, Suite 2000, Denver, CO 80202 ; Chairman of the Board of Hamilton Oil
Corp. (oil & gas exploration).
FRANK S. STREETER -- Honorary Trustee; 380 Madison Ave., 4th Floor, New
York, NY 10017 ; Trustees and Corp.
JOHN H. STOOKEY -- Trusteee/Director; Quantum Chemical Corp., 99 Park
Avenue, New York, NY 10016; Director, Chairman of the Board, Chief Executive
Officer and President of Quantum Chemical Corp.
ROBERT N. WILSON -- Trustee/Director; Johnson & Johnson, One Johnson &
Johnson Plaza, New Brunswick, NJ 08933 ; Vice Chairman of the Board of Johnson &
Johnson.
PETER L. MALKIN -- Trustee/Director; Wein, Malkin & Bettex , Lincoln
Building, 60 East 42nd Street, New York, NY 10165 ; Chairman of Wein, Malkin &
Bettex.
RICHARD F. TUCKER -- Trustee/Director; 11 Over Rock Lane, Westport, CT
06880 ; retired.
CARROLL L. WAINRIGHT, JR. -- Trustee/Director; Milbank, Tweed, Hadley &
McCloy, One Chase Manhattan Plaza, New York, NY 10005 ; Consulting Partner of
Milbank, Tweed, Hadley & McCloy (law firm).
FREDERICK S. WONHAM -- Trustee/Director and Vice Chairman; United
States Trust Company of New York, 114 West 47th Street, New York, NY 10036; Vice
Chairman of the Board of U.S. Trust Corporation and United States Trust Company
of New York (bank).
DONALD M. ROBERTS -- Trustee/Director, Vice Chairman and Treasurer;
United States Trust Company of New York, 114 West 47th Street, New York, NY
10036; Vice Chairman of the Board and Treasurer of U.S. Trust Corporation and
United States Trust Company of New York (bank).
FREDERICK B. TAYLOR -- Trustee/Director, Vice Chairman and Chief
Investment Officer; United States Trust Company of New York; 114 West 47th
Street, New York, NY 10036; Vice Chairman and Chief Investment Officer of U.S.
Trust Corporation and United States Trust Company of New York (bank).
JEFFREY S. MAURER -- United States Trust Company of New York, 114 West
47th Street, New York, NY 10036 (bank).
DANIEL P. DAVISON -- Trustee/Director; Christie, Manson & Woods
International, Inc., 502 Park Avenue, New York, NY 10021, Chairman, Christie,
Manson & Woods International, Inc. (fine art auctioneer).
TOM KILLEFER -- Honorary Trustee; United States Trust, Company of New
York, 114 West 47th Street, New York, NY 10036; Former Chairman of the Board and
President of U.S. Trust Corporation and United States Trust Company of New York
(bank).
ORSON D. MUNN -- Trustee/Director; Munn, Bernhard & Associates, Inc., 6
East 43rd Street , 28th Floor, New York, NY 10017 ; Chairman and Director of
Munn, Bernhard & Associates, Inc. (investment advisory firm).
WALTER N. ROTHSCHILD, JR. -- Trustee/Director; 145 East 48th Street,
Suite 16D, New York, NY 10017 ; Corporate Director and Trustee.
PHILIP L. SMITH -- Trustee/Director; P.O. Box 205, Oakledge, Mount
Sunapee, NH 03772 ; Corporate Director and Trustee.
EDWIN D. ETHERINGTON -- Trustee/Director; P.O. Box 100, Old Lyme, CT
06371; President Emeritus, Wesleyan University, and Former President of American
Stock Exchange (education).
HAROLD J. HUDSON, JR. -- Honorary Trustee; General Reinsurance Co.,
Financial Center, P.O. Box 10350, Stamford, CT 06904; Former Chairman of the
Board of General Reinsurance Corporation.
Item 29. Principal Underwriters.
(a) SBDS is the distributor of the shares of Excelsior Institutional
Money Fund. SBDS also serves as the principal underwriter or placement agent for
other registered investment companies.
(b) Set forth below are the names, principal business addresses and
positions of each director and officer of SBDS. Unless otherwise noted, the
principal business address of these individuals is Signature Broker-Dealer
Services, Inc., 6 St. James Avenue, Boston, Massachusetts 02116. Unless
otherwise specified, none of the officers and directors of SBDS serve as
officers and Trustees of the Registrant.
PHILIP W. COOLIDGE: Chief Executive Officer, President and Director of SBDS.
President of Registrant.
JOHN R. ELDER: Assistant Treasurer of SBDS. Treasurer of the Registrant.
BARBARA M. O'DETTE: Assistant Treasurer of SBDS.
LINWOOD C. DOWNS: Treasurer of SBDS.
THOMAS M. LENZ: Assistant Secretary of SBDS. Secretary of Registrant.
MOLLY S. MUGLER: Assistant Secretary of SBDS. Assistant Secretary of Registrant.
LINDA T. GIBSON: Assistant Secretary of SBDS. Assistant Secretary of Registrant.
BETH A. REMY: Assistant Treasurer of SBDS.
ANDRES E. SALDANA: Assistant Secretary of SBDS. Assistant Secretary of
Registrant.
JULIE J. WYETZNER: Product Manager Officer of SBDS.
ROBERT G. DAVIDOFF: Director of SBDS; CMNY Capital, L.P., 135 East 57th Street,
New York, NY 10022.
LEEDS HACKETT: Director of SBDS; Hackett Associates Limited, 1260 Avenue of the
Americas, 12th Floor, New York, NY 10020.
LAURENCE B. LEVINE: Director of SBDS; Blair Corporation, 250 Royal Palm Way,
Palm Beach, FL 33480
DONALD S. CHADWICK: Director of SBDS; 4609 Bayard Street, Apartment 411,
Pittsburgh, PA 15213.
(c) Not applicable.
Item 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the Rules thereunder will be maintained at the
offices of:
Signature Broker-Dealer Services, Inc. 6 St. James Avenue
Services, Inc. Boston, MA 02116
(administrator and distributor)
Chase Global Funds Services Company 73 Tremont Street
(sub-administrator and sub-transfer Boston, MA 02108-3913
agent)
United States Trust Company of New York Mutual Funds Service Division
(investment advisor, custodian, 770 Broadway
shareholder servicing agent New York, NY 10003-9598
and transfer agent)
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
(a) The Registrant undertakes to comply with Section 16(c) of the 1940
Act as though such provisions of the 1940 Act were applicable to the Registrant,
except that the request referred to in the third full paragraph thereof may only
be made by shareholders who hold in the aggregate at least 10% of the
outstanding shares of the Registrant, regardless of the net asset value of
shares held by such requesting shareholders.
(b) If the information called for by Item 5A of Form N-1A is contained
in the latest annual report to shareholders, the Registrant shall furnish each
person to whom a prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this amendment to its Registration Statement
on Form N-1A ("Registration Statement") pursuant to Rule 485(b) under the
Securities Act of 1933, and has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereto duly authorized, in the City of
Boston and Commonwealth of Massachusetts on the 22nd day of December, 1995.
EXCELSIOR FUNDS
By: /s/ PHILIP W. COOLIDGE
______________________
Philip W. Coolidge
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on December 22, 1995.
Signature
/s/ PHILIP W. COOLIDGE
______________________
Philip W. Coolidge
President
/s/ JOHN R. ELDER
______________________
John R. Elder
Treasurer and Chief Financial and Accounting Officer
W. WALLACE MCDOWELL*
______________________
W. Wallace McDowell
Trustee
JONATHAN PIEL*
______________________
Jonathan Piel
Trustee
RODMAN L. DRAKE*
______________________
Rodman L. Drake
Trustee
*By /s/ PHILIP W. COOLIDGE
______________________
Philip W. Coolidge
As attorney-in-fact pursuant to a power of attorney previously filed
<PAGE>
SIGNATURES
Cash Reserves Portfolio (the "Portfolio") has duly caused the
Registration Statement on Form N-1A ("Registration Statement") of Excelsior
Funds (the "Trust") to be signed on its behalf by the undersigned, thereto duly
authorized in George Town, Grand Cayman on the 22nd day of December, 1995.
CASH RESERVES PORTFOLIO
By /s/ SUSAN JAKUBOSKI
______________________
Susan Jakuboski
Assistant Secretary
Pursuant to the requirements of the Securities Act of 1933, the Trust's
Registration Statement has been signed below by the following persons in the
capacities indicated on December 22, 1995.
PHILIP W. COOLIDGE*
______________________
Philip W. Coolidge
President and Trustee of the Portfolio
/s/ SUSAN JAKUBOSKI
______________________
Susan Jakuboski
Acting Treasurer and Acting Chief Financial and
Accounting Officer of the Portfolio
WALTER E. ROBB III*
______________________
Walter E. Robb III
Trustee of the Portfolio
MARK T. FINN*
______________________
Mark T. Finn
Trustee of the Portfolio
ELLIOTT J. BERV*
______________________
Elliott J. Berv
Trustee of the Portfolio
*By /s/ SUSAN JAKUBOSKI
______________________
Susan Jakuboski
As attorney-in-fact pursuant to a power of attorney previously filed
<PAGE>
INDEX TO EXHIBITS
Exhibit No./Description of Exhibit
1. Trust Instrument.
2. By-Laws.
5. Investment Advisory Agreement.
6(a). Distribution Agreement.
9(a). Administrative Services Agreement.
9(b). Shareholder Servicing Agreement with U.S. Trust.
9(c). Shareholder Service Agreement with UST Distributors,Inc.
9(d). Shareholder Servicing Agreement with Mid Atlantic Capital Corporation.
9(e). Amended and Restated Servicing Plan.
11. Consents of Independent Accountants.
16. Schedule for Computation of Performance Information.
17. Financial Data Schedule.
UST030D
EXCELSIOR FUNDS
TRUST INSTRUMENT
This TRUST INSTRUMENT is made on October 25, 1993, by the Trustees, to
establish a business trust for the investment and reinvestment of funds
contributed to the Trust by investors. The Trustees declare that all money and
property contributed to the Trust shall be held and managed in trust pursuant to
this Trust Instrument. The name of the Trust created by this Trust Instrument is
Excelsior Funds.
ARTICLE I
DEFINITIONS
Unless otherwise provided or required by the context:
(a) "By-laws" means the By-laws of the Trust adopted by the Trustees,
as amended from time to time;
(b) "Class" means the class of Shares of a Series established pursuant
to Article IV;
(c) "Commission," "Interested Person," and "Principal Underwriter" have
the meanings provided in the 1940 Act;
(d) "Covered Person" means a person so defined in Article IX, Section
2;
(e) "Delaware Act" means Chapter 38 of Title 12 of the Delaware Code
entitled "Treatment of Delaware Business Trusts," as amended from time to time;
(f) "Majority Shareholder Vote" means "the vote of a majority of the
outstanding voting securities" as defined in the 1940 Act;
(g) "Net Asset Value" means the net asset value of each Series of the
Trust, determined as provided in Article V, Section 3;
(h) "Outstanding Shares" means Shares shown in the books of the Trust
or its transfer agent as then issued and outstanding, but does not include
Shares which have been repurchased or redeemed by the Trust and which are held
in the treasury of the Trust;
(i) "Series" means a series of Shares established pursuant to Article
IV;
(j) "Shareholder" means a record owner of Outstanding Shares;
(k) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest of each Series or Class is divided
from time to time (including whole Shares and fractions of Shares);
<PAGE>
(1) "Trust" means Excelsior Funds established hereby, and reference to
the Trust, when applicable to one or more Series, refers to that Series;
(m) "Trustees" means the person or persons who have signed this Trust
Instrument, so long as they shall continue in office in accordance with the
terms hereof, and all other persons who may from time to time be duly qualified
and serving as Trustees in accordance with Article II, in all cases in their
capacities as Trustees hereunder;
(n) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the Trust or any Series
or the Trustees on behalf of the Trust or any Series;
(o) The "1940 Act" means the Investment Company Act of 1940, as amended
from time to time.
ARTICLE II
THE TRUSTEES
Section 1. Management of the Trust. The business and affairs of the
Trust shall be managed by or under the direction of the Trustees, and they shall
have all powers necessary or desirable to carry out that responsibility. The
Trustees may execute all instruments and take all action they deem necessary or
desirable to promote the interests of the Trust. Any determination made by the
Trustees in good faith as to what is in the interests of the Trust shall be
conclusive.
Section 2. Initial Trustee; Election and Number of Trustees. The
initial Trustee shall be the person initially signing this Trust Instrument. The
number of Trustees (other than the initial Trustee) shall be fixed from time to
time by a majority of the Trustees; provided, that there shall be at least one
(1) Trustee. The Shareholders shall elect the Trustees (other than the initial
Trustee) on such dates as the Trustees may fix from time to time.
Section 3. Term of Office of Trustees. Each Trustee shall hold office
for life or until his successor is elected or the Trust terminates; except that
(a) any Trustee may resign by delivering to the other Trustees or to any Trust
officer a written resignation effective upon such delivery or a later date
specified therein; (b) any Trustee may be removed with or without cause at any
time by a written instrument signed by at least two-thirds of the other
Trustees, specifying the effective date of removal; (c) any Trustee who requests
to be retired, or who has become physically or mentally incapacitated or is
otherwise unable to serve, may be retired by a written instrument signed by a
majority of the other Trustees, specifying the effective date of retirement; and
(d) any Trustee may be removed at any meeting of the Shareholders by a vote of
at least two-thirds of the Outstanding Shares.
Section 4. Vacancies; Appointment of Trustees. Whenever a vacancy shall
exist in the Board of Trustees, regardless of the reason for such vacancy, the
remaining Trustees shall appoint any person as they determine in their sole
discretion to fill that vacancy, consistent with the limitations under the 1940
-2-
<PAGE>
Act. Such appointment shall be made by a written instrument signed by a majority
of the Trustees or by a resolution of the Trustees, duly adopted and recorded in
the records of the Trust, specifying the effective date of the appointment. The
Trustees may appoint a new Trustee as provided above in anticipation of a
vacancy expected to occur because of the retirement, resignation, or removal of
a Trustee, or an increase in number of Trustees, provided that such appointment
shall become effective only at or after the expected vacancy occurs. As soon as
any such Trustee has accepted his appointment in writing, the trust estate shall
vest in the new Trustee, together with the continuing Trustees, without any
further act or conveyance, and he shall be deemed a Trustee hereunder. The power
of appointment is subject to Section 16(a) of the 1940 Act.
Section 5. Temporary Vacancy or Absence. Whenever a vacancy in the
Board of Trustees shall occur, until such vacancy is filled, or while any
Trustee is absent from his domicile (unless that Trustee has made arrangements
to be informed about, and to participate in, the affairs of the Trust during
such absence), or is physically or mentally incapacitated, the remaining
Trustees shall have all the powers hereunder and their certificate as to such
vacancy, absence, or incapacity shall be conclusive. Any Trustee may, by power
of attorney, delegate his powers as Trustee for a period not exceeding six (6)
months at any one time to any other Trustee or Trustees.
Section 6. Chairman. The Trustees may appoint one of their number to be
Chairman of the Board of Trustees. The Chairman shall preside at all meetings of
the Trustees.
Section 7. Action by the Trustees. The Trustees shall act by majority
vote at a meeting duly called (including at a telephonic meeting, unless the
1940 Act requires that a particular action be taken only at a meeting of
Trustees in person) at which a quorum is present or by written consent of a
majority of Trustees (or such greater number as may be required by applicable
law) without a meeting. A majority of the Trustees shall constitute a quorum at
any meeting. Meetings of the Trustees may be called orally or in writing by the
Chairman of the Board of Trustees or by any Trustee. Notice of the time, date
and place of all Trustees meetings shall be given to each Trustee by telephone,
facsimile or other electronic mechanism sent to his home or business address at
least twenty-four hours in advance of the meeting or by written notice mailed to
his home or business address at least seventy-two hours in advance of the
meeting. Notice need not be given to any Trustee who attends the meeting without
objecting to the lack of notice or who signs a waiver of notice either before or
after the meeting. Subject to the requirements of the 1940 Act, the Trustees by
majority vote may delegate to any Trustee or Trustees authority to approve
particular matters or take particular actions on behalf of the Trust. Any
written consent or waiver may be provided and delivered to the Trust by
facsimile or other similar electronic mechanism.
Section 8. Ownership of Trust Property. The Trust Property of the Trust
and of each Series shall be held separate and apart from any assets now or
hereafter held in any capacity other than as Trustee hereunder by the Trustees
or any successor Trustees. All of the Trust Property and legal title thereto
shall at all times be considered as vested in the Trustees on behalf of the
Trust, except that the Trustees may cause legal title to any Trust Property to
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be held by or in the name of the Trust, or in the name of any person as nominee.
No Shareholder shall be deemed to have a severable ownership in any individual
asset of the Trust or of any series or any right of partition or possession
thereof, but each Shareholder shall have, as provided in Article IV, a
proportionate undivided beneficial interest in the Trust or Series represented
by Shares.
Section 9. Effect of Trustees Not Serving. The death, resignation,
retirement, removal, incapacity, or inability or refusal to serve of the
Trustees, or any one of them, shall not operate to annul the Trust or to revoke
any existing agency created pursuant to the terms of this Trust Instrument.
Section 10. Trustees, etc. as Shareholders. Subject to any restrictions
in the By-laws, any Trustee, officer, agent or independent contractor of the
Trust may acquire, own and dispose of Shares to the same extent as any other
Shareholder; the Trustees may issue and sell Shares to and buy Shares from any
such person or any firm or company in which such person is interested, subject
only to any general limitations herein.
ARTICLE III
POWERS OF THE TRUSTEES
Section 1. Powers. The Trustees in all instances shall act as
principals, free of the control of the Shareholders. The Trustees shall have
full power and authority to take or refrain from taking any action and to
execute any contracts and instruments that they may consider necessary or
desirable in the management of the Trust. The Trustees shall not in any way be
bound or limited by current or future laws or customs applicable to trust
investments, but shall have full power and authority to make any investments
which they, in their sole discretion, deem proper to accomplish the purposes of
the Trust. The Trustees may exercise all of their powers without recourse to any
court or other authority. Subject to any applicable limitation herein or in the
By-laws or resolutions of the Trust, the Trustees shall have power and
authority, without limitation:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested, without in any event being bound or limited by any
current or future law or custom concerning investments by trustees, and to sell,
exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or
all of the Trust Property; to invest in obligations and securities of any kind,
and without regard to whether they may mature before the possible termination of
the Trust; and without limitation to invest all or any part of its cash and
other property in securities issued by a registered investment company or series
thereof, subject to the provisions of the 1940 Act;
(b) To operate as and carry on the business of a registered investment
company, and exercise all the powers necessary and proper to conduct such a
business;
(c) To adopt By-laws not inconsistent with this Trust Instrument
providing for the conduct of the business of the Trust and to amend and repeal
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them to the extent such right is not reserved to the Shareholders;
(d) To elect and remove such officers and appoint and terminate such
agents as they deem appropriate;
(e) To employ as custodian of any assets of the Trust, subject to any
provisions herein or in the By-laws, one or more banks, trust companies or
companies that are members of a national securities exchange, or other entities
permitted by the Commission to serve as such;
(f) To retain one or more transfer agents and Shareholder servicing
agents, or both;
(g) To establish a registered office and have a registered agent in the
State of Delaware;
(h) To provide for the distribution of Shares either through a
Principal Underwriter as provided herein or by the Trust itself, or both, or
pursuant to a distribution plan of any kind;
(i) To set record dates in the manner provided for herein or in the By-
laws;
(j) To delegate such authority as they consider desirable to any
officers of the Trust and to any agent, independent contractor, manager,
investment adviser, custodian or underwriter;
(k) To sell or exchange any or all of the assets of the Trust, subject
to Article X, Section 5;
(l) To vote or give assent, or exercise any rights of ownership, with
respect to other securities or property; and to execute and deliver powers of
attorney delegating such power to other persons;
(m) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities;
(n) To hold any security or other property (i) in a form not indicating
any trust, whether in bearer, book entry, unregistered or other negotiable form,
or (ii) either in the Trust's or Trustees' own name or in the name of a
custodian or a nominee or nominees, subject to safeguards according to the usual
practice of business trusts or investment companies;
(o) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article IV;
(p) To the full extent permitted by Section 3804 of the Delaware Act,
to allocate assets, liabilities and expenses of the Trust to a particular Series
and liabilities and expenses to a particular Class or to apportion the same
between or among two or more Series or Classes, provided that any liabilities or
expenses
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incurred by a particular Series or Class shall be payable solely out of the
assets belonging to that Series or Class as provided for in Article IV, Section
4;
(q) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or concern whose securities are held
by the Trust; to consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern; and to pay calls or subscriptions with
respect to any security held in the Trust;
(r) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy including, but not limited to,
claims for taxes;
(s) To make distributions of income and of capital gains to
Shareholders in the manner hereinafter provided for;
(t) To borrow money;
(u) To establish, from time to time, a minimum total investment for
Shareholders, and to require the redemption of the Shares of any Shareholders
whose investment is less than such minimum upon giving notice to such
Shareholder;
(v) To establish committees for such purposes, with such membership,
and with such responsibilities as the Trustees may consider proper, including a
committee consisting of fewer than all of the Trustees then in office, which may
act for and bind the Trustees and the Trust with respect to the institution,
prosecution, dismissal, settlement, review or investigation of any legal action,
suit or proceeding, pending or threatened;
(w) To issue, sell, repurchase, redeem, cancel, retire, acquire, hold,
resell, reissue, dispose of and otherwise deal in Shares; to establish terms and
conditions regarding the issuance, sale, repurchase, redemption, cancellation,
retirement, acquisition, holding, resale, reissuance, disposition of or dealing
in Shares; and, subject to Articles IV and V, to apply to any such repurchase,
redemption, retirement, cancellation or acquisition of Shares any funds or
property of the Trust or of the particular Series with respect to which such
Shares are issued; and
(x) To carry on any other business in connection with or incidental to
any of the foregoing powers, to do everything necessary or desirable to
accomplish any purpose or to further any of the foregoing powers, and to take
every other action incidental to the foregoing business or purposes, objects or
powers.
The clauses above shall be construed as objects and powers, and the
enumeration of specific powers shall not limit in any way the general powers of
the Trustees. Any action by one or more of the Trustees in their capacity as
such hereunder shall be deemed an action on behalf of the Trust or the
applicable Series, and not an action in an individual capacity. No one dealing
with the Trustees shall be under any obligation to make any inquiry concerning
the
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authority of the Trustees, or to see to the application of any payments made or
property transferred to the Trustees or upon their order. In construing this
Trust Instrument, the presumption shall be in favor of a grant of power to the
Trustees.
Section 2. Certain Transactions. Except as prohibited by applicable
law, the Trustees may, on behalf of the Trust, buy any securities from or sell
any securities to, or lend any assets of the Trust to, any Trustee or officer of
the Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with any investment adviser, administrator,
distributor or transfer agent for the Trust or with any Interested Person of
such person. The Trust may employ any such person or entity in which such person
is an Interested Person, as broker, legal counsel, registrar, investment
adviser, administrator, distributor, transfer agent, dividend disbursing agent,
custodian or in any other capacity upon customary terms.
ARTICLE IV
SERIES: CLASSES: SHARES
Section 1. Establishment of Series or Class. The Trust shall consist of
one or more Series. The Trustees hereby establish the Series listed in Schedule
A attached hereto and made a part hereof. Each additional Series shall be
established by the adoption of a resolution of the Trustees. The Trustees may
designate the relative rights and preferences of the Shares of each Series. The
Trustees may divide the Shares of any Series into Classes. In such case each
Class of a Series shall represent interests in the assets of that Series and
have identical voting, dividend, liquidation and other rights and the same terms
and conditions, except as may be provided in the instrument establishing the
rights and preferences of the Class and except that expenses allocated to a
Class may be borne solely by such Class as determined by the Trustees and a
Class may have exclusive voting rights with respect to matters affecting only
that Class. The Trust shall maintain separate and distinct records for each
Series and hold and account for the assets thereof separately from the other
assets of the Trust or of any other Series. A Series may issue any number of
Shares and need not issue Shares. Each Share of a Series shall represent an
equal beneficial interest in the net assets of such Series. Each holder of
Shares of a Series shall be entitled to receive his pro rata share of all
distributions made with respect to such Series. Upon redemption of his Shares,
such Shareholder shall be paid solely out of the funds and property of such
Series. The Trustees may change the name of any Series or Class.
Section 2. Shares. The beneficial interest in the Trust shall be
divided into Shares of one or more separate and distinct Series or Classes
established by the Trustees. The number of Shares of each Series and Class is
unlimited and each Share shall have a par value of $0.00001 per Share. All
Shares issued hereunder shall be fully paid and nonassessable. Shareholders
shall have no preemptive or other right to subscribe to any additional Shares or
other securities issued by the Trust. The Trustees shall have full power and
authority, in their sole discretion and without obtaining Shareholder approval:
to issue original or additional Shares at such times and on such terms and
conditions as they deem appropriate; to issue fractional Shares and Shares held
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in the treasury; to establish and to change in any manner Shares of any Series
or Classes with such preferences, terms of conversion, voting powers, rights and
privileges as the Trustees may determine (but the Trustees may not change
Outstanding Shares in a manner materially adverse to the Shareholders of such
Shares); to divide or combine the Shares of any Series or Classes into a greater
or lesser number; to classify or reclassify any unissued Shares of any Series or
Classes into one or more Series or Classes of Shares; to abolish any one or more
Series or Classes of Shares; to issue Shares to acquire other assets (including
assets subject to, and in connection with, the assumption of liabilities) and
businesses; and to take such other action with respect to the Shares as the
Trustees may deem desirable. Shares held in the treasury shall not confer any
voting rights on the Trustees and shall not be entitled to any dividends or
other distributions declared with respect to the Shares.
Section 3. Investment in the Trust. The Trustees shall accept
investments in any Series from such persons and on such terms as they may from
time to time authorize. At the Trustees' discretion, such investments, subject
to applicable law, may be in the form of cash or securities in which that Series
is authorized to invest, valued as provided in Article V, Section 3. Investments
in a Series shall be credited to each Shareholder's account in the form of full
Shares at the Net Asset Value per Share next determined after the investment is
received or accepted as may be determined by the Trustees; provided, however,
that the Trustees may, in their sole discretion, (a) impose a sales charge upon
investments in any Series or Class, (b) issue fractional Shares, or (c)
determine the Net Asset Value per Share of the initial capital contribution. The
Trustees shall have the right to refuse to accept investments in any Series at
any time without any cause or reason therefor whatsoever.
Section 4. Assets and Liabilities of Series. All consideration received
by the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof (including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may
be), shall be held and accounted for separately from the other assets of the
Trust and every other Series and are referred to as "assets belonging to" that
Series. The assets belonging to a Series shall belong only to that Series for
all purposes, and to no other Series, subject only to the rights of creditors of
that Series. Any assets, income, earnings, profits, and proceeds thereof, funds,
or payments which are not readily identifiable as belonging to any particular
Series shall be allocated by the Trustees between and among one or more Series
as the Trustees deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Shareholders of all Series for all purposes, and
such assets, earnings, income, profits or funds, or payments and proceeds
thereof shall be referred to as assets belonging to that Series. The assets
belonging to a Series shall be so recorded upon the books of the Trust, and
shall be held by the Trustees in trust for the benefit of the Shareholders of
that Series. The assets belonging to a Series shall be charged with the
liabilities of that Series and all expenses, costs, charges and reserves
attributable to that series, except that liabilities and expenses allocated
solely to a particular Class shall be borne by that Class. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular
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Series or Class shall be allocated and charged by the Trustees between or among
any one or more of the Series or Classes in such manner as the Trustees deem
fair and equitable. Each such allocation shall be conclusive and binding upon
the Shareholders of all Series or Classes for all purposes.
Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or reserves
as herein provided, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Series shall
be enforceable against the assets of such Series only, and not against the
assets of the Trust generally or of any other Series. Notice of this contractual
limitation on liabilities among Series may, in the Trustees' discretion, be set
forth in the certificate of trust of the Trust (whether originally or by
amendment) as filed or to be filed in the Office of the Secretary of State of
the State of Delaware pursuant to the Delaware Act, and upon the giving of such
notice in the certificate of trust, the statutory provisions of Section 3804 of
the Delaware Act relating to limitations on liabilities among Series (and the
statutory effect under Section 3804 of setting forth such notice in the
certificate of trust) shall become applicable to the Trust and each Series. Any
person extending credit to, contracting with or having any claim against any
Series may look only to the assets of that Series to satisfy or enforce any
debt, with respect to that Series. No Shareholder or former Shareholder of any
Series shall have a claim on or any right to any assets allocated or belonging
to any other Series.
Section 5. Ownership and Transfer of Shares. The Trust shall maintain a
register containing the names and addresses of the Shareholders of each Series
and Class thereof, the number of Shares of each Series and Class held by such
Shareholders, and a record of all Share transfers. The register shall be
conclusive as to the identity of Shareholders of record and the number of Shares
held by them from time to time. The Trustees may authorize the issuance of
certificates representing Shares and adopt rules governing their use. The
Trustees may make rules governing the transfer of Shares, whether or not
represented by certificates.
Section 6. Status of Shares: Limitation of Shareholder Liability.
Shares shall be deemed to be personal property giving Shareholders only the
rights provided in this Trust Instrument. Every Shareholder, by virtue of having
acquired a Share, shall be held expressly to have assented to and agreed to be
bound by the terms of this Trust Instrument and to have become a party hereto.
No Shareholder shall be personally liable for the debts, liabilities,
obligations and expenses incurred by, contracted for, or otherwise existing with
respect to, the Trust or any Series. Neither the Trust nor the Trustees shall
have any power to bind any Shareholder personally or to demand payment from any
Shareholder for anything, other than as agreed by the Shareholder. Shareholders
shall have the same limitation of personal liability as is extended to
shareholders of a private corporation for profit incorporated in the State of
Delaware. Every written obligation of the Trust or any Series shall contain a
statement to the effect that such obligation may only be enforced against the
assets of the Trust or such Series; however, the omission of such statement
shall not operate to bind or create personal liability for any Shareholder or
Trustee.
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ARTICLE V
DISTRIBUTIONS AND REDEMPTIONS
Section 1. Distributions. The Trustees may declare and pay dividends
and other distributions, including dividends on Shares of a particular Series
and other distributions from the assets belonging to that Series. The amount and
payment of dividends or distributions and their form, whether they are in cash,
Shares or other Trust Property, shall be determined by the Trustees. Dividends
and other distributions may be paid pursuant to a standing resolution adopted
once or more often as the Trustees determine. All dividends and other
distributions on Shares of a particular Series shall be distributed pro rata to
the Shareholders of that Series in proportion to the number of Shares of that
Series they held on the record date established for such payment, except that
such dividends and distributions shall appropriately reflect expenses allocated
to a particular Class of such Series. The Trustees may adopt and offer to
Shareholders such dividend reinvestment plans, cash dividend payout plans or
similar plans as the Trustees deem appropriate.
Section 2. Redemptions. Each Shareholder of a Series shall have the
right at such times as may be permitted by the Trustees to require the Series to
redeem all or any part of his Shares at a redemption price per Share equal to
the Net Asset Value per Share at such time as the Trustees shall have prescribed
by resolution. In the absence of such resolution, the redemption price per Share
shall be the Net Asset Value next determined after receipt by the Series of a
request for redemption in proper form less such charges as are determined by the
Trustees and described in the Trust's Registration Statement for that Series
under the Securities Act of 1933 or the 1940 Act. The Trustees may specify
conditions, prices, and places of redemption, and may specify binding
requirements for the proper form or forms of requests for redemption. Payment of
the redemption price may be wholly or partly in securities or other assets at
the value of such securities or assets used in such determination of Net Asset
Value, or may be in cash. Upon redemption, Shares may be reissued from time to
time. The Trustees may require Shareholders to redeem Shares for any reason
under terms set by the Trustees, including the failure of a Shareholder to
supply a personal identification number if required to do so, or to have the
minimum investment required, or to pay when due for the purchase of Shares
issued to him. To the extent permitted by law, the Trustees may retain the
proceeds of any redemption of Shares required by them for payment of amounts due
and owing by a Shareholder to the Trust or any Series or Class. Notwithstanding
the foregoing, the Trustees may postpone payment of the redemption price and may
suspend the right of the Shareholders to require any Series or Class to redeem
Shares during any period of time when and to the extent permissible under the
1940 Act.
Section 3. Determination of Net Asset Value. The Trustees shall cause
the Net Asset Value of Shares of each Series or Class to be determined from time
to time in a manner consistent with applicable laws and regulations. The
Trustees may delegate the power and duty to determine Net Asset Value per Share
to one or more Trustees or officers of the Trust or to a custodian, depository
or other agent appointed for such purpose. The Net Asset Value of Shares shall
be determined separately for each Series or Class at such times as may be
prescribed
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by the Trustees or, in the absence of action by the Trustees, as of the close of
trading on the New York Stock Exchange on each day for all or part of which such
Exchange is open for unrestricted trading.
Section 4. Suspension of Right of Redemption. If, as referred to in
Section 2 of this Article, the Trustees postpone payment of the redemption price
and suspend the right of Shareholders to redeem their Shares, such suspension
shall take effect at the time the Trustees shall specify, but not later than the
close of business on the business day next following the declaration of
suspension. Thereafter Shareholders shall have no right of redemption or payment
until the Trustees declare the end of the suspension. If the right of redemption
is suspended, a Shareholder may either withdraw his request for redemption or
receive payment based on the Net Asset value per Share next determined after the
suspension terminates.
Section 5. Redemptions Necessary for Qualification as Regulated
Investment Company. If the Trustees shall determine that direct or indirect
ownership of Shares of any Series has or may become concentrated in any person
to an extent which would disqualify any Series as a regulated investment company
under the Internal Revenue Code, then the Trustees shall have the power (but not
the obligation) by lot or other means they deem equitable to (a) call for
redemption by any such person of a number, or principal amount, of Shares
sufficient to maintain or bring the direct or indirect ownership of Shares into
conformity with the requirements for such qualification and (b) refuse to
transfer or issue Shares to any person whose acquisition of Shares in question
would, in the Trustees'judgement, result in such disqualification. Any such
redemption shall be effected at the redemption price and in the manner provided
in this Article. Shareholders shall upon demand disclose to the Trustees in
writing such information concerning direct and indirect ownership of Shares as
the Trustees deem necessary to comply with the requirements of any taxing
authority.
ARTICLE VI
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 1. Voting Powers. The Shareholders shall have power to vote
only with respect to (a) the removal of Trustees as provided in Article II,
Section 3(d); (b) any investment advisory or management contract as provided in
Article VII, Section 1; (c) any termination of the Trust as provided in Article
X, Section 5; (d) the amendment of this Trust Instrument to the extent and as
provided in Article X, Section 9; and (e) such additional matters relating to
the Trust as may be required or authorized by law, this Trust Instrument, or the
By- laws or any registration of the Trust with the Commission or any State, or
as the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all Shares shall
be voted by individual Series or Class, except (a) when required by the 1940
Act, Shares shall be voted in the aggregate and not by individual Series or
Class, and (b) when the Trustees have determined that the matter affects the
interests of more than one Series or Class, then the Shareholders of all such
Series or Classes shall be entitled to vote thereon. Each whole Share shall be
entitled
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to one vote as to any matter on which it is entitled to vote, and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy or in any manner provided for in the By-laws. The By-laws
may provide that proxies may be given by any electronic or telecommunications
device or in any other manner, but if a proposal by anyone other than the
officers or Trustees is submitted to a vote of the Shareholders of any Series or
Class, or if there is a proxy contest or proxy solicitation or proposal in
opposition to any proposal by the officers or Trustees, Shares may be voted only
in person or by written proxy. Until Shares of a Series are issued, as to that
Series the Trustees may exercise all rights of Shareholders and may take any
action required or permitted to be taken by Shareholders by law, this Trust
Instrument or the By- laws.
Section 2. Meetings of Shareholders. Special meetings of the
Shareholders of any Series or Class may be called by the Trustees and shall be
called by the Trustees upon the written request of Shareholders owning at least
ten percent of the Outstanding Shares of such Series or Class entitled to vote.
Shareholders shall be entitled to at least fifteen days' notice of any meeting,
given as determined by the Trustees.
Section 3. Quorum; Required Vote. One-third of the Outstanding Shares
of each Series or Class, or one-third of the Outstanding Shares of the Trust,
entitled to vote in person or by proxy shall be a quorum for the transaction of
business at a Shareholders' meeting with respect to such Series or Class, or
with respect to the entire Trust, respectively. Any lesser number shall be
sufficient for adjournments. Any adjourned session of a Shareholders' meeting
may be held within a reasonable time without further notice. Except when a
larger vote is required by law, this Trust Instrument or the By-laws, a majority
of the Outstanding Shares voted in person or by proxy shall decide any matters
to be voted upon with respect to the entire Trust and a plurality of such
Outstanding Shares shall elect a Trustee; provided, that if this Trust
Instrument or applicable law permits or requires that Shares be voted on any
matter by individual Series or Classes, then a majority of the Outstanding
Shares of that Series or Class (or, if required by law, a Majority Shareholder
Vote of that Series or Class) voted in person or by proxy voted on the matter
shall decide that matter insofar as that Series or Class is concerned.
Shareholders may act as to the Trust or any Series or Class by the written
consent of a majority (or such greater amount as may be required by applicable
law) of the Outstanding Shares of the Trust or of such Series or Class, as the
case may be.
ARTICLE VII
CONTRACTS WITH SERVICE PROVIDERS
Section 1. Investment Adviser. Subject to a Majority Shareholder Vote,
the Trustees may enter into one or more investment advisory contracts on behalf
of the Trust or any Series, providing for investment advisory services,
statistical and research facilities and services, and other facilities and
services to be furnished to the Trust or Series on terms and conditions
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acceptable to the Trustees. Any such contract may provide for the investment
adviser to effect purchases, sales or exchanges of portfolio securities or other
Trust Property on behalf of the Trustees or may authorize any officer or agent
of the Trust to effect such purchases, sales or exchanges pursuant to
recommendations of the investment adviser. The Trustees may authorize the
investment adviser to employ one or more sub-advisers.
Section 2. Principal Underwriter. The Trustees may enter into contracts
on behalf of the Trust or any Series or Class, providing for the distribution
and sale of Shares by the other party, either directly or as sales agent, on
terms and conditions acceptable to the Trustees. The Trustees may adopt a plan
or plans of distribution with respect to Shares of any Series or Class and enter
into any related agreements, whereby the Series or Class finances directly or
indirectly any activity that is primarily intended to result in sales of its
Shares, subject to the requirements of Section 12 of the 1940 Act, Rule 12b-1
thereunder, and other applicable rules and regulations.
Section 3. Transfer Agency, Shareholder Services, and Administration
Agreements. The Trustees, on behalf of the Trust or any Series or Class, may
enter into transfer agency agreements, Shareholder service agreements, and
administration and management agreements with any party or parties on terms and
conditions acceptable to the Trustees.
Section 4. Custodian. The Trustees shall at all times place and
maintain the securities and similar investments of the Trust and of each Series
in custody meeting the requirements of Section 17(f) of the 1940 Act and the
rules thereunder. The Trustees, on behalf of the Trust or any Series, may enter
into an agreement with a custodian on terms and conditions acceptable to the
Trustees, providing for the custodian, among other things, to (a) hold the
securities owned by the Trust or any Series and deliver the same upon written
order or oral order confirmed in writing, (b) to receive and receipt for any
moneys due to the Trust or any Series and deposit the same in its own banking
department or elsewhere, (c) to disburse such funds upon orders or vouchers, and
(d) to employ one or more sub-custodians.
Section 5. Parties to Contracts with Service Providers. The Trustees
may enter into any contract referred to in this Article with any entity,
although one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, partner, shareholder, or member of such entity, and no such
contract shall be invalidated or rendered void or voidable because of such
relationship. No person having such a relationship shall be disqualified from
voting on or executing a contract in his capacity as Trustee and/or Shareholder,
or be liable merely by reason of such relationship for any loss or expense to
the Trust with respect to such a contract or accountable for any profit realized
directly or indirectly therefrom; provided, that the contract was reasonable and
fair and not inconsistent with this Trust Instrument or the By-laws.
Any contract referred to in Sections 1 and 2 of this Article shall be
consistent with and subject to the applicable requirements of Section 15 of the
1940 Act and the rules and orders thereunder with respect to its continuance in
effect, its termination, and the method of authorization and approval of such
contract or renewal. No amendment to a contract referred to in Section 1 of this
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Article shall be effective unless assented to in a manner consistent with the
requirements of Section 15 of the 1940 Act, and the rules and orders thereunder.
ARTICLE VIII
EXPENSES OF THE TRUST AND SERIES
Subject to Article IV, Section 4, the Trust or a particular Series
shall pay, or shall reimburse the Trustees from the Trust estate or the assets
belonging to the particular Series, for their expenses and disbursements,
including, but not limited to, interest charges, taxes, brokerage fees and
commissions; expenses of issue, repurchase and redemption of Shares; certain
insurance premiums; applicable fees, interest charges and expenses of third
parties, including the Trust's investment advisers, managers, administrators,
distributors, custodians, transfer agents and fund accountants; fees of pricing,
interest, dividend, credit and other reporting services; costs of membership in
trade associations; telecommunications expenses; funds transmission expenses;
auditing, legal and compliance expenses; costs of forming the Trust and its
Series and maintaining its existence; costs of preparing and printing the
prospectuses of the Trust and each Series, statements of additional information
and Shareholder reports and delivering them to Shareholders; expenses of
meetings of Shareholders and proxy solicitations therefor; costs of maintaining
books and accounts; costs of reproduction, stationery and supplies; fees and
expenses of the Trustees; compensation of the Trust's officers and employees and
costs of other personnel performing services for the Trust or any Series; costs
of Trustee meetings; Commission registration fees and related expenses; state or
foreign securities laws registration fees and related expenses; and for such
non-recurring items as may arise, including litigation to which the Trust or a
Series (or a Trustee or officer of the Trust acting as such) is a party, and for
all losses and liabilities by them incurred in administering the Trust. The
Trustees shall have a lien on the assets belonging to the appropriate Series, or
in the case of an expense allocable to more than one Series, on the assets of
each such Series, prior to any rights or interests of the Shareholders thereto,
for the reimbursement to them of such expenses, disbursements, losses and
liabilities.
ARTICLE IX
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Liability. All persons contracting with or
having any claim against the Trust or a particular Series shall look only to the
assets of the Trust or such Series for payment under such contract or claim; and
neither the Trustees nor any of the Trust's officers, employees or agents,
whether past, present or future, shall be personally liable therefor. Every
written instrument or obligation on behalf of the Trust or any Series shall
contain a statement to the foregoing effect, but the absence of such statement
shall not operate to make any Trustee or officer of the Trust liable thereunder.
Provided they have exercised reasonable care and have acted under the reasonable
belief that their
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actions are in the best interest of the Trust, the Trustees and officers of the
Trust shall not be responsible or liable for any act or omission or for neglect
or wrongdoing of them or any officer, agent, employee, investment adviser or
independent contractor of the Trust, but nothing contained in this Trust
Instrument or in the Delaware Act shall protect any Trustee or officer of the
Trust against liability to the Trust or to Shareholders to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
Section 2. Indemnification. (a) Subject to the exceptions and
limitations contained in subsection (b) below:
(i) every person who is, or has been, a Trustee or an officer,
employee or agent of the Trust ("Covered Person") shall be
indemnified by the Trust or the appropriate Series to the fullest
extent permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit or proceeding in which he becomes involved as a party
or otherwise by virtue of his being or having been a Covered
Person and against amounts paid or incurred by him in the
settlement thereof;
(ii) as used herein, the words "claim, "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including appeals), actual
or threatened, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Covered Person:
(i) who shall have been adjudicated by a court or body before which
the proceeding was brought (A) to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office, or (B) not to have acted in good faith in
the reasonable belief that his action was in the best interest of
the Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Covered Person did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office; (A) by the court
or other body approving the settlement; (B) by at least a majority
of those Trustees who are neither Interested Persons of the Trust
nor are parties to the matter based upon a review of readily
available facts (as opposed to a full trial-type inquiry); or (C)
by written opinion of independent legal counsel based upon a
review of readily available facts (as opposed to a full trial-type
inquiry).
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not be
exclusive
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of or affect any other rights to which any Covered Person may now or hereafter
be entitled, and shall inure to the benefit of the heirs, executors and
administrators of a Covered Person.
(d) To the maximum extent permitted by applicable law, expenses in
connection with the preparation and presentation of a defense to any claim,
action, suit or proceeding of the character described in subsection (a) of this
Section may be paid by the Trust or applicable Series from time to time prior to
final disposition thereof upon receipt of an undertaking by or on behalf of such
Covered Person that such amount will be paid over by him to the Trust or
applicable Series if it is ultimately determined that he is not entitled to
indemnification under this Section; provided, however, that either (i) such
Covered Person shall have provided appropriate security for such undertaking,
(ii) the Trust is insured against losses arising out of any such advance
payments or (iii) either a majority of the Trustees who are neither Interested
Persons of the Trust nor parties to the matter, or independent legal counsel in
a written opinion, shall have determined, based upon a review of readily
available facts (as opposed to a full trial-type inquiry) that there is reason
to believe that such Covered Person will not be disqualified from
indemnification under this Section.
(e) Any repeal or modification of this Article IX by the Shareholders
of the Trust, or adoption or modification of any other provision of the Trust
Instrument or By-laws inconsistent with this Article, shall be prospective only,
to the extent that such repeal or modification would, if applied
retrospectively, adversely affect any limitation on the liability of any Covered
Person or indemnification available to any Covered Person with respect to any
act or omission which occurred prior to such repeal, modification or adoption.
Section 3. Indemnification of Shareholders. If any Shareholder or
former Shareholder of any Series shall be held personally liable solely by
reason of his being or having been a Shareholder and not because of his acts or
omissions or for some other reason, the Shareholder or former Shareholder (or
his heirs, executors, administrators or other legal representatives or in the
case of any entity, its general successor) shall be entitled out of the assets
belonging to the applicable Series to be held harmless from and indemnified
against all loss and expense arising from such liability. The Trust, on behalf
of the affected Series, shall, upon request by such Shareholder, assume the
defense of any claim made against such Shareholder for any act or obligation of
the Series and satisfy any judgment thereon from the assets of the Series.
ARTICLE X
MISCELLANEOUS
Section 1. Trust Not a Partnership. This Trust Instrument creates a
trust and not a partnership. No Trustee shall have any power to bind personally
either the Trust's officers or any Shareholder.
Section 2. Trustee Action; Expert Advice; No Bond or Surety. The
exercise
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by the Trustees of their powers and discretion hereunder in good faith and with
reasonable care under the circumstances then prevailing shall be binding upon
everyone interested. Subject to the provisions of Article IX,, the Trustees
shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Trust Instrument, and subject to the provisions of Article
IX, shall not be liable for any act or omission in accordance with such advice
or for failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is obtained.
Section 3. Derivative Actions. Shareholders shall have the right to
bring derivative actions to the extent provided in the Delaware Act; provided,
however, that except as required under the 1940 Act, no derivative action may be
brought unless Shareholders owning not less than 10% of the outstanding Shares
of all Series of the Trust, or of the affected Series of the Trust, as the case
may be, join in the bringing of such derivative action.
Section 4. Record Dates. The Trustees may fix in advance a date up to
ninety (90) days before the date of any Shareholders' meeting, or the date for
the payment of any dividends or other distributions, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect as a record date for the determination of the
Shareholders entitled to notice of, and to vote at, any such meeting, or
entitled to receive payment of such dividend or other distribution, or to
receive any such allotment of rights, or to exercise such rights in respect of
any such change, conversion or exchange of Shares.
Section 5. Termination of the Trust. (a) This Trust shall have
perpetual existence. Subject to a Majority Shareholder Vote of the Trust or of
each Series to be affected, the Trustees may
(i) sell and convey all or substantially all of the assets of the
Trust or any affected Series to another Series or to another
entity which is an open-end investment company as defined in the
1940 Act, or is a series thereof, for adequate consideration,
which may include the assumption of all outstanding obligations,
taxes and other liabilities, accrued or contingent, of the Trust
or any affected Series, and which may include shares of or
interests in such Series, entity, or series thereof; or
(ii) at any time sell and convert into money all or substantially all
of the assets of the Trust or any affected,Series.
Upon making reasonable provision for the payment of all known liabilities of the
Trust or any affected Series in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds or assets (as
the case may be) ratably among the Shareholders of the Trust or any affected
Series; however, the payment to any particular Class of such Series may be
reduced by any fees, expenses or charges allocated to that Class.
(b) The Trustees may take any of the actions specified in subsection
(a) (i) and (ii) above without obtaining a Majority Shareholder Vote of the
Trust or
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any Series if a majority of the Trustees determines that the continuation of the
Trust or Series is not in the best interests of the Trust, such Series, or their
respective Shareholders as a result of factors or events adversely affecting the
ability of the Trust or such Series to conduct its business and operations in an
economically viable manner. Such factors and events may include the inability of
the Trust or a Series to maintain its assets at an appropriate size, changes in
laws or regulations governing the Trust or the Series or affecting assets of the
type in which the Trust or Series invests, or economic developments or trends
having a significant adverse impact on the business or operations of the Trust
or such Series.
(c) Upon completion of the distribution of the remaining proceeds or
assets pursuant to subsection (a), the Trust or affected Series shall terminate
and the Trustees and the Trust shall be discharged of any and all further
liabilities and duties hereunder with respect thereto and the right, title and
interest of all parties therein shall be canceled and discharged. Upon
termination of the Trust, following completion of winding up of its business,
the Trustees shall cause a certificate of cancellation of the Trust's
certificate of trust to be filed in accordance with the Delaware Act, which
certificate of cancellation may be signed by any one Trustee.
Section 6. Reorganization. Notwithstanding anything else herein, to
change the Trust's form of organization the Trustees may, without Shareholder
approval, (a) cause the Trust to merge or consolidate with or into one or more
entities, if the surviving or resulting entity is the Trust or another open-end
management investment company registered under the 1940 Act, or a series
thereof, that will succeed to or assume the Trust's registration under the 1940
Act, or (b) cause the Trust to incorporate under the laws of the State of
Delaware. Any agreement of merger or consolidation or certificate of merger may
be signed by a majority of Trustees and facsimile signatures conveyed by
electronic or telecommunication means shall be valid.
Pursuant to and in accordance with the provisions of Section 3815 (f)
of the Delaware Act, an agreement of merger or consolidation approved by the
Trustees in accordance with this Section may effect any amendment to the Trust
Instrument or effect the adoption of a new trust instrument of the Trust if it
is the surviving or resulting trust in the merger or consolidation.
Section 7. Trust Instrument. The original or a copy of this Trust
Instrument and of each amendment hereto or Trust Instrument supplemental shall
be kept at the office of the Trust where it may be inspected by any Shareholder.
Anyone dealing with the Trust may rely on a certificate by a Trustee or an
officer of the Trust as to the authenticity of the Trust Instrument or any such
amendments or supplements and as to any matters in connection with the Trust.
The masculine gender herein shall include the feminine and neuter genders.
Headings herein are for convenience only and shall not affect the construction
of this Trust Instrument. This Trust Instrument may be executed in any number of
counterparts, each of which shall be deemed an original.
Section 8. Applicable Law. This Trust Instrument and the Trust created
hereunder are governed by and construed and administered according to the
Delaware Act and the applicable laws of the State of Delaware; provided,
however,
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that there shall not be applicable to the Trust, the Trustees or this Trust
Instrument (a) the provisions of Section 3540 of Title 12 of the Delaware Code,
or (b) any provisions of the laws (statutory or common) of the State of Delaware
(other than the Delaware Act) pertaining to trusts which relate to or regulate
(i) the filing with any court or governmental body or agency of trustee accounts
or schedules of trustee fees and charges, (ii) affirmative requirements to post
bonds for trustees, officers, agents or employees of a trust, (iii) the
necessity for obtaining court or other governmental approval concerning the
acquisition, holding or disposition of real or personal property, (iv) fees or
other sums payable to trustees, officers, agents or employees of a trust, (v)
the allocation of receipts and expenditures to income or principal, (vi)
restrictions or limitations on the permissible nature, amount or concentration
of trust investments or requirements relating to the titling, storage or other
manner of holding of trust assets, or (vii) the establishment of fiduciary or
other standards of responsibilities or limitations on the acts or powers of
trustees, which are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this Trust
Instrument. The Trust shall be of the type commonly called a Delaware business
trust, and, without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust under Delaware law. The
Trust specifically reserves the right to exercise any of the powers or
privileges afforded to trusts or actions that may be engaged in by trusts under
the Delaware Act, and the absence of a specific reference herein to any such
power, privilege or action shall not imply that the Trust may not exercise such
power or privilege or take such actions.
Section 9. Amendments. The Trustees may, without any Shareholder vote,
amend or otherwise supplement this Trust Instrument by making an amendment, a
Trust Instrument supplemental hereto or an amended and restated trust
instrument; provided, that Shareholders shall have the right to vote on any
amendment (a) which would affect the voting rights of Shareholders granted in
Article VI, Section 1, (b) to this Section, (c) required to be approved by
Shareholders by law or by the Trust's registration statement(s) filed with the
Commission, and (d) submitted to them by the Trustees in their discretion. Any
amendment submitted to Shareholders which the Trustees determine would affect
the Shareholders of any Series shall be authorized by vote of the Shareholders
of such Series and no vote shall be required of Shareholders of a Series not
affected. Notwithstanding anything else herein, any amendment to Article IX
which would have the effect of reducing the indemnification and other rights
provided thereby to Trustees, officers, employees, and agents of the Trust or to
Shareholders or former Shareholders, and any repeal or amendment of this
sentence shall each require the affirmative vote of the holders of two-thirds of
the outstanding Shares of the Trust entitled to vote thereon.
Section 10. Fiscal Year. The fiscal year of the Trust shall end on a
specified date as set forth in the By-Laws. The Trustees may change such fiscal
year without Shareholder approval.
Section 11. Severability. The provisions of this Trust Instrument are
severable. If the Trustees determine, with the advice of counsel, that any
provision hereof conflicts with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
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regulations, the conflicting provision shall be deemed never to have constituted
a part of this Trust Instrument; provided, however, that such determination
shall not affect any of the remaining provisions of this Trust Instrument or
render invalid or improper any action taken or omitted prior to such
determination. If any provision hereof shall be held invalid or unenforceable in
any jurisdiction, such invalidity or unenforceability shall attach only to such
provision only in such jurisdiction and shall not affect any other provision of
this Trust Instrument.
IN WITNESS WHEREOF, the undersigned initial Trustee has executed this
Trust Instrument as of the date first above written.
/S/ ANDRES E. SALDANA
Andres E. Saldana, as
Trustee and not individually
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SCHEDULE A
Excelsior Equity Fund
Excelsior Income and Growth Fund
Excelsior Income Fund
Excelsior Total Return Bond Fund
Excelsior Socially Responsible Equity Fund
Excelsior Institutional Money Fund
Excelsior Institutional Treasury Money Fund
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AMENDED AND RESTATED SCHEDULE A
TO TRUST INSTRUMENT DATED OCTOBER 25, 1993
OF EXCELSIOR FUNDS
Dated as of June 22, 1994
Excelsior Equity Fund
Excelsior Income and Growth Fund
Excelsior Income Fund
Excelsior Total Return Bond Fund
Excelsior Socially Responsible Fund1
Excelsior Institutional Money Fund
Excelsior Institutional Treasury Money Fund
IN WITNESS WHEREOF, the undersigned Trustees of Excelsior Funds (the
"Trust") has executed this Amended and Restated Schedule A to the Trust
Instrument of the Trust as of the date first above written.
/S/ RODMAN L. DRAKE
Rodman L. Drake, as
Trustee and not individually
/S/ W. WALLACE MCDOWELL
W. Wallace McDowell, as
Trustee and not individually
/S/ JONATHAN PIEL
Jonathan Piel, as
Trustee and not individually
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1Formerly, Excelsior Socially Responsible Equity Fund.
UST030D
BY-LAWS
OF
EXCELSIOR FUNDS
These By-laws of Excelsior Funds (the "Trust"), a Delaware business
trust, are subject to the Trust Instrument of the Trust dated October 25, 1993,
as from time to time amended, supplemented or restated (the "Trust Instrument").
Capitalized terms used herein have the same meanings as in the Trust Instrument.
ARTICLE I
PRINCIPAL OFFICE AND SEAL
Section 1. Principal Office. The principal office of the Trust shall be located
in Boston, Massachusetts, or such other location as the Trustees determine. The
Trust may establish and maintain other offices and places of business as the
Trustees determine.
Section 2. Seal. The Trustees may adopt a seal for the Trust in such form and
with such inscription as the Trustees determine. Any Trustee or officer of the
Trust shall have authority to affix the seal to any document.
ARTICLE II
MEETINGS OF TRUST
Section 1. Action by Trustees. Trustees may take actions at meetings held at
such places and times as the Trustees may determine, or without meetings, all as
provided in Article II, Section 7, of the Trust Instrument.
Section 2. Compensation of Trustees. Each Trustee who is neither an employee of
an investment adviser of the Trust or any Series nor an employee of an entity
affiliated with the investment adviser may receive such compensation from the
Trust for services and reimbursement for expenses as the Trustees may determine.
ARTICLE III
COMMITTEES AND ADVISORY BOARD
Section 1. Executive and Other Committees. The Trustees by vote of a majority of
all the Trustees may elect from their own number an Executive Committee to
consist of not less than three Trustees to hold office at the pleasure of the
Trustees. While the Trustees are not in session, the Executive Committee shall
have the power to conduct the current and ordinary business of the Trust,
including the purchase and sale of securities and the designation of securities
to be delivered upon redemption of Shares of the Trust, and such other powers of
<PAGE>
the Trustees as the Trustees may, from time to time, delegate to the Executive
Committee except those powers which by law, the Instrument or these By-Laws the
Trustees are prohibited from so delegating. The Trustees may also elect from
their own number other Committees from time to time, the number composing such
Committees, the powers conferred upon the same (subject to the same limitations
as with respect to the Executive Committee) and the term of membership on such
Committees to be determined by the Trustees. The Trustees may designate a
chairman of any such Committee. In the absence of such designation a Committee
may elect its own chairman. The Trustees may abolish any Committee at any time.
The Trustees shall have power to rescind any action of any Committee, but no
such rescission shall have retroactive effect.
Section 2. Meeting, Quorum and Manner of Acting. The Trustees may (i) provide
for stated meetings of any Committee, (ii) specify the manner of calling and
notice required for special meetings of any Committee, (iii) specify the number
of members of a Committee required to constitute a quorum and the number of
members of a Committee required to exercise specified powers delegated to such
Committee, (iv) authorize the making of decisions to exercise specified powers
by written assent of the requisite number of members of a Committee without a
meeting, and (v) authorize the members of a Committee to meet by means of a
telephone conference circuit. Unless the Trustees so provide, all the Committees
shall be governed by the same rules as is the full Board.
Each Committee may, but is not required to, keep regular minutes of its
meetings and records of decisions taken without a meeting and cause them to be
recorded in a book designated for that purpose and kept in the office of the
Trust.
Section 3. Advisory Board. The Trustees may appoint an Advisory Board to consist
in the first instance of not less than three members. Members of such Advisory
Board shall not be Trustees or officers and need not be Shareholders. A member
of such Advisory Board shall hold office for such period as the Trustees may by
vote provide and may resign therefrom by a written instrument signed by him
which shall take effect upon its delivery to the Trustees. The Advisory Board
shall have no legal powers and shall not perform the functions of Trustees in
any manner, such Advisory Board being intended merely to act in an advisory
capacity. Such Advisory Board shall meet at such times and upon such notice as
the Trustees may by vote provide.
Section 4. Chairman. The Trustees may, by a majority vote of all the Trustees,
elect from their own number a Chairman, to hold office until his successor shall
have been duly elected and qualified. The Chairman shall not hold any other
office. The Chairman may be, but need not be, a Shareholder. The Chairman shall
preside at all meetings of the Trustees and shall have such other duties as from
time to time may be assigned to him by the Trustees.
ARTICLE IV
OFFICERS
Section 1. General Provisions. The officers of the Trust shall be a President,
a Treasurer and a Secretary, each of whom shall be elected by the Trustees. The
<PAGE>
Trustees may elect or appoint such other officers or agents as the business of
the Trust may require, including one or more Vice Presidents, one or more
Assistant Treasurers, and one or more Assistant Secretaries. The Trustees may
delegate to any officer or committee the power to appoint any subordinate
officers or agents.
Section 2. Term of Office and Qualifications. Except as otherwise provided by
law, the Instrument or these By-Laws, the President, the Treasurer and the
Secretary shall hold office until his respective successor shall have been duly
elected and qualified, and all other officers shall hold office at the pleasure
of the Trustees. The Secretary and Treasurer may be the same person. A Vice
President and the Treasurer or a Vice President and the Secretary may be the
same person, but the offices of Vice President, Secretary and Treasurer shall
not be held by the same person. Except as above provided, any two offices may be
held by the same person. Any officer may be, but does not need be, a Trustee or
Shareholder.
Section 3. Removal. The Trustees, at any regular or special meeting of the
Trustees, may remove any officer with or without cause by a vote of a majority
of the Trustees. Any officer or agent appointed by any officer or committee may
be removed with or without cause by such appointing officer or committee.
Section 4. Powers and Duties of the President. The President, unless the
Chairman, if any, is so appointed by the Trustees, shall be the principal
executive officer of the Trust. Subject to the control of the Trustees and any
committee of the Trustees, the President shall at all times exercise a general
supervision and direction over the affairs of the Trust. The President shall
have the power to employ attorneys and counsel for the Trust and to employ such
subordinate officers, agents, clerks and employees as he may find necessary to
transact the business of the Trust. The President shall also have the power to
grant, issue, execute or sign such powers of attorney, proxies or other
documents as may be deemed advisable or necessary in the furtherance of the
interests of the Trust. The President shall have such other powers and duties
as, from time to time, may be conferred upon or assigned to him by the Trustees.
Section 5. Powers and Duties of Vice Presidents. In the absence or disability of
the President, the Vice President or, if there are more than one Vice President,
any Vice President designated by the Trustees shall perform all the duties and
may exercise any of the powers of the President, subject to the control of the
Trustees. Each Vice President shall perform such other duties as may be assigned
to him from time to time by the Trustees or the President.
Section 6. Powers and Duties of the Treasurer. The Treasurer shall be the
principal financial and accounting officer of the Trust. The Treasurer shall
deliver all funds of the Trust which may come into his hands to such custodian
as the Trustees may employ pursuant to Article X hereof. The Treasurer shall
render a statement of condition of the finances of the Trust to the Trustees as
often as they shall require the same and shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required to do so by the Trustees, in such
sum and with such surety or sureties as the Trustees shall require. The
<PAGE>
Treasurer shall be responsible for the general supervision of the Trust's funds
and property and for the general supervision of the Trust's custodian.
Section 7. Powers and Duties of the Secretary. The Secretary shall keep the
minutes of all meetings of the Shareholders in proper books provided for that
purpose; shall keep the minutes of all meetings of the Trustees; shall have
custody of the seal of the Trust; and shall have charge of the Share transfer
books, lists and records unless the same are in the charge of the Transfer
Agent. The Secretary shall attend to the giving and serving of all notices by
the Trust in accordance with the provisions of these By-Laws and as required by
law; and subject to these By-Laws, shall in general perform all the duties
incident to the office of Secretary and such other duties as from time to time
may be assigned to him by the Trustees.
Section 8. Powers and Duties of Assistant Treasurers. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him by the Trustees. Each Assistant Treasurer shall
give a bond for the faithful discharge of his duties, if required to do so by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
Section 9. Powers and Duties of Assistant Secretaries. In the absence or
disability of the Secretary, any Assistant Secretary designated by the Trustees
shall perform all of the duties, and may exercise any of the powers, of the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be assigned to him by the Trustees.
Section 10. Compensation of Officers and Trustees and Members of the Advisory
Board. Subject to any applicable law or provision of the Instrument, the
compensation of the officers and Trustees and members of the Advisory Board
shall be fixed from time to time by the Trustees or, in the case of officers, by
any committee of officers upon whom such power may be conferred by the Trustees.
No officer shall be prevented from receiving such compensation as such officer
by reason of the fact that he is also a Trustee.
Section 11. Execution of Papers. Except as the Trustees may generally or in
particular cases authorize, all deeds, leases, transfers, contracts, bonds,
notes, checks, drafts and other obligations made, accepted or endorsed by the
Trust shall be executed by the President, any Vice President, or the Treasurer,
or by whomever else shall be designated for that purpose by the Trustees, and
need not bear the seal of the Trust.
ARTICLE V
MEETINGS OF SHAREHOLDERS
Section 1. No Annual Meetings. There shall be no annual Shareholders' meetings,
unless required by law.
<PAGE>
Section 2. Special Meetings. The Secretary shall call a special meeting of
Shareholders of any Series or Class whenever ordered by the Trustees.
The Secretary also shall call a special meeting of Shareholders of any
Series or Class upon the written request of Shareholders owning at least ten
percent of the Outstanding Shares of such Series or Class entitled to vote at
such meeting; provided, that (1) such request shall state the purposes of such
meeting and the matters proposed to be acted on, and (2) the Shareholders
requesting such meeting shall have paid to the Trust the reasonably estimated
cost of preparing and mailing the notice thereof, which the Secretary shall
determine and specify to such Shareholders. If the Secretary fails for more than
thirty days to call a special meeting when required to do so, the Trustees or
the Shareholders requesting such a meeting may, in the name of the Secretary,
call the meeting by giving the required notice. The Secretary shall not call a
special meeting upon the request of Shareholders of any Series or Class to
consider any matter that is substantially the same as a matter voted upon at any
special meeting of Shareholders of such Series or Class held during the
preceding twelve months, unless requested by the holders of a majority of the
outstanding Shares of such Series or Class entitled to be voted at such meeting.
A special meeting of Shareholders of any series or Class shall be held
at such time and place as is determined by the Trustees and stated in the notice
of that meeting.
Section 3. Notice of Meetings; Waiver. The Secretary shall call a special
meeting of Shareholders by giving written notice of the place, date, time, and
purposes of that meeting at least fifteen days before the date of such meeting.
The Secretary may deliver or mail, postage prepaid, the written notice of any
meeting to each Shareholder entitled to vote at such meeting. If mailed, notice
shall be deemed to be given when deposited in the United States mail directed to
the Shareholder at his or her address as it appears on the records of the Trust.
Section 4. Adjourned Meetings. A Shareholders, meeting may be adjourned one or
more times for any reason, including the failure of a quorum to attend the
meeting. No notice of adjournment of a meeting to another time or place need be
given to Shareholders if such time and place are announced at the meeting at
which the adjournment is taken or reasonable notice is given to persons present
at the meeting, and if the adjourned meeting is held within a reasonable time
after the date set for the original meeting. Any business that might have been
transacted at the original meeting may be transacted at any adjourned meeting.
If after the adjournment a new record date is fixed for the adjourned meeting,
the Secretary shall give notice of the adjourned meeting to Shareholders of
record entitled to vote at such meeting. Any irregularities in the notice of any
meeting or the nonreceipt of any such notice by any of the Shareholders shall
not invalidate any action otherwise properly taken at any such meeting.
Section 5. Validity of Proxies. Subject to the provisions of the Trust
Instrument, Shareholders entitled to vote may vote either in person or by proxy;
provided, that either (1) the Shareholder or his or her duly authorized attorney
has signed and dated a written instrument authorizing such proxy to act, or (2)
the Trustees adopt by resolution an electronic, telephonic, computerized or
other alternative to execution of a written instrument authorizing the proxy to
act,
<PAGE>
but if a proposal by anyone other than the officers or Trustees is submitted to
a vote of the Shareholders of any Series or Class, or if there is a proxy
contest or proxy solicitation or proposal in opposition to any proposal by the
officers or Trustees, Shares may be voted only in person or by written proxy.
Unless the proxy provides otherwise, it shall not be valid for more than eleven
months before the date of the meeting. All proxies shall be delivered to the
Secretary or other person responsible for recording the proceedings before being
voted. A proxy with respect to Shares held in the name of two or more persons
shall be valid if executed by one of them unless at or prior to exercise of such
proxy the Trust receives a specific written notice to the contrary from any one
of them. Unless otherwise specifically limited by their terms, proxies shall
entitle the Shareholder to vote at any adjournment of a Shareholders' meeting. A
proxy purporting to be executed by or on behalf of a Shareholder shall be deemed
valid unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. At every meeting of Shareholders,
unless the voting is conducted by inspectors, the chairman of the meeting shall
decide all questions concerning the qualifications of voters, the validity of
proxies, and the acceptance or rejection of votes. Subject to the provisions of
the Delaware Business Trust Act, the Trust Instrument, or these By-laws, the
General Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder shall govern all matters concerning the
giving, voting or validity of proxies, as if the Trust were a Delaware
corporation and the Shareholders were shareholders of a Delaware corporation.
Section 6. Record Date. The Trustees may fix in advance a date up to ninety days
before the date of any Shareholders' meeting as a record date for the
determination of the Shareholders entitled to notice of, and to vote at, any
such meeting. The Shareholders of record entitled to vote at a Shareholders'
meeting shall be deemed the Shareholders of record at any meeting reconvened
after one or more adjournments, unless the Trustees have fixed a new record
date. If the Shareholders' meeting is adjourned for more than sixty days after
the original date, the Trustees shall establish a new record date.
Section 7. Action Without a Meeting. Shareholders may take any action without a
meeting if a majority (or such greater amount as may be required by law) of the
Outstanding Shares entitled to vote on the matter consent to the action in
writing and such written consents are filed with the records of Shareholders'
meetings. Such written consent shall be treated for all purposes as a vote at a
meeting of the Shareholders.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
Section 1. No Share Certificates. Neither the Trust nor any Series or Class
shall issue certificates certifying the ownership of Shares, unless the Trustees
may otherwise specifically authorize such certificates.
Section 2. Transfer of Shares. Shares shall be transferable only by a transfer
recorded on the books of the Trust by the Shareholder of record in person or by
his or her duly authorized attorney or legal representative. Shares may be
<PAGE>
freely transferred and the Trustees may, from time to time, adopt rules and
regulations regarding the method of transfer of such Shares.
ARTICLE VII
FISCAL YEAR AND ACCOUNTANT
Section 1. Fiscal Year. The fiscal year of the Trust shall be determined by the
Trustees, provided, however, that the Trustees may from time to time change the
fiscal year.
Section 2. Accountant. The Trust shall employ independent certified public
accountants as its Accountant to examine the accounts of the Trust and to sign
and certify financial statements filed by the Trust. The Accountant's
certificates and reports shall be addressed both to the Trustees and to the
Shareholders. A majority of the Disinterested Trustees shall select the
Accountant at any meeting held within ninety days before or after the beginning
of the fiscal year of the Trust, acting upon the recommendation of the Audit
Committee. The Trust shall submit the selection for ratification or rejection at
the next succeeding Shareholders' meeting, if such a meeting is to be held
within the Trust's fiscal year. If the selection is rejected at that meeting,
the Accountant shall be selected by majority vote of the Trust's outstanding
voting securities, either at the meeting at which the rejection occurred or at a
subsequent meeting of shareholders called for the purpose of selecting an
Accountant. The employment of the Accountant shall be conditioned upon the right
of the Trust to terminate such employment without any penalty by vote of a
Majority Shareholder Vote at any Shareholders' meeting called for that purpose.
ARTICLE VIII
AMENDMENTS
These By-Laws, or any of them, may be altered, amended or repealed, or
new By-Laws may be adopted (a) by the Shareholders by a Majority Shareholder
Vote, or (b) by the Trustees, provided, however, that no By-Law may be amended,
adopted or repealed by the Trustees if such amendment, adoption or repeal
requires, pursuant to law, the Instrument or these By-Laws, a vote of the
Shareholders.
ARTICLE IX
NET ASSET VALUE
The term "Net Asset Value" of any Series shall mean that amount by
which the assets belonging to that Series exceed its liabilities, all as
determined by or under the direction of the Trustees. Net Asset Value per Share
shall be determined separately for each Series and shall be determined on such
days and at such times as the Trustees may determine. The Trustees shall make
such determination with respect to securities for which market quotations are
readily available, at the market value of such securities, and with respect to
other securities and assets, at the fair value as determined in good faith by
the Trustees; provided, however, that the Trustees, without Shareholder
approval, may alter the method of appraising portfolio securities insofar as
permitted under
<PAGE>
the 1940 Act and the rules, regulations and interpretations thereof promulgated
or issued by the SEC or insofar as permitted by any order of the SEC applicable
to the Series. The Trustees may delegate any of their powers and duties under
this Article X with respect to appraisal of assets and liabilities. At any time
the Trustees may cause the Net Asset Value per Share last determined to be
determined again in a similar manner and may fix the time when such redetermined
values shall become effective.
UST045
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of October 26, 1993 by and between EXCELSIOR FUNDS, a
Delaware business trust (herein called the "Trust"), and UNITED STATES TRUST
COMPANY OF NEW YORK, a New York trust company (herein called the "Adviser").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain the Adviser to render investment
advisory services with respect to the series (the "Series") of the Trust as
listed on Exhibit A hereto, and the Adviser is willing to so render such
services on the terms hereinafter set forth;
NOW, THEREFORE, this Agreement
W I T N E S E T H:
In consideration of the promises and mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. The Trust hereby appoints the Adviser to act as investment adviser
to the Trust with respect to the Series for the period and on the terms set
forth in this Agreement. The Adviser accepts such appointment and agrees to
render the services herein set forth for the compensation herein provided. In
providing the services and assuming the obligations set forth herein, the
Adviser may, at its expense, employ one or more subadvisers. References herein
to the Adviser shall include any subadviser employed by the Adviser. Any
agreement between the Adviser and a subadviser shall be subject to the renewal,
termination and amendment provisions of paragraph 6 hereof.
2. (a) The Adviser shall, at its expense, (i) employ or associate with
itself such persons as it believes appropriate to assist it in performing its
obligations under this Agreement and (ii) provide all services, equipment and
facilities necessary to perform its obligations under this Agreement.
(b) The Trust shall be responsible for 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 each Series), transfer agent, registrar and dividend
disbursing agent of the Trust; expenses of preparing and mailing reports to
investors and to regulatory agencies; the cost of office supplies, including
stationery; travel expenses of all officers, Trustees and employees; insurance
premiums; brokerage and other
1
<PAGE>
expenses of executing portfolio transactions; expenses of investors' and
Trustees' meetings; organization expenses; and extraordinary expenses.
3. (a) Subject to the general supervision of the Board of Trustees of
the Trust, the Adviser shall formulate and provide an appropriate investment
program on a continuous basis in connection with the management of each Series,
including research, analysis, advice, statistical and economic data and
information and judgments of both a macroeconomic and microeconomic character.
The Adviser shall provide additional investment services, as specified and
agreed to by the parties from time to time in writing, with respect to any
Series all of whose assets are invested in a corresponding HubSM investment
company. However, the Adviser shall not be responsible for providing any of the
services set forth in this Agreement to any Series unless the Board of Trustees
of the Trust (i) determines that it will not invest all of the assets of that
Series into a corresponding HubSM investment company and (ii) provides a written
request to the Adviser specifying which services the Adviser shall perform for
such Series.
The Adviser will determine the securities to be purchased, sold or lent
by the Trust and will place orders pursuant to its determinations either
directly with the issuer or with any broker or dealer who deals in such
securities. In placing orders with brokers and dealers, the 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
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 the Trust and/or other accounts over which the
Adviser or any of its affiliates exercises investment discretion. Subject to the
review of the Trust's Board of Trustees from time to time with respect to the
extent and continuation of the policy on purchase and sale of portfolio
securities set forth in this paragraph, the 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 the Trust which is in excess of the
amount of commission another broker or dealer 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 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 Adviser with respect to the
accounts as to which it exercises investment discretion.
In placing orders with brokers and/or dealers, the Adviser may effect
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 broker-dealers having comparable execution
capability in connection with comparable transactions involving similar
securities and provided that the transactions in connection with which such
commissions are paid are effected pursuant to procedures established by the
Board of the Trustees of the Trust. Pursuant to such authorizations, an
affiliated broker-dealer may transmit, clear and settle transactions for the
Trust that are
2
<PAGE>
executed on a securities exchange provided that it arranges for unaffiliated
brokers to execute such transactions.
The Adviser shall determine from time to time the manner in which
voting rights, rights to consent to corporate action and any other rights
pertaining to the Trust's portfolio securities shall be exercised. The Adviser
will determine what portion of securities owned by the Trust shall be invested
in securities described by the policies of the Trust and what portion, if any,
should be held uninvested. The Adviser will determine whether and to what extent
to employ various investment techniques available to the Trust, including among
others but without limitation, implementation of a global investment strategy,
engaging in hedging transactions, selection of derivative securities and
entering into foreign currency transactions.
Notwithstanding the foregoing, should the Board of Trustees at any time
make any definite determination as to investment policy and notify the Adviser
thereof in writing, the Adviser shall be bound by such determination for the
period, if any, specified in such notice or until similarly notified that such
determination has been revoked. In effecting transactions with respect to
securities or other property for the account of a Series of the Trust, the
Adviser may deal with itself and its affiliates, with the Trustees of the Trust
or with other persons to the extent such actions are permitted by the 1940 Act.
(b) The Adviser also shall provide to the Trust's officers assistance
in connection with the operation of the Trust, which shall include compliance
with all reasonable requests of the Trust for information, including information
required in connection with the Trust's filings with the Securities and Exchange
Commission and state securities commissions.
(c) As manager of the assets of the Series, the Adviser shall make
investments for the account of the Series in accordance with the Adviser's best
judgment and within the respective Series' investment objectives and
restrictions, the 1940 Act and the provisions of the Internal Revenue Code of
1986 relating to regulated investment companies subject to policy decisions
adopted by the Board of Trustees.
(d) The Adviser shall furnish to the Board of Trustees periodic reports
on the investment performance of the Trust and on the performance of its
obligations under this Agreement and shall supply such additional reports and
information as the Trust's officers or Board of Trustees shall reasonably
request.
(e) On occasions 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, if any. The Adviser may also on occasions purchase or
sell a particular security for one or more customers in different amounts. On
either occasion, and to the extent permitted by applicable law and regulations,
allocation of the securities so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Trust and to such other customers.
3
<PAGE>
4. The Adviser shall give the Trust the benefit of the Adviser's best
judgment and efforts in rendering services under this Agreement. As an
inducement to the Adviser's undertaking to render these services, the Trust
agrees that the Adviser shall not be liable under this Agreement for any mistake
in judgment or in any other event whatsoever provided that nothing in this
Agreement shall be deemed to protect or purport to protect the Adviser against
any liability to the Trust or its investors to which the Adviser would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of the Adviser's duties under this Agreement or by reason of the
Adviser's reckless disregard of its obligations and duties hereunder.
5. 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 each Series at an annual rate equal to that specified in Exhibit A
hereunder for that Series' average daily net assets. If the fees payable to the
Adviser pursuant to this paragraph 5 begin to accrue before the end of any month
or if this Agreement terminates before the end of any month, the fees for the
period from that date to the end of that month or from the beginning of that
month to the date of termination, as the case may be, shall be paid for the
portion of the month accrued as set forth in the preceding sentence. For
purposes of calculating the monthly fees, the value of the net assets of each
Series of the Trust shall be computed in the manner specified in its
Registration Statement on Form N-1A for the computation of net asset value. For
purposes of this Agreement, a "business day" is any day the New York Stock
Exchange is open for trading.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Adviser hereby agrees that all records which it maintains for the Trust are
property of the Trust and further agrees to surrender promptly to the Trust any
such records upon the Trust's request. The Adviser further agrees to preserve
for the periods prescribed by Rule 31a-2 under the 1940 Act any such records
required to be maintained by Rule 31a-1 under the 1940 Act.
6. This Agreement shall be effective as to each Series as of the date
such Series commences investment operations, after this Agreement shall have
been approved by the Board of Trustees of the Trust and by the investor(s) in
such Series in the manner contemplated by Section 15 of the 1940 Act and, unless
sooner terminated as provided herein, shall continue until the second
anniversary of the date hereof. Thereafter, if not terminated, this Agreement
shall continue in effect as to each Series of the Trust 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 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
approval; and either (a) by the vote of a majority of the full Board of Trustees
or (b) by vote of a majority of the outstanding voting securities of such
Series; provided, however, that this Agreement may be terminated as to one or
more Series, by the Trust at any time, without the payment of any penalty, by
action of the Board of Trustees or by vote of a majority of the outstanding
voting securities of such Series on 60 days' written notice to the Adviser, or
by the Adviser, as to one or more Series, at any time, without payment of any
penalty, on not more than 90 days' written notice to the Trust. This Agreement
will terminate immediately in the event of its assignment. Termination of this
Agreement with respect to any
4
<PAGE>
particular Series shall not be deemed a termination with respect to any other
Series. (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 and the rules and regulatory
constructions thereunder.)
7. Except to the extent necessary to perform the Adviser's obligations
under this Agreement, nothing herein shall be deemed to limit or restrict the
right of the Adviser, or any affiliate of the Adviser, or any employee of the
Adviser, to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other trust,
corporation, firm, individual or association.
8. The investment management services of the Adviser to the Trust under
this Agreement are not to be deemed exclusive as to the Adviser and the Adviser
will be free to render similar services to others.
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
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 material amendment of this Agreement shall be effective as to any
Series of the Trust until approved by vote of the holders of a majority of the
outstanding voting securities of such Series.
This agreement embodies the entire agreement and understanding between
the parties hereto and supersedes all prior agreements and understandings
relating to the subject matter hereof. 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.
Should any part of this Agreement 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 and shall inure to the benefit
of the parties hereto and their respective successors, to the extent permitted
by law.
9. This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts provided that nothing herein shall be construed in
a manner inconsistent with the requirements of the 1940 Act.
The undersigned officer of the Trust has executed this Agreement not
individually, but as President under the Trust's Trust Instrument, dated October
25, 1993, as amended. Pursuant to the Declaration of Trust the obligations of
this Agreement are not binding upon any of the Trustees or investors of the
Trust individually, but bind only the trust estate.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
EXCELSIOR FUNDS
Attest:
/S/ ANDRES E. SALDANA By: /S/ PHILIP W. COOLIDGE
Andres E. Saldana Philip W. Coolidge
Assistant Secretary President
UNITED STATES TRUST COMPANY OF NEW YORK
Attest:
/S/ D. J. MARENO By: /S/ PETER P. CAPACCIO
Name: Peter P. Capaccio
Title:
6
<PAGE>
Exhibit A
EXCELSIOR FUNDS
SCHEDULE OF SERIES AND FEES UNDER INVESTMENT
ADVISORY AGREEMENT
SERIES NAMES Fee (as a percentage of the
average daily net assets of a
FUND)
Excelsior Equity Fund 0.65%
Excelsior Income and Growth Fund 0.65%
Excelsior Income Fund 0.65%
Excelsior Total Return Bond Fund 0.65%
Excelsior Institutional Money Fund 0%
Excelsior Institutional Treasury Money Fund 0%
7
UST005B
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT, dated as of October 26, 1993, by and between
Excelsior Funds, a Delaware business trust (the "Trust"), and Signature Broker-
Dealer Services, Inc., a Delaware corporation ("SBDS" or the "Distributor").
W I T N E S E T H:
WHEREAS, the Trust has been organized to operate as an open-end
investment company registered under the Investment Company Act of 1940, as
amended (collectively with the rules and regulations promulgated thereunder, the
"1940 Act") and under the Securities Act of 1933, as amended (the "1933 Act");
WHEREAS, the Shares of Beneficial Interest (par value $0.00001 per
share) of the Trust (the "Shares") are divided into separate series, two of
which, Excelsior Institutional Money Fund and Excelsior Institutional Treasury
Money
Fund (the "Series"), are subject to this Agreement;
WHEREAS, the Trust wishes to engage SBDS to provide certain services
with respect to the distribution of Shares of each Series, and SBDS is willing
to provide such services to the Trust on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. The Trust grants to the Distributor the right, as agent of the
Trust, to solicit and accept orders for the purchase of Shares of each Series
upon the terms hereinbelow set forth during the term of this Agreement. While
this Agreement is in force, the Distributor agrees to use its best efforts to
find purchasers for Shares of each Series.
The Distributor shall have the right, as agent of the Trust, to order
from the Trust the Shares needed, but not more than the Shares needed (except
for clerical errors and errors of transmission), to fill unconditional orders
for Shares of each Series placed with the Distributor, all such orders to be
made in the manner set forth in such Series' then-current prospectus (the
"Prospectus") and then-current statement of additional information (the
"Statement of Additional Information") relating to such Series. The price which
shall be paid to the Trust for the Shares of each Series so purchased shall be
the net asset value per Share as determined in accordance with the provisions of
the Trust's Declaration of Trust and By-Laws and the respective Series'
then-current Prospectus and Statement of Additional Information, as may from
time to time be amended (collectively, the "Governing Instruments"). The
Distributor shall notify the custodian of the Trust with respect to each Series
as of the time, as disclosed in the respective Series' then-current Prospectus,
that the net asset
<PAGE>
value of such Series is determined, or such other time as is agreed to in
writing by the Distributor and the Trust) (a "Valuation Time"), on each business
day, or as soon thereafter as the orders placed with the Distributor have been
compiled, of the number of Shares of each Series and the prices thereof which
have been ordered through the Distributor since the respective Valuation Time.
The right granted to the Distributor to place orders for Shares with
the Trust shall be exclusive, except that this exclusive right shall not apply
to Shares issued in the event that an investment company (whether a regulated or
private investment company or a personal holding company) is merged with and
into or consolidated with the Trust or in the event that the Trust acquires, by
purchase or otherwise, all (or substantially all) the assets or the outstanding
shares of any such company; nor shall it apply to Shares issued by the Trust as
a dividend or stock split. The exclusive right to place orders for Shares
granted to the Distributor may be waived by the Distributor by notice to the
Trust in writing, either unconditionally or subject to such conditions and
limitations as may be set forth in such notice to the Trust. The Trust hereby
acknowledges that the Distributor may render distribution and other services to
other parties, including other investment companies. In connection with its
duties hereunder, the Distributor shall also arrange for computation of
performance statistics with respect to each Series and arrange for publication
of current price information in newspapers and other publications.
2. The Shares may be sold by the Distributor on behalf of the Trust, to
any investor or to or through any dealer having a sales agreement with the
Distributor, upon the following terms and conditions:
The public offering price of Shares of each Series, I.E., the price per
Share at which the Distributor or any dealer purchasing Shares through the
Distributor may sell shares to the public, shall be as disclosed in the
respective Series then-current Prospectus.
The Trust shall have the right to suspend the sale of Shares of any
Series if, because of some extraordinary condition, the New York Stock Exchange
(the "Exchange") shall be closed, or if conditions existing during the hours
when the Exchange is open render such action advisable or for any other reason
deemed adequate by the Trust.
3. The Trust agrees that it will, from time to time, but subject to the
necessary approval, if any, of its shareholders and Trustees, take all necessary
action to register such number of Shares of each Series under the 1933 Act as
the Distributor may reasonably be expected to sell.
The Distributor shall be an independent contractor and neither the
Distributor nor any of its directors, officers or employees as such, is or shall
be, solely by reason of this Agreement, an employee of the Trust. It is
understood that Trustees, officers and shareholders of the Trust are or may
become interested in the Distributor, as directors, officers, employees, or
otherwise and that directors, officers and employees of the Distributor are or
may become similarly interested in the Trust and that the Distributor may be or
become interested in the Trust as a shareholder or otherwise. The Distributor is
responsible for its own conduct and the employment, control and conduct (but
<PAGE>
only with respect to the duties and obligations of the Distributor hereunder) of
its agents and employees and for any injury to any person through its agents or
employees. The Distributor assumes full responsibility for its agents and
employees under applicable statutes and agrees to pay all employer taxes
thereunder.
4. The Distributor covenants and agrees that, in selling Shares, it
will in all respects conform with the requirements of all state and federal laws
and the Rules of Fair Practice of the National Association of Securities
Dealers, Inc. relating to the sale of Shares, and will indemnify and hold
harmless the Trust and each of its Trustees and officers and each person, if
any, who controls the Trust within the meaning of Section 15 of the 1933 Act or
Section 20 of the Securities Exchange Act of 1934 (the "Indemnified Parties")
against all losses, liabilities, damages, claims or expenses (including the
reasonable cost of investigating or defending any alleged loss, liability,
damages, claim or expense and advances for reasonable counsel fees incurred in
connection therewith) arising from any claim, demand, action or suit
(collectively, "Claims"), (i) arising by reason of any person's acquiring any of
the Shares through the Distributor, which may be based upon the 1933 Act or any
other statute or common law, on account of any wrongful act of the Distributor
or any of its employees (including any failure to conform with any requirement
of any state or federal law or the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. relating to the sale of Shares) or on
the ground that the registration statement of the Trust under the 1933 Act,
including all amendments thereto (the "Registration Statement"), or Prospectus
or previous prospectus or Statement of Additional Information or previous
statement of additional information, with respect to such Shares, includes or
included an untrue statement of a material fact or omits or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading, if and only if any such act, statement or
omission was made in reliance upon information furnished by the Distributor to
the Trust; or (ii) which may be incurred or arise by reason of the Distributor
acting as agent of the Trust or any Series; PROVIDED, HOWEVER, that in no case
(a) is the indemnity of the Distributor in favor of any Indemnified Party to be
deemed to protect any such Indemnified Party against liability to which such
Indemnified Party would otherwise be subject by reason of his or its willful
misfeasance, bad faith or gross negligence in the performance of its or his
duties or by reason of its or his reckless disregard of its or his obligations
and duties under this Agreement or (b) is the Distributor to be liable under its
indemnity agreement contained in this Section 4 with respect to any Claim made
against any Indemnified Party unless such Indemnified Party shall have notified
the Distributor in writing within 10 calendar days after the summons or other
first legal process giving information of the nature of the Claim shall have
been served upon such Indemnified Party (or after such Indemnified Party shall
have received notice of such service on any designated agent), but failure to
notify the Distributor of any such Claim shall not relieve it from any liability
which it may have to any Indemnified Party otherwise than on account of its
indemnity agreement contained in this Section 4. The Distributor shall be
entitled to participate, at its own expense, in the defense, or, if it so
elects, to assume the defense, of any suit brought to enforce any such Claim,
and, if the Distributor elects to assume the defense, such defense shall be
conducted by counsel chosen by it and satisfactory to each Indemnified Party. In
the event
<PAGE>
that the Distributor elects to assume the defense of any such suit and retain
such counsel, each Indemnified Party shall bear the fees and expenses of any
additional counsel retained by it but, in case the Distributor does not elect to
assume the defense of any such suit, it shall reimburse the Indemnified Parties
for the reasonable fees and expenses of any counsel retained by them. Except
with the prior written consent of the Distributor, no Indemnified Party shall
confess any Claim or make any compromise in any case in which the Distributor
will be asked to indemnify such Indemnified Party. The Distributor agrees
promptly to notify the Trust of the commencement of any litigation or proceeding
against it in connection with the issuance and sale of any of the Shares. The
indemnity provisions of this Agreement shall survive the termination of this
Agreement with respect to events occurring prior to such termination.
Neither the Distributor nor any dealer nor any other person is
authorized to give any information or to make any representation on behalf of
the Trust in connection with the sale of Shares of any Series, other than those
contained in the Registration Statement or Prospectus or Statement of Additional
Information relating to such Series.
In connection with sales and offers of sales of Shares, the Distributor
shall give only such information and make only such statements or
representations as are contained in the Prospectus, Statement of Additional
Information or information furnished in writing to the Distributor by the Trust,
and the Trust shall not be responsible in any way for any other information,
statements or representations given or made by the Distributor or its
representatives or agents.
5. The Trust will pay, or cause to be paid--
(i) all costs and expenses of the Trust, including, but not limited to,
fees and disbursements of its counsel, in connection with the preparation and
filing of the Registration Statement, each Prospectus and Statement of
Additional Information, and preparing and mailing to shareholders Prospectuses,
Statements of Additional Information with respect to Shares of each Series, all
costs and expenses of the holding of meetings of the Trust's Board of Trustees
and materials related thereto, statements and confirmations and periodic reports
(including the expense of setting in type the Registration Statement, Prospectus
and Statement of Additional Information or any periodic report with respect to
Shares of each Series), all costs and fees associated with registering the Trust
or its Shares under federal or state securities laws;
(ii) the cost of preparing temporary or permanent certificates
for Shares;
(iii) the cost and expenses of delivering to the Distributor at
its office in Boston, Massachusetts all Shares purchased through it as
agent hereunder;
(iv) all fees and disbursements of the Trust's transfer agent
and custodian or depository with respect to each Series, subject to the
Trust's transfer agent and custody or depository agreements;
(v) a fee to the administrator of the Trust, if any, pursuant to
an administrative services agreement; and
<PAGE>
(vi) a fee to the investment adviser of the Trust, if any,
pursuant to an investment advisory agreement with such investment
adviser.
The Distributor shall receive no compensation for its services to the
Trust hereunder.
The Distributor agrees that with respect to the sale of Shares of each
Series, subject to the Trust's obligations under clause (iv) above, (a) after
the Prospectus and Statement of Additional Information and periodic reports with
respect to each Series have been set in type, it will bear the expense of
printing and distributing any copies thereof ordered by it which are to be used
in connection with the offering or sale of Shares of such Series to any dealer
or prospective investor and (b) it will bear the expenses of preparing, printing
and distributing any other literature used by the Distributor or furnished by it
for use by any dealer in connection with the offering of Shares of such Series
for sale to the public and any expense of sending confirmations and statements
to any dealer having a sales agreement with the Distributor.
6. If, at any time during the term of this Agreement, the Trust shall
deem it necessary or advisable in the best interests of the Trust that any
amendment of this Agreement be made in order to comply with any recommendation
or requirement of the Securities and Exchange Commission or other governmental
authority or to obtain any advantage under Massachusetts or federal tax laws, it
shall notify the Distributor of the form of amendment which it deems necessary
or advisable and the reasons therefor. If the Distributor declines to assent to
such amendment (after a reasonable time), the Trust may terminate this Agreement
forthwith by written notice to the Distributor without payment of any penalty.
If, at any time during the term of this Agreement, the Distributor requests the
Trust to make any change in its Governing Instruments or in its methods of doing
business which are necessary in order to comply with any requirement of federal
law or regulations of the Securities and Exchange Commission or of a national
securities association of which the Distributor is or may become a member,
relating to the sale of Shares, and the Trust fails (after a reasonable time) to
make any such change as requested, the Distributor may terminate this Agreement
forthwith by written notice to the Trust without payment of any penalty.
7. The Distributor agrees that it will not take any long or short
position in the Shares of any Series and that, so far as it can control the
situation, it will prevent any of its directors or officers from taking any long
or short position in the Shares of such Series, except as permitted by the
Governing Instruments.
8. This Agreement shall become effective upon its execution and shall
continue in force for a period of two years and indefinitely thereafter,
PROVIDED that such continuance is "specifically approved at least annually" by
the vote of a majority of the Trustees of the Trust who are not "interested
persons" of the Trust or of the Distributor at a meeting specifically called for
the purpose of voting on such approval, and by the Board of Trustees of the
Trust.
This Agreement may be terminated as to any Series at any time by (i)
the Trust, (a) by the vote of a majority of the Trustees of the Trust who are
not "interested persons" of the Trust or the Distributor, (b) by the vote of the
<PAGE>
Board of Trustees of the Trust, or (c) by the "vote of a majority of the
outstanding voting securities" of the Trust, or (ii) by the Distributor, in any
case without payment of any penalty on not more than 60 days' nor less than 30
days' written notice to the other party.
This Agreement shall automatically terminate in the event of its
assignment.
9. The terms "vote of a majority of the outstanding voting securities",
"interested person", "assignment" and "specifically approved at least annually"
shall have the respective meanings specified in, and shall be construed in a
manner consistent with, the 1940 Act, SUBJECT, HOWEVER, to such exemptions as
may be granted by the Securities and Exchange Commission thereunder.
10. 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.
11. Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof. This
Agreement shall be construed and enforced in accordance with and governed by the
laws of Massachusetts. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
Pursuant to the Trust's Declaration of Trust, dated as of October 25, 1993, as
amended from time to time, the obligations of this Agreement are not binding
upon any of the Trustees or shareholders of the Trust individually, but bind
only the Trust estate of the Series.
EXCELSIOR FUNDS, for the benefit of
Excelsior Institutional Money Fund
Excelsior Institutional Treasury Money Fund
By /S/ PHILIP W. COOLIDGE
Philip W. Coolidge
President
SIGNATURE BROKER-DEALER SERVICES, INC.
By /S/ PHILIP W. COOLIDGE
Philip W. Coolidge
President
UST005B
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of October 26, 1993 by and between Excelsior
Funds, a Delaware business trust ("the Trust"), and Signature Broker-Dealer
Services, Inc., a Delaware corporation (the "Administrator").
W I T N E S E T H:
WHEREAS, the Trust is registered as a open-end, management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Trust wishes to retain the Administrator to
provide certain fund accounting and administration services with respect to the
Trust's series-Excelsior Equity Fund, Excelsior Income and Growth Fund,
Excelsior Income Fund, Excelsior Total Return Bond Fund, Excelsior Socially
Responsible Equity Fund, Excelsior Institutional Money Fund, and Excelsior
Institutional Treasury Money Fund (collectively with additional series which may
be established in the future, the "Funds")-and the Administrator is willing to
furnish such services;
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints the Administrator to provide
fund accounting and administration services for the benefit of the Funds,
subject to the supervision of the Board of Trustees of the Trust (the "Board"),
for the period and on the terms set forth in this Agreement. The Administrator
accepts such appointment and agrees to furnish the services herein set forth in
return for the compensation provided in Paragraph 5 of this Agreement and
Schedule A referred to therein. The Trust currently consists of the Funds listed
in Schedule B, attached hereto. The Trust shall notify the Administrator in
writing of each additional Fund established by the Trust. Each new Fund shall be
subject to the provisions of this Agreement, except to the extent that said
provisions (including those relating to the compensation and expenses payable by
the Fund) may be modified with respect to such new Fund in writing by the Trust
and the Administrator at the time of the addition of such new Fund.
2. REPRESENTATIONS AND WARRANTIES.
(a) The Administrator represents and warrants to the Trust that:
(i) the Administrator is empowered under applicable laws
and by its Certificate of Incorporation and By-Laws to enter into
and perform this Agreement;
(ii) all requisite corporate proceedings have been taken
to authorize the Administrator to enter into and perform this
Agreement;
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(iii) the Administrator has, and will continue to have,
access to the facilities, personnel and equipment required to
fully perform its duties and obligations hereunder;
(iv) no legal or administrative proceedings have been
instituted or threatened which would impair the Administrator's
ability to perform its duties and obligations under this
Agreement; and
(v) the Administrator's entrance into this Agreement
shall not cause a material breach or be in material conflict with
any other agreement or obligation of the Administrator or any law
or regulation applicable to the Administrator;
(b) The Trust represents and warrants to the Administrator that:
(i) The Trust is a Delaware business trust, duly
organized and existing and in good standing under the laws of the
State of Delaware;
(ii) The Trust is empowered under applicable laws and by
its Trust Instrument and By-Laws to enter into and perform this
Agreement;
(iii) all requisite proceedings have been taken to
authorize the Trust to enter into and perform this Agreement;
(iv) the Trust is an investment company properly
registered under the 1940 Act;
(v) registration statements under the Securities Act of
1933, as amended (the "1933 Act"), and/or the 1940 Act on Form
N-1A have been filed and will be effective and will remain
effective during the term of this Agreement, and all necessary
filings under the laws of the applicable states will have been
made and will be current during the term of this Agreement;
(vii) no legal or administrative proceedings have been
instituted or threatened which would impair the Trust's ability to
perform its duties and obligations under this Agreement; and
(viii) the Trust's entrance into this Agreement shall
not cause a material breach or be in material conflict with any
other agreement or obligation of the Trust or any law or
regulation applicable to the Trust.
3. DELIVERY OF DOCUMENTS. The Trust will promptly furnish to the
Administrator such copies, properly certified or authenticated, of contracts,
documents and other related information that the Administrator may request or
requires to properly discharge its duties. Such documents may include but are
not limited to the following:
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(a) Resolutions of the Board authorizing the appointment of the
Administrator to provide certain fund accounting and administration
services to the Funds and approving this Agreement;
(b The Trust's Trust Instrument;
(c) The Trust's By-laws ("By-laws");
(d) The Trust's Notification of Registration on Form N-8A under
the 1940 Act as filed with the Securities and Exchange
Commission ("SEC");
(e) The Trust's registration statements including exhibits,
as amended, on Form N-1A (the "Registration Statement") under the 1933
Act and/or the 1940 Act, as applicable, as filed with the SEC;
(f) Copies of the Investment Advisory Agreement between the Trust
and its investment adviser (the "Advisory Agreement");
(g) Opinions of counsel and auditors reports;
(h) The Trust's Prospectus(es), Statement(s) of Additional
Information, and/or Offering Memorandum(a), as applicable,
relating to all Funds and all amendments and supplements thereto
(such Prospectus(es), Statement(s) of Additional Information,
Offering Memorandum(a) and supplements thereto, as presently in
effect and as from time to time hereafter amended and
supplemented, are hereinafter referred to as the "Prospectuses");
and
(i) Such other agreements as the Trust may enter into from time to
time, including securities lending agreements, futures and commodities
account agreements, brokerage agreements, and options agreements.
4. SERVICES PROVIDED BY THE ADMINISTRATOR.
(a) The Administrator will provide the following services subject to
the control, direction and supervision of the Board and in compliance
with the objectives, policies and limitations set forth in the Trust's
Registration Statement, Trust Instrument and By-Laws; applicable laws
and regulations; and all resolutions and policies implemented by the
Board:
(i) Trust administration; and
(ii) Fund accounting.
A detailed description of each of the above services is contained in
Schedules C and D, respectively, to this Agreement.
(b) The Administrator will also:
(i) provide office facilities with respect to the provision of
the services contemplated herein (which may be in the offices of the
Administrator or a corporate affiliate of the Administrator);
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<PAGE>
(ii) provide the services of individuals to serve as the Trust's
officers, to be designated by the Administrator and elected by the
Board;
(iii) provide or otherwise obtain personnel sufficient, in the
Administrator's sole discretion, for provision of the services
contemplated herein;
(iv) furnish equipment and other materials, which the
Administrator, in its sole discretion, believes are necessary or
desirable for provision of the services contemplated herein; and
(v) keep records relating to the services provided hereunder in
such form and manner as set forth in Schedule C and D and as the
Administrator may otherwise deem appropriate or advisable, all in
accordance with the 1940 Act. To the extent required by Section 31 of
the 1940 Act and the rules thereunder, the Administrator agrees that
all such records prepared or maintained by the Administrator relating
to the services provided hereunder are the property of the Trust and
will be preserved for the periods prescribed under Rule 31a-2 under
the 1940 Act, maintained at the Trust's expense, and made available in
accordance with such Section and rules. The Administrator further
agrees to surrender promptly to the Trust upon its request and cease
to retain in its records and files those records and documents created
and maintained by the Administrator pursuant to this Agreement.
5. FEES, EXPENSES, EXPENSE REIMBURSEMENT.
(a) As compensation for the services rendered to the Trust
pursuant to this Agreement, the Trust shall pay the Administrator
monthly fees determined as set forth in Schedule A to this Agreement.
Such fees are to be computed daily and paid monthly on the first
business day of the month following provision of the services. Upon any
termination of this Agreement before the end of any month, the fee for
the part of the month before such termination shall be payable upon the
date of termination of this Agreement.
(b) For the purpose of determining fees calculated as a
function of the Fund's assets, the value of each Fund's assets and net
assets shall be computed as required by its Prospectus or Offering
Memorandum, as the case may be, generally accepted accounting
principles and resolutions of the Board.
(c) The Administrator will from time to time employ or
associate with such person or persons as may be appropriate to assist
the Administrator in the performance of this Agreement. Such person or
persons may be officers and employees who are employed or designated as
officers by both the Administrator and the Trust. The compensation of
such person or persons for such employment shall be paid by the
Administrator and no obligation will be incurred by or on behalf of the
Trust in such respect.
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<PAGE>
(d) The Administrator will generally bear all of its own
expenses in connection with the performance of its services under this
Agreement. The Trust agrees to promptly reimburse the Administrator for
any equipment and supplies specially ordered by or for the Trust
through the Administrator and for any other expenses not contemplated
by this Agreement that the Administrator may incur on the Trust's
behalf at the Trust's request or as consented to by the Trust. Such
other expenses to be incurred in the operation of the Trust and to be
borne by the Trust, include, but are not limited to: taxes; interest
charges; brokerage fees and commissions; salaries and fees of officers
and Trustees who are not officers, directors, shareholders or employees
of the Administrator, or the Trust's investment adviser or distributor;
governmental fees, including, without limitation, SEC and state Blue
Sky registration and qualification fees, levies, fines and other
charges; advisory and administration fees; charges, fees and expenses
of any custodian, registrar, transfer agent and depository of the
Trust, including safekeeping of funds and securities and maintaining
required books and accounts; expenses connected with the execution,
recording and settlement of security transactions; expenses of
calculating the net asset value of shares of the Trust; insurance
premiums, including fidelity bond premiums; auditing and legal fees and
expenses; costs of maintenance of corporate existence; expenses of
typesetting and printing of prospectuses for regulatory purposes and
for distribution to current shareholders of the Funds (the Trust's
distributor to bear the expense of all other printing, production, and
distribution of prospectuses, statements of additional information, and
marketing materials); expenses of preparing, printing, mailing and
production costs of shareholders' reports, notices and proxy statements
and materials; costs and expenses of stationery and forms; costs and
expenses of special telephone and data lines and devices; costs and
expenses associated with shareholder and Board meetings; expenses
relating to the issuance, registration and qualification of shares of
the Trust; and any extraordinary expenses and other customary expenses.
In addition, the Administrator may utilize one or more independent
pricing services, approved from time to time by the Board, to obtain
securities prices and to act as backup to the primary pricing services,
in connection with determining the net asset values of the Funds, and
the Trust will reimburse the Administrator for the Trust's share of the
cost of such services based upon the actual usage, or a pro-rata
estimate of the use, of the services for the benefit of the Funds.
6. PROPRIETARY AND CONFIDENTIAL INFORMATION. The Administrator agrees
on behalf of itself and its employees to treat confidentially and as proprietary
information of the Trust, all records and other information relative to the
Trust's prior, present or potential shareholders, and to not use such records
and information for any purpose other than performance of the Administrator's
responsibilities and duties hereunder. The Administrator may seek a waiver of
such confidentiality provisions by furnishing reasonable prior notice to the
Trust and obtaining approval in writing from the Trust, which approval shall not
be unreasonably withheld and may not be withheld where the Administrator may be
exposed to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities. Waivers
of confidentiality are automatically effective without further action by the
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<PAGE>
Administrator with respect to Internal Revenue Service levies, subpoenas and
similar actions, or with respect to any request by the Trust.
7. DUTIES, RESPONSIBILITIES AND LIMITATION OF LIABILITY.
(a) In the performance of its duties hereunder, the
Administrator shall exercise the due care and diligence of a mutual
fund accounting agent, administrator and blue sky administrator, and
shall act in good faith in performing the services provided for under
this Agreement. In performing its services hereunder, the Administrator
shall be entitled to rely on any oral or written instructions, notices
or other communications from the Trust and its custodians, officers and
Trustees, investors, agents and other service providers which the
Administrator reasonably believes to be genuine, valid and authorized.
(b) Subject to the foregoing, the Administrator shall not be
liable for any error of judgement or mistake of law or for any loss or
expense suffered by the Trust, in connection with the matters to which
this Agreement relates, except for a loss or expense resulting from
willful misfeasance, bad faith or gross negligence on the
Administrator's part in the performance of its duties or from reckless
disregard by the Administrator of its obligations and duties under this
Agreement. Any person, even though also an officer, director, partner,
employee or agent of the Administrator, who may be or become an
officer, director, partner, employee or agent of the Trust, shall be
deemed when rendering services to the Funds or acting on any business
of the Trust (other than services or business in connection with the
Administrator's duties hereunder) to be rendering such services to or
acting solely for the Trust and not as an officer, director, partner,
employee or agent or person under the control or direction of the
Administrator even though paid by the Administrator. As used in this
Paragraph 7, the term "Administrator" shall include Signature
Broker-Dealer Services, Inc. and/or any of its affiliates, and the
Directors, officers and employees of Signature Broker-Dealer Services,
Inc. and/or its affiliates.
(c) Subject to Paragraph 7 (b) above, the Administrator shall
not be responsible for, and the Trust shall indemnify and hold the
Administrator harmless from and against, any and all losses, damages,
costs, reasonable attorneys' fees and expenses, payments, expenses and
liabilities arising out of or attributable to:
(i) all actions of the Administrator or its officers or agents
required to be taken pursuant to this Agreement;
(ii) the reliance on or use by the Administrator or its officers
or agents of information, records, or documents which are received by
the Administrator or its officers or agents and furnished to it or
them by or on behalf of the Trust, and which have been prepared or
maintained by the Trust, or any other third party on behalf of the
Trust;
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<PAGE>
(iii) the Trust's refusal or failure to comply with the terms of
this Agreement or the Trust's lack of good faith, or its actions, or
lack thereof, involving gross negligence or willful misfeasance;
(iv) the breach of any representation or warranty of the Trust
hereunder;
(v) the reliance on or the carrying out by the Administrator or
its officers or agents of any proper instructions or requests
reasonably believed to be duly authorized; and
(vi) the offer or sale of shares by the Funds in violation of any
requirement under the Federal securities laws or regulations or the
securities laws or regulations of any state, or in violation of any
stop order or other determination or ruling by any Federal agency or
any state agency with respect to the offer or sale of such shares in
such state resulting from activities, actions, or omissions by or on
behalf of the Trust.
(d) The Administrator shall indemnify and hold the Trust
harmless from and against any and all losses, damages, costs, charges,
reasonable attorneys' fees and expenses, payments, expenses and
liability arising out of or attributable to the Administrator's refusal
or failure to comply with the terms of this Agreement; the
Administrator's breach of any representation or warranty made by it
herein; or the Administrator's lack of good faith, or acts involving
gross negligence, willful misfeasance or reckless disregard of its
duties.
8. TERM. This Agreement shall become effective on the date first
hereinabove written. This Agreement shall continue in effect unless terminated
by the Board of Trustees of the Trust or by the Administrator, in each case on
not more than 60 days' nor less than 30 days' written notice to the other party.
Upon termination of this Agreement, the Trust shall pay to the Administrator
such compensation and any reimbursable expenses as may be due under the terms
hereof as of the date of termination or the date that the provision of services
ceases, whichever is later.
9. ACTIVITIES OF THE ADMINISTRATOR. The services of the Administrator
to the Trust are not to be deemed to be exclusive, the Administrator being free
to render administrative and/or other services to other parties. It is
understood that (i) Trustees, officers, and investors of the Trust are or may
become interested in the Administrator and/or any of its affiliates, as
Directors, officers, employees, or otherwise, (ii) Directors, officers and
employees of the Administrator and/or any of its affiliates are or may become
similarly interested in the Trust, and (iii) the Administrator and/or any of its
affiliates may be or become interested in the Trust as an investor or otherwise.
10. HIRING OF EMPLOYEES. The Trust and the Administrator agree that
they will not enter into discussions of employment or make offers of employment
to each others' employees without written approval from the other.
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<PAGE>
11. NOTICES. Any notice required or permitted hereunder shall be in
writing and shall be deemed to have been given when delivered in person or by
certified mail, return receipt requested, to the parties at the following
address (or such other address as a party may specify by notice to the other):
If to the Trust:
with a copy to:
Roger P. Joseph
Bingham, Dana & Gould
150 Federal Street
Boston, Massachusetts 02110
Fax: (617) 951-8736
If to the Administrator:
Signature Broker-Dealer Services, Inc.
6 St. James Avenue, 9th Floor
Boston, MA 02116
Attention: Philip W. Coolidge
Fax: (617) 542-5815
Notice shall be effective upon receipt if by mail, on the date of personal
delivery (by private messenger, courier service or otherwise) or upon confirmed
receipt of telex or facsimile, whichever occurs first.
12. ASSIGNABILITY. This Agreement shall not be assigned by any of the
parties hereto without the prior consent in writing of the other party;
provided, however, that the Administrator may in its own discretion and without
limitation or prior consent of the Trust, whenever and on such terms and
conditions as the Administrator deems necessary or appropriate, subcontract,
delegate or assign its rights, duties, obligations and liabilities to any one or
more persons; provided, further, that any such subcontract, agreement or
understanding shall not discharge the Administrator from its obligations
hereunder. Similarly, the Administrator or its subcontractor, designee, or
assignee may at its discretion, without notice to the Trust, enter into such
subcontracts, agreements and understandings, whenever and on such terms and
conditions as the Administrator or they deem necessary or appropriate to perform
services hereunder, with non-affiliated third parties; provided, however, that
such subcontract, agreement or understanding shall not discharge the
Administrator, or its subcontractor, designee, or assignee, as the case may be,
from the Administrator's obligations hereunder.
13. WAIVER. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver nor
shall it deprive such party of the right thereafter to insist upon strict
adherence to that term or any term of this Agreement. Any waiver must be in
writing signed by the waiving party.
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<PAGE>
14. FORCE MAJEURE. The Administrator shall not be responsible or liable
for any failure or delay in performance of its obligations under this Agreement
arising out of or caused, directly or indirectly, by circumstances beyond its
control, including, without limitation, acts of God, earthquakes, fires, floods,
wars, acts of civil or military authorities, or governmental actions.
15. USE OF NAME. The Trust and the Administrator agree not to use the
other's name nor the names of such other's affiliates, designees, or assignees
in any prospectus, sales literature or other printed material written in a
manner not previously, expressly approved in writing by the other or such
other's affiliates, designees, or assignees, except where required by the SEC or
any state agency responsible for securities regulation.
16. AMENDMENTS. 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.
17. SEVERABILITY. If any provision of this Agreement is held or made
invalid or unenforceable by a court decision, statute, rule or otherwise, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any person or circumstance it shall nevertheless remain
applicable to all other persons and circumstances.
18. MISCELLANEOUS. This agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. 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.
19. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below as of the date first written
above. The undersigned officer of the Trust has executed this Agreement not
individually, but as President under the Trust's Trust Instrument dated October
25, 1993, as the same may be amended from time to time, and the obligations of
this Agreement are not binding upon any of the Trustees or investors of the
Trust
[THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY]
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individually, but bind only the trust estate.
EXCELSIOR FUNDS
By:/S/ PHILIP W. COOLIDGE
Philip W. Coolidge
President
SIGNATURE BROKER-DEALER SERVICES, INC.
By:/S/ PHILIP W. COOLIDGE
Philip W. Coolidge
President
UST038B
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SCHEDULE A
SERIES NAMES Fee (as a percentage of the
average daily net assets of a
FUND)
Excelsior Equity Fund 0.10%
Excelsior Income and Growth Fund 0.10%
Excelsior Income Fund 0.10%
Excelsior Total Return Bond Fund 0.10%
Excelsior Institutional Money Fund 0.06%(*)
Excelsior Institutional Treasury Money Fund 0.06%(*)
(*) $20,000 per annum minimum fee, regardless of asset level.
<PAGE>
SCHEDULE B
Excelsior Equity Fund
Excelsior Income and Growth Fund
Excelsior Income Fund
Excelsior Total Return Bond Fund
Excelsior Socially Responsible Equity Fund
Excelsior Institutional Money Fund
Excelsior Institutional Treasury Money Fund
<PAGE>
SCHEDULE C
GENERAL DESCRIPTION OF TRUST ADMINISTRATION SERVICES
I. FINANCIAL AND TAX REPORTING
A. Prepare agreed upon management reports and Board of Trustees
materials such as unaudited financial statements, distribution
summaries, and deviations of mark-to-market valuation and the
amortized cost for money market funds.
B. Report Fund performance to outside services as directed by Trust
management.
C. Calculate dividend and capital gain distributions in accordance
with distribution policies detailed in the Trust's prospectus(es).
Assist management of the Trust in making final determinations of
distribution amounts.
D. Estimate and recommend year-end dividend and capital gain
distributions necessary to establish each Fund's status as a
regulated investment company ("RIC") under Section 4982 of the
Internal Revenue Code of 1986, as amended (the "Code") regarding
minimum distribution requirements.
E. Prepare and file each Fund's federal tax return on Form 1120-RIC
along with all state and local tax returns where applicable.
Prepare and file Federal Excise Tax Return (Form 8613).
F. Prepare and file each Fund's Semiannual Reports on Form N-SAR with
the SEC.
G. Prepare and coordinate printing of each Fund's Semiannual and
Annual Reports to Shareholders.
H. File copies of every financial report to shareholders with the SEC
under Rule 30b2-1.
I. In conjunction with transfer agent, notify shareholders as to what
portion, if any, of the distributions made by the Funds during the
prior fiscal year were exempt-interest dividends under Section 852
(b)(5)(A) of the Code.
J. Provide Form 1099-MISC to persons other than corporations (i.e.,
Trustees) to whom the Trust paid more than $600 during the year.
K. Prepare and file California State Expense Limitation Report, if
applicable.
L. Provide financial information for proxies, prospectuses and
offering memoranda.
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II. PORTFOLIO COMPLIANCE
A. Assist with monitoring each Fund's compliance with investment
restrictions (e.g., issuer or industry diversification, etc.)
listed in the current prospectus(es) and statement(s) of
additional information, or offering memorandum(a), as the case may
be.
B. Assist with monitoring each Fund's compliance with the
requirements of the Code Section 851 for qualification as
regulated investment companies (i.e., 90% Income, 30% Income -
Short Three, Diversification Tests).
C. Assist with monitoring investment manager's compliance with Board
directives such as "Approved Issuers Listings for Repurchase
Agreements", Rule 2a-7 procedures for money market funds and Rule
12d-3 procedures.
D. Mail quarterly requests for "Securities Transaction Reports" to
the Trust's Trustees and officers and "access persons" under the
terms of the Trust's Code of Ethics and SEC regulations.
III. REGISTRATION AND CORPORATE GOVERNANCE
A. Prepare and file all post-effective amendments to the Trust's
registration statement(s) on Form N-1A and file supplements as
needed.
B. Prepare and file proxy materials and administer shareholder
meetings.
C. Prepare and file Rule 24f-2 Notice and Opinion.
D. Prepare and file all state registrations of the Trust's securities
including annual renewals, registering new Funds, preparing and
filing sales reports, filing copies of the registration statement
and of prospectuses and statements of additional information, and
increasing registered amounts of securities in individual states.
IV. GENERAL ADMINISTRATION
A. Furnish persons to serve as officers of the Trust, subject to
reasonable Board approval.
B. Prepare fund expense projections, establish accruals and review on
a periodic basis, including expenses based on a percentage of each
Fund's average daily net assets (advisory and administrative fees)
and expenses based on actual charges annualized and accrued daily
(audit fees, registration fees, Trustees' fees, etc.).
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C. For new Funds, obtain Employer Identification Number and CUSIP
numbers for Funds. Estimate organization (offering) costs and
monitor against actual disbursements.
D. Coordinate all communications and data collection with regards to
any regulatory examinations and yearly audits by independent
accountants.
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SCHEDULE D
DESCRIPTION OF TRUST ACCOUNTING SERVICES
I. GENERAL DESCRIPTION
The Administrator shall provide the following accounting services to
the Trust:
A. Maintenance of the books and records and accounting controls for
the Trust's assets, including records of all securities
transactions;
B. Calculation and transmission of each Fund's Net Asset Value to the
NASD source for publication of prices in accordance with the
prospectus and to such other entities as directed by the Trust;
C. Accounting for dividends and interest received and distributions
made by the Funds;
D. Preparation and filing of each Fund's tax returns and Semiannual
Reports on Form N-SAR;
E. Production of transaction data, financial reports and such other
periodic and special reports as the Board may reasonably request;
F. The preparation of financial statements for the semiannual and
annual reports and other shareholder communications;
G. Liaison with the Trust's independent auditors; and
H. Monitoring and administration of arrangements with the Trust's
custodian and depository banks. A listing of reports that will be
available to the Trust is included below.
II. DOMESTIC FUND ACCOUNTING DAILY REPORTS
A. General Ledger Reports
1. Trial Balance Report
2. General Ledger Activity Report
B. Portfolio Reports
1. Portfolio Report
2. Cost Lot Report
3. Purchase Journal
4. Sell/Maturity Journal
5. Amortization/Accretion Report
6. Maturity Projection Report
C. Pricing Reports
1. Pricing Report
2. Pricing Report by Market Value
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3. Pricing Variance by % Change
4. NAV Report
5. NAV Proof Report
6. Money Market Pricing Report
D. Accounts Receivable/Payable Reports
1. Accounts Receivable for Investments Report
2. Accounts Payable for Investments Report
3. Interest Accrual Report
4. Dividend Accrual Report
E. Other Reports
1. Dividend Computation Report
2. Cash Availability Report
3. Settlement Journal
III. INTERNATIONAL FUND ACCOUNTING DAILY REPORTS
A. General Ledger
1. Trial Balance Report
2. General Ledger Activity Report
B. Portfolio Reports
1. Portfolio Report by Sector
2. Cost Lot Report
3. Purchase Journal
4. Sell/Maturity Journal
C. Currency Reports
1. Currency Purchase/Sales Journal
2. Currency Valuation Report
D. Pricing Reports
1. Pricing Report by Country
2. Pricing Report by Market Value
3. Price Variance by % Change
4. NAV Report
5. NAV Proof Report
E. Accounts Receivable/Payable Reports
1. Accounts Receivable for Investments Sold/Matured
2. Accounts Payable for Investments Purchased
3. Accounts Receivable for Forward Exchange Contracts
4. Accounts Payable for Forward Exchange Contracts
5. Interest Receivable Valuation
6. Interest Recoverable Withholding Tax
7. Dividends Receivable Valuation
8. Dividends Recoverable Withholding Tax
F. Other Reports
1. Exchange Rate Report
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IV. MONTHLY FUND ACCOUNTING REPORTS
A. Standard Reports
1. Cost Proof Report
2. Transaction History Report
3. Realized Gain/Loss Report
4. Interest Record Report
5. Dividend Record Report
6. Broker Commission Totals
7. Broker Principal Trades
8. Shareholder Activity Report
9. Fund Performance Report
10. SEC Yield Calculation Work Sheet
B. International Reports
1. Forward Contract Transaction History Report
2. Currency Gain/Loss Report
UST038B
UST049A
SHAREHOLDER SERVICING AGREEMENT
THIS AGREEMENT, dated as of January 1, 1994, by and between Excelsior
Funds (the "Trust"), a Delaware business trust having its principal place of
business at 6 St. James Avenue, Boston, Massachusetts 02116, and United States
Trust of New York (the "Financial Institution"), a bank and trust company
chartered under the laws of the state of New York, as a shareholder servicing
agent hereunder (the "Agent");
W I T N E S S E T H:
WHEREAS, certain transactions in Shares of Beneficial Interest (par
value $0.00001 per share) ("Shares"), which may be divided into separate series
(each, a "Fund"), of the Trust may be made by investors who are customers of,
and using the services of, a Shareholder Servicing Agent (as defined in the
then-current Prospectus or Offering Memorandum, as applicable, of the respective
series of the Trust), which has entered into a shareholder servicing agreement
with the Trust; and
WHEREAS, the Financial Institution wishes to make it possible for its
customers (the "Customers") to purchase Shares and wishes to act as the
Customers' agent in performing certain administrative functions in connection
with purchases and redemptions of Shares from time to time upon the order and
for the account of Customers and to provide related services to its Customers in
connection with their investments in the Trust; and
WHEREAS, it is in the interest of the Trust to make the services of the
Agent available to Customers who are or may become shareholders of the Trust;
NOW, THEREFORE, the Trust and the Financial Institution hereby agree as
follows:
1. APPOINTMENT. The Financial Institution, as Agent, hereby agrees to
perform certain services for Customers as hereinafter set forth.
2. SERVICE TO BE PERFORMED.
2.1. TYPE OF SERVICE. The Agent shall be responsible for performing
shareholder account administrative and servicing functions, which shall include
without limitation: (a) answering Customer inquiries regarding account status
and history, the manner in which purchases and redemptions of the Shares may be
effected, and certain other matters pertaining to the Trust; (b) assisting
Customers in designating and changing dividend options, account designations and
addresses; (c) providing necessary personnel and facilities to establish and
maintain certain shareholder accounts and records, as may reasonably be
requested from time to time by the Trust; (d) assisting in processing purchase,
exchange, and redemption transactions; (e) arranging for the wiring of funds;
(f) transmitting and receiving funds in connection with Customer orders to
purchase or redeem Shares; (g) verifying and guaranteeing Customer signatures in
connection with redemption orders, transfers among and changes in
<PAGE>
Customer-designated accounts; (h) providing periodic statements showing a
Customer's account balances and, to the extent practicable, integration of such
information with information concerning other client transactions otherwise
effected with or through the Financial Institution; (i) furnishing on behalf of
the Trust's distributor (either separately or on an integrated basis with other
reports sent to a Customer by the Agent) all daily, monthly or annual statements
and confirmations of all purchases and redemptions of Shares in a Customer's
account required by applicable federal or state law, all such confirmations and
statements to conform to Rule 10b-10 under the Securities Exchange Act of 1934
and other applicable federal or state law; (j) transmitting proxy statements,
annual and semi-annual reports, updating Prospectuses or Offering Memoranda, as
applicable, and supplements thereto (or updating statements of additional
information or supplements thereto if requested by a Customer) and other
communications from the Trust to Customers; (k) receiving, tabulating and
transmitting to the Trust proxies executed by Customers with respect to annual
and special meetings of shareholders of the Trust; (l) providing reports (at
least monthly but more frequently if reasonably so requested by the Trust's
distributor) containing state-by-state listings of the principal residences of
the beneficial owners of the Shares; and (m) providing such other related
services as the Trust or a Customer may reasonably request. The Agent shall
provide all personnel and facilities to perform the functions described in this
paragraph with respect to its Customers and shall bear all of its own expenses
in connection therewith.
2.2. STANDARD OF SERVICES. All services to be rendered by the Agent
hereunder shall be performed in a professional, competent and timely manner. The
details of the operating standards and procedures to be followed by the Agent in
performance of the services described above shall be determined from time to
time by agreement between the Agent and the Trust. The Trust acknowledges that
the Agent's ability to perform on a timely basis certain of its obligations
under this Agreement depends upon the Trust's timely delivery of certain
materials and/or information to the Agent. The Trust agrees to use its best
efforts to provide such materials to the Agent in a timely manner.
3. FEES.
3.1. FEES FROM THE TRUST. In consideration for the services described
in Section 2 hereof and the incurring of expenses in connection therewith, the
Agent shall receive a fee on an annual basis equal to a percentage, to be
determined periodically by the paries, of the average daily net assets of each
Fund, for that Fund's then-current fiscal year, represented by Shares owned
during the period for which payment is being made by Customers for whom the
Agent is the holder or agent of record or with whom it maintains a servicing
relationship. For purposes of determining the fees payable to the Agent
hereunder, the value of each Fund's net assets shall be computed in the manner
specified in the Fund's then-current Prospectus or Offering Memorandum, as
applicable, for computation of the net asset value of the Fund's Shares. The
above fees constitute all fees to be paid to the Agent by the Trust with respect
to the transactions contemplated hereby.
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<PAGE>
3.2. FEES FROM CUSTOMERS. It is agreed that the Financial Institution
may impose certain conditions on Customers, in addition to or different from
those imposed by the Trust, such as requiring a minimum initial investment or
charging Customers direct fees for the same or similar services as are provided
hereunder by the Financial Institution as Agent (which fees may either relate
specifically to the Financial Institution's services with respect to the Trust
or generally cover services not limited to those with respect to the Trust);
PROVIDED, HOWEVER, that the Financial Institution may not charge customers any
direct fee which would constitute a "sales load" within the meaning of Section
2(a)(35) of the Investment Company Act of 1940, as amended (the "1940 Act"). The
Financial Institution shall bill Customers directly for such fees. In the event
the Financial Institution charges Customers such fees, it shall notify the Trust
in advance and make appropriate prior written disclosure (such disclosure to be
in accordance with all applicable laws) to Customers of any such fees charged to
the Customer. To the extent required by applicable rules and regulations of the
Securities and Exchange Commission, the Trust shall make written disclosure of
the fees paid or to be paid to the Agent pursuant to Section 3.1 of this
Agreement. It is understood, however, that in no event shall the Financial
Institution have recourse or access as Agent or otherwise to the account of any
shareholder of the Trust except to the extent expressly authorized by law or by
such shareholder, or to any assets of the Trust, for payment of any direct fees
referred to in this Section 3.2.
4. INFORMATION PERTAINING TO THE SHARES. The Agent and its officers,
employees and agents are not authorized to make any representations concerning
the Trust or the Shares to Customers or prospective Customers, excepting only
accurate communication of any information provided by or on behalf of any
administrator of the Trust or any distributor of the Shares or any factual
information contained in the then-current Prospectus or Offering Memorandum, as
applicable, Statement of Additional Information or Registration Statement. In
furnishing such information regarding the Trust or the Shares, the Agent shall
act as agent for the Customer only and shall have no authority to act as agent
for the Trust. Advance copies or proofs of all materials (other than a
Prospectus or Offering Memorandum, as applicable, Statement of Additional
Information, Registration Statement or other writing furnished to the Agent by
the Trust) which are generally circulated or disseminated by the Agent to
Customers or prospective Customers which identify or describe the Trust shall be
provided to the Trust at least 10 days prior to such circulation or
dissemination (unless the Trust consents in writing to a shorter period), and
such materials shall not be circulated or disseminated or further circulated or
disseminated at any time after the Trust shall have given written notice to the
Agent of any objection thereto.
Nothing in this Section 4 shall be construed to make the Trust liable
for the use (as opposed to the accuracy) of any information about the Trust
which is disseminated by the Agent.
5. USE OF THE AGENT'S NAME. The Trust shall not use the name of the
Agent, the Financial Institution or any of its affiliates or subsidiaries in any
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<PAGE>
Prospectus or Offering Memorandum, as applicable, sales literature or other
material relating to the Trust in a manner not approved by the Agent prior
thereto in writing; PROVIDED, HOWEVER, that the approval of the Agent shall not
be required for any use of its name which merely refers in accurate and factual
terms to its appointment, the services provided and the fees paid hereunder and
is required by the Securities and Exchange Commission or any state securities
authority or any other appropriate regulatory, governmental or judicial
authority; PROVIDED, FURTHER, that in no event shall such approval be
unreasonably withheld or delayed.
6. USE OF THE TRUST'S NAME. The Agent shall not use the name of the
Trust on any checks, bank drafts, bank statements or forms for other than
internal use in a manner not approved by the Trust prior thereto in writing;
PROVIDED, HOWEVER, that the approval of the Trust shall not be required for the
use of the Trust's name in connection with communications permitted by Section 4
hereof or (subject to Section 4, to the extent the same may be applicable) for
any use of the Trust's name which merely refers in accurate and factual terms to
the Trust in connection with the Agent's role hereunder or which is required by
the Securities and Exchange Commission or any state securities authority or any
other appropriate regulatory, governmental or judicial authority; PROVIDED,
FURTHER, that in no event shall such approval be unreasonably withheld or
delayed.
7. SECURITY. The Agent represents and warrants that to the best of its
knowledge, the various procedures and systems which it has implemented
(including provision for twenty-four hours a day restricted access) with regard
to safeguarding from loss or damage attributable to fire, theft or any other
cause the Trust's records and other data and the Agent's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and procedures
on a periodic basis, and the Trust shall from time to time specify the types of
records and other data of the Trust to be safeguarded in accordance with this
Section 7.
8. COMPLIANCE WITH LAWS. Each of the Agent and the Trust shall comply
with all applicable federal and state laws and regulations, including securities
laws in respect of this Agreement and the activities contemplated hereby. Each
of the Agent and the Trust represents and warrants to the other that the
performance of all its obligations hereunder will comply with all applicable
laws and regulations, the provisions of its charter documents and by-laws and
all material contractual obligations binding upon it. Each of the Agent and the
Trust furthermore undertakes that it will promptly, after it becomes so aware,
inform the other of any change in applicable laws or regulations (or
interpretations thereof) or in its charter or by-laws or material contracts
which would prevent or impair full performance of any of its obligations
hereunder.
9. REPORTS. To the extent requested by the Trust from time to time, the
Agent agrees that it will provide the Treasurer of the Trust with a written
4
<PAGE>
report of the amounts expended by the Agent pursuant to this Agreement and the
purposes for which such expenditures were made. Such written reports shall be in
a form reasonably satisfactory to the Trust and shall supply all information
reasonably necessary for the Trust and the Agent to discharge their respective
responsibilities under applicable laws and regulations.
10. RECORD KEEPING. While it is acknowledged and agreed that the
provisions of the 1940 Act, the Securities Exchange Act of 1934 and the
regulations thereunder that are referenced in this Section 10 do not apply to
the Agent, the Agent agrees, as agent for the Trust, to maintain certain records
and accounts as if such provisions apply to it, as herein provided.
10.1. SECTION 31(A). The Agent shall, on behalf of the Trust, maintain
records in a form reasonably acceptable to the Trust and in compliance with
applicable laws and the rules and regulations of the Securities and Exchange
Commission, including but not limited to the record-keeping requirements of
Section 31(a) of the 1940 Act and the rules thereunder. Such records shall be
deemed to be the property of the Trust and will be made available, at the
Trust's request, for inspection and use by the Trust, representatives of the
Trust and governmental authorities.
10.2. RULES 17A-3 AND 17A-4. The Agent shall maintain accurate and
complete records with respect to services performed by the Agent in connection
with the purchase and redemption of Shares. Such records shall be maintained in
a form reasonably acceptable to the Trust and in compliance with the
requirements of Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934,
as amended, pursuant to which any dealer of the Shares must maintain certain
records. All such records maintained by the Agent shall be the property of such
dealer and will be made available for inspection and use by the Trust or such
dealer upon the request of either. The Agent shall file with the Securities and
Exchange Commission and other appropriate governmental authorities, and furnish
to the Trust and any such dealer copies of, all reports and undertakings as may
be reasonably requested by the Trust or such dealer in order to comply with the
said rules. If so requested by any such dealer, the Agent shall confirm to such
dealer its obligations under this Section 10.2 by a writing reasonably
satisfactory to such dealer.
10.3. IDENTIFICATION, ETC. OF RECORDS. The Trust shall from time to
time instruct the Agent in writing as to, and the Trust and the Agent shall
periodically review, the records to be maintained and the procedures to be
followed by the Agent in complying with the foregoing Sections 10.1 and 10.2 and
Section 8 to the extent it relates to record-keeping required under federal
securities laws and regulations. Notwithstanding the provisions of Section 8,
the Agent shall be entitled to rely on such instructions.
10.4. TRANSFER OF CUSTOMER DATA. In the event this Agreement is
terminated or a successor to the Agent is appointed, the Agent shall, at the
expense of the Trust, transfer to such designee as the Trust may direct a
certified list of the shareholders of the Trust serviced by the Agent (with
name,
5
<PAGE>
address and tax identification or Social Security number), a complete record of
the account of each such shareholder with respect to shares of the Trust and the
status thereof, and all other relevant books, records, correspondence, and other
data established or maintained by the Agent under this Agreement. In the event
this Agreement is terminated, the Agent will use reasonable efforts to cooperate
in the orderly transfer of such duties and responsibilities, including
assistance in the establishment of books, records and other data by the
successor.
10.5. SURVIVAL OF RECORD-KEEPING OBLIGATIONS. The Agent shall retain
any records deemed the property of the Trust pursuant to Section 10 for a period
of six years after the end of the fiscal year in which the transaction to which
such records relate occurred and shall, at the written request of the Trust
before the expiration of such period with respect to any records, deliver such
records to the Trust or its designated agent.
10.6. OBLIGATIONS PURSUANT TO AGREEMENT ONLY. Nothing in this Section
10 shall be construed to mean that the Agent would, by virtue of its role
hereunder, be required under applicable law to maintain the records required to
be maintained by it under this Section 10.
10.7. AGENT'S RIGHTS TO COPY RECORDS. Anything in this Section 10 to
the contrary notwithstanding, except to the extent otherwise prohibited by law,
the Agent shall have the right to copy, maintain and use any records maintained
by the Agent pursuant to this Section 10, except as otherwise prohibited by
Sections 4 and 6 hereof.
11. FORCE MAJEURE. The Agent shall not be liable or responsible for
delays or errors by reason of circumstances beyond its reasonable control,
including, but not limited to, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdown, flood or
catastrophe, Acts of God, insurrection, war, riots or failure of communication
or power supply.
12. INDEMNIFICATION.
12.1. INDEMNIFICATION OF THE AGENT. Without limiting the rights of the
Agent Indemnified Parties (as hereinafter defined) under applicable law, the
Trust will indemnify and hold harmless the Agent, any person that directly or
indirectly controls the Agent (within the meaning of the Securities Act of 1933
and the Securities Exchange Act of 1934, each as amended) and the Agent's and
their respective directors, officers and employees (collectively, the "Agent
Indemnified Parties") from all losses, claims, damages, liabilities or expenses,
joint or several, to which they or any of them become subject insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of or are based upon (a) any untrue statement or alleged untrue
statement contained in the then-current Prospectus or Offering Memorandum, as
applicable, Statement of Additional Information or Registration Statement, or
any omission or alleged omission therefrom, or (b) any claim, demand, action or
suit, both (x) arising in connection with actions or inactions by the Trust or
any of
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<PAGE>
its agents or contractors or the performance of the Agent's obligations
hereunder and (y) not resulting from (i) the bad faith or gross negligence of
the Agent, its officers, employees or agents, or (ii) any breach of applicable
law by the Agent, its officers, employees or agents, or (iii) any action of the
Agent, its officers, employees or agents which exceeds the legal authority of
the Agent or its authority hereunder, or (iv) any material error or omission of
the Agent, its officers, employees or agents with respect to the purchase,
redemption and transfer of Customers' Shares or the Agent's verification or
guarantee of any Customer signature. Notwithstanding anything herein to the
contrary, the Trust will indemnify and hold the Agent harmless from any and all
losses, claims, damages, liabilities or expenses (including reasonable counsel
fees and expenses) resulting from any claim as a result of its acting in
accordance with any written instructions reasonably believed by the Agent to
have been executed by any person duly authorized by the Trust, or as a result of
acting in reliance upon any instrument or stock certificate reasonably believed
by the Agent to have been genuine and signed, countersigned or executed by a
person duly authorized by the Trust, excepting only the gross negligence or bad
faith of the Agent.
In any case in which the Trust may be asked to indemnify or hold an
Agent Indemnified Party harmless, the Trust shall be advised of all pertinent
facts concerning the situation in question and the Agent Indemnified Party shall
use reasonable care to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present a claim for
indemnification against the Trust. The Trust shall have the option to defend the
Agent Indemnified Party against any claim which may be the subject of
indemnification hereunder. In the event that the Trust elects to defend against
such claim, the defense shall be conducted by counsel chosen by the Trust and
reasonably satisfactory to the Agent Indemnified Party. The Agent Indemnified
Party may retain additional counsel at its expense. Except with the prior
written consent of the Trust, the Agent Indemnified Party shall not confess any
claim or make any compromise in any case in which the Trust will be asked to
indemnify the Agent Indemnified Party.
12.2. INDEMNIFICATION OF THE TRUST. Without limiting the rights of the
Trust under applicable law, the Agent will indemnify and hold the Trust, its
officers, Trustees, employees and controlling persons harmless from all losses,
claims, damages, liabilities or expenses (including reasonable counsel fees and
expenses) from any claim both (a) resulting from (i) the bad faith or gross
negligence of the Agent, its officers, employees or agents, or (ii) any breach
of applicable law by the Agent, its officers, employees or agents, or (iii) any
action of the Agent, its officers, employees or agents which exceeds the legal
authority of the Agent or its authority hereunder, or (iv) any material error or
omission of the Agent, its officers, employees or agents with respect to the
purchase, redemption and transfer of Customers' Shares or the Agent's
verification or guarantee of any Customer signature, and (b) not resulting from
the Agent's actions in accordance with written instructions reasonably believed
by the Agent to have been executed by any person duly authorized by the Trust,
or in reliance upon the Prospectus or Offering Memorandum, as applicable,
Statement of Additional Information or Registration Statement or any instrument
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<PAGE>
or stock certificate reasonably believed by the Agent to have been genuine and
signed, countersigned or executed by a person duly authorized by the Trust.
In any case in which the Agent may be asked to indemnify or hold the
Trust or another party harmless, the Agent shall be advised of all pertinent
facts by the Trust or other party concerning the situation in question and the
Trust or other party shall use reasonable care to identify and notify the Agent
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against the Agent. The Agent shall have the option to
defend the Trust or other party against any claim which may be the subject of
indemnification hereunder. In the event that the Agent elects to defend against
such claim, the defense shall be conducted by counsel chosen by the Agent and
reasonably satisfactory to the Trust or other party. The Trust or other party
may retain additional counsel at its expense. Except with the prior written
consent of the Agent, the Trust or other party shall not confess any claim or
make any compromise in any case in which the Agent will be asked to indemnify
the Trust or other party.
12.3. SURVIVAL OF INDEMNITIES. The indemnities granted by the parties
in this Section 12 shall survive the termination of this Agreement.
13. INSURANCE. The Agent shall maintain reasonable insurance coverage
against any and all liabilities which may arise in connection with the
performance of its duties hereunder.
14. NOTICES. All communications and notices to either party hereto
shall be sent to the address or facsimile number of such party set forth by its
name on the signature pages hereto (in the case of the Agent, to the attention
of its President) or such other address or number as shall be provided to the
other party hereto in writing, and shall be duly given if mailed or telegraphed,
sent by facsimile, or delivered by hand or other courier delivery service that
requires written acknowledgement of receipt, to such party at such address.
15. FURTHER ASSURANCES. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
16. TERMINATION. This Agreement may be terminated by each of the
Financial Institution or the Trust, without the payment of any penalty, at any
time upon not more than 60 days' nor less than 30 days' notice. Upon termination
hereof, the Trust shall pay such compensation as may be due the Agent as of the
date of such termination.
17. CHANGES; AMENDMENTS. This Agreement may be changed or amended only
by written instrument signed by both parties.
18. LIMITATION OF SHAREHOLDER, TRUSTEE AND AGENT LIABILITY. The Agent
hereby agrees that obligations assumed by the Trust pursuant to this Agreement
shall be limited in all cases to the Trust and its assets and that neither the
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Agent nor any other person shall seek satisfaction of any such obligation from
the shareholders or any shareholder of the Trust. It is further agreed that
neither the Agent nor any other person shall seek satisfaction of any such
obligations from the Board of Trustees or any individual Trustee or officer of
the Trust. The Trust hereby agrees that obligations assumed by the Agent
pursuant to this Agreement shall be limited in all cases to the Agent and its
assets and that neither the Trust nor any other person shall seek satisfaction
of any such obligation from the officers, directors or shareholders of the
Agent.
19. DIVIDEND PAYMENT DATES. The Trust hereby agrees, with respect to
any series of the Trust that is a money market fund, that dividends otherwise
payable to any Customer on the last business day of each month shall, to the
extent required by the Agent, be distributed on such other date in each month as
the Agent may designate as the dividend distribution date with respect to such
Customer but no more than once a month with respect to each Customer.
20. SUBCONTRACTING BY AGENT. The Agent may, with the written approval
of the Trust (such approval not to be unreasonably withheld or delayed),
subcontract for the performance of the Agent's obligations hereunder with any
one or more persons, including but not limited to any one or more persons which
is an affiliate of the Agent; PROVIDED, HOWEVER, that the Agent shall be as
fully responsible to the Trust for the acts and omissions of any subcontractor
as it would be for its own acts or omissions.
21. COMPLIANCE WITH LAWS AND POLICIES; COOPERATION. The Trust hereby
agrees that it will comply with all laws and regulations applicable to its
operations and the Agent agrees that it will comply with all laws and
regulations applicable to its operations hereunder.
22. AUDIT. The Trust shall maintain or arrange to be maintained
complete and accurate accounting records, in accordance with generally accepted
accounting principles. The Trust shall retain or arrange to be retained such
records for a period of three years from the termination of this Agreement. The
Agent and its designated certified public accountants shall have access to such
records based on reasonable cause and professional judgment during normal
business hours upon reasonable notice to the Trust.
23. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. This Agreement shall be
construed and the provisions thereof interpreted under and in accordance with
the laws of the Commonwealth of Massachusetts. The captions in this Agreement
are included for convenience of reference only and in no way define or limit any
of the provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. This Agreement has been executed on
behalf of the Trust by the undersigned not individually, but in the capacity
indicated. The obligations under this Agreement are not binding upon any of the
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officers, Trustees or shareholders of the Trust individually, but bind only the
trust estate. This Agreement has been executed on behalf of the Agent by the
undersigned not individually, but only in the capacity indicated. The
obligations under this Agreement are not binding upon any of the Agent's
directors, officers, shareholders or controlling persons individually, but bind
only the Agent.
NOTICE ADDRESS: EXCELSIOR FUNDS
Excelsior Funds
6 St. James Avenue By: /S/ PHILIP W. COOLIDGE
Boston, Massachusetts 02116 Philip W. Coolidge
Facsimile number: 617-542-5815 President
As officer and not individually
NOTICE ADDRESS: UNITED STATES TRUST OF NEW YORK
United States Trust of New York By: /S/ PETER P CAPACCIO
114 West 47th Street Name: Peter P. Capaccio
New York, NY 10036 Title: Vice President
Facsimile number: 212-852-1310 As officer and not individually
10
SHAREHOLDER SERVICE AGREEMENT
With Respect to Excelsior Institutional Money Fund and
Excelsior Institutional Treasury Money Fund
of
Excelsior Funds (the "Trust")
UST Distributors, Inc.
125 West 55th Street, 11th Floor
New York, New York 10019
Ladies and Gentlemen:
We wish to enter into this Shareholder Service Agreement (the "Agreement") with
you concerning the provision of support services to your clients ("Clients") who
may from time to time beneficially own shares of beneficial interest in
Excelsior Institutional Money Fund and Excelsior Institutional Treasury Money
Fund (the "Funds") and any other funds as may from time to time be agreed
between the parties. The terms and conditions of this Agreement are as follows:
1. You agree to provide certain of the following support services to Clients who
may from time to time beneficially own shares of the Funds: (i) aggregating and
processing purchase and redemption requests for the Funds from Clients and
placing net purchase and redemption orders with our distributor; (ii) providing
Clients with a service that invests the assets of their accounts in the Funds
pursuant to specific or pre-authorized instructions; (iii) processing dividend
payments from us on behalf of Clients; (iv) providing information periodically
to Clients showing their positions in the Funds; (v) arranging for bank wires;
(vi) responding to Client inquires relating to the services performed by you;
(vii) if required by law, forwarding shareholder communications from us (such as
proxies, shareholder reports, annual and semi-annual financial statements and
dividend distribution and tax notices) to Clients; (viii) forwarding to Clients
proxy statements and proxies containing any proposals regarding this Agreement
or the Shareholder Services Plan related hereto; and (ix) providing such other
similar services as we may reasonably request to the extent you are permitted to
do so under applicable statutes, rules or regulations.
2. You will provide such office space and equipment, telephone facilities and
personnel (which may be any part of the space, equipment and facilities
currently used in your business, or any personnel employed by you) as may be
reasonably necessary or beneficial in order to provide such services to Clients.
3. Neither you nor any of your officers, employees or agents are authorized to
make any representations concerning Excelsior Funds except those contained in
our then current prospectuses for such shares, copies of which will be supplied
by
<PAGE>
us to you, or in such supplemental literature or advertising as may be
authorized by us in writing.
4. For all purposes of this Agreement you will be deemed to be an independent
contractor, and will have no authority to act as agent for us in any matter or
in any respect. By your written acceptance of this Agreement, you agree to and
do release, indemnify and hold us harmless from and against any and all direct
or indirect liabilities or losses resulting from requests, directions, actions
or inactions of or by you or your officers, employees or agents regarding your
responsibilities hereunder or the purchase, redemption, transfer or registration
of shares of the Funds by or on behalf of Clients. You and your employees will,
upon request, be available during normal business hours to consult with us or
our designees concerning the performance of your responsibilities under this
agreement.
5. In consideration of the services and facilities provided by you hereunder, we
will pay to you and you will accept as full payment therefor, a fee at the
annual rate of .05 of 1% of the average daily net asset values up to $500
million and .10 of 1% of the average daily net asset values from $500 million
and above of the Funds beneficially owned by your Clients for whom you are the
dealer of record or holder of record or with whom you have a servicing
relationship (the "Clients Shares"), which fee will be computed daily and
payable monthly. By your written acceptance of this Agreement, you agree to and
do waive such portion of the fee payable under this Section 5 as is necessary to
assure that the amount of such fee which is required to be accrued on any day
with respect to your Clients does not exceed the income to be accrued to your
Clients Shares on that day. For purposes of determining the fees payable under
this Section 5, the average daily net asset value of the Clients Shares will be
computed in the manner specified in our registration statement (as the same is
in effect from time to time) in connection with the computation of the net asset
value of the Funds for purposes of purchases and redemptions. Further we may, in
our discretion and without notice, suspend or withdraw the sale of the Funds,
including the sale of such shares to you for the account of any Client or
Clients.
6. Any person authorized to direct the disposition of monies paid or payable by
us pursuant to this Agreement will provide to our Board of Trustees, and our
Trustees will review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made. In addition,
you will furnish us or our desingees with such information as we or they may
reasonable request (including, without limitation, periodic certifications
confirming the provision to Clients of the service described herein), and will
otherwise cooperate with us and our designees (including, without limitation,
any auditors designated by us), in connection with the preparation of reports to
our Board of Trustees concerning this Agreement and the monies paid or payable
by us pursuant hereto, as well as any other reports or filings that may be
required by law.
7. We may enter into other similar Shareholder Service Agreements with any other
person or persons without your consent.
8. This agreement will become effective on the date a fully executed copy of
this Agreement is received by us or our designee. Unless sooner terminated, this
Agreement will continue automatically for successive annual periods, provided
<PAGE>
such continuance is specifically approved at least annually by us in the manner
described in Section 11. This Agreement is terminable with respect to any Fund,
without penalty, at any time by us (which termination may be by vote of a
majority of our Disinterested Trustees as defined in Section 11) or by you upon
notice to the other party hereto.
9. All notices and other communications to either you or us will be duly given
if mailed, telegraphed, telexed or transmitted by similar telecommunications
device to the appropriate address shown above, or to such other address as
either party shall so provide the other.
10. This Agreement shall be construed in accordance with the internal laws of
the State of New York without giving effect to principles of conflict of laws,
and is non-assignable by the parties hereto.
11. This Agreement has been approved by vote of a majority of (i) our Board of
Trustees and (ii) those Trustees who are not "interested persons" (as defined in
the Investment Company Act of 1940) of us and have no direct or indirect
financial interest in the operation of the Shareholder Services Plan adopted by
us regarding the provision of support services to the beneficial owners of
Excelsior Funds or in any agreements related thereto ("Disinterested Trustees"),
cast in person at a meeting called for the purpose of voting on such approval.
12(a). Indemnification of the Agent. Without limiting the rights of the Agent
Indemnified Parties (as hereinafter defined) under applicable law, the Trust
will indemnify and hold harmless UST Distributors, Inc. (the "Agent"), any
person that directly or indirectly controls the Agent (within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended)
and the Agents and their respective directors, officers and employees
(collectively, the "Agent Indemnified Parties") from all losses, claims,
damages, liabilities or expenses, joint or several, to which they or any of them
become subject insofar as such losses, claims, damages liabilities or expenses
(or actions in respect thereof) arise out of or are based upon (a) any untrue
statement or alleged untrue statement contained in the then-current Prospectus
or Offering Memorandum, as applicable, Statement of Additional Information or
Registration Statement, or any omission or alleged omission therefrom, or (b)
any claim, demand, action or suit, both (x) arising in connection with actions
or inactions by the Trust or any of its agents or contractors or the performance
of the Agent's obligations hereunder and (y) not resulting from (i) the bad
faith or gross negligence of the Agent, its officers, employees or agents, or
(ii) any breach of applicable law by the Agent, its officers, employees or
agents. Notwithstanding anything herein to the contrary, the Trust will
indemnify and hold the Agent harmless from any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and expenses)
resulting from any claim as a result of its acting in accordance with any
written instructions reasonably believed by the Agent to have been executed by
any person duly authorized by the Trust, excepting only the gross negligence or
bad faith of the Agent.
In any case in which the Trust may be asked to indemnify or hold an Agent
Indemnified Party harmless, the Trust shall be advised of all pertinent facts
concerning the situation in question and the Agent Indemnified Party shall use
reasonable care to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present a claim for
indemnification against the Trust. The Trust shall have the option to defend the
Agent
<PAGE>
Indemnified Party against any claim which may be the subject of indemnification
hereunder. In the event that the Trust elects to defend against such claim, the
defense shall be conducted by counsel chosen by the Trust and reasonably
satisfactory to the Agent Indemnified Party. The Agent Indemnified Party may
retain additional counsel at its expense. Except with the prior written consent
of the Trust, the Agent Indemnified Party shall not confess any claim or make
any compromise in any case in which the Trust will be asked to indemnify the
Agent Indemnified Party. The Trust shall not, without the prior written consent
of the Agent Indemnified Party, settle or compromise any claim, or permit a
default or consent to the entry of any judgment in respect thereof unless such
settlement, compromise or consent includes, as an unconditional term thereof,
the giving by the claimant to the Agent Indemnified Party of an unconditional
release from all liability in respect of such claim.
(b). Indemnification of the Trust. Without limiting the rights of the Trust
under applicable law, the Agent will indemnify and hold the Trust, its officers,
Trustees, employees and controlling persons harmless from all losses, claims,
damages, liabilities or expenses (including reasonable counsel fees and
expenses) from any claim both (a) resulting from (i) the bad faith or gross
negligence of the Agent, its officers, employees or agents, or (ii) any breach
of applicable law by the Agent, its officers, employees or agents, and (b) not
resulting from the Agent's actions in accordance with written instructions
reasonably believed by the Agent to have been executed by any person duly
authorized by the Trust, or in reliance upon the Prospectus or Offering
Memorandum, as applicable, or in reliance upon the Prospectus or Offering
Memorandum, as applicable, Statement of Additional Information or Registration
Statement or any instrument or stock certificate reasonably believed by the
Agent to have been genuine and signed, countersigned or executed by a person
dully authorized by the Trust.
In any case in which the Agent may be asked to indemnify or hold the Trust or
another party harmless, the Agent shall be advised of all pertinent facts by the
Trust or other party concerning the situation in question and the Trust or other
party shall use reasonable care to identify and notify the Agent promptly
concerning any situation which presents or appears likely to present a claim for
indemnification against the Agent. The Agent shall have the option to defend the
Trust or other party against any claim which may be the subject of
indemnification hereunder. In the event that the Agent elects to defend against
such claim, the defense shall be conducted by counsel chosen by the Agent and
reasonably satisfactory to the Trust or other party. The Trust or other party
may retain additional counsel at its expense. Except with the prior written
consent of the Agent, the Trust or other party shall not confess any claim or
make any compromise in any case in which the Agent will be asked to indemnify
the Trust or other party. The Agent shall not, without the prior written consent
of the Trust, settle or compromise any claim, or permit a default or consent to
the entry of any judgment in respect thereof unless such settlement, compromise
or consent includes, as an unconditional term thereof, the giving by the
claimant to the Trust of an unconditional release from all liability in respect
of such claim.
(c). Survival of Indemnities. The indemnities granted by the parties in this
Section 12 shall survive the termination of this Agreement.
<PAGE>
13. If you agree to be legally bound by the provisions of this Agreement, please
sign a copy of this letter where indicated below and promptly return it to
Signature Broker-Dealer Services, Inc.
Very truly yours,
EXCELSIOR FUNDS
By: /S/ PHILIP W. COOLIDGE
Philip W. Coolidge
Title: PRESIDENT
Accepted and agreed to:
UST DISTRIBUTORS, INC.
(Name of Institution)
By: /S/ WILLIAM B. BLUNDIN
Title: PRESIDENT
Date: 11/25/93
UST196A
SHAREHOLDER SERVICING AGREEMENT
THIS AGREEMENT, dated as of June 22, 1995, by and between Excelsior
Funds (the "Trust"), a Delaware business trust having its principal place of
business at 6 St. James Avenue, Boston, Massachusetts 02116, and Mid Atlantic
Capital Corporation ("Atlantic"), a corporation organized under the laws of the
Commonwealth of Pennsylvania, as a shareholder servicing agent hereunder (the
"Agent");
W I T N E S S E T H:
WHEREAS, certain transactions in Shares of Beneficial Interest (par
value $0.00001 per share) ("Shares"), which may be divided into separate series
(each, a "Fund"), of the Trust may be made by investors who are customers of,
and using the services of, a Shareholder Servicing Agent (as defined in the
then-current Prospectus or Offering Memorandum, as applicable, of the respective
series of the Trust), which has entered into a shareholder servicing agreement
with the Trust; and
WHEREAS, Atlantic wishes to make it possible for its customers (the
"Customers") to purchase Shares and wishes to act as the Customers' agent in
performing certain administrative functions in connection with purchases and
redemptions of Shares from time to time upon the order and for the account of
Customers and to provide related services to its Customers in connection with
their investments in the Trust; and
WHEREAS, it is in the interest of the Trust to make the services of the
Agent available to Customers who are or may become shareholders of the Trust;
NOW, THEREFORE, the Trust and Atlantic hereby agree as follows:
1. APPOINTMENT. Atlantic, as Agent, hereby agrees to perform certain
services for Customers as hereinafter set forth.
2. SERVICE TO BE PERFORMED.
2.1. TYPE OF SERVICE. The Agent shall be responsible for performing
shareholder account administrative and servicing functions, which shall include
without limitation: (a) answering Customer inquiries regarding account status
and history, the manner in which purchases and redemptions of the Shares may be
effected, and certain other matters pertaining to the Trust; (b) assisting
Customers in designating and changing dividend options, account designations and
addresses; (c) providing necessary personnel and facilities to establish and
maintain certain shareholder accounts and records, as may reasonably be
requested from time to time by the Trust; (d) assisting in processing purchase,
exchange, and redemption transactions; (e) arranging for the wiring of funds;
(f) transmitting and receiving funds in connection with Customer orders to
purchase or redeem Shares (g) providing periodic statements showing a Customer's
account balances and, to the extent practicable, integration of such information
with information concerning other client transactions otherwise effected with or
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through Atlantic; (h) furnishing on behalf of the Trust's distributor (either
separately or on an integrated basis with other reports sent to a Customer by
the Agent) all daily, monthly or annual statements and confirmations of all
purchases and redemptions of Shares in a Customer's account required by
applicable federal or state law, all such confirmations and statements to
conform to Rule 10b-10 under the Securities Exchange Act of 1934 and other
applicable federal or state law; (i) transmitting proxy statements, annual and
semi-annual reports, updating Prospectuses or Offering Memoranda, as applicable,
and supplements thereto (or updating statements of additional information or
supplements thereto if requested by a Customer) and other communications from
the Trust to Customers; (j) receiving, tabulating and transmitting to the Trust
proxies executed by Customers with respect to annual and special meetings of
shareholders of the Trust; (k) providing reports (at least monthly but more
frequently if reasonably so requested by the Trust's distributor) containing
state-by-state listings of the principal residences of the beneficial owners of
the Shares; and (l) providing such other related services as the Trust or a
Customer may reasonably request. The Agent shall provide all personnel and
facilities to perform the functions described in this paragraph with respect to
its Customers and shall bear all of its own expenses in connection therewith.
2.2. STANDARD OF SERVICES. All services to be rendered by the Agent
hereunder shall be performed in a professional, competent and timely manner. The
details of the operating standards and procedures to be followed by the Agent in
performance of the services described above shall be determined from time to
time by agreement between the Agent and the Trust. The Trust acknowledges that
the Agent's ability to perform on a timely basis certain of its obligations
under this Agreement depends upon the Trust's timely delivery of certain
materials and/or information to the Agent. The Trust agrees to use its best
efforts to provide such materials to the Agent in a timely manner.
3. FEES.
3.1. FEES FROM THE TRUST. In consideration for the services described
in Section 2 hereof and the incurring of expenses in connection therewith, the
Agent shall receive a fee on a regular basis equal to a percentage, to be
determined periodically by the parties, of the average daily net assets of each
Fund, for that Fund's then-current fiscal year, represented by Shares owned
during the period for which payment is being made by Customers for whom the
Agent is the holder or agent of record or with whom it maintains a servicing
relationship. For purposes of determining the fees payable to the Agent
hereunder, the value of each Fund's net assets shall be computed in the manner
specified in the Fund's then-current Prospectus or Offering Memorandum, as
applicable, for computation of the net asset value of the Fund's Shares. The
above fees constitute all fees to be paid to the Agent by the Trust with respect
to the transactions contemplated hereby.
3.2. FEES FROM CUSTOMERS. It is agreed that Atlantic may impose certain
conditions on Customers, in addition to or different from those imposed by the
Trust, such as requiring a minimum initial investment or charging Customers
direct fees for the same or similar services as are provided hereunder by
Atlantic as Agent (which fees may either relate specifically to Atlantic's
2
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services with respect to the Trust or generally cover services not limited to
those with respect to the Trust); PROVIDED, HOWEVER, that Atlantic may not
charge customers any direct fee which would constitute a "sales load" within the
meaning of Section 2(a)(35) of the Investment Company Act of 1940, as amended
(the "1940 Act"). Atlantic shall bill Customers directly for such fees. In the
event Atlantic charges Customers such fees, it shall notify the Trust in advance
and make appropriate prior written disclosure (such disclosure to be in
accordance with all applicable laws) to Customers of any such fees charged to
the Customer. To the extent required by applicable rules and regulations of the
Securities and Exchange Commission, the Trust shall make written disclosure of
the fees paid or to be paid to the Agent pursuant to Section 3.1 of this
Agreement. It is understood, however, that in no event shall Atlantic have
recourse or access as Agent or otherwise to the account of any shareholder of
the Trust except to the extent expressly authorized by law or by such
shareholder, or to any assets of the Trust, for payment of any direct fees
referred to in this Section 3.2.
4. INFORMATION PERTAINING TO THE SHARES. The Agent and its officers,
employees and agents are not authorized to make any representations concerning
the Trust or the Shares to Customers or prospective Customers, excepting only
accurate communication of any information provided by or on behalf of any
administrator of the Trust or any distributor of the Shares or any factual
information contained in the then-current Prospectus or Offering Memorandum, as
applicable, Statement of Additional Information or Registration Statement. In
furnishing such information regarding the Trust or the Shares, the Agent shall
act as agent for the Customer only and shall have no authority to act as agent
for the Trust. Advance copies or proofs of all materials (other than a
Prospectus or Offering Memorandum, as applicable, Statement of Additional
Information, Registration Statement or other writing furnished to the Agent by
the Trust) which are generally circulated or disseminated by the Agent to
Customers or prospective Customers which identify or describe the Trust shall be
provided to the Trust at least 10 days prior to such circulation or
dissemination (unless the Trust consents in writing to a shorter period), and
such materials shall not be circulated or disseminated or further circulated or
disseminated at any time after the Trust shall have given written notice to the
Agent of any objection thereto.
Nothing in this Section 4 shall be construed to make the Trust liable
for the use (as opposed to the accuracy) of any information about the Trust
which is disseminated by the Agent.
5. USE OF THE AGENT'S NAME. The Trust shall not use the name of the
Agent, Atlantic or any of its affiliates or subsidiaries in any Prospectus or
Offering Memorandum, as applicable, sales literature or other material relating
to the Trust in a manner not approved by the Agent prior thereto in writing;
PROVIDED, HOWEVER, that the approval of the Agent shall not be required for any
use of its name which merely refers in accurate and factual terms to its
appointment, the services provided and the fees paid hereunder or which is
required by the Securities and Exchange Commission or any state securities
authority or any other appropriate regulatory, governmental or judicial
authority; PROVIDED, FURTHER, that in no event shall such approval be
unreasonably withheld or delayed.
3
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6. USE OF THE TRUST'S NAME. The Agent shall not use the name of the
Trust on any checks, bank drafts, bank statements or forms for other than
internal use in a manner not approved by the Trust prior thereto in writing;
PROVIDED, HOWEVER, that the approval of the Trust shall not be required for the
use of the Trust's name in connection with communications permitted by Section 4
hereof or (subject to Section 4, to the extent the same may be applicable) for
any use of the Trust's name which merely refers in accurate and factual terms to
the Trust in connection with the Agent's role hereunder or which is required by
the Securities and Exchange Commission or any state securities authority or any
other appropriate regulatory, governmental or judicial authority; PROVIDED,
FURTHER, that in no event shall such approval be unreasonably withheld or
delayed.
7. SECURITY. The Agent represents and warrants that to the best of its
knowledge, the various procedures and systems which it has implemented
(including provision for twenty-four hours a day restricted access) with regard
to safeguarding from loss or damage attributable to fire, theft or any other
cause the Trust's records and other data and the Agent's records, data,
equipment, facilities and other property used in the performance of its
obligations hereunder are adequate and that it will make such changes therein
from time to time as in its judgment are required for the secure performance of
its obligations hereunder. The parties shall review such systems and procedures
on a periodic basis, and the Trust shall from time to time specify the types of
records and other data of the Trust to be safeguarded in accordance with this
Section 7.
8. COMPLIANCE WITH LAWS. Each of the Agent and the Trust shall comply
with all applicable federal and state laws and regulations, including securities
laws, in respect of this Agreement and the activities contemplated hereby. Each
of the Agent and the Trust represents and warrants to the other that the
performance of all its obligations hereunder will comply with all applicable
laws and regulations, the provisions of its charter documents and by-laws and
all material contractual obligations binding upon it. Each of the Agent and the
Trust furthermore undertakes that it will promptly, after it becomes so aware,
inform the other of any change in applicable laws or regulations (or
interpretations thereof) or in its charter or by-laws or material contracts
which would prevent or impair full performance of any of its obligations
hereunder.
9. REPORTS. To the extent requested by the Trust from time to time, the
Agent agrees that it will provide the Treasurer of the Trust with a written
report of the amounts expended by the Agent pursuant to this Agreement and the
purposes for which such expenditures were made. Such written reports shall be in
a form reasonably satisfactory to the Trust and shall supply all information
reasonably necessary for the Trust and the Agent to discharge their respective
responsibilities under applicable laws and regulations.
10. RECORD KEEPING. While it is acknowledged and agreed that the
provisions of the 1940 Act, the Securities Exchange Act of 1934 and the
regulations thereunder that are referenced in this Section 10 do not apply to
the Agent, the Agent agrees, as agent for the Trust, to maintain certain records
and accounts as if such provisions apply to it, as herein provided.
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10.1. SECTION 31(A). The Agent shall, on behalf of the Trust, maintain
records in a form reasonably acceptable to the Trust and in compliance with
applicable laws and the rules and regulations of the Securities and Exchange
Commission, including but not limited to the record-keeping requirements of
Section 31(a) of the 1940 Act and the rules thereunder. Such records shall be
deemed to be the property of the Trust and will be made available, at the
Trust's request, for inspection and use by the Trust, representatives of the
Trust and governmental authorities.
10.2. RULES 17A-3 AND 17A-4. The Agent shall maintain accurate and
complete records with respect to services performed by the Agent in connection
with the purchase and redemption of Shares. Such records shall be maintained in
a form reasonably acceptable to the Trust and in compliance with the
requirements of Rules 17a-3 and 17a-4 under the Securities Exchange Act of 1934,
as amended, pursuant to which any dealer of the Shares must maintain certain
records. All such records maintained by the Agent shall be the property of such
dealer and will be made available for inspection and use by the Trust or such
dealer upon the request of either. The Agent shall file with the Securities and
Exchange Commission and other appropriate governmental authorities, and furnish
to the Trust and any such dealer copies of, all reports and undertakings as may
be reasonably requested by the Trust or such dealer in order to comply with the
said rules. If so requested by any such dealer, the Agent shall confirm to such
dealer its obligations under this Section 10.2 by a writing reasonably
satisfactory to such dealer.
10.3. IDENTIFICATION, ETC. OF RECORDS. The Trust shall from time to
time instruct the Agent in writing as to, and the Trust and the Agent shall
periodically review, the records to be maintained and the procedures to be
followed by the Agent in complying with the foregoing Sections 10.1 and 10.2 and
Section 8 to the extent it relates to record-keeping required under federal
securities laws and regulations. Notwithstanding the provisions of Section 8,
the Agent shall be entitled to rely on such instructions.
10.4. TRANSFER OF CUSTOMER DATA. In the event this Agreement is
terminated or a successor to the Agent is appointed, the Agent shall, at the
expense of the Trust, transfer to such designee as the Trust may direct a
certified list of the shareholders of the Trust serviced by the Agent (with
name, address and tax identification or Social Security number), a complete
record of the account of each such shareholder with respect to shares of the
Trust and the status thereof, and all other relevant books, records,
correspondence, and other data established or maintained by the Agent under this
Agreement. In the event this Agreement is terminated, the Agent will use
reasonable efforts to cooperate in the orderly transfer of such duties and
responsibilities, including assistance in the establishment of books, records
and other data by the successor.
10.5. SURVIVAL OF RECORD-KEEPING OBLIGATIONS. The Agent shall retain
any records deemed the property of the Trust pursuant to Section 10 for a period
of six years after the end of the fiscal year in which the transaction to which
such records relate occurred and shall, at the written request of the Trust
before the expiration of such period with respect to any records, deliver such
records to the Trust or its designated agent.
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10.6. OBLIGATIONS PURSUANT TO AGREEMENT ONLY. Nothing in this Section
10 shall be construed to mean that the Agent would, by virtue of its role
hereunder, be required under applicable law to maintain the records required to
be maintained by it under this Section 10.
10.7. AGENT'S RIGHTS TO COPY RECORDS. Anything in this Section 10 to
the contrary notwithstanding, except to the extent otherwise prohibited by law,
the Agent shall have the right to copy, maintain and use any records maintained
by the Agent pursuant to this Section 10, except as otherwise prohibited by
Sections 4 and 6 hereof.
11. FORCE MAJEURE. The Agent shall not be liable or responsible for
delays or errors by reason of circumstances beyond its reasonable control,
including, but not limited to, acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdown, flood or
catastrophe, Acts of God, insurrection, war, riots or failure of communication
or power supply.
12. INDEMNIFICATION.
12.1. INDEMNIFICATION OF THE AGENT. Without limiting the rights of the
Agent Indemnified Parties (as hereinafter defined) under applicable law, the
Trust will indemnify and hold harmless the Agent, any person that directly or
indirectly controls the Agent (within the meaning of the Securities Act of 1933
and the Securities Exchange Act of 1934, each as amended) and the Agent's and
their respective directors, officers and employees (collectively, the "Agent
Indemnified Parties") from all losses, claims, damages, liabilities or expenses,
joint or several, to which they or any of them become subject insofar as such
losses, claims, damages, liabilities or expenses (or actions in respect thereof)
arise out of or are based upon (a) any untrue statement or alleged untrue
statement contained in the then-current Prospectus or Offering Memorandum, as
applicable, Statement of Additional Information or Registration Statement, or
any omission or alleged omission therefrom, or (b) any claim, demand, action or
suit, both (x) arising in connection with actions or inactions by the Trust or
any of its agents or contractors or the performance of the Agent's obligations
hereunder and (y) not resulting from (i) the bad faith or gross negligence of
the Agent, its officers, employees or agents, or (ii) any breach of applicable
law by the Agent, its officers, employees or agents, or (iii) any action of the
Agent, its officers, employees or agents which exceeds the legal authority of
the Agent or its authority hereunder, or (iv) any material error or omission of
the Agent, its officers, employees or agents with respect to the purchase,
redemption and transfer of Customers' Shares. Notwithstanding anything herein to
the contrary, the Trust will indemnify and hold the Agent harmless from any and
all losses, claims, damages, liabilities or expenses (including reasonable
counsel fees and expenses) resulting from any claim as a result of its acting in
accordance with any written instructions reasonably believed by the Agent to
have been executed by any person duly authorized by the Trust, or as a result of
acting in reliance upon any instrument or stock certificate reasonably believed
by the Agent to have been genuine and signed, countersigned or executed by a
person duly authorized by the Trust, excepting only the gross negligence or bad
faith of the Agent.
6
<PAGE>
In any case in which the Trust may be asked to indemnify or hold an
Agent Indemnified Party harmless, the Trust shall be advised of all pertinent
facts concerning the situation in question and the Agent Indemnified Party shall
use reasonable care to identify and notify the Trust promptly concerning any
situation which presents or appears likely to present a claim for
indemnification against the Trust. The Trust shall have the option to defend the
Agent Indemnified Party against any claim which may be the subject of
indemnification hereunder. In the event that the Trust elects to defend against
such claim, the defense shall be conducted by counsel chosen by the Trust and
reasonably satisfactory to the Agent Indemnified Party. The Agent Indemnified
Party may retain additional counsel at its expense. Except with the prior
written consent of the Trust, the Agent Indemnified Party shall not confess any
claim or make any compromise in any case in which the Trust will be asked to
indemnify the Agent Indemnified Party.
12.2. INDEMNIFICATION OF THE TRUST. Without limiting the rights of the
Trust under applicable law, the Agent will indemnify and hold the Trust, its
officers, Trustees, employees and controlling persons harmless from all losses,
claims, damages, liabilities or expenses (including reasonable counsel fees and
expenses) from any claim both (a) resulting from (i) the bad faith or gross
negligence of the Agent, its officers, employees or agents, or (ii) any breach
of applicable law by the Agent, its officers, employees or agents, or (iii) any
action of the Agent, its officers, employees or agents which exceeds the legal
authority of the Agent or its authority hereunder, or (iv) any material error or
omission of the Agent, its officers, employees or agents with respect to the
purchase, redemption and transfer of Customers' Shares, and (b) not resulting
from the Agent's actions in accordance with written instructions reasonably
believed by the Agent to have been executed by any person duly authorized by the
Trust, or in reliance upon the Prospectus or Offering Memorandum, as applicable,
Statement of Additional Information or Registration Statement or any instrument
or stock certificate reasonably believed by the Agent to have been genuine and
signed, countersigned or executed by a person duly authorized by the Trust.
In any case in which the Agent may be asked to indemnify or hold the
Trust or another party harmless, the Agent shall be advised of all pertinent
facts by the Trust or other party concerning the situation in question and the
Trust or other party shall use reasonable care to identify and notify the Agent
promptly concerning any situation which presents or appears likely to present a
claim for indemnification against the Agent. The Agent shall have the option to
defend the Trust or other party against any claim which may be the subject of
indemnification hereunder. In the event that the Agent elects to defend against
such claim, the defense shall be conducted by counsel chosen by the Agent and
reasonably satisfactory to the Trust or other party. The Trust or other party
may retain additional counsel at its expense. Except with the prior written
consent of the Agent, the Trust or other party shall not confess any claim or
make any compromise in any case in which the Agent will be asked to indemnify
the Trust or other party.
12.3. SURVIVAL OF INDEMNITIES. The indemnities granted by the parties
in this Section 12 shall survive the termination of this Agreement.
7
<PAGE>
13. NOTICES. All communications and notices to either party hereto
shall be sent to the address or facsimile number of such party set forth by its
name on the signature pages hereto (in the case of the Agent, to the attention
of its President) or such other address or number as shall be provided to the
other party hereto in writing, and shall be duly given if mailed or telegraphed,
sent by facsimile, or delivered by hand or other courier delivery service that
requires written acknowledgement of receipt, to such party at such address.
14. FURTHER ASSURANCES. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
15. TERMINATION. This Agreement may be terminated by each of Atlantic
or the Trust, without the payment of any penalty, at any time upon not more than
60 days' nor less than 30 days' notice. Upon termination hereof, the Trust shall
pay such compensation as may be due the Agent as of the date of such
termination.
16. CHANGES; AMENDMENTS. This Agreement may be changed or amended only
by written instrument signed by both parties.
17. LIMITATION OF SHAREHOLDER, TRUSTEE AND AGENT LIABILITY. The Agent
hereby agrees that obligations assumed by the Trust pursuant to this Agreement
shall be limited in all cases to the Trust and its assets and that neither the
Agent nor any other person shall seek satisfaction of any such obligation from
the shareholders or any shareholder of the Trust. The obligations of this
Agreement pertaining to a particular Fund shall apply only to that particular
Fund and to no other series of the Trust. It is further agreed that neither the
Agent nor any other person shall seek satisfaction of any such obligations from
the Board of Trustees or any individual Trustee or officer of the Trust. The
Trust hereby agrees that obligations assumed by the Agent pursuant to this
Agreement shall be limited in all cases to the Agent and its assets and that
neither the Trust nor any other person shall seek satisfaction of any such
obligation from the officers, directors or shareholders of the Agent.
18. DIVIDEND PAYMENT DATES. The Trust hereby agrees, with respect to
any series of the Trust that is a money market fund, that dividends otherwise
payable to any Customer on the last business day of each month shall, to the
extent required by the Agent, be distributed on such other date in each month as
the Agent may designate as the dividend distribution date with respect to such
Customer but no more than once a month with respect to each Customer.
19. SUBCONTRACTING BY AGENT. The Agent may, with the written approval
of the Trust (such approval not to be unreasonably withheld or delayed),
subcontract for the performance of the Agent's obligations hereunder with any
one or more persons, including but not limited to any one or more persons which
is an affiliate of the Agent; PROVIDED, HOWEVER, that the Agent shall be as
fully responsible to the Trust for the acts and omissions of any subcontractor
as it would be for its own acts or omissions.
20. COMPLIANCE WITH LAWS AND POLICIES; COOPERATION. The Trust hereby
agrees that it will comply with all laws and regulations applicable to its
8
<PAGE>
operations and the Agent agrees that it will comply with all laws and
regulations applicable to its operations hereunder.
21. AUDIT. The Trust shall maintain or arrange to be maintained
complete and accurate accounting records, in accordance with generally accepted
accounting principles. The Trust shall retain or arrange to be retained such
records for a period of three years from the termination of this Agreement. The
Agent and its designated certified public accountants shall have access to such
records based on reasonable cause and professional judgment during normal
business hours upon reasonable notice to the Trust.
22. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. This Agreement shall be
construed and the provisions thereof interpreted under and in accordance with
the laws of the Commonwealth of Massachusetts. The captions in this Agreement
are included for convenience of reference only and in no way define or limit any
of the provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. This Agreement has been executed on
behalf of the Trust by the undersigned not individually, but in the capacity
indicated. The obligations under this Agreement are not binding upon any of the
officers, Trustees or shareholders of the Trust individually, but bind only the
trust estate. This Agreement has been executed on behalf of the Agent by the
undersigned not individually, but only in the capacity indicated. The
obligations under this Agreement are not binding upon any of the Agent's
directors, officers, shareholders or controlling persons individually, but bind
only the Agent.
NOTICE ADDRESS: EXCELSIOR FUNDS
Excelsior Funds
6 St. James Avenue By: /S/ THOMAS M. LENZ
Boston, Massachusetts 02116 Thomas M. Lenz
Facsimile number: 617-542-5815 Secretary
Telephone number: 617-423-0800 As officer and not individually
NOTICE ADDRESS: MID ATLANTIC CAPITAL CORPORATION
Mid Atlantic Capital Corporation By: /S/ TIMOTHY FRIDAY
The Times Building name: Timothy Friday
336 Fourth Avenue title: President
6th Floor As officer and not individually
Pittsburgh, Pennsylvania 15222
Facsimile number: 412-391-2207
Telephone number: 800-220-7857
9
UST036A
AMENDED AND RESTATED SERVICING PLAN
AMENDED AND RESTATED SERVICING PLAN, dated as of August 9, 1994, of
Excelsior Funds, a Delaware business trust (the "Trust").
W I T N E S S E T H:
WHEREAS, the Trust is engaged in business as an open-end management
investment company and is registered under the Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the ("1940
Act"); and
WHEREAS, the shares of beneficial interest (par value $0.00001 per
share) of the Trust (the "Shares") are divided into one or more separate series,
of which the following series are covered by this Plan: Excelsior Equity Fund,
Excelsior Income and Growth Fund, Excelsior Income Fund, Excelsior Total Return
Bond Fund, Excelsior Equity Index Fund, Excelsior Bond Index Fund, Excelsior
Small Capitalization Fund, Excelsior Balanced Fund, Excelsior Equity Growth
Fund, Excelsior Value Equity Income Fund, Excelsior Institutional Money Fund,
and Excelsior Institutional Treasury Money Fund (the "Funds"); and
WHEREAS, the Trust desires to adopt this Servicing Plan (the "Plan") in
order to provide for certain services to the Trust and holders of Shares of each
Fund; and
WHEREAS, the Trust desires to enter into a transfer agency agreement
(in such form as may from time to time be approved by the Board of Trustees of
the Trust) with a financial institution, as transfer agent for the Trust (the
"Transfer Agent"), whereby the Transfer Agent will provide transfer agency
services to the Trust (the "Transfer Agency Agreement"); and
WHEREAS, the Trust desires to enter into a custodian agreement (in such
form as may from time to time be approved by the Board of Trustees of the Trust)
with a financial institution, as custodian for the Trust (the "Custodian"),
whereby the Custodian will provide custodial services to the Trust with respect
to each Fund (the "Custodian Agreement"); and
WHEREAS, the Trust desires to enter into servicing and fund accounting
agreements (in such form as may from time to time be approved by the Board of
Trustees of the Trust) with Signature Financial Services, Inc., a Delaware
corporation, or its affiliate, Signature Broker-Dealer Services, Inc., a
Delaware corporation, as servicing and fund accounting agent of the Trust (each
a "Servicing Agent"), whereby the Servicing Agent will provide certain
management services to the Trust (the "Servicing Agent Agreement"); and
WHEREAS, the Trust also desires to enter into shareholder servicing
agreements (in such form as may from time to time be approved by the Board of
Trustees of the Trust) with certain financial institutions, as shareholder
servicing agents ("Shareholder Servicing Agents"), whereby each Shareholder
1
<PAGE>
Servicing Agent will, as agent for its customers, provide certain services to
shareholders of one or more Funds (the "Shareholder Servicing Agreements"); and
WHEREAS, the Board of Trustees of the Trust, in considering whether the
Trust should adopt and implement this Plan, has evaluated such information as it
deemed necessary to an informed determination as to whether this Plan should be
adopted and implemented and has considered such pertinent factors as it deemed
necessary to form the basis for a decision to use assets of each Fund for such
purposes and has determined that there is a reasonable likelihood that the
adoption and implementation of this Plan will benefit the Trust and each Fund
and its shareholders.
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Trust, on the following terms and conditions:
1. As specified in the Transfer Agency Agreement, the Transfer Agent
shall act as dividend disbursing agent for the Trust and perform transfer agency
functions for each Fund. The Trust shall pay to the Transfer Agent such
compensation from the assets of each Fund as may from time to time be agreed to
by the Trust and the Transfer Agent.
2. As specified in the Custodian Agreement, the Custodian shall
safeguard and control the cash and securities of each Fund, handle receipt and
delivery of securities for each Fund, determine income and collect interest on
the investments of each Fund, maintain books of original entry for the Trust and
Fund accounting and other required books and accounts, calculate the daily net
asset value of Shares of each Fund and, in general, act as the custodian of the
assets of the Trust pertaining to each Fund, but the Custodian shall have no
power to determine the investment policies of the Trust or to determine which
securities the Trust will buy or sell on behalf of any Fund. The Trust shall pay
to the Custodian such compensation as may from time to time be agreed to by the
Trust and the Custodian.
3. As specified in the Servicing Agent Agreement, the Servicing Agent
shall perform certain management and fund accounting services on behalf of the
Trust, including: (a) providing office space, equipment and clerical personnel
necessary for performing the management functions herein set forth; (b)
arranging, if desired by the Trust, for directors, officers or employees of SFSI
to serve as Trustees, officers or agents of the Trust if duly elected or
appointed to such positions and subject to their individual consent and to any
limitations imposed by law; (c) supervising the overall management of the Trust,
including the updating of organizational documents, and the negotiation of
contracts and fees with and the monitoring and coordinating of performance and
billings of the Trust's transfer agent, custodian, shareholder servicing agents
and other independent contractors or agents; (d) preparing and, if applicable,
filing all documents required for compliance by the Trust with applicable laws
and regulations (including state "blue sky" laws and regulations), including
registration statements on Form N-1A, prospectuses and statements of additional
information, semi-annual and annual reports to the Trust's shareholders, and
reviewing (including coordinating the preparing of, but not preparing) tax
returns; (e) preparation of agendas and supporting documents for and minutes of
2
<PAGE>
meetings of Trustees, committees of Trustees, and preparation of notices, proxy
statements and minutes of meetings of one or more Funds' shareholders; (f)
arranging for maintenance of books and records of the Trust; (g) maintaining
telephone coverage to respond to shareholder inquiries regarding matters to
which this Agreement pertains to which the transfer agent and or shareholder
servicing agents are unable to respond; (h) providing monitoring reports and
assistance regarding the Funds' compliance with federal securities and tax laws;
(i) arranging for dissemination of yield and other performance information to
newspapers and tracking services; (j) arranging for and preparing annual
renewals for fidelity bond and errors and omissions insurance coverage; and (k)
developing a budget for the Trust, establishing the rate of expense accruals,
and arranging for the payment of all fixed and management expenses. As
consideration for services performed under the Servicing Agent Agreement, the
Trust shall, subject to paragraph 5 hereof, periodically pay to the Servicing
Agent such fee from the assets of each Fund as may from time to time be agreed
to by the Trust and the Servicing Agent.
4. As specified in each Shareholder Servicing Agreement, each
Shareholder Servicing Agent shall, with respect to one or more Funds, as agent
for its customers who purchase Shares, perform certain shareholder account and
service functions for such customers, including among others: answering customer
inquiries regarding the manner in which purchases and redemptions of Shares may
be effected, and with regard to certain other matters pertaining to the Trust or
such Fund; assisting customers in designating and changing dividend options,
account designations and addresses; providing necessary personnel and facilities
to maintain certain shareholder accounts and records, as specified from time to
time by the Trust; assisting in processing purchase and redemption transactions;
arranging for the wiring of funds; transmitting and receiving funds in
connection with customer orders to purchase and redeem Shares; verifying and
guaranteeing shareholder signatures in connection with redemption orders and
transfers and changes in shareholder-designated accounts; furnishing periodic
statements showing customer account balances, monthly and annual statements and
confirmations of purchases and redemptions of Shares in a customer's account;
transmitting proxy statements, annual reports, updating prospectuses, statements
of additional information and other communications from the Trust to
shareholders of such Fund; and providing such other related services as the
Trust or a shareholder may request. Each Shareholder Servicing Agreement shall
provide that the Shareholder Servicing Agent shall provide all personnel and
facilities necessary in order for it to perform the functions described in this
paragraph with respect to its customers who purchase Shares. As consideration
for services performed under the Shareholder Servicing Agreements, the Trust
shall, subject to paragraph 5 hereof, periodically pay to each Shareholder
Servicing Agent such fee from the assets of each such Fund as may from time to
time be agreed to by the Trust and such Shareholder Servicing Agent. Each
Shareholder Servicing Agent will be permitted to charge its customers direct
fees for the same or similar services as provided pursuant to a Shareholder
Servicing Agreement.
5. Notwithstanding paragraphs 3 and 4 hereof, the aggregate of the fee
payable from a Fund to the Servicing Agent pursuant to the Servicing Agent
Agreement, and the fees payable from such Fund to the Shareholder Servicing
Agents pursuant to the Shareholder Servicing Agreements, may not exceed, (i)
with respect to either of Excelsior Institutional Money Market Fund or Excelsior
Institutional Treasury Money Market Fund (the "Money Market Funds"), 0.40% of
3
<PAGE>
such Fund's average daily net assets on an annualized basis for such Funds'
then-current fiscal year, and (ii) with respect to any of the Funds other than
the Money Market Funds, 0.65% of such Fund's average daily net assets on an
annualized basis for such Fund's then-current fiscal year.
6. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Trust Instrument or By-Laws or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board of Trustees of the Trust of the
responsibility for and control of the conduct of the affairs of the Trust.
7. This Plan shall become effective upon (a) approval by a vote of at
least a "majority of the outstanding voting securities" of each Fund, and (b)
approval by a vote of the Board of Trustees of the Trust and vote of a majority
of the Trustees who are not "interested persons" of the Trust and who have no
direct or indirect financial interest in the operation of the Plan or in any of
the agreements related to the Plan (the "Qualified Trustees"), such votes to be
cast in person at a meeting called for the purpose of voting on this Plan.
8. This Plan shall continue in effect indefinitely, provided that such
continuance is subject to annual approval by a vote of the Board of Trustees of
the Trust and a majority of the Qualified Trustees, such votes to be cast in
person at a meeting called for the purpose of voting on continuance of this
Plan. If such annual approval is not obtained, this Plan shall expire on the
date which is 15 months after the date of the last approval.
9. This Plan may be amended at any time by the Board of Trustees of the
Trust, provided that (a) any amendment to increase materially the amount
authorized to be expended from the assets of any Fund for the services described
herein shall be effective only upon approval by a vote of a "majority of the
outstanding voting securities" of such Fund, and (b) any material amendment of
this Plan shall be effective only upon approval by a vote of the Board of
Trustees of the Trust and a majority of the Qualified Trustees, such votes to be
cast in person at a meeting called for the purpose of voting on such amendment.
This Plan may be terminated at any time with respect to any Fund by vote of a
majority of the Qualified Trustees or by a vote of a "majority of the
outstanding voting securities" of such Fund.
10. The Treasurer of the Trust shall provide the Board of Trustees of
the Trust, and the Board of Trustees of the Trust shall review, at least
quarterly, a written report of the amounts expended under the Plan and the
purposes for which such expenditures were made.
11. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the Trustees who are
not "interested persons" of the Trust.
12. For the purposes of this Plan, the terms "interested person" and
"majority of the outstanding voting securities" are used as defined in the 1940
Act. In addition, for purposes of determining the fees payable to the Servicing
Agent and each Shareholder Servicing Agent, the value of a Fund's net assets
shall be computed in the manner specified in the Trust's then-current
4
<PAGE>
prospectus and statement of additional information and/or offering circular
applicable to that Fund for the computation of the net asset value of Shares of
that Fund.
13. The Fund shall preserve copies of this Plan, and each agreement
related hereto and each report referred to in paragraph 10 hereof (collectively
the "Records"), for a period of six years from the end of the fiscal year in
which such Record was made and each such Record shall be kept in an easily
accessible place for the first two years of said record-keeping.
14. This Plan shall be construed in accordance with the laws of the
Commonwealth of Massachusetts and the applicable provisions of the 1940 Act.
15. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Plan shall not
be affected thereby.
UST036A
5
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 4 to the registration statement on Form N-1A (the "Registration
Statement") of Excelsior Funds of our report dated October 5, 1995, relating to
the financial statements and financial highlights appearing in the August 31,
1995 Annual Report of Excelsior Institutional Money Fund, which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Financial Highlights" in the Prospectus
and under the heading "Independent Accountants" in the Statement of Additional
Information.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Boston, Massachusetts
December 18, 1995
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this Post-Effective Amendment No. 4
to the registration statement on Form N-1A (the "Registration Statement") of
Excelsior Funds of our report dated October 5, 1995, relating to the financial
statements and financial highlights of the Cash Reserves Portfolio, which
appears in such Statement of Additional Information. We also consent to the
reference to us under the heading "Independent Accountants" in the Statement of
Additional Information.
/s/ Price Waterhouse
Chartered Accountants
Toronto, Ontario
December 18, 1995
EXCELSIOR FUNDS
EXCELSIOR INSTITUTIONAL MONEY FUND
7-DAY YIELD
Quotations of "yield" will be based on the net investment income per
share generated over a seven-day period. The income is then "annualized".
BASE PERIOD RETURN = Net Change in Account Value
Beginning Account Value
CURRENT YIELD = Base Period Return x 365/7
The "effective yield" is calculated similarly, but when annualized, the
income earned by the investment during that seven-day period is assumed to be
reinvested. The effective yield will be slightly higher than the yield because
of the compounding effect of this assumed reinvestment.
7-DAY EFFECTIVE YIELD
EFFECTIVE YIELD = [(1 + Base Period Return)365/7] - 1
(Base Period Return = net change in account value divided by
beginning account value)
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary information extracted from the Excelsior
Institutional Money Fund Annual Report, dated 8/31/95 and is qualified in its
entirety by reference to such Annual Report.
</LEGEND>
<CIK> 0000914535
<NAME> EXCELSIOR FUNDS
<SERIES>
<NUMBER> 1
<NAME> EXCELSIOR INSTITUTIONAL MONEY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1995
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> 640,129,726
<INVESTMENTS-AT-VALUE> 640,129,726
<RECEIVABLES> 0
<ASSETS-OTHER> 139,670
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 640,269,396
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2,158,535
<TOTAL-LIABILITIES> 2,158,535
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 638,110,861
<SHARES-COMMON-STOCK> 638,110,861
<SHARES-COMMON-PRIOR> 770,657,638
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 638,110,861
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 27,220,569
<OTHER-INCOME> 0
<EXPENSES-NET> 715,477
<NET-INVESTMENT-INCOME> 26,505,092
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 26,505,092
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 26,505,092
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,171,328,156
<NUMBER-OF-SHARES-REDEEMED> 8,308,620,124
<SHARES-REINVESTED> 4,745,191
<NET-CHANGE-IN-ASSETS> (132,546,777)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,121,624
<AVERAGE-NET-ASSETS> 474,530,555
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.058
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0.058
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
