<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Excelsior Institutional Trust
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Mari A. Wilson
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
2. Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
4. Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
5. Total fee paid:
-------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
<PAGE>
-2-
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
-------------------------------------------------------------------------
2. Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
3. Filing Party:
-------------------------------------------------------------------------
4. Date Filed:
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<PAGE>
EXCELSIOR
- ----------------
INSTITUTIONAL FUNDS
October 16, 1995
Dear Shareholder:
Your Board of Trustees has proposed a restructuring of the Excelsior
Institutional Trust which will streamline the product offering and eliminate
certain costs inherent in the current fund structure. You and your fellow
shareholders will continue to benefit from the same high quality professional
investment management which you have received in the past.
Under the terms of the restructuring, each of the funds will be withdrawing
from its two-tier master/feeder structure and will then operate as a more
traditional one-tier mutual fund. Your Trustees are therefore requesting that
you approve investment advisory agreements which are identical in nature to
those currently in existence. This will enable your fund's investment advisor
to directly manage the fund on your behalf. Currently this is accomplished
through the use of a separate portfolio with an investment objective identical
to the fund. In addition, the Trustees are requesting your approval of several
new Trustees who currently serve as directors of the UST Master Funds, in order
to more closely align the two fund complexes. As part of this restructuring,
the UST Master Funds have agreed to change their name to Excelsior Funds.
Additional proposals relate only to the Bond Index Fund; shareholders of that
fund should read Proposal 3 carefully. Finally, you are being requested to
approve Ernst & Young LLP as the auditors for the funds.
Since the Trustees have approved the restructuring, the proposal is now
subject to the approval of you and your fellow shareholders at a meeting to be
held on Wednesday, November 15, 1995, in the offices of U.S. Trust, 114 West
47th Street, New York, New York, at 10:00 a.m., Eastern Standard Time. Your
vote is very important. Even if you cannot attend, it is extremely important
that you complete and return the enclosed proxy card.
Because the Trustees believe that this restructuring will benefit all
shareholders, the Trustees encourage you to vote for the proposals.
Thomas M. Lenz
Secretary
<PAGE>
EXCELSIOR INSTITUTIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL INCOME FUND
EXCELSIOR INSTITUTIONAL TOTAL RETURN BOND FUND
EXCELSIOR INSTITUTIONAL EQUITY INDEX FUND
EXCELSIOR INSTITUTIONAL BOND INDEX FUND
EXCELSIOR INSTITUTIONAL SMALL CAPITALIZATION FUND
EXCELSIOR INSTITUTIONAL BALANCED FUND
EXCELSIOR INSTITUTIONAL EQUITY GROWTH FUND
EXCELSIOR INSTITUTIONAL VALUE EQUITY INCOME FUND
EXCELSIOR INSTITUTIONAL INTERNATIONAL EQUITY FUND
EACH A SERIES OF EXCELSIOR INSTITUTIONAL TRUST
6 ST. JAMES AVENUE
BOSTON, MASSACHUSETTS 02116
TELEPHONE: (617) 423-0800
----------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 15, 1995
----------------
A Special Meeting of Shareholders (the "Meeting") of Excelsior Institutional
Equity Fund, Excelsior Institutional Income Fund, Excelsior Institutional Total
Return Bond Fund, Excelsior Institutional Equity Index Fund, Excelsior
Institutional Bond Index Fund, Excelsior Institutional Small Capitalization
Fund, Excelsior Institutional Balanced Fund, Excelsior Institutional Equity
Growth Fund, Excelsior Institutional Value Equity Income Fund and Excelsior
Institutional International Equity Fund (each, a "Fund"; collectively, the
"Funds"), each a separate series of Excelsior Institutional Trust (the
"Trust"), will be held at the offices of United States Trust Company of New
York ("U.S. Trust") located at 114 West 47th Street, New York, New York 10036,
at 10:00 a.m., Eastern time, on Wednesday, November 15, 1995 for the following
purposes:
PROPOSAL 1.EXCELSIOR INSTITUTIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL INCOME FUND
EXCELSIOR INSTITUTIONAL TOTAL RETURN BOND FUND
EXCELSIOR INSTITUTIONAL BALANCED FUND
EXCELSIOR INSTITUTIONAL EQUITY GROWTH FUND
EXCELSIOR INSTITUTIONAL INTERNATIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL BOND INDEX FUND
<PAGE>
For each of the above Funds, to approve or disapprove of the withdrawal
by such Fund of its investment in the series of the St. James Portfolios
corresponding to such Fund, in order to allow the current operating
structure of such Fund to be replaced (temporarily, in the case of the
Excelsior Institutional Bond Index Fund) by a traditional one-tier
operating structure common to most mutual funds. (Shareholders of each of
the above Funds will vote separately with respect to the withdrawal of such
investment by such Fund.)
PROPOSAL 2.EXCELSIOR INSTITUTIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL INCOME FUND
EXCELSIOR INSTITUTIONAL TOTAL RETURN BOND FUND
EXCELSIOR INSTITUTIONAL BALANCED FUND
EXCELSIOR INSTITUTIONAL EQUITY GROWTH FUND
EXCELSIOR INSTITUTIONAL INTERNATIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL BOND INDEX FUND
For each of the above Funds, to approve or disapprove of investment
advisory agreements and, with respect to certain of the Funds, investment
subadvisory agreements, as more specifically described in parts (a), (b),
(c), (d), (e) and (f) below of this Proposal 2. In each case upon the
changes in operating structure described in Proposal 1 above the existing
agreements would no longer apply to the Funds and therefore approval of
agreements applicable to the Funds would be required. The agreements to be
approved will provide the same advisory services to the Funds as the
existing agreements. The specific proposals with regard to each Fund are as
follows:
(a).EXCELSIOR INSTITUTIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL INCOME FUND
EXCELSIOR INSTITUTIONAL TOTAL RETURN BOND FUND
For each of the above Funds, to approve or disapprove of a new investment
advisory agreement between the Trust, on behalf of each such Fund, and U.S.
Trust as investment adviser, identical in material terms to the existing
agreement between the St. James Portfolios and U.S. Trust. (Shareholders of
each of the above Funds will vote separately with respect to the investment
advisory agreement for such Fund.)
(b).EXCELSIOR INSTITUTIONAL BALANCED FUND
EXCELSIOR INSTITUTIONAL EQUITY GROWTH FUND
EXCELSIOR INSTITUTIONAL INTERNATIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL BOND INDEX FUND
For each of the above Funds, to approve or disapprove of a new investment
advisory agreement between the Trust, on behalf of each such Fund, and
United States Trust Company of the Pacific Northwest ("U.S. Trust Pacific")
as investment adviser, identical in material terms to the existing
agreement between the St. James Portfolios and U.S. Trust Pacific.
(Shareholders of each of the above Funds will vote separately with respect
to the investment advisory agreement for such Fund.)
2
<PAGE>
(c).EXCELSIOR INSTITUTIONAL BALANCED FUND
For the above Fund, to approve or disapprove of a new investment
subadvisory agreement between U.S. Trust Pacific and Becker Capital
Management, Inc. ("Becker") as investment subadviser, identical in material
terms to the existing agreement with Becker.
(d).EXCELSIOR INSTITUTIONAL EQUITY GROWTH FUND
For the above Fund, to approve or disapprove of a new investment
subadvisory agreement between U.S. Trust Pacific and Luther King Capital
Management Corporation ("Luther King") as investment subadviser, identical
in material terms to the existing agreement with Luther King.
(e).EXCELSIOR INSTITUTIONAL INTERNATIONAL EQUITY FUND
For the above Fund, to approve or disapprove of a new investment
subadvisory agreement between U.S. Trust Pacific and Harding, Loevner
Management, L.P. ("Harding Loevner") as investment subadviser, identical in
material terms to the existing agreement with Harding Loevner.
(f).EXCELSIOR INSTITUTIONAL BOND INDEX FUND
For the above Fund, to approve or disapprove of a new investment
subadvisory agreement between U.S. Trust Pacific and U.S. Trust as
investment subadviser, identical in material terms to the existing
agreement with U.S. Trust.
PROPOSAL 3.EXCELSIOR INSTITUTIONAL BOND INDEX FUND
For the above Fund, to approve or disapprove of the investment of all of
its investable assets in the Bond Index Portfolio, a series of Federated
Investment Portfolios ("Federated Portfolios"), and in connection
therewith:
(a). For the Bond Index Fund, as an investor in the Bond Index Portfolio,
to approve or disapprove of an investment advisory agreement between
Federated Portfolios and Federated Management with respect to the Bond
Index Portfolio.
(b). For the Bond Index Fund, as an investor in the Bond Index Portfolio,
to approve or disapprove of an investment subadvisory agreement
between Federated Management and U.S. Trust with respect to the Bond
Index Portfolio.
(c). For the Bond Index Fund, as an investor in Federated Portfolios, to
authorize the election of the Trustees of Federated Portfolios.
(d). For the Bond Index Fund, as an investor in Federated Portfolios, to
authorize the approval or disapproval of the selection of Ernst &
Young LLP as the independent certified public accountants of Federated
Portfolios.
PROPOSAL 4.ALL FUNDS
To elect a Board of Trustees of the Trust.
3
<PAGE>
PROPOSAL 5.ALL FUNDS
To approve or disapprove of the selection of Ernst & Young LLP as the
independent certified public accountants of the Trust.
PROPOSAL 6.ALL FUNDS
To transact such other business as may properly come before the Meeting
and any adjournments thereof.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT YOU VOTE IN FAVOR OF ALL
ITEMS.
Only shareholders of record of the Funds as of the close of business on
September 15, 1995 will be entitled to vote at the Meeting or any adjournment
of the Meeting.
Thomas M. Lenz, Secretary
October 16, 1995
YOUR VOTE IS IMPORTANT. WE WOULD APPRECIATE YOUR PROMPTLY VOTING, SIGNING AND
RETURNING THE ENCLOSED PROXY, WHICH WILL HELP AVOID THE ADDITIONAL EXPENSE OF A
SECOND SOLICITATION. THE ENCLOSED ADDRESSED ENVELOPE REQUIRES NO POSTAGE AND IS
PROVIDED FOR YOUR CONVENIENCE.
4
<PAGE>
EXCELSIOR INSTITUTIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL INCOME FUND
EXCELSIOR INSTITUTIONAL TOTAL RETURN BOND FUND
EXCELSIOR INSTITUTIONAL EQUITY INDEX FUND
EXCELSIOR INSTITUTIONAL BOND INDEX FUND
EXCELSIOR INSTITUTIONAL SMALL CAPITALIZATION FUND
EXCELSIOR INSTITUTIONAL BALANCED FUND
EXCELSIOR INSTITUTIONAL EQUITY GROWTH FUND
EXCELSIOR INSTITUTIONAL VALUE EQUITY INCOME FUND
EXCELSIOR INSTITUTIONAL INTERNATIONAL EQUITY FUND
EACH A SERIES OF EXCELSIOR INSTITUTIONAL TRUST
6 ST. JAMES AVENUE
BOSTON, MASSACHUSETTS 02116
TELEPHONE: (617) 423-0800
----------------
PROXY STATEMENT
----------------
GENERAL
This Proxy Statement and Notice of Special Meeting with accompanying form of
proxy are being mailed by the Board of Trustees of Excelsior Institutional
Trust (the "Trust") on behalf of Excelsior Institutional Equity Fund (the
"Equity Fund"), Excelsior Institutional Income Fund (the "Income Fund"),
Excelsior Institutional Total Return Bond Fund (the "Total Return Bond Fund"),
Excelsior Institutional Equity Index Fund (the "Equity Index Fund"), Excelsior
Institutional Bond Index Fund (the "Bond Index Fund"), Excelsior Institutional
Small Capitalization Fund (the "Small Cap Fund"), Excelsior Institutional
Balanced Fund (the "Balanced Fund"), Excelsior Institutional Equity Growth Fund
(the "Equity Growth Fund"), Excelsior Institutional Value Equity Income Fund
(the "Value Equity Income Fund") and Excelsior Institutional International
Equity Fund (the "International Equity Fund") (each, a "Fund"; collectively,
the "Funds"), each a series of the Trust, on or about October 16, 1995. They
are being furnished in connection with the solicitation of proxies by the Board
of Trustees of the Trust for use at a special meeting (the "Meeting") of the
shareholders of the Funds to be held at the offices of United States Trust
Company of New York ("U.S. Trust") located at 114 West 47th Street, New York,
New York 10036, on Wednesday, November 15, 1995 at 10:00 a.m., Eastern time for
the purposes set forth in the accompanying Notice of Special Meeting.
<PAGE>
The table below sets forth the proposals on which shareholders of each Fund
will vote:
<TABLE>
<CAPTION>
FUND PROPOSALS TO BE CONSIDERED
---- --------------------------
<S> <C>
Equity Fund... Proposals 1, 2(a), 4, 5, 6
Income Fund... Proposals 1, 2(a), 4, 5, 6
Total Return
Bond Fund.... Proposals 1, 2(a), 4, 5, 6
Equity Index
Fund......... Proposals 4, 5, 6
Bond Index
Fund......... Proposals 1, 2(b), 2(f), 3, 3(a), 3(b), 3(c), 3(d), 4, 5, 6
Small Cap
Fund......... Proposals 4, 5, 6
Balanced Fund. Proposals 1, 2(b), 2(c), 4, 5, 6
Equity Growth
Fund......... Proposals 1, 2(b), 2(d), 4, 5, 6
Value Equity
Income Fund.. Proposals 4, 5, 6
International
Equity Fund... Proposals 1, 2(b), 2(e), 4, 5, 6
</TABLE>
Each of the Funds is one of the twelve series of the Trust, which is an open-
end diversified management company organized as a Delaware business trust
established under a Trust Instrument dated April 27, 1994 (the "Trust
Instrument"). Each of the Funds was designated as a separate series of the
Trust on April 27, 1994. There are currently two inactive series of the Trust,
and additional series may be established from time to time.
Each of the Funds currently seeks to achieve its investment objective by
investing all of its investable assets in a corresponding portfolio, as
follows:
<TABLE>
<CAPTION>
FUND CORRESPONDING PORTFOLIO
---- -----------------------
<S> <C>
Equity Fund... Equity Portfolio
Income Fund... Income Portfolio
Total Return
Bond Fund.... Total Return Bond Portfolio
Equity Index
Fund......... Equity Market Portfolio
Bond Index
Fund......... Bond Market Portfolio
Small Cap
Fund......... Small Cap Portfolio
Balanced Fund. Balanced Portfolio
Equity Growth
Fund......... Equity Growth Portfolio
Value Equity
Income Fund.. Value Equity Income Portfolio
International
Equity Fund... International Equity Portfolio
</TABLE>
Each of the portfolios described above (each a "Portfolio," collectively, the
"Portfolios") is a series of St. James Portfolios (the "Portfolio Series"), an
open-end management investment company. Each Portfolio has the same investment
objective and policies as its corresponding Fund.
The mailing address of the Trust is 6 St. James Avenue, Boston, Massachusetts
02116. This Proxy Statement and proxy card are being mailed to shareholders on
or about October 16, 1995. Each Fund's annual report for the fiscal year ending
May 31, 1995 was mailed to the shareholders of such Fund on or about July 28,
1995. A copy may be obtained free of charge by writing to the Trust at the
address stated above or by calling the Trust toll-free at (800) 909-1989.
2
<PAGE>
MANNER OF VOTING PROXIES
If the accompanying form of proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the proxy. If no instructions are specified, shares will be
voted "for" the proposed items. If the enclosed form of proxy is executed and
returned, it may nevertheless be revoked prior to its exercise by a signed
writing delivered at the Meeting or filed with the Secretary of the Trust.
Under the Trust Instrument of the Trust, with respect to any Proposal to be
considered at the Meeting, a quorum is considered the presence in person or by
proxy of the holders of one-third of the outstanding shares of the Fund
entitled to vote at the Meeting with respect to such Proposal. For purposes of
determining the presence of a quorum for transacting business at the Meeting,
abstentions and broker "non-votes" (that is, proxies from brokers or nominees
indicating that such persons have not received instructions from the beneficial
owner or other persons entitled to vote shares on a particular matter with
respect to which the brokers or nominees do not have discretionary power) will
be treated as shares that are present but which have not been voted. For this
reason, abstentions and broker "non-votes" will have the effect of a "no" vote
for purposes of obtaining the requisite approval of the proposals.
In the event that a quorum is not present at the Meeting with respect to a
Fund, the persons named as proxies will vote those proxies which they are
entitled to vote in favor of one or more adjournments of the Meeting with
respect to that Fund to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of a majority of those shares of
that Fund represented at the meeting in person or by proxy. In the event that a
quorum is present at the Meeting with respect to a Fund but sufficient votes to
approve one or more of the proposed items with respect to that Fund are not
received, the persons named as proxies may propose one or more adjournments of
the Meeting with respect to that Fund to permit further solicitation of
proxies. Any such adjournment with respect to a Fund will require the
affirmative vote of a majority of the shares of such Fund voted at the Meeting.
When voting on a proposed adjournment, the persons named as proxies will vote
all shares that they are entitled to vote with respect to each item for the
proposed adjournment, unless directed to disapprove the item, in which case
such shares will be voted against the proposed adjournment. A shareholder vote
may be taken on one or more of the proposals in this Proxy Statement prior to
any such adjournment if sufficient votes have been received for approval.
The cost of soliciting proxies on the accompanying form, including the fees
of a proxy soliciting agent, if any, will be borne by U.S. Trust. In addition
to solicitation by mail, proxies may be solicited by the Board of Trustees of
the Trust, officers, and regular employees and agents of the Trust without
compensation therefor. The Trust will reimburse brokerage firms and others for
their expenses in forwarding proxy materials to the beneficial owners and
soliciting them to execute the proxies.
The Board of Trustees of the Trust has fixed the close of business on
September 15, 1995 as the record date (the "Record Date") for determination of
shareholders of the Funds entitled to notice of and to vote at the Meeting.
Shareholders of record of the Funds on the Record Date are entitled to one vote
per share of their respective Fund(s) at the Meeting or any adjournment of the
Meeting. On the Record Date, there were
3
<PAGE>
(i) 2,636,205.590 outstanding shares of the Equity Fund, held by 3 shareholders
of record, (ii) 4,617,170.046 outstanding shares of the Income Fund, held by 2
shareholders of record, (iii) 4,309,651.939 outstanding shares of the Total
Return Bond Fund, held by 3 shareholders of record, (iv) 1,915,592.706
outstanding shares of the Equity Index Fund, held by 2 shareholders of record,
(v) 2,183,102.711 outstanding shares of the Bond Index Fund, held by 2
shareholders of record, (vi) 2,211,311.830 outstanding shares of the Small Cap
Fund, held by 2 shareholders of record, (vii) 10,448,913.657 outstanding shares
of the Balanced Fund, held by 2 shareholders of record, (viii) 6,954,798.462
outstanding shares of the Equity Growth Fund, held by 2 shareholders of record,
(ix) 2,081,399.211 outstanding shares of the Value Equity Income Fund, held by
2 shareholders of record, and (x) 1,995,381.000 outstanding shares of the
International Equity Fund, held by 2 shareholders of record.
INTERESTS OF CERTAIN PERSONS
As of the Record Date, to the best knowledge of the Trust, the following
persons benefically owned 5% or more of the outstanding shares of the Equity
Fund:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF SHARES
- ------------------- ---------- ---------
<S> <C> <C>
The Children's Aid Society Bequest Account ................ 251,648 10.0%
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
Saint Domenic Church....................................... 207,001 8.2%
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
Albany Law School Restricted .............................. 139,004 5.5%
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
Dow Jones Foundation....................................... 131,293 5.2%
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
</TABLE>
4
<PAGE>
As of the Record Date, to the best knowledge of the Trust, the following
persons benefically owned 5% or more of the outstanding shares of the Income
Fund:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF SHARES
- ------------------- ---------- ---------
<S> <C> <C>
U/W Eugene Higgins Residuary Trust for .................... 1,522,827 32.9%
Columbia Harvard Princeton and Yale Universities
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
U/W Martin S. Paine for the Martin S. Paine Foundation .... 765,536 16.5%
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
The Liberty Fund .......................................... 525,979 11.3%
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
Santa Fe Opera Foundation.................................. 339,840 7.3%
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
The Fund for American Studies ............................. 242,566 5.2%
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
</TABLE>
5
<PAGE>
As of the Record Date, to the best knowledge of the Trust, the following
persons benefically owned 5% or more of the outstanding shares of the Total
Return Bond Fund:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF SHARES
- ------------------- ---------- ---------
<S> <C> <C>
U/W Eugene Higgins Residuary Trust for..................... 1,917,451 45.4%
Columbia Harvard Princeton and Yale Universities
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
The Liberty Fund .......................................... 490,672 11.6%
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
The Chamber Music Society.................................. 313,546 7.4%
of Lincoln Center Inc.
c/o U.S. Trust
114 W. 47th Street
New York, NY 10014
</TABLE>
As of the Record Date, to the best knowledge of the Trust, the following
persons benefically owned 5% or more of the outstanding shares of the Equity
Index Fund:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF SHARES
- ------------------- ---------- ---------
<S> <C> <C>
USTPN Equity Index Fund................................... 807,028 42.1%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Stevedoring Services of America Retirement Trust ......... 529,186 27.6%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Washington Education Association Pension Plan ............ 245,255 12.8%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
</TABLE>
6
<PAGE>
As of the Record Date, to the best knowledge of the Trust, the following
persons benefically owned 5% or more of the outstanding shares of the Bond
Index Fund:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF SHARES
- ------------------- ---------- ---------
<S> <C> <C>
USTPN Bond Index Fund..................................... 920,009 42.1%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Sun Studs Inc. Profit Sharing Plan ....................... 280,821 12.8%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Washington Education Association Pension Plan ............ 270,108 12.3%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Stevedoring Services of America Retirement Trust ......... 248,043 11.3%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Columbia Helicopters Profit Sharing Plan--UST Account .... 120,525 5.5%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
</TABLE>
7
<PAGE>
As of the Record Date, to the best knowledge of the Trust, the following
persons benefically owned 5% or more of the outstanding shares of the Small Cap
Fund:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF SHARES
- ------------------- ---------- ---------
<S> <C> <C>
Stevedoring Services of America Retirement Trust ......... 737,384 33.3%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
USTPN Small Cap Equity Fund .............................. 661,021 29.9%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Washington Education Association Pension Plan ............ 374,659 16.9%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Sun Studs Inc. Profit Sharing Plan ....................... 138,938 6.2%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
</TABLE>
8
<PAGE>
As of the Record Date, to the best knowledge of the Trust, the following
persons benefically owned 5% or more of the outstanding shares of the Balanced
Fund:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF SHARES
- ------------------- ---------- ---------
<S> <C> <C>
USTPN Balanced Fund........................................ 4,412,489 42.4%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Washington Water Power Company Investment Plan and Trust... 1,637,921 15.7%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Columbia Helicopters 401(k) Plan........................... 608,746 5.8%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
United Grocers Special 401(k) Plan ........................ 578,248 5.5%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
</TABLE>
As of the Record Date, to the best knowledge of the Trust, the following
persons benefically owned 5% or more of the outstanding shares of the Equity
Growth Fund:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF SHARES
- ------------------- ---------- ---------
<S> <C> <C>
USTPN Equity Growth Fund................................... 2,715,031 39.1%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Washington Water Power Company Investment Plan and Trust... 1,245,500 17.9%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
</TABLE>
9
<PAGE>
As of the Record Date, to the best knowledge of the Trust, the following
persons benefically owned 5% or more of the outstanding shares of the Value
Equity Income Fund:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF SHARES
- ------------------- ---------- ---------
<S> <C> <C>
USTPN Value Equity Income Fund............................ 1,211,648 58.3%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Washington Education Association Pension Plan ............ 179,019 8.6%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Sun Studs Inc. Profit Sharing Plan ....................... 151,016 7.2%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Cascade General Inc. Retirement Plan ..................... 139,926 6.7%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
</TABLE>
10
<PAGE>
As of the Record Date, to the best knowledge of the Trust, the following
persons benefically owned 5% or more of the outstanding shares of the
International Equity Fund:
<TABLE>
<CAPTION>
AMOUNT OF
NAME AND ADDRESS BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF SHARES
- ------------------- ---------- ---------
<S> <C> <C>
Stevedoring Services of America Retirement Trust.......... 564,159 28.2%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
United Grocers Pension Trust.............................. 239,938 12.0%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Prudence Miller Agency.................................... 173,581 8.6%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Columbia Helicopters Profit Sharing Plan--UST Account .... 156,279 7.8%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Columbia Helicopters 401(k) Plan World Stock Fund ........ 148,887 7.4%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Washington Education Association Pension Plan ............ 148,770 7.4%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
Norris Beggs & Simpson NW Tax Deferred Investment Plan ... 106,265 5.3%
c/o United States Trust Company of the Pacific Northwest
4380 S.W. Macadam Ave.
Suite 450
Portland, Oregon 97201
</TABLE>
11
<PAGE>
SUBMISSION OF CERTAIN PROPOSALS
The Trust is a Delaware business trust, and as such is not required to hold
annual meetings of shareholders, although special meetings may be called for a
Fund, or for the Trust as a whole, for purposes such as electing Trustees or
removing Trustees, changing fundamental policies, or approving an advisory
contract. Shareholder proposals to be presented at any subsequent meeting of
shareholders must be received by the Trust at the Trust's office within a
reasonable time before the proxy solicitation is made.
PROPOSAL 1. EXCELSIOR INSTITUTIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL INCOME FUND
EXCELSIOR INSTITUTIONAL TOTAL RETURN BOND FUND
EXCELSIOR INSTITUTIONAL BALANCED FUND
EXCELSIOR INSTITUTIONAL EQUITY GROWTH FUND
EXCELSIOR INSTITUTIONAL INTERNATIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL BOND INDEX FUND
FOR EACH OF THE ABOVE FUNDS, TO APPROVE OR DISAPPROVE OF THE
WITHDRAWAL BY SUCH FUND OF ITS INVESTMENT IN THE CORRESPONDING
PORTFOLIO OF THE PORTFOLIO SERIES.
GENERAL
Unlike other mutual funds which directly acquire and manage their own
portfolios of securities, the Trust currently seeks to achieve each Fund's
investment objective by investing all of that Fund's investable assets in a
corresponding portfolio or series of St. James Portfolios (the "Portfolio
Series"), an open-end management investment company (each such series is
referred to herein as a "Portfolio"; collectively the "Portfolios"). Each
Portfolio has the same investment objective and policies as its corresponding
Fund. The Funds invest in the Portfolios through Signature Financial Group,
Inc.'s two-tier structure known as the Hub and Spoke(R) financial services
method. Hub and Spoke(R) employs a two-tier master/feeder fund structure and is
a registered service mark of Signature Financial Group, Inc. This structure
allows several funds (each, a "Spoke" or "feeder fund") with different
distribution features, but with the same investment objective, restrictions and
policies, to combine their investments in a single fund (the "Hub" or "master
fund") instead of managing them separately. The Hub and Spoke(R) structure may
produce measurable benefits to shareholders of a feeder fund if other feeder
funds invest in the master fund, thereby increasing the master fund's assets
and producing economies of scale that result in reduced fund expenses
indirectly borne by shareholders of each feeder fund.
Because the Funds are currently the only feeder funds investing in the
Portfolio Series, the Funds are not deriving the special advantages of the Hub
and Spoke(R) structure. As the Trustees have been informed that it is unlikely
that there will be additional feeder funds investing in the Portfolio Series in
the near future, and as the expected benefits of the Hub and Spoke(R) structure
are therefore not likely to materialize in the near future, the Trustees have
decided that it would be in the best interests of the shareholders of each Fund
to withdraw such Fund from its corresponding Portfolio and to thereafter
operate such Fund (temporarily, in the case of the Bond Index Fund) in a more
traditional one-tier mutual fund structure. As more fully
12
<PAGE>
described in Proposal 3 below, the Trustees have decided that it would be in
the best interests of the shareholders of the Bond Index Fund if the
investable assets of such Fund were then reinvested in the Bond Index
Portfolio, a series of Federated Investment Portfolios ("Federated
Portfolios"). Therefore, if Proposals 1, 2 and 3 are approved by the
shareholders of the Bond Index Fund, it is contemplated that such Fund will
temporarily operate in a traditional one-tier mutual fund structure which will
be replaced almost immediately thereafter by a new two-tier master/feeder
structure.
Operating in a more traditional one-tier mutual fund structure will also
enable each of the above Funds to be more closely aligned to other mutual
funds also advised by U.S. Trust, UST Master Funds, Inc., UST Master Tax-
Exempt Funds, Inc. and UST Master Variable Series, Inc. (collectively, the
"Master Funds"). Closer alignment with the Master Funds, with 32 separate
investment series and approximately $3.2 billion in assets, is anticipated to
lead to a more focused and therefore successful marketing effort of shares of
all funds in the combined fund complex. In addition, the closer alignment has
the potential to produce some of the benefits of economies of scale which
would have occurred if there had been additional feeder funds in the St. James
Portfolios, because of the ability of the combined fund complex to negotiate
fees with service providers and other third parties on a more advantageous
basis. To further achieve this alignment, the Trustees of the Trust have
proposed for nomination as additional Trustees of the Trust, effective
following the next regularly scheduled meeting of the Board of Trustees of the
Trust, the current Directors of the Master Funds, as more fully described
below in Proposal 4. Additionally, the Master Funds has agreed to change its
name to Excelsior Funds. Both the Funds and the Master Funds currently employ
the same distributor, the same independent public accountants, the same
custodian, and the same transfer agent. It is also anticipated that if
Proposal 1 is approved, effective upon the restructuring, the Funds will
employ as administrators, those entities which serve as administrators for the
Master Funds, and will appoint as officers of the Trust, certain individuals
who also serve as officers of the Master Funds.
As a feeder fund in a Hub and Spoke(R) structure, each Fund indirectly pays
its share of the expenses of its corresponding Portfolio. Because in each case
a Fund is the only feeder fund investing in its corresponding Portfolio, each
Fund has borne both its own expenses and, indirectly, the entire amount of the
Portfolio's advisory, custody and other expenses. The actual expenses paid by
the Funds have been very low due to the fee waivers and expense reimbursements
by U.S. Trust, United States Trust Company of the Pacific Northwest ("U.S.
Trust Pacific"), and Mutual Funds Services Company, which had been an
affiliate of U.S. Trust and U.S. Trust Pacific. As these fee waivers and
expense reimbursements are voluntary, they may be discontinued at any time.
U.S. Trust and U.S. Trust Pacific have informed the Trustees of the Trust that
they intend, as of December 1, 1995, to modify their voluntary fee waivers and
reimbursements whether or not the restructuring is approved by shareholders.
Thus, although the restructuring will not result in any increases in the
aggregate contractual fees payable directly or indirectly by any Fund for
advisory, transfer agency, custody or distribution services, and it is
anticipated that certain savings may be achieved because of reduced
administration and other operating fees after the restructuring, expenses of
the Funds will increase due to the modification of the current voluntary fee
waivers and expense reimbursements.
Therefore, whether or not the restructuring is approved, the ordinary
operating expenses for each of the Funds, currently set at 0.12% of net asset
value as a result of voluntary fee waivers and expense reimbursements, will
increase. The table below sets forth, in column (1), the annual ordinary
operating
13
<PAGE>
expenses of each Fund, expressed as a percentage of average net assets, for
the fiscal year ending May 31, 1995, or pro rata portion of such year, without
giving effect to voluntary fee waivers and expense reimbursements in effect
during the period, in column (2), the annual ordinary operating expenses of
each Fund, expressed as a percentage of average net assets, for the fiscal
year ending May 31, 1995, or pro rata portion of such year, after giving
effect to voluntary fee waivers and expense reimbursements in effect during
the period, and in column (3), the estimated annual ordinary operating
expenses of each Fund, expressed as a percentage of estimated average net
assets, for the annual period beginning December 1, 1995, after giving effect
to the modification of such voluntary fee waivers and expense reimbursements.
<TABLE>
<CAPTION>
1 2 3
ACTUAL EXPENSES EXPENSES FOR ESTIMATED
FOR PERIOD ENDING PERIOD ENDING EXPENSES AFTER
MAY 31, 1995 MAY 31, 1995 MODIFICATION
FUND PRIOR TO WAIVERS WITH FEE WAIVERS OF FEE WAIVERS
- ---- ----------------- ---------------- --------------
<S> <C> <C> <C>
Equity Fund.............. 2.67% 0.12% 0.70%
Income Fund.............. 1.65% 0.12% 0.50%
Total Return Bond Fund... 1.93% 0.12% 0.50%
Bond Index Fund.......... 1.23% 0.12% 0.30%*
Balanced Fund............ 1.32% 0.12% 0.70%
Equity Growth Fund....... 1.36% 0.12% 0.70%
International Equity
Fund.................... 3.32% 0.25% 0.90%
</TABLE>
- --------
* For further information about the estimated expenses of the Bond Index Fund
following the proposed restructuring, see Proposal 3, below.
The expense ratios set forth in Column (3) above will be supported by
voluntary fee waivers and expense reimbursements that, except as set forth in
Proposal 3 relating to the Bond Index Fund, may be discontinued by U.S. Trust
and its affiliates at any time.
As part of the overall restructuring of the Funds, three of the series of
the Trust, Excelsior Institutional Equity Index Fund, Excelsior Institutional
Small Capitalization Fund, and Excelsior Institutional Value Equity Fund will
be terminated.
At meetings of the Trust's Board of Trustees on August 29, 1995, September
13, 1995 and October 6, 1995, the Trustees considered alternatives available
to the Funds and determined that the proposed withdrawal from the Portfolio
and modification of the structure of each Fund to a more traditional operating
structure (temporarily, in the case of the Bond Index Fund) was in the best
interests of the shareholders of each Fund. The Trustees' decision was based
upon several factors including: (i) the offer of each investment adviser and
each subadviser to the Portfolio to manage the assets of the Funds pursuant to
new investment advisory agreements on substantially identical terms as the
current agreements pursuant to which the Portfolios receive investment
advisory services (see Proposal 2 below); (ii) the expected benefits resulting
from the simplified structure; and (iii) the expected benefits resulting from
a closer alignment with the Master Funds.
After consideration of the relevant factors, the Trustees, including the
Trustees who are not "interested persons" of the Trust, as that term is
defined (the "Independent Trustees") in the Investment Company Act of 1940, as
amended (the "1940 Act"), voted to approve, and voted to recommend that the
shareholders of each Fund approve the withdrawal of the assets from each
Portfolio. The withdrawal with respect to each Fund is subject to approval by
that Fund of the new advisory and, in certain cases, subadvisory agreement,
with respect to such Fund by the requisite vote of the shareholders of such
Fund. If such new advisory and
14
<PAGE>
subadvisory agreements are not approved by the shareholders of a Fund, that
Fund will not withdraw from the corresponding Portfolio, even if the
shareholders of the Fund approve the withdrawal.
The conversion to a traditional, one-tier investment company structure would
be accomplished by having the applicable Portfolio distribute to the
corresponding Fund such Fund's pro rata portion of the Portfolio's securities
and other assets, net of any liabilities, in a redemption in-kind of all of the
Fund's interest in the Portfolio. The Fund may elect either to retain or sell
all or any portion of these securities.
The restructuring is subject to the receipt of an opinion of Bingham, Dana &
Gould, counsel to the Trust, substantially to the effect that the withdrawal
from the Portfolios will not cause either a Fund or its shareholders to
recognize any gain or loss under the Internal Revenue Code of 1986, as amended
(the "Code"), and that the Fund's holding period for each security will include
the Portfolio's holding period for that security. In rendering such opinion,
counsel may rely, to the extent they deem necessary or appropriate, upon
representations of an officer or Trustee of the Trust, including
representations to the effect that the Portfolio is an "investment partnership"
for purposes of Section 731(c) of the Code.
Approval by the shareholders of a Fund of Proposal 1 will be deemed an
authorization to the Trustees and officers of the Trust to take any steps
necessary or appropriate to withdraw such Fund from its corresponding
Portfolio, including authorization to vote, as an investor in such Portfolio,
on such matters as are consistent with this Proposal 1.
TRUSTEES' RECOMMENDATION
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF EACH FUND APPROVE THE
PROPOSAL TO WITHDRAW THE FUND'S ASSETS FROM THE CORRESPONDING PORTFOLIO.
If the shareholders of a Fund do not approve this Proposal and Proposal 2
(and, in the case of the Bond Index Fund, Proposal 3), such Fund will continue
to operate in its existing structure and the Trustees will consider what future
action to take, including possible resubmission of the Proposal to shareholders
at a future date.
VOTE REQUIRED
The Trust Instrument of the Trust would permit the withdrawal of a Fund's
assets from a Portfolio without a shareholder vote. However, the Trustees have
decided to seek shareholder approval of the withdrawal. Approval of Proposal 1
with respect to a Fund requires the affirmative vote of a majority of the
outstanding shares of the Fund represented in person or by proxy and entitled
to vote at the Meeting if a quorum is present.
PROPOSAL 2.EXCELSIOR INSTITUTIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL INCOME FUND
EXCELSIOR INSTITUTIONAL TOTAL RETURN BOND FUND
EXCELSIOR INSTITUTIONAL BALANCED FUND
EXCELSIOR INSTITUTIONAL EQUITY GROWTH FUND
EXCELSIOR INSTITUTIONAL INTERNATIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL BOND INDEX FUND
15
<PAGE>
FOR EACH OF THE ABOVE FUNDS, TO APPROVE OR DISAPPROVE OF NEW
INVESTMENT ADVISORY AGREEMENTS AND/OR SUBADVISORY AGREEMENTS WITH
RESPECT TO SUCH FUND, AS MORE SPECIFICALLY DESCRIBED IN PARTS(a),
(b), (c), (d), (e) AND (f) OF THIS PROPOSAL
GENERAL
As noted above, each of the above Funds is currently a SpokeSM fund within a
two-tier, master/feeder mutual fund structure, also referred to as a Hub and
Spoke(R) structure. In such structure, each Fund, unlike other mutual funds
which directly acquire and manage their own portfolios of securities, seeks to
achieve its investment objective by investing all of its investable assets in
the corresponding Portfolio of the Portfolio Series having the same investment
objective as such Fund.
Under this structure, the Portfolio Series has entered into investment
advisory agreements (the "Current Advisory Agreements") on behalf of the
Portfolios corresponding to the above Funds with the investment advisers
described in the table set forth below, whereby each of the investment advisers
provides such Portfolio with investment, research and portfolio management
services. The dates on which the Current Advisory Agreements were established
are also set forth in the table.
<TABLE>
<CAPTION>
DATE CURRENT
ADVISORY AGREEMENT
PORTFOLIO INVESTMENT ADVISER ESTABLISHED
--------- ------------------ ------------------
<S> <C> <C>
Equity Portfolio U.S. Trust September 13, 1994
Income Portfolio U.S. Trust September 13, 1994
Total Return Bond Portfolio U.S. Trust September 13, 1994
Balanced Portfolio U.S. Trust Pacific June 30, 1994
Equity Growth Portfolio U.S. Trust Pacific June 30, 1994
International Equity Portfolio U.S. Trust Pacific September 13, 1994
Bond Market Portfolio U.S. Trust Pacific June 30, 1994
</TABLE>
U.S. Trust Pacific, as investment adviser to the Balanced Portfolio, the
Equity Growth Portfolio, the International Equity Portfolio and the Bond Market
Portfolio, has delegated the daily management of the security holdings of such
Portfolios to certain investment subadvisers pursuant to the investment
subadvisory agreements (the "Current Subadvisory Agreements") described in the
table set forth below. The dates on which the Current Subadvisory Agreements
were established are also set forth in the table.
<TABLE>
<CAPTION>
DATE CURRENT
SUBADVISORY AGREEMENT
PORTFOLIO INVESTMENT SUBADVISER ESTABLISHED
--------- --------------------------------- ---------------------
<S> <C> <C>
Balanced Portfolio Becker Capital Management, Inc. June 30, 1994
("Becker")
Equity Growth Portfolio Luther King Capital Management June 30, 1994
Corporation ("Luther King")
International Equity Portfolio Harding, Loevner Management, L.P. September 13, 1994
("Harding Loevner")
Bond Market Portfolio U.S. Trust June 30, 1994
</TABLE>
16
<PAGE>
Under each Fund's current structure, the Fund is not required to engage the
services of an investment adviser, because such Fund holds only a redeemable
interest in the corresponding Portfolio. Each Fund's shareholders, however,
indirectly bear the payment of the corresponding Portfolio's expenses,
including the payment of the corresponding Portfolio's advisory fee. If a
Fund's shareholders approve the plan to withdraw such Fund's investment from
the corresponding Portfolio, as described in Proposal 1, and such Fund's
existing structure is replaced by a traditional one-tier operating structure,
such Fund will be required to engage an investment adviser and, if applicable,
to approve the engagement of an investment subadviser to manage such Fund's
portfolio of investments. As more fully described in Proposal 3 below, the
structure of the Bond Index Fund would only temporarily be replaced by a
traditional one-tier operating structure, since it is contemplated that the
investable assets of such Fund would almost immediately be reinvested in the
Bond Index Portfolio, a series of Federated Portfolios, in a two-tier, master-
feeder operating structure.
At a meeting of the Board of Trustees of the Trust on August 29, 1995, the
Trustees, including the Independent Trustees, voted to approve, and recommend
that the shareholders of each of the above Funds approve, investment advisory
agreements (each a "New Advisory Agreement") between the Trust on behalf of
such Fund and the investment adviser currently providing advisory services to
the Portfolio corresponding to such Fund. The Trustees also voted to approve,
and recommend that the shareholders of each of the Balanced Fund, the Equity
Growth Fund, the International Equity Fund and the Bond Index Fund approve,
investment subadvisory agreements (each a "New Subadvisory Agreement") between
such Fund's investment adviser and the investment subadviser currently
providing investment advisory services with respect to the Portfolio
corresponding to such Fund. The rates of the advisory fees in each of the New
Advisory Agreements and the New Subadvisory Agreements, as approved by the
Trustees and recommended for approval by the shareholders of the appropriate
Funds, are identical to the rates of the advisory fees in the corresponding
Current Advisory Agreement or Current Subadvisory Agreement, as the case may
be. If a Fund's shareholders do not approve Proposal 1 with respect to such
Fund, the withdrawal of such Fund's investment from the corresponding Portfolio
will not occur and the Current Advisory Agreement with respect to the Portfolio
corresponding to such Fund and the Current Subadvisory Agreement with respect
to the Portfolio corresponding to such Fund, if any, will continue in effect.
THE NEW AND CURRENT ADVISORY AND SUBADVISORY AGREEMENTS
The terms and conditions of the New Advisory Agreements and New Subadvisory
Agreements with respect to the above Funds are identical in all material
respects to those of the Current Advisory Agreements or, as the case may be,
Current Subadvisory Agreements with respect to the Portfolios corresponding to
such Funds, with the exception of the identity of the party contracting with
the investment adviser and their effective dates and termination dates. A form
of New Advisory Agreement with respect to the above Funds is attached hereto as
Exhibit A, and the discussion of the terms of each New Advisory Agreement is
qualified in its entirety by reference to Exhibit A. A form of New Subadvisory
Agreement with respect to the above Funds having investment subadvisers is
attached hereto as Exhibit B, and the discussion of the terms of each New
Subadvisory Agreement is qualified in its entirety by reference to Exhibit B.
Subject to the supervision and approval of the Board of Trustees of the
Trust, under the New Advisory Agreement or New Subadvisory Agreement with
respect to each of the above Funds, as under the Current Advisory Agreement or
Current Subadvisory Agreement corresponding to such Fund, the investment
adviser
17
<PAGE>
or, as the case may be, investment subadviser, is required to: (a) prepare and
evaluate statistical, financial and economic data and other information; (b)
formulate, review and administer an investment program for such Fund; (c)
determine the securities to be purchased by such Fund and monitor such
securities to determine when to take action with respect to such securities;
(d) determine whether and how to exercise rights with respect to such
securities such as voting rights and warrants; (e) determine the value of such
securities; (f) report to the officers of the Trust and its Board of Trustees
as to investment performance and such adviser's performance under the
applicable New Advisory Agreement or New Subadvisory Agreement; (g) assist the
officers of the Trust and the investment adviser, if applicable, in connection
with the operation of the Trust; (h) place orders for the purchase, sale or
loan of securities by the Trust; (i) provide office space, office facilities,
equipment and personnel; and (j) maintain all records concerning activities of
such investment adviser or investment subadviser that it is required by law to
maintain. Under each New Advisory Agreement (but not under the New Subadvisory
Agreements), the investment adviser may appoint and employ one or more
subadvisers that are satisfactory to such Fund.
Each New Advisory Agreement and each New Subadvisory Agreement with respect
to a Fund will, as does the corresponding Current Advisory Agreement or Current
Subadvisory Agreement, provide that the investment adviser or investment
subadviser thereunder is not liable for any act or omission connected with the
rendering of services under the New Advisory Agreement or New Subadvisory
Agreement, as the case may be, or any losses that may be sustained in the
purchase, holding or sale of any security. However, the investment adviser or
investment subadviser will be liable for a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties under such Agreement. Furthermore, each New Subadvisory
Agreement will, as does each Current Subadvisory Agreement, provide that the
investment subadviser thereunder is not liable for errors of judgment,
mistakes, acts or omissions of the applicable adviser.
By its terms, each New Advisory Agreement and each New Subadvisory Agreement
will continue in effect for an initial term of two years from the date of
execution and for successive annual periods thereafter, provided that the
continuance is specifically approved at least annually by a majority of the
Independent Trustees and either (i) a vote of a 1940 Act Majority (as defined
in part (a) below) of the Fund's outstanding voting securities, or (ii) the
vote of a majority of the full Board of Trustees. Each such New Advisory
Agreement is terminable without penalty, (x) by the Trust on not less than 60
days' written notice by the Trustees to the investment adviser, by action of
the Board of Trustees or the vote of a majority of the Fund's outstanding
voting securities, or (y) by the investment adviser on not less than 90 days'
written notice by the investment advisor to the Trust. Each New Subadvisory
Agreement is terminable without penalty (a) by the Trust on not less than 60
days' written notice by the Trustees to the investment subadviser, by action of
the Board of Trustees or the vote of a majority of the Fund's outstanding
voting securities, (b) by the investment adviser on not less than 60 days'
written notice from the investment adviser to the investment subadviser, or (c)
by the investment subadviser on not less than 90 days' written notice from the
investment subadviser to the investment adviser and the Trust. Each New
Advisory Agreement and New Subadvisory Agreement terminates automatically in
the event of its "assignment" (as defined in the 1940 Act).
Each New Advisory Agreement and each New Subadvisory Agreement with respect
to each of the above Funds provides that the services of the investment adviser
or investment subadviser thereunder are not exclusive and that the investment
adviser or investment subadviser is free to render services to others so long
as such person's ability to perform its obligations under such agreement is not
adversely effected.
18
<PAGE>
Each New Advisory Agreement and New Subadvisory Agreement with respect to
the above Funds states that it will be governed in accordance with the laws of
The Commonwealth of Massachusetts and that each provision of such Agreement is
independent of all other provisions.
The foregoing descriptions of the terms of the New Advisory Agreements and
New Subadvisory Agreements are subject to the provisions of parts (a), (b),
(c), (d), (e) and (f) set forth below of this Proposal 2. Shareholders should
also refer to Exhibit A for the specific terms of the New Advisory Agreements
and Exhibit B for the specific terms of the New Subadvisory Agreements.
MATERIAL PAYMENTS BY THE FUNDS TO U.S. TRUST OR U.S. TRUST PACIFIC AND THEIR
AFFILIATES
During the past fiscal year, U.S. Trust and its affiliates provided transfer
agency, shareholder servicing and custodial services to each Fund and in the
case of custodial services, each Fund's corresponding Portfolio. With respect
to each of the Funds, U.S. Trust and its affiliates waived all transfer agency
and shareholder servicing fees during the past fiscal year. During the period
beginning with each of the above Funds' inception and ending on the last day
of the Trust's fiscal year on May 31, 1995, the payments to U.S. Trust and its
affiliates by such Funds and their corresponding Portfolios (other than for
investment advisory services) are set forth in the following table:
<TABLE>
<CAPTION>
TRANSFER
AGENCY SHAREHOLDER CUSTODIAN
FUND SERVICES SERVICES SERVICES*
---- -------- ----------- ---------
<S> <C> <C> <C>
Equity Fund...................................... $ 0 $ 0 $ 0
------ ------- -------
Income Fund...................................... $ 0 $ 0 $ 0
------ ------- -------
Total Return Bond Fund........................... $ 0 $ 0 $ 0
------ ------- -------
Balanced Fund.................................... $ 0 $ 0 $ 0
------ ------- -------
Equity Growth Fund............................... $ 0 $ 0 $ 0
------ ------- -------
International Equity Fund........................ $ 0 $ 0 $ 0
------ ------- -------
Bond Index Fund.................................. $ 0 $ 0 $ 0
------ ------- -------
Total............................................ $ 0 $ 0 $ 0
------ ------- -------
</TABLE>
- --------
* The custodial services referred to above were provided by U.S. Trust,
which entered into sub-custody arrangements with respect to the Portfolios
corresponding to the above Funds. Although U.S. Trust did not retain any fees
for its services as custodian to the Portfolios, it did receive fees totaling
$53,230 which U.S. Trust paid to the Portfolios' sub-custodian. As The Chase
Manhattan Bank, N.A. ("Chase") became the Trust's custodian as of September 1,
1995, U.S. Trust will no longer serve as custodian.
The transfer agency services referred to above were provided by Mutual Fund
Services Company, which was an affiliate of U.S. Trust and U.S. Trust Pacific
until September 1, 1995, when it was acquired by Chase and is now doing
business under the name Chase Global Funds Services Company ("CGFSC"). In
connection with the restructuring, it is expected that U.S. Trust will provide
transfer agency services to the above Funds, but that CGFSC will provide sub-
transfer services to U.S. Trust with respect to such Funds.
The shareholder services referred to above were provided by U.S. Trust,
which voluntarily agreed to waive all of the shareholder servicing fees set
forth in the table above for the fiscal year ending May 31, 1995. It is
expected that U.S. Trust will provide shareholder services to the above Funds
in the future.
19
<PAGE>
OTHER GENERAL MATTERS
The Glass-Steagall Act and applicable banking laws and regulations generally
prohibit certain financial institutions such as U.S. Trust or U.S. Trust
Pacific from engaging in the business of underwriting securities of open-end
investment companies such as the Trust. Based on advice of its counsel, it is
the position of U.S. Trust and U.S. Trust Pacific that the investment advisory
services to be performed by U.S. Trust Pacific or U.S. Trust under the New
Advisory Agreements with the Trust and the activities performed by U.S. Trust
as shareholder servicing agent for the Funds, do not constitute underwriting
activities and are consistent with the requirements of the Glass-Steagall Act.
In addition, counsel have advised that this combination of individually
permissible activities is consistent with the Glass-Steagall Act and other
federal or state and regulatory precedent. There is presently no controlling
precedent regarding the performance of a combination of investment advisory and
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
servicing or investment management activities. If a bank were prohibited from
so acting, its shareholder 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 shareholders 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 Funds would suffer any adverse financial consequences as a
result of these occurrences.
U.S. Trust, U.S. Trust Pacific and their affiliates may have deposit, loan
and other commercial banking relationships with the issuers of securities that
may be purchased on behalf of the Funds, including outstanding loans to such
issuers which could be repaid in whole or in part with the proceeds of
securities so purchased. U.S. Trust and U.S. Trust Pacific have informed the
Trust that, in making investment decisions, they do not obtain or use material
inside information in their possession or in the possession of any of their
affiliates. In making investment recommendations for the Funds, U.S. Trust and
U.S. Trust Pacific will not inquire or take into consideration whether an
issuer of securities proposed for purchase or sale by a Fund is a customer of
U.S. Trust or U.S. Trust Pacific, their parents or their subsidiaries or
affiliates. When dealing with its customers, U.S. Trust, U.S. Trust Pacific,
their parents, subsidiaries, and affiliates will not inquire or take into
consideration whether securities of such customers are held by any fund managed
by U.S. Trust, U.S. Trust Pacific or any such affiliate.
PROPOSAL 2(a). EXCELSIOR INSTITUTIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL INCOME FUND
EXCELSIOR INSTITUTIONAL TOTAL RETURN BOND FUND
FOR EACH OF THE ABOVE FUNDS, TO APPROVE OR DISAPPROVE OF A NEW
INVESTMENT ADVISORY AGREEMENT BETWEEN THE TRUST, ON BEHALF OF
THE FUND, AND U.S. TRUST AS INVESTMENT ADVISER.
20
<PAGE>
GENERAL
As noted above, the Board of Trustees of the Trust has voted to approve, and
recommended that shareholders of each of the above Funds approve, that the
Trust on behalf of each of those Funds enter into a New Advisory Agreement with
U.S. Trust.
COMPARISON OF NEW AND CURRENT ADVISORY AGREEMENT
For a description and comparison of the terms of the New Advisory Agreement
and Current Advisory Agreement with respect to the above Funds, see "The New
and Current Advisory and Subadvisory Agreements" above. The Current Advisory
Agreement with respect to the Portfolios corresponding to the above Funds was
approved by the Board of Trustees of the Portfolio Series on September 13,
1994.
THE ADVISORY FEE AND OTHER EXPENSES
Under the New Advisory Agreement, each of the above Funds will directly pay
to U.S. Trust, as investment adviser, a monthly fee that is equal on an annual
basis to 0.65% of such Fund's average daily net assets. THIS IS THE SAME RATE
OF COMPENSATION AS IS PAYABLE INDIRECTLY BY SUCH FUND TO U.S. TRUST UNDER THE
CURRENT INVESTMENT ADVISORY AGREEMENT. Approval of the New Advisory Agreement
with respect to such Fund will not result in an increase, either directly or
indirectly, to the aggregate contractual fees borne by the Fund. However, as
further discussed under Proposal 1--"General", fees borne by the Fund are
expected to increase due to the modification of the current voluntary fee
waivers and expense reimbursements.
During the Trust's fiscal year ended May 31, 1995, (i) the Equity Fund,
through its corresponding Portfolio, indirectly paid advisory fees to U.S.
Trust of $0, (ii) the Income Fund, through its corresponding Portfolio,
indirectly paid advisory fees to U.S. Trust of $0, and (iii) the Total Return
Bond Fund, through its corresponding Portfolio, paid advisory fees to U.S.
Trust of $0. This represented a waiver of advisory fees by U.S. Trust of
$23,905, $67,732, and $43,478 with respect to the Equity Fund, the Income Fund
and the Total Return Bond Fund respectively.
CONCERNING U.S. TRUST AS INVESTMENT ADVISER
U.S. Trust is a state-chartered bank and trust company. U.S. Trust 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 September 1,
1995, U.S. Trust's Asset Management Group had approximately $36 billion in
assets under management. U.S. Trust, which has its principal offices at 114
West 47th Street, New York, NY 10036, is a wholly-owned subsidiary of U.S.
Trust Corporation, a registered bank holding company. Other than U.S. Trust
Corporation, no person owns more than 10% of the voting securities of U.S.
Trust.
U.S. Trust provides investment advisory services to other mutual funds with a
similar investment objective to that of the above Funds. See Exhibit C for a
list of those funds, the size of those funds, the rate of the advisory fees
paid by those funds and whether any of such fees have been waived or otherwise
reduced.
21
<PAGE>
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS AND OTHER FEES
During the Trust's fiscal year ended May 31, 1995, none of the above Funds
paid brokerage commissions to affiliated brokers. For a description of other
fees paid by the Funds to U.S. Trust, see "Material Payments by the Funds to
U.S. Trust or U.S. Trust Pacific and their Affiliates" above.
THE DIRECTORS OF U.S. TRUST
The table below sets forth the name, address and principal occupation of each
of the Directors of U.S. Trust and the principal executive officer of U.S.
Trust:
<TABLE>
<CAPTION>
NAME ADDRESS PRINCIPAL OCCUPATION
---- --------------------------- -----------------------------
<S> <C> <C>
Samuel C. Butler........ Cravath, Swaine & Moore Partner in Cravath,
Worldwide Plaza Swaine & Moore
825 Eighth Avenue
New York, NY 10019
Peter O. Crisp.......... Venrock Associates General Partner in
Room 560 Venrock Associates
30 Rockefeller Plaza
New York, NY 10019
Antonia M. Grumbach..... Patterson, Belknap, Partner in Patterson,
Webb & Tyler Belknap, Webb & Tyler
30 Rockefeller Plaza
New York, NY 10112
H. Marshall Schwarz..... United States Trust Company Chairman of the Board
of New York & Chief Executive
114 West 47th Street Officer of U.S. Trust
New York, NY 10036 Corporation and United States
Trust Company of New York
Philippe de Montebello.. Metropolitan Museum of Art Director of the
1000 Fifth Avenue Metropolitan Museum
New York, NY 10029-0198 of Art
Paul W. Douglas......... 250 Park Avenue Retired
Room 1900
New York, NY 10177
Frederic C. Hamilton.... Hamilton Oil Corp. Chairman of the Board
1560 Broadway of Hamilton Oil Corp.
Suite 2000
Denver, CO 80202
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NAME ADDRESS PRINCIPAL OCCUPATION
---- --------------------------- ----------------------------------
<S> <C> <C>
John H. Stookey......... Hanson Industries Chairman and President,
410 Park Avenue Quantum Chemical Corporation
New York, NY 10028
Robert N. Wilson........ Johnson & Johnson Vice Chairman of the Board
One Johnson & Johnson Plaza of Johnson & Johnson
New Brunswick, NJ 08933
Peter L. Malkin......... Wein, Malkin & Bettex Chairman of Wein, Malkin
Lincoln Building & Bettex
60 East 42nd Street
New York, NY 10165
Richard F. Tucker....... 11 Over Rock Lane Retired
Westport, CT 06880
Carroll L. Wainright, Milbank, Tweed, Hadley Consulting Partner
Jr..................... & McCloy of Milbank, Tweed,
One Chase Manhattan Plaza Hadley & McCloy
New York, NY 10005
Frederick B. Taylor..... United States Trust Vice Chairman and Chief
Company of New York Investment Officer of U.S. Trust
114 West 47th Street Corporation and United States
New York, NY 10036 Trust Company of New York
Jeffrey S. Maurer....... United States Trust President of U.S. Trust
Company of New York Corporation and United States
114 West 47th Street Trust Company of New York
New York, NY 10036
Daniel P. Davison....... Christie, Manson & Woods Chairman, Christie,
International, Inc. Manson & Woods
502 Park Avenue International, Inc.
New York, NY 10021
Orson D. Munn........... Munn, Bernhard & Chairman and Director
Associates, Inc. of Munn, Bernhard &
6 East 43rd Street Associates, Inc.
28th Floor
New York, NY 10017
Philip L. Smith......... P.O. Box 386 Corporate Director and
Ponte Verde Beach, FL 32004 Trustee
Edwin D. Etherington.... P.O. Box 100 President Emeritus, Wesleyan
Old Lyme, CT 06371 University and Former President of
American Stock Exchange
</TABLE>
23
<PAGE>
TRUSTEES' EVALUATION AND RECOMMENDATION
At the meeting of the Board of Trustees on August 29, 1995, the Trustees,
including the Independent Trustees, approved the New Advisory Agreements with
respect to the above Funds and the amount of the advisory fee to be paid by
such Funds. In making this determination, the Trustees considered several
factors, including the nature, quality and scope of the services to be provided
to each Fund and the investment record of U.S. Trust in managing the Portfolios
corresponding to such Funds and the other mutual funds managed by U.S. Trust.
The Trustees also considered that U.S. Trust's relationship with each Fund will
provide continuity of portfolio management services to each Fund. The Trustees
believe the New Advisory Agreements with respect to the above Funds and the
proposed advisory fees to be reasonable, fair and in the best interests of each
Fund's shareholders.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT EACH FUND'S SHAREHOLDERS APPROVE THE
NEW INVESTMENT ADVISORY AGREEMENT WITH RESPECT TO SUCH FUND.
If the New Advisory Agreement with respect to any of the above Funds is not
approved, the Trustees will not authorize the withdrawal by such Fund of its
investment in the corresponding Portfolio as described in Proposal 1,
regardless of the fact that Proposal 1 may have been approved by the
shareholders of such Fund.
VOTE REQUIRED
Approval of this part (a) of Proposal 2 with respect to a Fund requires the
affirmative vote of a majority of the outstanding voting securities of that
Fund, as defined in the 1940 Act, which means the lesser of (1) 67 percent or
more of the shares of the Fund represented at the Meeting if at least 50
percent of all outstanding shares of such Fund are represented at the Meeting
or (2) 50 percent or more of the outstanding shares of such Fund entitled to
vote at the meeting (the "1940 Act Majority").
PROPOSAL 2(b). EXCELSIOR INSTITUTIONAL BALANCED FUND
EXCELSIOR INSTITUTIONAL EQUITY GROWTH FUND
EXCELSIOR INSTITUTIONAL INTERNATIONAL EQUITY FUND
EXCELSIOR INSTITUTIONAL BOND INDEX FUND
FOR EACH OF THE ABOVE FUNDS, TO APPROVE OR DISAPPROVE OF A NEW
INVESTMENT ADVISORY AGREEMENT BETWEEN THE TRUST, ON BEHALF OF
THE FUND, AND U.S. TRUST PACIFIC AS INVESTMENT ADVISER.
GENERAL
As noted above, the Board of Trustees of the Trust has voted to approve, and
recommended that shareholders of each of the above Funds approve, that the
Trust, on behalf of those Funds, enter into a New Advisory Agreement with U.S.
Trust Pacific.
24
<PAGE>
COMPARISON OF NEW AND CURRENT ADVISORY AGREEMENTS
For a description and comparison of the terms of the New Advisory Agreements
and Current Advisory Agreements with respect to the above Funds, see "The New
and Current Advisory and Subadvisory Agreements" in Proposal 2 above. The
Current Advisory Agreements with respect to the Portfolios corresponding to the
above Funds were approved by the Board of Trustees of the Portfolio Series on
June 30, 1994 (September 13, 1994 in the case of the International Equity
Fund).
THE ADVISORY FEE AND OTHER EXPENSES
Under the respective New Advisory Agreements, the Balanced Fund and the
Equity Growth Fund will directly pay to U.S. Trust Pacific, as investment
adviser, a monthly fee that is equal on an annual basis to 0.65% of such Fund's
average daily net assets, the Bond Index Fund will pay to U.S. Trust Pacific,
as investment adviser, a monthly fee that is equal on an annual basis to 0.25%
of such Fund's average daily net assets, and the International Equity Fund will
pay to U.S. Trust Pacific, as investment adviser, a monthly fee that is equal
on an annual basis to 1.00% of such Fund's average daily net assets. IN EACH
CASE THIS IS THE SAME RATE OF COMPENSATION AS IS PAYABLE INDIRECTLY BY SUCH
FUND TO THE ADVISER UNDER THE CURRENT INVESTMENT ADVISORY AGREEMENT. Approval
of the New Advisory Agreement with respect to such Fund will not result in an
increase, either directly or indirectly, to the aggregate contractual fees
borne by any of the above Funds. However, as further discussed under
Proposal 1--"General", fees borne by the Funds are expected to increase due to
the modification of the current voluntary fee waivers and expense
reimbursements.
During the Trust's fiscal year ended May 31, 1995, (i) the Balanced Fund,
through its corresponding Portfolio, indirectly paid advisory fees to U.S.
Trust Pacific of $0, (ii) the Equity Growth Fund, through its corresponding
Portfolio indirectly paid advisory fees to U.S. Trust Pacific of $0, (iii) the
International Equity Fund, through its corresponding Portfolio, indirectly paid
advisory fees to U.S. Trust Pacific of $0, and (iv) the Bond Index Fund,
through its corresponding Portfolio, indirectly paid advisory fees to U.S.
Trust Pacific of $0. This represented a waiver of advisory fees of $365,664,
$285,384, $26,275 and $47,955 with respect to the Balanced Fund, the Equity
Growth Fund, the International Equity Fund and the Bond Index Fund
respectively.
CONCERNING U.S. TRUST PACIFIC AS INVESTMENT ADVISER
U.S. Trust Pacific is a wholly-owned subsidiary of U. S. Trust. For
information about U.S. Trust, see "Concerning U.S. Trust as Investment Adviser"
in part (a) above of this Proposal 2. U.S. Trust Pacific is a full-service
state chartered bank which maintains its principal offices at 4380 S.W. Macadam
Avenue, Suite 450, Portland, Oregon 97201.
U.S. Trust Pacific does not currently provide investment advisory services to
other mutual funds.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS AND OTHER FEES
During the Trust's fiscal year ended May 31, 1995, none of the above Funds
paid brokerage commissions to brokers affiliated with U.S. Trust Pacific. For a
description of other fees paid by the Funds to U.S. Trust Pacific, see
"Material Payments by the Funds to U.S. Trust or U.S. Trust Pacific and their
Affiliates" above.
25
<PAGE>
THE DIRECTORS OF U.S. TRUST PACIFIC
The table below sets forth the name, address and principal occupation of each
of the Directors of U.S. Trust Pacific and the principal executive officer of
U.S. Trust Pacific:
<TABLE>
<CAPTION>
POSITION WITH U.S. TRUST PACIFIC;
NAME ADDRESS PRINCIPAL OCCUPATION
- ---- ------- ---------------------------------
<S> <C> <C>
Ralph C. Rittenour, 4380 S.W. Macadam Avenue Director; Chairman of the
Jr. ................... Suite 450 Board and Chief Executive Officer
Portland, Oregon 97201
Charles J. Swindells.... 4380 S.W. Macadam Avenue Director; Vice Chairman
Suite 450
Portland, Oregon 97201
Nancy L. Jacob, Ph.D. .. 4380 S.W. Macadam Avenue Director; Executive Vice
Suite 450 President
Portland, Oregon 97201
Douglas Adams........... 4380 S.W. Macadam Avenue Director; President
Suite 450
Portland, Oregon 97201
Stephen Brink........... 4380 S.W. Macadam Avenue Director; Senior Vice President
Suite 450 and Chief Investment Officer
Portland, Oregon 97201
Marcia Bennett.......... 4380 S.W. Macadam Avenue Director; Senior Vice
Suite 450 President, Trust Officer and
Portland, Oregon 97201 Operations Officer
Marv Vukovich........... 4380 S.W. Macadam Avenue Director; Vice President
Suite 450 and Chief Financial Officer
Portland, Oregon 97201
Carol Hibbs............. Tonkon Torp, Galen, Marmaduke & Director; Attorney of
Booth Tonkon Torp, Galen, Marmaduke
1600 Pioneer Tower & Booth
888 SW Fifth Avenue
Portland, OR 97204
</TABLE>
TRUSTEES' EVALUATION AND RECOMMENDATION
At the meeting of the Board of Trustees on August 29, 1995, the Trustees,
including the Independent Trustees, approved the New Advisory Agreements with
respect to the above Funds and the amount of the advisory fee to be paid by
such Funds. In making this determination, the Trustees considered several
factors, including the nature, quality and scope of the services to be provided
to each Fund and the investment record of U.S. Trust Pacific in managing the
Portfolios corresponding to such Funds. The Trustees also considered that U.S.
Trust Pacific's relationship with each Fund will provide continuity of
portfolio management services to each Fund. The Trustees believe the New
Advisory Agreements with respect to the above Funds and the proposed advisory
fees to be reasonable, fair and in the best interests of each Fund's
shareholders.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT EACH FUND'S SHAREHOLDERS APPROVE THE
NEW INVESTMENT ADVISORY AGREEMENT WITH RESPECT TO SUCH FUND.
26
<PAGE>
If the New Advisory Agreement with respect to any of the above Funds is not
approved, the Trustees will not authorize the withdrawal by such Fund of its
investment in the corresponding Portfolio as described in Proposal 1,
regardless of the fact that Proposal 1 may have been approved by the
shareholders of such Fund.
VOTE REQUIRED
Approval of this part (b) of Proposal 2 with respect to a Fund requires the
affirmative vote of a 1940 Act Majority (as defined in part (a) above) of
outstanding voting securities of that Fund.
PROPOSAL 2(c).EXCELSIOR INSTITUTIONAL BALANCED FUND
FOR THE ABOVE FUND, TO APPROVE OR DISAPPROVE OF A NEW
INVESTMENT SUBADVISORY AGREEMENT BETWEEN U.S. TRUST PACIFIC AND
BECKER CAPITAL MANAGEMENT, INC. AS INVESTMENT SUBADVISER.
GENERAL
As noted above, the Board of Trustees of the Trust has voted to approve, and
recommended that shareholders of the above Fund approve, that the Trust on
behalf of such Fund enter into a New Subadvisory Agreement between U.S. Trust
Pacific as investment adviser to such Fund and Becker as investment subadviser.
COMPARISON OF NEW AND CURRENT SUBADVISORY AGREEMENTS
For a description and comparison of the terms of the New Subadvisory
Agreement and Current Subadvisory Agreement with respect to the above Fund, see
"the New and Current Advisory and Subadvisory Agreements" in Proposal 2 above.
The Current Subadvisory Agreement with respect to the Portfolio corresponding
to the above Fund was approved by the Board of Trustees of the Portfolio Series
on June 30, 1994.
THE ADVISORY FEE AND OTHER EXPENSES
Under the New Subadvisory Agreement with respect to the above Fund U.S. Trust
Pacific will directly pay to Becker, as investment subadviser, a monthly fee
that is equal on an annual basis to 0.425% of the first $20,000,000 of such
Fund's average daily net assets and 0.20% of such Fund's average daily net
assets in excess of $20,000,000. THIS IS THE SAME RATE OF COMPENSATION AS IS
PAYABLE BY U.S. TRUST PACIFIC TO BECKER UNDER THE CURRENT INVESTMENT
SUBADVISORY AGREEMENT. Approval of the New Subadvisory Agreement with respect
to such Fund will not result in an increase, either directly or indirectly, to
the aggregate contractual fees borne by the above Fund. However, as further
discussed under Proposal 1--"General", fees borne by the Fund are expected to
increase due to the modification of the current voluntary fee waivers and
expense reimbursements.
During the Trust's fiscal year ended May 31, 1995, U.S. Trust Pacific paid
advisory fees to Becker of $239,088 with respect to the Portfolio corresponding
to the above Fund.
27
<PAGE>
CONCERNING BECKER AS INVESTMENT SUBADVISER
Becker is a registered investment adviser. It maintains its principal offices
at 2185 Pacwest Center, Portland, Oregon 97204. As of September 30, 1994,
Becker had $900 million in assets under management. The person primarily
responsible for the day-to-day management of the Balanced Portfolio is Donald
L. Wolcott, C.F.A., Vice President and Portfolio Manager of Becker. Mr. Wolcott
joined Becker in 1987 and brings 19 years of experience in investment
management to his position.
Patrick E. Becker, the President of Becker, owns more than 10% of the voting
securities of Becker. His address is 23661 Stafford Hill Drive, West Linn,
Oregon 97068.
Becker does not currently provide investment advisory services to other
mutual funds.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
During the Trust's fiscal year ended May 31, 1995, the above Fund paid no
brokerage commissions to brokers affiliated with Becker.
OTHER MATERIAL PAYMENTS BY THE FUND TO BECKER AND AFFILIATES OF BECKER
During the Trust's fiscal year ended May 31, 1995, neither the Fund nor the
Portfolio corresponding to the Fund made any payments to Becker or any
affiliate of Becker for services provided to such Fund or its corresponding
Portfolio (other than investment advisory services).
THE DIRECTORS OF BECKER
The table below sets forth the name, address and principal occupation of each
of the Directors of Becker and of the principal executive officer of Becker:
<TABLE>
<CAPTION>
POSITION WITH BECKER;
NAME ADDRESS PRINCIPAL OCCUPATION
- ---- ------- ---------------------
<S> <C> <C>
Patrick E. Becker....... 1211 SW Fifth Avenue, #2185 Director; President
Portland, Oregon 97204
Janeen S. McAnich....... 1211 SW Fifth Avenue, #2185 Director; Executive Vice President
Portland, Oregon 97204
</TABLE>
TRUSTEES' EVALUATION AND RECOMMENDATION
At the meeting of the Board of Trustees on August 29, 1995, the Trustees,
including the Independent Trustees, approved the New Subadvisory Agreement with
respect to the above Fund and the amount of the advisory fee to be paid by U.S.
Trust Pacific to Becker with respect to such Fund. In making this
determination, the Trustees considered several factors, including the nature,
quality and scope of the services to be provided to the Fund and the investment
record of Becker in managing the Portfolio corresponding to the Fund. The
Trustees also considered that Becker's relationship with the Fund will provide
continuity of
28
<PAGE>
portfolio management services to the Fund. The Trustees believe the New
Subadvisory Agreement with respect to the above Fund and the proposed advisory
fees to be reasonable, fair and in the best interests of the Fund's
shareholders.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE FUND'S SHAREHOLDERS APPROVE THE
NEW INVESTMENT SUBADVISORY AGREEMENT WITH RESPECT TO THE FUND.
If the New Subadvisory Agreement with respect to the above Fund is not
approved, the Trustees will not authorize the withdrawal by the Fund of its
investment in the corresponding Portfolio as described in Proposal 1,
regardless of the fact that Proposal 1 may have been approved by the
shareholders of the Fund.
VOTE REQUIRED
Approval of this part (c) of Proposal 2 requires the affirmative vote of a
1940 Act Majority (as defined in part (a) above) of outstanding voting
securities of the above Fund.
PROPOSAL 2(d).EXCELSIOR INSTITUTIONAL EQUITY GROWTH FUND
FOR THE ABOVE FUND, TO APPROVE OR DISAPPROVE OF A NEW
INVESTMENT SUBADVISORY AGREEMENT BETWEEN U.S. TRUST PACIFIC AND
LUTHER KING CAPITAL MANAGEMENT CORPORATION AS INVESTMENT
SUBADVISER.
GENERAL
As noted above, the Board of Trustees of the Trust has voted to approve, and
recommended that shareholders of the above Fund approve, that the Trust, on
behalf of such Fund, enter into a New Subadvisory Agreement between U.S. Trust
Pacific, as investment adviser to such Fund and Luther King.
COMPARISON OF NEW AND CURRENT SUBADVISORY AGREEMENTS
For a description and comparison of the terms of the New Subadvisory
Agreement and Current Subadvisory Agreement with respect to the above Fund, see
"The New and Current Advisory and Subadvisory Agreements" in Proposal 2 above.
The Current Subadvisory Agreement with respect to the Portfolio corresponding
to the above Fund was approved by the Board of Trustees of the Portfolio Series
on June 30, 1994.
THE ADVISORY FEE AND OTHER EXPENSES
Under the New Subadvisory Agreement, with respect to the above Fund, U.S.
Trust Pacific will directly pay to Luther King, as investment subadviser, a
monthly fee that is equal on an annual basis to 0.40% of the first $20,000,000
of such Fund's average daily net assets, 0.30% of the next $30,000,00 of such
Fund's average daily net assets, and a percentage to be negotiated of such
Fund's average daily net assets in excess of
29
<PAGE>
$50,000,000. THIS IS THE SAME RATE OF COMPENSATION AS IS PAYABLE BY U.S. TRUST
PACIFIC TO LUTHER KING WITH RESPECT TO SUCH FUND UNDER THE CURRENT INVESTMENT
ADVISORY AGREEMENT. Approval of the New Subadvisory Agreement with respect to
such Fund will not result in an increase, either directly or indirectly, to the
aggregate contractual fees borne by the above Fund. However, as further
discussed under Proposal 1--"General", fees borne by the Fund are expected to
increase due to the modification of the current voluntary fee waivers and
expense reimbursements.
During the Trust's fiscal year ended May 31, 1995, U.S. Trust Pacific paid
advisory fees to Luther King of $175,621 with respect to the Portfolio
corresponding to the above Fund.
CONCERNING LUTHER KING AS INVESTMENT SUBADVISER
Luther King is a registered investment adviser. It maintains its principal
offices at 301 Commerce Street, Suite 1600, Fort Worth, TX 76102. As of
September 30, 1994, Luther King had $4.5 billion in assets under management.
Emmett M. Murphy is primarily responsible for the day-to-day management of
Equity Growth Portfolio. Mr. Murphy has been an investment manager with Luther
King since 1981. He is also a Chartered Financial Analyst.
Southwest JLK Corporation owns more than 10% of the voting securities of
Luther King. Southwest JLK Corporation is owned by the President of Luther
King, John Luther King, Jr., and Teresa King. Their address is 4224 Versailles,
Dallas, Texas 75205.
Luther King provides investment advisory services to other mutual funds with
similar investment objectives to that of the above Fund. See Exhibit D for a
list of those funds, the size of those funds, the rate of the advisory fees
paid by those funds, and whether any of such fees have been waived or otherwise
reduced.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
During the Trust's fiscal year ended May 31, 1995, the above Fund paid no
brokerage commissions to brokers affiliated with Luther King.
OTHER MATERIAL PAYMENTS BY THE FUNDS TO LUTHER KING AND AFFILIATES OF LUTHER
KING
During the Trust's fiscal year ended May 31, 1995, neither the Fund nor the
Portfolio corresponding to the Fund made any payments to Luther King or any
affiliate of Luther King for services provided to the Fund or its corresponding
Portfolio (other than investment advisory services).
30
<PAGE>
THE DIRECTORS OF LUTHER KING
The table below sets forth the name, address and principal occupation of the
Director and principal executive officer of Luther King:
<TABLE>
<CAPTION>
POSITION WITH LUTHER KING;
NAME ADDRESS PRINCIPAL OCCUPATION
- ---- ------- --------------------------
<S> <C> <C>
John Luther King, Jr. .. 301 Commerce Street, Suite 1600 Director; President
Fort Worth, Texas 76102
</TABLE>
TRUSTEES' EVALUATION AND RECOMMENDATION
At the meeting of the Board of Trustees on August 29, 1995, the Trustees,
including the Independent Trustees, approved the New Subadvisory Agreement with
respect to the above Fund and the amount of the advisory fee to be paid by U.S.
Trust Pacific to Luther King with respect to such Fund. In making this
determination, the Trustees considered several factors, including the nature,
quality and scope of the services to be provided to the Fund and the investment
record of Luther King in managing the Portfolio corresponding to such Fund and
the other mutual funds managed by Luther King. The Trustees also considered
that Luther King's relationship with the Fund will provide continuity of
portfolio management services to the Fund. The Trustees believe the New
Subadvisory Agreement with respect to the above Fund and the proposed advisory
fees to be reasonable, fair and in the best interests of the Fund's
shareholders.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE FUND'S SHAREHOLDERS APPROVE THE
NEW INVESTMENT SUBADVISORY AGREEMENT WITH RESPECT TO THE FUND.
If the New Subadvisory Agreement with respect to the above Fund is not
approved, the Trustees will not authorize the withdrawal by the Fund of its
investment in the corresponding Portfolio as described in Proposal 1,
regardless of the fact that Proposal 1 may have been approved by the
shareholders of the Fund.
VOTE REQUIRED
Approval of this part (d) of Proposal 2 requires the affirmative vote of a
1940 Act Majority (as defined in part (a) above) of outstanding voting
securities of the above Fund.
PROPOSAL 2(e).EXCELSIOR INSTITUTIONAL INTERNATIONAL EQUITY FUND
FOR THE ABOVE FUND, TO APPROVE OR DISAPPROVE OF A NEW INVESTMENT
SUBADVISORY AGREEMENT BETWEEN U.S. TRUST PACIFIC AND HARDING,
LOEVNER MANAGEMENT, L.P. AS INVESTMENT SUBADVISER.
GENERAL
As noted above, the Board of Trustees of the Trust has voted to approve, and
recommended that shareholders of the above Fund approve, that the Trust, on
behalf of such Fund, enter into a New Subadvisory Agreement between U.S. Trust
Pacific, as investment adviser to such Fund, and Harding Loevner.
31
<PAGE>
COMPARISON OF NEW AND CURRENT ADVISORY AGREEMENTS
For a description and comparison of the terms of the New Subadvisory
Agreement and the Current Subadvisory Agreement with respect to the above Fund,
see "The New and Current Advisory and Subadvisory Agreements" in Proposal 2
above. The Current Subadvisory Agreement with respect to the Portfolio
corresponding to the above Fund was approved by the Board of Trustees of the
Portfolio Series on September 13, 1994.
THE ADVISORY FEE AND OTHER EXPENSES
Under the New Subadvisory Agreement with respect to the above Fund, U.S.
Trust Pacific will directly pay to Harding Loevner, as investment subadviser, a
monthly fee that is equal on an annual basis to 0.50% of such Fund's average
daily net assets. THIS IS THE SAME RATE OF COMPENSATION AS IS PAYABLE BY U.S.
TRUST PACIFIC TO HARDING LOEVNER UNDER THE CURRENT INVESTMENT SUBADVISORY
AGREEMENT. Approval of the New Subadvisory Agreement with respect to the Fund
will not result in an increase, either directly or indirectly, to the aggregate
contractual fees borne by the Fund. However, as further discussed under
Proposal 1--"General", fees borne by the Fund are expected to increase due to
the modification of the current voluntary fee waivers and expense
reimbursements.
During the Trust's fiscal year ended May 31, 1995, U.S. Trust Pacific paid
advisory fees to Harding Loevner of $11,824 with respect to the Portfolio
corresponding to the above Fund.
CONCERNING HARDING LOEVNER AS INVESTMENT SUBADVISER
Harding Loevner is a New Jersey limited partnership and a registered
investment adviser. It maintains its principal offices at 50 Division Street,
Suite 401, Somerville, New Jersey 08876. Harding Loevner's only general partner
is HLM Holdings, Inc., which has approximately a 96% interest in Harding
Loevner. Approximately 87% of the stock of HLM Holdings, Inc. is owned by the
principals of Harding Loevner, David D. Harding (Chief Investment Officer),
David R. Loevner (Chief Executive Officer) and Simon Hallett (Senior Portfolio
Manager). The remaining stock of HLM Holdings, Inc. is owned by other Harding
Loevner employees. As of September 30, 1994, Harding Loevner had $350 million
in assets under management. All investment management decisions of Harding
Loevner are made by an investment group and not by portfolio managers
individually.
Harding Loevner provides investment advisory services to other mutual funds
with similar investment objectives to that of the above Fund. See Exhibit E for
a list of those funds, the size of those funds, the rate of the advisory fees
paid by those funds, and whether any of such fees have been waived or otherwise
reduced.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
During the Trust's fiscal year ended May 31, 1995, the above Fund paid no
brokerage commissions to brokers affiliated with Harding Loevner.
32
<PAGE>
OTHER MATERIAL PAYMENTS BY THE FUND TO HARDING LOEVNER AND AFFILIATES OF
HARDING LOEVNER
During the Trust's fiscal year ended May 31, 1995, neither the Fund nor the
Portfolio corresponding to the Fund paid any fees to Harding Loevner or any
affiliate of Harding Loevner for services provided to such Fund or its
corresponding Portfolio (other than investment advisory services).
TRUSTEES' EVALUATION AND RECOMMENDATION
At the meeting of the Board of Trustees on August 29, 1995, the Trustees,
including the Independent Trustees, approved the New Subadvisory Agreement with
respect to the above Fund and the amount of the advisory fee to be paid by U.S.
Trust Pacific to Harding Loevner with respect to such Fund. In making this
determination, the Trustees considered several factors, including the nature,
quality and scope of the services to be provided to the Fund and the investment
record of Harding Loevner in managing the Portfolio corresponding to the Fund
and the other mutual funds managed by Harding Loevner. The Trustees also
considered that Harding Loevner's relationship with the Fund will provide
continuity of portfolio management services to the Fund. The Trustees believe
the New Subadvisory Agreement with respect to the above Fund and the proposed
advisory fees to be reasonable, fair and in the best interests of the Fund's
shareholders.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE FUND'S SHAREHOLDERS APPROVE THE
NEW INVESTMENT SUBADVISORY AGREEMENT WITH RESPECT TO SUCH FUND.
If the New Subadvisory Agreement with respect to the above Fund is not
approved, the Trustees will not authorize the withdrawal by such Fund of its
investment in the corresponding Portfolio as described in Proposal 1,
regardless of the fact that Proposal 1 may have been approved by the
shareholders of such Fund.
VOTE REQUIRED
Approval of this part (e) of Proposal 2 requires the affirmative vote of a
1940 Act Majority (as defined in part (a) above) of outstanding voting
securities of the above Fund.
PROPOSAL 2(f).EXCELSIOR INSTITUTIONAL BOND INDEX FUND
FOR THE ABOVE FUND, TO APPROVE OR DISAPPROVE OF A NEW
INVESTMENT SUBADVISORY AGREEMENT BETWEEN U.S. TRUST PACIFIC AND
U.S. TRUST AS INVESTMENT SUBADVISER.
GENERAL
As noted above, the Board of Trustees of the Trust has voted to approve, and
recommended that shareholders of the above Fund approve, that the Trust, on
behalf of such Fund, enter into a New Subadvisory Agreement between U.S. Trust
Pacific, as investment adviser to such Fund, and U.S. Trust, to be in effect
prior to the Fund's proposed investment into Federated Portfolios, as more
fully described in Proposal 3 below.
33
<PAGE>
COMPARISON OF NEW AND CURRENT SUBADVISORY AGREEMENTS
For a description and comparison of the terms of the New Subadvisory
Agreement and Current Subadvisory Agreement with respect to the above Fund, see
"The New and Current Advisory and Subadvisory Agreements" in Proposal 2 above.
The Current Subadvisory Agreement with respect to the Portfolio corresponding
to the above Fund was approved by the Board of Trustees of the Portfolio Series
on June 30, 1994.
THE ADVISORY FEE AND OTHER EXPENSES
Under the New Subadvisory Agreement, with respect to the above Fund, U.S.
Trust Pacific will directly pay to U.S. Trust, as investment subadviser, a
monthly fee that is equal on an annual basis to 0.25% of such Fund's average
daily net assets. THIS IS THE SAME RATE OF COMPENSATION AS IS PAYABLE BY U.S.
TRUST PACIFIC TO U.S. TRUST UNDER THE CURRENT INVESTMENT SUBADVISORY AGREEMENT.
Approval of the New Subadvisory Agreement with respect to such Fund will not
result in an increase, either directly or indirectly, to the aggregate
contractual fees borne by the above Fund. However, as further discussed under
Proposal 1--"General", fees borne by the Fund are expected to increase due to
the modification of the current voluntary fee waivers and expense
reimbursements.
During the Trust's fiscal year ended May 31, 1995, advisory fees payable by
U.S. Trust Pacific to U.S. Trust were $47,955 with respect to the Portfolio
corresponding to the Bond Index Fund, all of which were waived by U.S. Trust.
CONCERNING U.S. TRUST AS INVESTMENT SUBADVISER
See "Concerning U.S. Trust as Investment Adviser" above.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
During the Trust's fiscal year ended May 31, 1995, the above Fund did not pay
brokerage commissions to brokers affiliated with U.S. Trust. For a description
of other fees paid by the Fund to U.S. Trust, see "Material Payments by the
Funds to U.S. Trust or U.S. Trust Pacific and their Affiliates" above.
THE DIRECTORS OF U. S. TRUST
See "The Directors of U.S. Trust" above.
TRUSTEES' EVALUATION AND RECOMMENDATION
At the meeting of the Board of Trustees on August 29, 1995, the Trustees,
including the Independent Trustees, approved the New Subadvisory Agreement with
respect to the above Fund and the amount of the advisory fee to be paid by U.S.
Trust Pacific to U.S. Trust with respect to such Fund. In making this
determination, the Trustees considered several factors, including the nature,
quality and scope of the services to be provided to the Fund and the investment
record of U.S. Trust in managing the Portfolio corresponding to such Fund and
the other mutual funds managed by U.S. Trust. The Trustees also considered that
U.S. Trust's relationship with the Fund will provide continuity of portfolio
management services to the Fund. The Trustees believe the New Subadvisory
Agreement with respect to the above Fund and the proposed advisory fees to be
reasonable, fair and in the best interests of the Fund's shareholders.
34
<PAGE>
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE FUND'S SHAREHOLDERS APPROVE THE
NEW INVESTMENT SUBADVISORY AGREEMENT WITH RESPECT TO THE FUND.
If the New Subadvisory Agreement with respect to the above Fund is not
approved, the Trustees will not authorize the withdrawal by the Fund of its
investment in the corresponding Portfolio as described in Proposal 1,
regardless of the fact that Proposal 1 may have been approved by the
shareholders of the Fund.
VOTE REQUIRED
Approval of this part (f) of Proposal 2 requires the affirmative vote of a
1940 Act Majority (as defined in part (a) above) of outstanding voting
securities of the above Fund.
PROPOSAL 3.EXCELSIOR INSTITUTIONAL BOND INDEX FUND
FOR THE ABOVE FUND, TO APPROVE OR DISAPPROVE OF THE INVESTMENT
BY SUCH FUND OF ITS INVESTABLE ASSETS IN THE BOND INDEX
PORTFOLIO, A SERIES OF FEDERATED PORTFOLIOS.
GENERAL
As more fully described under Proposal 1 above, the Trust currently invests
all of the Bond Index Fund's investable assets in the Bond Market Portfolio,
which has the same investment objective and policies as the Fund. As part of
the restructuring referred to in Proposal 1, the Trustees of the Trust have
recommended that the Fund withdraw its investment in the Bond Market Portfolio.
Unlike the other Funds that would also be withdrawn from the corresponding
Portfolio of the Portfolio Series if Proposal 1 is approved, the Trustees have
determined that in the case of the Bond Index Fund, the benefits of a two-tier
structure could potentially be realized by reinvesting the assets of the Fund
in a series (the "Bond Index Portfolio") of Federated Investment Portfolios
(the "Federated Portfolios") and operating in a two-tier, master/feeder
structure. Since it is expected that there will be one or more additional
feeder funds investing in the Bond Index Portfolio, it is anticipated that many
of the expected benefits of the two-tier structure will be realized. Therefore,
the Trustees have determined that it would be in the best interests of the
shareholders of the Fund to replace the temporary one-tier operating structure
contemplated by Proposal 1 as soon as practicable following the withdrawal from
the Bond Market Portfolio, with a two-tier, master/feeder structure by
investing all of the investable assets of the Fund in the Bond Index Portfolio,
which has adopted the same investment objective, restrictions and policies as
the Fund, and terminating the New Advisory Agreement and New Subadvisory
Agreement with respect to the Fund.
As a feeder fund, the Fund will remain a series of Excelsior Institutional
Trust and thus will continue to be managed by the Trust's Board of Trustees and
officers, and to be served by the Trust's other service providers.
The master fund corresponding to the Fund will be the Bond Index Portfolio, a
series of Federated Portfolios. Federated Portfolios is an open-end management
investment company that was established as a Massachusetts business trust under
a Declaration of Trust dated as of September 25, 1995. Federated
35
<PAGE>
Portfolios' business address is Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. Federated Portfolios is managed by a Board of
Trustees. The Trustees are responsible for managing Federated Portfolios'
business affairs and for exercising all Federated Portfolio's powers except
those reserved for the shareholders. An Executive Committee of the Board of
Trustees handles the Board's responsibilities between meetings of the Board.
The Declaration of Trust permits Federated Portfolios to offer separate series
representing interests in separate portfolios of securities. The Bond Index
Portfolio, which was established as a separate series of Federated Portfolios
as of September 25, 1995, is the first and currently the only series of
Federated Portfolios, although additional series of Federated Portfolios may be
established in the future from time to time. Federated Portfolios' fiscal year,
and therefore the fiscal year of the Bond Index Portfolio, will end on May 31
of each year, the same fiscal year as corresponds to the Fund.
Federated Administrative Services, a Delaware business trust whose address is
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate Federated Portfolios. Federated
Administrative Services provides these at an annual rate which relates to the
average aggregate daily net assets of the Federated Portfolios as specified
below:
<TABLE>
<CAPTION>
MAXIMUM AVERAGE AGGREGATE
ADMINISTRATIVE DAILY NET ASSETS OF THE
FEE FEDERATED PORTFOLIOS
-------------- -----------------------
<S> <C>
0.15% first $250 million
0.125% next $250 million
0.10% next $250 million
0.075% assets in excess of $750 million
</TABLE>
The administrative fee received during any fiscal year shall be at least
$120,000 per series of Federated Portfolios. Federated Administrative Services
may choose voluntarily to waive a portion of its fee and has agreed to waive a
portion of the administrative fee, including any minimum, as further discussed
in "Expense Information" below. Federated Administrative Services is a
subsidiary of Federated Investors.
Federated Services Company, a Delaware business trust whose address is P.O.
Box 8600, Boston, Massachusetts 02266-8600, serves as transfer agent, dividend
disbursing agent and custody procurement agent for Federated Portfolios. The
fee paid to the transfer agent is based upon the size, type, and number of
accounts and transactions made by shareholders. Federated Services Company also
maintains Federated Portfolios' accounting records. The fee paid for this
service is based upon the level of Federated Portfolios' average net assets for
the period plus out-of-pocket expenses.
Federated Securities Corp. is the placement agent for investments in the Bond
Index Portfolio. Federated Securities Corp. is located at Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779. It is a Pennsylvania corporation
organized on November 14, 1969, and is the principal distributor for a number
of investment companies. Federated Securities Corp. receives no fee for its
services as placement agent for the Bond Index Portfolio. Federated Securities
Corp. is a subsidiary of Federated Investors.
Federated Portfolios' custodian is Investors Bank & Trust Company, 89 South
Street, Boston, Massachusetts.
36
<PAGE>
Information regarding the proposed independent auditors for Federated
Portfolios is provided in part (d) of this Proposal 3, below.
Information regarding the proposed investment adviser and investment
subadviser to the Bond Index Portfolio is provided in parts (a) and (b) of this
Proposal 3, below.
TRUSTEES AND OFFICERS OF FEDERATED PORTFOLIOS
Information concerning the Trustees and Officers of Federated Portfolios is
provided in part (c) of this Proposal 3 below.
EXPENSE INFORMATION
The following table provides (i) a summary of estimated expenses relating to
purchases and sales of shares of the Fund, and the aggregate annual operating
expenses for the Fund and the corresponding Bond Index Portfolio, as a
percentage of 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,
in each case after giving effect to the transactions contemplated by this
Proposal 3. The Trustees of the Trust believe that the aggregate per share
expenses of the Fund and the corresponding Bond Index Portfolio will be less
than or approximately equal to the expenses which the Fund would incur if the
Trust retained the services of an investment adviser and the assets of the Fund
were invested directly in the type of securities held by the Bond Index
Portfolio.
<TABLE>
<S> <C> <C>
Shareholder Transaction Expenses
Sales Load Imposed on Purchases........................................ None
Sales Load Imposed on Reinvested Dividends............................. None
Deferred Sales Load.................................................... None
Redemption Fees........................................................ None
Exchange Fees.......................................................... None
</TABLE>
<TABLE>
<S> <C> <C>
Expense Table--Annual Operating Expenses
Advisory Fees (after waiver)........................................ 0%
12b-1 Fees.......................................................... None
Other Expenses
Administrative Fees (after waiver)................................ 0.08%
Shareholder Servicing Fees (after waiver)......................... 0%
Other Operating Expenses (after reimbursement).................... 0.22%
0.30%
Total Fund Operating Expenses
(after waivers and reimbursement)................................. 0.30%
</TABLE>
37
<PAGE>
Example
Investors would pay the following expenses on a $1,000 investment, assuming
(a) 5% annual return and (b) redemption of the investment at the end of the
following periods:
1 Year 3 Years
$3
$10
The example above should not be considered a representation of past or future
expenses or performance. Actual expenses and returns may be greater than 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 via the Bond Index Portfolio.
The expense table and the example reflect the fact that the Bond Index
Portfolio's investment adviser and administrator both voluntarily waive a
portion of their fees and both are voluntarily reimbursing certain operating
expenses of the Bond Index Portfolio. Without such waivers and reimbursements,
the advisory fees paid would equal 0.25% of the average daily net assets of the
Bond Index Portfolio, the administrative fees would equal 0.23% of the average
daily net assets of the Fund, the shareholder servicing fees would equal 0.25%
of the average daily net assets of the Fund, and other expenses would equal
0.56% of the average daily net assets of the Fund and the Bond Index Portfolio.
In aggregate, the total operating expenses of the Fund and the Bond Index
Portfolio would equal 1.29% of the average daily net assets of the Fund. Fee
waivers and expense reimbursements are terminable at any time in the sole
discretion of the service providers waiving fees or reimbursing expenses.
However, Federated Investors has agreed to maintain total annual operating
expenses (after waivers and reimbursements) of the Bond Index Portfolio at no
greater than 0.20% of average net assets for the twelve month period following
the restructuring, and U.S. Trust has agreed to maintain total annual operating
expenses (after waivers and reimbursements) of the Bond Index Fund (including
its pro rata share of the Bond Index Portfolio's expenses) at no greater than
0.30% of average net assets for the twelve month period following the
restructuring.
Federated Portfolios and the Bond Index Portfolio were newly formed at the
time this Proxy Statement was sent to shareholders of the Fund and therefore
historical information regarding the results of the Bond Index Portfolio's
operations has not been included in this Proxy Statement.
INVESTMENT OBJECTIVES AND POLICIES OF THE BOND INDEX FUND.
The Bond Index Portfolio has investment objectives and policies identical to
those of the Fund. The investment objective of the Bond Index Portfolio is to
provide investment results that correspond to the investment performance of the
Lehman Brothers Aggregate Bond Index (the "Aggregate Bond Index"), a broad
market-weighted index more fully described below. The Bond Index Portfolio's
investment policy is to invest at least 80% of its assets in a portfolio of
securities consisting of a representative selection of fixed income securities
included in the Aggregate Bond Index. The Bond Index Portfolio intends to
remain fully invested, to the extent practicable, in a pool of securities that
match the yield and total return of the Index.
The investment philosophy behind the Bond Index Portfolio is that the
Portfolio is not managed pursuant to traditional methods of active investment
management, which involves the buying and selling of
38
<PAGE>
securities based upon economic, financial and market analyses and investment
judgment. Instead, the Bond Index Portfolio, utilizing a passive or indexing
investment approach, will attempt to replicate the investment performance of
the Aggregate Bond Index.
The Bond Index Portfolio seeks to achieve its investment objective of
duplicating the investment performance of the Aggregate Bond Index through
statistical sampling procedures by investing in a selected group -- not the
entire universe -- of securities in the Aggregate Bond Index. This group of
securities, when taken together, is expected to perform similarly to the index
as a whole. This sampling technique is expected to enable the Bond Index
Portfolio to track the price movements and performance of its index, while
minimizing brokerage, custodial and accounting costs.
The Trust expects that there will be a close correlation between the Bond
Index Portfolio's performance and that of the Aggregate Bond Index in both
rising and falling markets. The Bond Index Portfolio will attempt to maximize
the correlation between its performance and that of the Aggregate Bond Index.
Over the long term, the investment managers of the Bond Index Portfolio seek a
correlation of 0.95 or better. In the event that a correlation of 0.95 or
better is not achieved, the Board of Trustees of Federated Portfolios will
review with the investment managers methods for increasing such correlation,
such as through adjustments in securities holdings of the Bond Index Portfolio.
Factors such as the size of the Portfolio's securities holdings, transaction
costs, management fees and expenses, brokerage commissions and fees, the extent
and timing of cash flows into and out of the Portfolio, and changes in the
securities markets and the indexes themselves, are expected to account for any
differences between the Portfolio's performance and that of the Index.
LEHMAN BROTHERS AGGREGATE BOND INDEX. The Aggregate Bond Index is a broad
market-weighted index which encompasses three major classes of United States
investment grade fixed income securities with maturities greater than one year:
U.S. Treasury and agency securities, corporate bonds, and mortgage-backed
securities. The Index measures the total investment return (capital change plus
income) provided by a universe of fixed income securities, weighted by the
market value outstanding of each security. The securities included in the Index
generally meet the following criteria, as defined by Lehman Brothers: an
outstanding market value of at least $100 million; and investment grade
quality, rated a minimum of Baa by Moody's or BBB by S&P. The Bond Market
Portfolio is managed without regard to tax ramifications.
U.S. GOVERNMENT AND AGENCY SECURITIES. The Bond Index Portfolio may invest in
U.S. Government securities and securities issued or guaranteed by agencies or
instrumentalities of the U.S. Government. Securities issued or guaranteed by
the U.S. Government or its agencies or instrumentalities include U.S. Treasury
securities (Treasury Bills, Treasury Notes and Treasury Bonds); securities such
as Government National Mortgage Association pass-through certificates, which
are supported by the full faith and credit of the U.S. Treasury; securities,
such as those of the Federal Home Loan Banks, which are supported by the right
of the issuer to borrow from the U.S. Treasury; securities, such as those
issued by the Federal National Mortgage Association, which are supported by
discretionary authority of the U.S. Government to purchase certain obligations
of the agency or instrumentality; and other securities, such as those issued by
the Student Loan Marketing Association, which are supported only by the credit
of the agency or instrumentality. While the U.S. Government provides financial
support to such U.S. Government-sponsored agencies or instrumentalities, no
assurance can be given that it will always do so, since it is not so obligated
by law. The
39
<PAGE>
Bond Index Fund and Bond Index Portfolio, and their respective net asset values
and yields, are not guaranteed by the U.S. Government or any federal agency or
instrumentality.
The Bond Index Portfolio may, from time and time, substitute one type of
investment grade bond for another. For instance, the Bond Index Portfolio may
hold more short-term corporate bonds (and fewer short-term U.S. Treasury bonds)
than represented in the Aggregate Bond Index so as to increase income.
CORPORATE BONDS. The Bond Index Portfolio may purchase debt securities of
United States corporations only if they are deemed investment grade, that is,
carry a rating of at least Baa from Moody's or BBB from S&P or, if not rated by
these rating agencies, are judged by the investment managers of the Portfolio
to be of comparable quality. The Portfolio intends to dispose in an orderly
manner of any security which is downgraded below investment grade subsequent to
its purchase.
Corporate bonds are subject to call risk during periods of falling interest
rates. Securities with high stated interest rates may be prepaid (or called)
prior to maturity, requiring the Bond Index Portfolio to invest the proceeds at
generally lower interest rates. If interest rates fall and bond issuers
exercise call provisions, the result would be that bonds with high interest
rates are called and must be replaced with lower-yielding instruments. In these
circumstances, the income of the Bond Index Portfolio would decline.
MORTGAGE PASS-THROUGH AND COLLATERALIZED MORTGAGE OBLIGATIONS. The Bond Index
Portfolio may purchase mortgage and mortgage-related securities such as pass-
throughs and collateralized mortgage obligations that meet the Bond Index
Portfolio's selection criteria (collectively, "Mortgage Securities"). As a
result of its investment in Mortgage Securities, the mortgage-backed securities
in the Bond Index Portfolio may be subject to a greater degree of market
volatility as a result of unanticipated prepayments of principal. When interest
rates fall, the principal invested in mortgage-backed securities with high
interest rates may be repaid earlier than scheduled, causing principal
prepayments to be reinvested at lower interest rates and reducing the income
that the Bond Index Portfolio derives from mortgage-backed securities. In
addition, like other fixed income securities, Mortgage Securities generally
decline in price when interest rates rise.
SAMPLING AND TRADING IN THE INDEX PORTFOLIOS. The Bond Index Portfolio does
not anticipate holding all of the individual issues which comprise the
Aggregate Bond Index because of the large number of securities involved.
Instead, the Portfolio will hold a representative sample of securities,
selecting one or two issues to represent entire classes or types of securities
in the Index. This sampling technique is expected to be an effective means of
substantially duplicating the income and capital returns provided by the Index.
To reduce transaction costs, the Bond Index Portfolio's securities holdings
will not be automatically traded or re-balanced to reflect changes in the
Aggregate Bond Index or in the market values of securities held by the Bond
Index Portfolio. The Bond Index Portfolio may trade large blocks of securities.
These policies may cause a particular security to be over- or under-represented
in the Portfolio relative to its index weighting or result in its continued
ownership by the Portfolio after its deletion from the Index, thereby reducing
the correlation between the Portfolio and the Index. In addition, the Bond
Index Portfolio may omit or remove Index securities from its portfolio if the
investment managers believe the security to be insufficiently liquid or believe
the merit of the investment has been substantially impaired by extraordinary
events or financial conditions.
40
<PAGE>
GENERAL MATTERS. Because the Bond Index Portfolio will seek to represent all
major sectors of the investment grade fixed income securities market, the Bond
Index Fund may be a suitable vehicle for those investors seeking ownership in
the "bond market" as a whole, without regard to particular sectors. The Bond
Index Fund is intended to be a long-term investment vehicle and is not designed
to provide investors with a means of speculating on short-term bond market
movements. Because of potential share price fluctuations, the Fund may be
inappropriate for investors who have short-term objectives or who require
stability of principal. Investors should not consider the Fund a complete
investment program.
Unless otherwise stated, all of the investment objectives, policies and
strategies discussed herein are deemed "non-fundamental", i.e., the approval of
the Fund's shareholders is not required to change its investment objective or
any of its investment policies and strategies. Likewise, the approval of the
Fund and other investors in the Bond Index Portfolio is not required to change
the Portfolio's investment objective or any of the Portfolio's investment
policies and strategies. Any changes in the Fund's or the Portfolio's
investment objective, policies or strategies could result in the Fund having
investment objectives, policies and strategies different from those applicable
at the time of a shareholder's investment in the Fund.
TRUSTEES' EVALUATION AND RECOMMENDATION
At meetings of Excelsior Institutional Trust's Board of Trustees on August
29, September 13, and October 6, 1995, the Trustees considered alternatives
available to the Bond Index Fund and determined that the proposed investment by
the Bond Index Fund of all of its investable assets in the Bond Index
Portfolio, and operating in a two-tier, master/feeder structure, was in the
best interests of the shareholders of the Fund. The Trustees' decision was
based on several factors including: (i) the expectation that the estimated
expense ratios of the Fund would be no greater than they would otherwise be if
the Fund did not invest in the Bond Index Portfolio; (ii) the expectation that
other feeder funds would invest in the Bond Index Portfolio, resulting in the
cost savings associated with a two-tier, master/feeder structure, (iii) the
expectation that the Bond Index Portfolio will have the same investment
objectives, policies and restrictions as the Fund, (iv) the expectation that
the Fund would be able to contribute all its assets, in kind, to the Bond Index
Portfolio, in a tax-free transaction, so that the Fund would not be required to
recognize any gain (or loss) on the transaction; and (v) the expected
continuity of Portfolio management resulting from the continued subadvisory
services of U.S. Trust to the Bond Index Portfolio (see parts (a) and (b) of
this Proposal 3 below).
After consideration of the relevant factors, the Trustees, including the
Independent Trustees, voted to approve, and voted to recommend that the
shareholders of the Bond Index Fund approve the investment by the Fund of all
of its investable assets in the Bond Index Portfolio. Such investment is
subject to approval of the new advisory and subadvisory agreements by the
requisite vote of the shareholders of the Fund, as more fully described in
parts (a) and (b) of this Proposal 3. If such new advisory and subadvisory
agreements are not approved by the shareholders of the Fund, the Fund will not
invest its investable assets in the Bond Index Portfolio, even if the
shareholders of the Fund approve such investment.
The conversion to a two-tier, master/feeder structure would be accomplished
by having the Fund invest in-kind its securities and other assets in the Bond
Index Portfolio.
41
<PAGE>
The conversion to a two-tier, master/feeder structure is subject to the
receipt of an opinion of Bingham, Dana & Gould, counsel to the Trust,
substantially to the effect that, based on the current position of the Internal
Revenue Service, as reflected in private rulings and proposed regulations, the
investment in-kind of its securities and other assets in the Bond Index
Portfolio will not cause either the Fund or its shareholders to recognize any
gain or loss under the Code, that the Bond Index Portfolio's basis in each
security invested in it will be the same as the Fund's basis for that security,
and that the Bond Index Portfolio's holding period for each security will
include the Fund's holding period for that security. In rendering such opinion,
counsel may rely, to the extent they deem necessary or appropriate, upon
representations of an officer or Trustee of the Trust.
Approval by the shareholders of the Fund of this Proposal 3 will be deemed an
authorization to the Trustees and officers of the Trust to take any steps
necessary or appropriate to invest all investable assets of the Fund in the
Bond Index Portfolio.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE SHAREHOLDERS OF THE BOND INDEX
FUND APPROVE THE PROPOSAL TO INVEST THE FUND'S ASSETS IN THE BOND INDEX
PORTFOLIO.
If the shareholders of the Fund do not approve this Proposal 3 and each of
subparts (a), (b), (c) and (d) hereof, the Fund will continue to operate in its
existing structure and the Trustees will consider what future action to take,
including resubmission of the Proposal to shareholders at a future date.
VOTE REQUIRED
The Declaration of Trust of the Trust would permit the investment of the
Fund's assets in the Bond Index Portfolio without a shareholder vote. However,
the Trustees have decided to seek shareholder approval of the investment.
Approval of this Proposal 3 requires the affirmative vote of a majority of the
outstanding shares of the Fund represented in person or by proxy and entitled
to vote at the Meeting if a quorum is present.
PROPOSAL 3(a). FOR THE BOND INDEX FUND, TO APPROVE OR DISAPPROVE OF AN
INVESTMENT ADVISORY AGREEMENT BETWEEN FEDERATED PORTFOLIOS AND
FEDERATED MANAGEMENT AS INVESTMENT ADVISER WITH RESPECT TO THE
BOND INDEX PORTFOLIO.
GENERAL
If Proposal 3 is approved by the shareholders of the Fund, all of the
investable assets of the Fund will be invested in the Bond Index Portfolio of
the Federated Portfolios. Federated Portfolios has engaged Federated Management
as its investment adviser, pursuant to the terms of an investment advisory
agreement (the "Federated Advisory Agreement") which is substantially the same
as the Current Advisory Agreement and the temporary New Advisory Agreement
corresponding to the Bond Index Fund. The Board of Trustees of Federated
Portfolios approved the Federated Advisory Agreement at a special meeting of
such Board on October 3, 1995. Since Federated Portfolios is expected to seek
the approval by the investors in the Bond Index Portfolio (including the Fund)
of the Federated Advisory Agreement, the shareholders of the Fund
42
<PAGE>
are being asked to vote on the Federated Advisory Agreement. The Trust on
behalf of the Fund will cast its votes as an investor in the Bond Index
Portfolio in the same proportions as the votes cast by the Fund's shareholders.
At a meeting of the Board of Trustees of the Trust on October 6, 1995, the
Trustees, including the Independent Trustees, voted to recommend that the
shareholders of the Fund approve the Federated Advisory Agreement between the
Federated Portfolios on behalf of the Bond Index Portfolio and Federated
Management. The rate of the advisory fee payable pursuant to the Federated
Advisory Agreement, as recommended for approval by the shareholders of the
Fund, is identical to the rate of the advisory fees payable pursuant to each of
the Current Advisory Agreement and the New Advisory Agreement corresponding to
the Fund. See "The Advisory Fee and Other Expenses" below.
COMPARISON OF THE FEDERATED ADVISORY AGREEMENT AND THE NEW AND CURRENT ADVISORY
AGREEMENTS.
The terms and conditions of the New Advisory Agreement and Current Advisory
Agreement with respect to the above Fund are substantially the same in all
material respects to those of the Federated Advisory Agreement, with the
exception of the identity of the party contracting with the investment adviser,
which will be Federated Portfolios, the identity of the Investment Adviser,
which will be Federated Management and their effective dates and termination
dates. The terms of the form of New Advisory Agreement attached hereto as
Exhibit A are substantially the same in all material respects, with the
exceptions noted above, to the terms of the Federated Advisory Agreement, and
the discussion of the terms of the Federated Advisory Agreement is qualified in
its entirety by reference to Exhibit A.
Subject to the supervision and approval of the Board of Trustees of Federated
Portfolios, under the Federated Advisory Agreement the investment adviser is
required to: (a) prepare and evaluate statistical, financial and economic data
and other information; (b) formulate, review and administer an investment
program for the Bond Index Portfolio; (c) determine the securities to be
purchased by such Portfolio and monitor such securities to determine when to
take action with respect to such securities; (d) determine whether and how to
exercise rights with respect to such securities such as voting rights and
warrants; (e) determine the value of such securities if so requested by the
Board of Trustees of Federated Portfolios; (f) report to the officers of
Federated Portfolios and its Board of Trustees as to investment performance and
such adviser's performance under the Federated Advisory Agreement; (g) assist
the officers of Federated Portfolios in connection with the operation of
Federated Portfolios; (h) place orders for the purchase, sale or loan of
securities by Federated Portfolios; (i) provide office space, office
facilities, equipment and personnel; and (j) maintain all records concerning
activities of such investment adviser that it is required by law to maintain.
Under the Federated Advisory Agreement, the investment adviser may appoint and
employ one or more subadvisers that are satisfactory to Federated Portfolios.
The Federated Advisory Agreement will, as do the Current Advisory Agreement
and the New Advisory Agreement, provide that the investment adviser thereunder
is not liable for any act or omission connected with the rendering of services
under the Federated Advisory Agreement, or any losses that may be sustained in
the purchase, holding or sale of any security. However, the investment adviser
will be liable for a loss resulting from willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties under such
Agreement.
43
<PAGE>
By its terms, the Federated Advisory Agreement will continue in effect for an
initial term of two years from the date of execution and for successive annual
periods thereafter, provided that the continuance is specifically approved at
least annually by a majority of the Independent Trustees of Federated
Portfolios and either (i) a vote of a 1940 Act Majority of the Federated
Portfolios' outstanding voting securities, or (ii) the vote of a majority of
the full Board of Trustees. The Federated Advisory Agreement is terminable
without penalty, (x) by Federated Portfolios on not less than 60 days' written
notice by the Trustees to the investment adviser, by action of the Board of
Trustees or the vote of a majority of the Bond Index Portfolios' outstanding
voting securities, or (y) by the investment adviser on not less than 90 days'
written notice by the investment advisor to Federated Portfolios. The Federated
Advisory Agreement terminates automatically in the event of its "assignment"
(as defined in the 1940 Act).
The Federated Advisory Agreement provides that the services of the investment
adviser thereunder are not exclusive and that the investment adviser is free to
render services to others so long as such person's ability to perform its
obligations under such agreement is not adversely effected.
The Federated Advisory Agreement states that it will be governed in
accordance with the laws of the Commonwealth of Massachusetts and that each
provision of such Agreement is independent of all other provisions.
Shareholders should also refer to Exhibit A for the specific terms of the
Federated Advisory Agreement.
THE ADVISORY FEE AND OTHER EXPENSES
Under the Federated Advisory Agreement, the Bond Index Fund will indirectly
pay to Federated Management, as investment adviser, a monthly fee that is equal
on an annual basis to 0.25% of the Bond Index Portfolio's average daily net
assets. THIS IS THE SAME RATE OF COMPENSATION AS IS PAYABLE INDIRECTLY BY SUCH
FUND TO THE ADVISER UNDER THE CURRENT INVESTMENT ADVISORY AGREEMENT AND AS WILL
BE PAYABLE TO THE ADVISER UNDER THE TEMPORARY NEW ADVISORY AGREEMENT. See
Proposal 3--"Expense Information" for a discussion of voluntary fee waivers.
During the Trust's fiscal year ended May 31, 1995, the Bond Index Fund,
through its corresponding Portfolio, indirectly paid advisory fees to U.S.
Trust Pacific of $0. This represented a waiver of advisory fees of $47,955 with
respect to the Bond Index Fund.
CONCERNING FEDERATED MANAGEMENT AS INVESTMENT ADVISER
Federated Management, a Delaware business trust organized on April 11, 1989,
is a registered investment adviser under the Investment Advisers Act of 1940.
Federated Management is an indirect, wholly owned subsidiary of Federated
Investors, a Delaware business trust which, together with its affiliates, has
approximately $70 billion in assets under management. All of the Class A shares
(voting) of Federated Investors are owned by a trust, the trustees of which are
John F. Donahue, his wife, and his son, J. Christopher Donahue; officers and
Trustees of Federated Portfolios who own Class B shares (non-voting) of
Federated Investors, their positions with Federated Investors, and the number
of shares beneficially owned by such persons are: John F. Donahue, Trustee,
Chairman and Chief Executive Officer (1,823,547);
44
<PAGE>
J. Christopher Donahue, Trustee, President and Chief Operating Officer
(1,051,483); Richard B. Fisher, Trustee, Executive Vice President and Assistant
Secretary (800,000); Edward C. Gonzales, Trustee, Vice Chairman and Treasurer
(400,000); John W. McGonigle, Trustee, Executive Vice President, General
Counsel and Secretary (1,000,000) and David M. Taylor, Trustee and Senior Vice
President (140,000). Federated Management's address is Federated Investors
Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania 15222-3779.
Federated Management acts as investment adviser to 25 investment companies
with multiple portfolios or series. Federated Management currently provides
investment advisory services to no other mutual funds with similar investment
objectives to those of the Bond Index Portfolio.
Dr. Henry J. Gailliot, an officer of Federated Management and a Trustee of
Federated Investors holds approximately 20% of the outstanding common stock and
serves as a director of Commercial Data Services, Inc., a company which
provides computer data processing services to Federated Administrative
Services, which is Federated Portfolios' administrator.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS
During the Trust's fiscal year ended May 31, 1995, the above Fund paid no
brokerage commissions to brokers affiliated with Federated Management.
OTHER MATERIAL PAYMENTS BY THE FUND TO FEDERATED MANAGEMENT AND AFFILIATES OF
FEDERATED MANAGEMENT.
During the Trust's fiscal year ended May 31, 1995, neither the Fund nor the
Bond Market Portfolio nor the Bond Index Portfolio made any payments to
Federated Management or any affiliate of Federated Management for services
provided to the Fund, the Bond Market Portfolio or the Bond Index Portfolio.
THE DIRECTORS OF FEDERATED MANAGEMENT
The following table lists the name, current position with Federated
Management, addresses and principal occupation of each Trustee and of the
principal executive officer of Federated Management.
<TABLE>
<CAPTION>
POSITION WITH FEDERATED
NAME ADDRESS MANAGEMENT; PRINCIPAL OCCUPATION
- ---- ------- --------------------------------
<S> <C> <C>
John F. Donahue ........ Federated Investors Tower Trustee and Chairman; Chairman and
Pittsburgh, PA Trustee, Federated Investors.
J. Christopher Donahue.. Federated Investors Tower Trustee; President and Trustee, Federated
Pittsburgh, PA Investors.
John W. McGonigle....... Federated Investors Tower Trustee; Executive Vice President,
Pittsburgh, PA Secretary, General Counsel, and Trustee,
Federated Investors.
Mark D. Olson........... Wilson, Halbrook & Bayard Trustee; Partner, Wilson Halbrook &
107 W. Market Street Bayard (law firm).
Georgetown, Delaware 19947
</TABLE>
45
<PAGE>
TRUSTEES' EVALUATION AND RECOMMENDATION
At the meeting of the Board of Trustees on October 6, 1995, the Trustees,
including the Independent Trustees, voted to recommend that the shareholders of
the Fund approve the Federated Advisory Agreement. In making this
recommendation, the Trustees considered several factors, including the nature,
quality and scope of the services to be provided to the Bond Index Portfolio
and the investment record of Federated Management and the other mutual funds
managed by Federated Management.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE FUND'S SHAREHOLDERS APPROVE THE
FEDERATED ADVISORY AGREEMENT.
If the Federated Advisory Agreement with respect to Bond Index Portfolio is
not approved by the shareholders of the Bond Index Fund, the Trustees will not
authorize the investment by the Fund of its investable assets in the Bond Index
Portfolio as described in Proposal 3, regardless of the fact that Proposal 3
may have been approved by the shareholders of such Fund.
VOTE REQUIRED
Approval of this subpart (a) of Proposal 3 with respect to the Bond Index
Fund requires the affirmative vote of a 1940 Act Majority (as defined in part
(a) of Proposal 2 above) of outstanding voting securities of the Fund.
PROPOSAL 3(b). FOR THE BOND INDEX FUND, TO APPROVE OR DISAPPROVE OF AN
INVESTMENT SUBADVISORY AGREEMENT BETWEEN FEDERATED MANAGEMENT
AND U.S. TRUST AS INVESTMENT SUBADVISER WITH RESPECT TO THE BOND
INDEX PORTFOLIO.
GENERAL
Federated Management has proposed delegating certain of its investment
advisory duties to U.S. Trust as investment subadviser pursuant to the terms of
an investment subadvisory agreement with U.S. Trust (the "UST Subadvisory
Agreement"). U.S. Trust currently serves as subadviser to the Bond Market
Portfolio pursuant to the Current Subadvisory Agreement. It is anticipated that
the persons at U.S. Trust primarily responsible for the day-to-day provision of
subadvisory services to the Bond Index Portfolio will be Bruce Tavel, Senior
Vice President, and Cyril M. Theccanat, Vice President, U.S. Trust Structured
Management Department, who are the persons who currently fill such role with
respect to the Bond Market Portfolio. The Board of Trustees of Federated
Portfolios approved the UST Subadvisory Agreement at a special meeting of such
Board on October 3, 1995. Since Federated Portfolios is expected to seek the
approval by the investors in the Bond Index Portfolio (including the Fund) of
the UST Subadvisory Agreement, the shareholders of the Fund are being asked to
vote on the UST Subadvisory Agreement. The Trust on behalf of the Fund will
cast its votes as an investor in the Bond Index Portfolio in the same
proportions as the votes cast by the Fund's shareholders.
46
<PAGE>
At a meeting of the Board of Trustees of the Trust on October 6, 1995, the
Trustees, including the Independent Trustees, voted to recommend that the
shareholders of the Fund approve the UST Subadvisory Agreement between
Federated Management and U.S. Trust. The rate of the advisory fee in the UST
Subadvisory Agreement, as approved by the Trustees and recommended for approval
by the shareholders of the Fund, is lower than the rate of the advisory fees
charged in each of the Current Subadvisory Agreement and the temporary New
Subadvisory Agreement corresponding to the Fund. See "The Advisory Fee and
Other Expenses" below.
COMPARISON OF THE UST SUBADVISORY AGREEMENT AND THE NEW AND CURRENT SUBADVISORY
AGREEMENTS.
The terms and conditions of the New Subadvisory Agreement and Current
Subadvisory Agreement corresponding to the above Fund are substantially the
same in all material respects as those of the UST Subadvisory Agreement, with
the exception of the advisory fee (as more fully discussed below), the identity
of the investment adviser, which will be Federated Management, and the
effective dates and termination dates. The terms of the form of New Subadvisory
Agreement attached hereto as Exhibit B are substantially the same in all
material respects, with the exception noted above, to the terms of the UST
Subadvisory Agreement, and the discussion of the terms of the UST Subadvisory
Agreement is qualified in its entirety by reference to Exhibit B.
Subject to the supervision and approval of the Board of Trustees of Federated
Portfolios, under the UST Subadvisory Agreement the investment subadviser is
required to: (a) prepare and evaluate statistical, financial and economic data
and other information; (b) formulate, review and administer an investment
program for the Bond Index Portfolio; (c) determine the securities to be
purchased by such Portfolio and monitor such securities to determine when to
take action with respect to such securities; (d) determine whether and how to
exercise rights with respect to such securities such as voting rights and
warrants; (e) determine the value of such securities if so requested by the
Board of Trustees of Federated Portfolios; (f) report to the officers of
Federated Portfolios and its Board of Trustees as to investment performance and
such subadviser's performance under the UST Subadvisory Agreement; (g) assist
the officers of Federated Portfolios in connection with the operation of
Federated Portfolios; (h) place orders for the purchase, sale or loan of
securities by Federated Portfolios; (i) provide office space, office
facilities, equipment and personnel; and (j) maintain all records concerning
activities of such investment subadviser that it is required by law to
maintain.
The UST Subadvisory Agreement will, as do the Current Subadvisory Agreement
and the New Subadvisory Agreement, provide that the investment subadviser
thereunder is not liable for any act or omission connected with the rendering
of services under the UST Subadvisory Agreement, or any losses that may be
sustained in the purchase, holding or sale of any security. However, the
investment subadviser will be liable for a loss resulting from willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties under such Agreement. Furthermore, the UST Subadvisory
Agreement will, as do the Current Subadvisory Agreement and the New Subadvisory
Agreement, provide that the investment subadviser thereunder is not liable for
errors of judgment, mistakes, acts or omissions of the investment adviser.
47
<PAGE>
By its terms, the UST Subadvisory Agreement will continue in effect for an
initial term of two years from the date of execution and for successive annual
periods thereafter, provided that the continuance is specifically approved at
least annually by a majority of the Independent Trustees of Federated
Portfolios and either (i) a vote of a 1940 Act Majority of the Bond Index
Portfolios' outstanding voting securities, or (ii) the vote of a majority of
the full Board of Trustees. The UST Subadvisory Agreement is terminable without
penalty, (x) by Federated Portfolios on not less than 60 days' written notice
by the Trustees to the investment subadviser, by action of the Board of
Trustees or the vote of a majority of the Bond Index Portfolios' outstanding
voting securities, (y) by the investment adviser on not less than 60 days'
written notice from the investment adviser to the investment subadviser, or (z)
by the investment subadviser on not less than 90 days' written notice by the
investment subadviser to the investment adviser and Federated Portfolios. The
UST Subadvisory Agreement terminates automatically in the event of its
"assignment" (as defined in the 1940 Act).
The UST Subadvisory Agreement provides that the services of the investment
subadviser thereunder are not exclusive and that the investment subadviser is
free to render services to others so long as such person's ability to perform
its obligations under such agreement is not adversely effected.
The UST Subadvisory Agreement states that it will be governed in accordance
with the laws of the Commonwealth of Massachusetts and that each provision of
such Agreement is independent of all other provisions.
Shareholders should also refer to Exhibit B for the specific terms of the UST
Subadvisory Agreement.
THE ADVISORY FEE AND OTHER EXPENSES
Under the UST Subadvisory Agreement, Federated Management will directly pay
to U.S. Trust, as investment subadviser, a monthly fee that is equal on an
annual basis to 0.12% of the Bond Index Portfolio's average daily net assets.
THIS IS LOWER THAN THE RATE OF COMPENSATION AS IS PAYABLE BY U.S. TRUST PACIFIC
TO U.S. TRUST UNDER THE CURRENT SUBADVISORY AGREEMENT AND AS WILL BE PAYABLE BY
U.S. TRUST PACIFIC TO U.S. TRUST UNDER THE TEMPORARY NEW SUBADVISORY AGREEMENT
CORRESPONDING TO THE FUND BUT WILL NOT LOWER THE ADVISORY FEES PAYABLE BY THE
BOND INDEX PORTFOLIO. See Proposal 3--"Expense Information" for a discussion of
voluntary fee waivers.
During the Trust's fiscal year ended May 31, 1995, advisory fees payable by
U.S. Trust Pacific to U.S. Trust were $47,955 with respect to the Portfolio
corresponding to the Bond Index Fund, all of which were waived by U.S. Trust.
CONCERNING U.S. TRUST AS INVESTMENT SUBADVISER
See "Concerning U.S. Trust as Investment Adviser" in part (a) of Proposal 2
above.
U.S. Trust provides investment advisory services to other mutual funds with a
similar investment objective to that of the above Fund. See Exhibit C for a
list of those funds, the size of those funds, the rate of the advisory fees
paid by those funds and whether any of such fees have been waived or otherwise
reduced.
48
<PAGE>
Please refer to "Other General Matters" in Proposal 2 above for information
concerning the Glass-Steagall Act and U.S. Trust's deposit, loan and other
commercial banking relationships and how such matters may effect U.S. Trust in
its capacity as investment subadviser.
BROKERAGE COMMISSIONS ON PORTFOLIO TRANSACTIONS AND OTHER FEES.
During the Trust's fiscal year ended May 31, 1995, the above Fund did not pay
brokerage commissions to brokers affiliated with U. S. Trust. For a description
of other fees paid by the Fund to U.S. Trust, see "Material Payments by the
Funds to U.S. Trust or U.S. Trust Pacific and their Affiliates" in Proposal 2
above.
THE DIRECTORS OF U.S. TRUST
See "The Directors of U.S. Trust" in part (a) of Proposal 2 above.
TRUSTEES' EVALUATION AND RECOMMENDATION
At the meeting of the Board of Trustees on October 6, 1995, the Trustees,
including the Independent Trustees, recommended that the shareholders of the
Fund approve the UST Subadvisory Agreement with respect to the Bond Index
Portfolio. In making this recommendation, the Trustees considered several
factors, including the nature, quality and scope of the services to be provided
to the Bond Index Portfolio and the investment record of U.S. Trust in managing
the Bond Market Portfolio and the other mutual funds managed by U.S. Trust. The
Trustees also considered that U.S. Trust's relationship with the Bond Index
Portfolio will provide continuity of portfolio management services to the Fund.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT THE FUND'S SHAREHOLDERS APPROVE THE
UST SUBADVISORY AGREEMENT WITH RESPECT TO THE BOND INDEX PORTFOLIO.
If the UST Subadvisory Agreement with respect to the Bond Index Portfolio is
not approved, the Trustees will not authorize the investment by the Fund of its
investable assets in the Bond Index Portfolio as described in Proposal 3,
regardless of the fact that Proposal 3 and subpart (a) of Proposal 3 may have
been approved by the shareholders of the Fund.
VOTE REQUIRED
Approval of this part (b) of Proposal 3 requires the affirmative vote of a
1940 Act Majority (as defined in part (a) of Proposal 2 above) of outstanding
voting securities of the Bond Index Fund.
PROPOSAL 3(c). FOR THE BOND INDEX FUND TO AUTHORIZE THE ELECTION OF TRUSTEES OF
FEDERATED PORTFOLIOS
Since Federated Portfolios is expected to seek the approval of its investors
(including the Fund) to elect a Board of Trustees of Federated Portfolios, the
shareholders of the Fund are being asked to vote on the
49
<PAGE>
proposed Board of Trustees. The Trust on behalf of the Fund will cast its votes
as an investor in Federated Portfolios in the same proportions as the votes
cast by the Funds' shareholders. It is intended that proxies submitted by
shareholders of the above Fund not limited to the contrary will be used for the
purpose of authorizing the Trust to vote for the election of the thirteen
nominees named below as Trustees of Federated Portfolios.
Each nominee has consented to serve as a trustee if elected. If a designated
nominee declines or otherwise becomes unavailable for election, however, the
proxy confers discretionary power on the persons named therein to authorize the
Trust to vote in favor of a substitute nominee or nominees.
If elected, a Trustee will hold office without limit in time, subject to
resignation, retirement or removal. In case a vacancy shall exist for any
reason, the remaining Trustees may fill the vacancy by appointing another
Trustee, provided that after filling the vacancy at least two-thirds of the
Trustees have been elected by investors. If at any time less than a majority of
the Trustees holding office have been elected by investors, the Trustees then
in office will call a meeting of the investors for the purpose of electing
Trustees.
The following table lists the name, age, current position with Federated
Portfolios, if any, and principal occupation during the past five years of each
nominee and of each of the executive officers of Federated Portfolios. Nominees
who are "interested persons" (as defined in the 1940 Act) of Federated
Portfolios are indicated by an asterisk. As the Federated Portfolios is a newly
created investment company, each nominee for election has not served before as
a Trustee of the Federated Portfolios. However, each nominee currently serves
as a Trustee of one or more other investment companies within the Federated
Fund Complex (as defined below). The table also lists the number of shares of
the Fund or the Bond Index Portfolio owned beneficially by such Trustee and by
the executive officers of Federated Portfolios, and the percentage of total
outstanding shares of the Fund or the Bond Index Portfolio owned by such
Trustee and by the executive officers of Federated Portfolios.
<TABLE>
<CAPTION>
SHARES OF FUND
POSITION WITH FEDERATED PORTFOLIOS; OR THE BOND INDEX PORTFOLIO
PRINCIPAL OCCUPATION DURING PAST FIVE YEARS; OWNED; PERCENTAGE OF
NAME AND AGE ADDRESS OUTSTANDING SHARES
------------ -------------------------------------------- ---------------------------
NOMINEES TO BECOME TRUSTEES OF FEDERATED PORTFOLIOS
<S> <C> <C>
JOHN F. DONAHUE* Trustee (Pending); Chairman of the Board of None
Age 71 Federated Portfolios; Chairman and Trustee,
Federated Investors, Federated Advisers,
Federated Management; Chairman and Director,
Federated Research Corp. and Federated Global
Research Corp.; Chairman, Passport Research,
Ltd.; Chief Executive Officer and Director,
Trustee or Managing General Partner of 74
investment companies for which subsidiaries
of Federated Investors serve as investment
adviser, administrator and/or distributor
(the "Federated Fund Complex"). Mr. Donahue
is the father of J. Christopher Donahue,
President of Federated Portfolios. His
address is Federated Investors Tower,
Pittsburgh, PA.
</TABLE>
50
<PAGE>
<TABLE>
<CAPTION>
SHARES OF FUND
POSITION WITH FEDERATED PORTFOLIOS; OR THE BOND INDEX PORTFOLIO
PRINCIPAL OCCUPATION DURING PAST FIVE OWNED; PERCENTAGE OF
NAME AND AGE YEARS; ADDRESS OUTSTANDING SHARES
------------ ------------------------------------- ---------------------------
<S> <C> <C>
THOMAS G. BIGLEY Trustee (Pending); Director, Ober None
Age 61 Manufacturing Co.; Chairman of the Board,
Children's Hospital of Pittsburgh;
Director, Trustee, or Managing General
Partner of 74 investment companies within
the Federated Fund Complex; formerly,
Senior Partner, Ernst & Young LLP. His
address is 28th Floor, One Oxford Centre,
Pittsburgh, PA.
JOHN T. CONROY, JR. Trustee (Pending); President, Investment None
Age 58 Properties Corporation; Senior Vice
President, John R. Wood and Associates,
Inc., Realtors; President, Northgate
Village Development Corporation; Partner or
Trustee in private real estate ventures in
Southwest Florida; Director, Trustee, or
Managing General Partner of 74 investment
companies within the Federated Fund
Complex; formerly, President, Naples
Property Management, Inc. His address is
Wood/IPC Commercial Department, John R.
Wood and Associates Inc., Realtors, 3255
Tamiami Trail North, Naples, FL.
WILLIAM J. COPELAND Trustee (Pending); Director and member of None
Age 77 the Executive Committee, Michael Baker,
Inc.; Director, Trustee or Managing General
Partner of 74 investment companies within
the Federated Fund Complex; formerly, Vice
Chairman and Director, PNC Bank, N.A., and
PNC Bank Corp. and Director, Ryan Homes,
Inc. His address is One PNC Plaza, 23rd
Floor, Pittsburgh, PA.
JAMES E. DOWD Trustee (Pending); Attorney-at-law; None
Age 73 Director, The Emerging Germany Fund, Inc.,
Director, Trustee, or Managing General
Partner of 74 investment companies within
the Federated Fund Complex. His address is
571 Hayward Mill Road, Concord, MA.
LAWRENCE D. ELLIS, M.D.* Trustee (Pending); Professor of Medicine None
Age 62 and Member, Board of Trustees, University
of Pittsburgh Medical Center--Downtown;
Member, Board of Directors, University of
Pittsburgh Medical Center; formerly
Hematologist, Oncologist, and Internist,
Presbyterian and Montefore Hospitals;
Director, Trustee, or Managing General
Partner of 74 investment companies within
the Federated Fund Complex. His address is
3471 Fifth Avenue, Suite 1111, Pittsburgh,
PA.
EDWARD L. FLAHERTY, JR. Trustee (Pending); Attorney-at-law; None
Age 71 Shareholder, Henny, Kochuba, Meyer and
Flaherty; Director, Eat'N Park Restaurants,
Inc., and Statewide Settlement Agency,
Inc.; Director, Trustee, or Managing
General Partner of 74 investment companies
within the Federated Fund Complex;
formerly, Counsel, Horizon Financial, F.A.,
Western Region. His address is Henny,
Kochuba, Meyer and Flaherty, Two Gateway
Center, Suite 674, Pittsburgh, PA.
PETER E. MADDEN Trustee (Pending); Consultant; State None
Age 53 Representative, Commonwealth of
Massachusetts; Director, Trustee, or
Managing General Partner of 74 investment
companies within the Federated Fund
Complex; formerly President, State Street
Bank and Trust Company and State Street
Boston Corporation. His address is 70
Westcliff Road, Weston, MA.
</TABLE>
51
<PAGE>
<TABLE>
<CAPTION>
SHARES OF FUND
POSITION WITH FEDERATED PORTFOLIOS; OR THE BOND INDEX PORTFOLIO
PRINCIPAL OCCUPATION DURING PAST FIVE OWNED; PERCENTAGE OF
NAME AND AGE YEARS; ADDRESS OUTSTANDING SHARES
------------ ------------------------------------- ---------------------------
<S> <C> <C>
GREGOR F. MEYER Trustee (Pending); Attorney-at-law; None
Age 68 Shareholder, Henny, Kochuba, Meyer and
Flaherty; Chairman, Meritcar, Inc.;
Director, Eat'N Park Restaurants, Inc.;
Director, Trustee or Managing General
Partner of 74 investment companies within
the Federated Fund Complex. His address is
Henny, Kochuba, Meyer and Flaherty, Two
Gateway Center, Suite 674, Pittsburgh, PA.
JOHN E. MURRAY, JR., Trustee (Pending); President, Law None
J.D.,S.J.D. Professor, Duquesne University; Consulting
Age 62 Partner, Molica, Murray and Hogue;
Director, Trustee or Managing General
Partner of 74 investment companies within
the Federated Fund Complex. His address is
Duquesne University, Pittsburgh, PA.
WESLEY W. POSVAR Trustee (Pending); Professor, International None
Age 70 Politics and Management Consultant;
Trustee, Carneige Endowment for
International Peace, RAND Corporation,
Online Computer Library Center, Inc., and
U.S. Space Foundation; Chairman, Czecho
Management Center; Director, Trustee or
Managing General Partner of 74 investment
companies within the Federated Fund
Complex; President Emeritus, University of
Pittsburgh, founding Chairman, National
Advisory Council for Environmental Policy
and Technology and Federal Emergency
Management Advisory Board. His address is
1202 Cathedral of Learning, University of
Pittsburgh, Pittsburgh, PA.
MARJORIE P. SMUTS Trustee (Pending); Public None
Age 60 relations/marketing consultant; Conference
Coordinator, Non-profit entities; Director,
Trustee, or Managing General Partner of 74
investment companies within the Federated
Fund Complex. Her address is 4905 Bayard
Street, Pittsburgh, PA.
J. CHRISTOPHER DONAHUE* Trustee (Pending); President, Federated None
Age 46 Portfolios; President and Trustee,
Federated Investors, Federated Advisers,
Federated Management and Federated
Research; President and Director, Federated
Research Corp. and Federated Global
Research Corp.; President, Passport
Research, Ltd.; Trustee, Federated
Administrative Services, Federated Services
Company, and Federated Shareholder
Services; President or Executive Vice
President of the Funds; Director, Trustee,
or Managing General Partner of certain
investment companies within the Federated
Fund Complex. Mr. Donahue is the son of
John F. Donahue, Chairman of Federated
Portfolios. His address is Federated
Investors Tower, Pittsburgh, PA.
EXECUTIVE OFFICERS OF FEDERATED PORTFOLIOS
RICHARD B. FISHER Vice President; Executive Vice President None
Age 72 and Trustee, Federated Investors; Chairman
and Director, Federated Securities Corp.;
President or Vice President of some of the
Funds; Director or Trustee of certain
investment companies within the Federated
Fund Complex. His address is Federated
Investors Tower, Pittsburgh, PA.
</TABLE>
52
<PAGE>
<TABLE>
<CAPTION>
SHARES OF FUND
POSITION WITH FEDERATED PORTFOLIOS; OR THE BOND INDEX PORTFOLIO
PRINCIPAL OCCUPATION DURING PAST FIVE OWNED; PERCENTAGE OF
NAME AND AGE YEARS; ADDRESS OUTSTANDING SHARES
------------ ------------------------------------- ---------------------------
<S> <C> <C>
EDWARD C. GONZALEZ Executive Vice President; Vice Chairman, None
Age 64 Treasurer, and Trustee, Federated
Investors; Vice President, Federated
Advisers, Federated Management, Federated
Research, Federated Research Corp., Federal
Global Research Corp. and Passport Research
Ltd.; Executive Vice President and
Director, Federated Securities Corp.;
Trustee, Federated Services Company,
Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or
Director of certain investment companies
within the Federated Fund Complex;
Executive Vice President and Treasurer of
74 investment companies within the
Federated Fund Complex. His address is
Federated Investors Tower, Pittsburgh, PA.
JOHN W. MCGONIGLE Executive Vice President and Secretary; None
Age 56 Executive Vice President, Secretary,
General Counsel, and Trustee, Federated
Investors; Trustee, Federated Advisers,
Federated Management, Research, Director,
Federated Research Corp., Federal Global
Research Corp. Trustee, Federated Services
Company; Executive Vice President,
Secretary, and Trustee, Federated
Administrative Services; President and
Trustee Federated Shareholder Services;
Director, Federated Securities Corp.;
Executive Vice President and Secretary of
74 investment companies within the
Federated Fund Complex. His address is
Federated Investors Tower, Pittsburgh, PA.
DAVID M. TAYLOR Treasurer; Senior Vice President, None
Age 48 Controller, and Trustee, Federated
Investors; Controller, Federated Advisers,
Federated Management, Federated Research,
Federated Research Corp., and Passport
Research Ltd.; Vice President, Federated
Shareholder Service; Senior Vice President,
Federated Administrative Services;
Treasurer of certain investment companies
within the Federated Fund Complex. His
address is Federated Investors Tower,
Pittsburgh, PA.
</TABLE>
- --------
* These Trustees are deemed to be "interested persons" as defined in the
1940 Act since John F. Donahue and J. Christopher Donahue are trustees of
Federated Portfolio's investment adviser, Federated Management, and Mr. Ellis'
son-in-law is an employee of Federated Securities Corp., which is the
placement agent for Federated Portfolios.
See "Concerning Federated Management as Investment Advisor" in subpart (a)
of this Proposal 3 above, for the ownership interest in Federated Investors of
certain Trustees and officers of Federated Portfolios.
Federated Portfolios has a standing Audit Committee which is expected to
consist of Messrs. Conroy, Copeland, Dowd and Flaherty, all of whom are
Trustees and are not Interested Persons. The functions of the Audit Committee
are to assist the Board in fulfilling its duties relating to Federated
Portfolios' accounting and financial reporting practices and to serve as a
direct line of communication between the Board and the independent auditors.
The specific functions of the Audit Committee include recommending the
engagement or retention of the independent auditors, reviewing with the
independent auditors the plan and the results of the auditing engagement,
approving professional services provided by the independent auditors prior to
the performance of such services, considering the range of audit and non-audit
fees, reviewing the independence of the independent auditors, reviewing the
scope and results of Federated Portfolios' procedures for internal auditing,
and reviewing Federated Portfolios' system of internal accounting controls.
53
<PAGE>
Federated Portfolios also has an Executive Committee, which is expected to
consist of Messrs. John F. Donahue and Flaherty. The Executive Committee
handles the responsibilities of the Board of Trustees between meetings of the
Board.
The Declaration of Trust of Federated Portfolios provides that Federated
Portfolios will indemnify its trustees and officers against liabilities and
expenses incurred in connection with litigation in which they may be involved
because of the their offices with Federated Portfolios 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.
The following table describes the compensation paid during the year ending
August 31, 1995 to each nominee to the Board of Trustees of Federated
Portfolios.
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT ESTIMATED COMPENSATION
BENEFITS ANNUAL FROM TRUST
AGGREGATE ACCRUED AS BENEFITS AND FUND
COMPENSATION PART OF UPON COMPLEX PAID
NAME OF PERSON FROM TRUST TRUST EXPENSES RETIREMENT TO TRUSTEES
-------------- ------------ -------------- ---------- ------------
<S> <C> <C> <C> <C>
John F. Donahue............ None None None $ 0
Thomas G. Bigley........... None None None $ 20,688
John T. Conroy, Jr......... None None None $117,202
William J. Copeland........ None None None $117,202
James E. Dowd.............. None None None $117,202
Lawrence D. Ellis, M.D..... None None None $106,460
Edward L. Flaherty, Jr..... None None None $117,202
Peter E. Madden............ None None None $ 90,563
Gregor F. Meyer............ None None None $106,460
John E. Murray, Jr., J.D.,
S.J.D. ................... None None None $ 0
Wesley W. Posvar........... None None None $106,460
Marjorie P. Smuts.......... None None None $106,460
J. Christopher Donahue..... None None None $ 0
</TABLE>
As used in the above compensation table, the term "Fund Complex" shall
collectively refer to Federated Portfolios and up to 74 other mutual funds for
which subsidiaries of Federated Investors serve as investment adviser,
administrator and/or distributor. Federated Portfolios has no pension plan. It
is expected that each of the Trustees who is not an "interested person" will
not receive compensation from the Federated Portfolios for service as Trustees
during the first fiscal year of the Federated Portfolios, and thereafter shall
be paid such amounts as shall be fixed by the Board of Trustees of Federated
Portfolios.
54
<PAGE>
REQUIRED VOTE
The election of each nominee as a Trustee of Federated Portfolios will
require the vote of a plurality of the aggregate votes cast by all of the
investors in Federated Portfolios.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT THE SHAREHOLDERS OF THE
FUND VOTE TO AUTHORIZE THE TRUST TO VOTE FOR EACH OF THE NOMINEES FOR TRUSTEE
OF FEDERATED PORTFOLIOS.
PROPOSAL 3(d). FOR THE BOND INDEX FUND, TO AUTHORIZE THE TRUST TO VOTE TO
APPROVE OR DISAPPROVE THE SELECTION OF ERNST & YOUNG LLP AS THE
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF FEDERATED PORTFOLIOS
The Board of Trustees of Federated Portfolios approved the selection of Ernst
& Young LLP as the independent certified public accountants of Federated
Portfolios at a special meeting of such Board on October 3, 1995. Since
Federated Portfolios is expected to ask investors (including the above Fund) to
ratify the selection of Ernst & Young LLP, the shareholders of the Fund are
being asked to vote on the proposed accountants. The Trust on behalf of the
Fund will cast its votes as an investor in Federated Portfolios in the same
proportion as the votes cast by the Fund's shareholders. It is intended that
proxies submitted by shareholders of the Bond Index Fund not limited to the
contrary will be used for the purpose of authorizing the Trust to vote in favor
of ratifying the selection, under Section 32(a) of the 1940 Act, by a majority
of the Independent Trustees of Federated Portfolios, of Ernst & Young LLP as
independent public accountants, to certify every financial statement of each
series of Federated Portfolios (including the Bond Index Portfolio) required by
any law or regulation to be certified by independent public accountants and
filed with the Securities and Exchange Commission (the "SEC") in respect of all
or any part of the fiscal year of such series ending May 31, 1996. Ernst &
Young LLP has no direct or material indirect interest in any of the series of
Federated Portfolios.
Representatives of Ernst & Young LLP are not expected to be present at the
Meeting.
REQUIRED VOTE
Ratification of the selection of Ernst & Young LLP as the independent
certified public accountants of Federated Portfolios will require a majority of
the aggregate votes cast by all investors in Federated Portfolios.
THE BOARD OF TRUSTEE OF THE TRUST RECOMMENDS THAT THE SHAREHOLDERS OF THE
FUND VOTE TO AUTHORIZE THE TRUST TO VOTE FOR RATIFICATION OF THE SELECTION OF
ERNST & YOUNG LLP FOR FEDERATED PORTFOLIOS AT THE MEETING OF THE INVESTORS IN
FEDERATED PORTFOLIOS.
PROPOSAL 4.ALL FUNDS
55
<PAGE>
ELECTION OF TRUSTEES OF THE TRUST
It is intended that proxies submitted by shareholders of the Funds not
limited to the contrary will be voted in favor of the election of the nominees
named below as Trustees of the Trust, to be effective following the next
regularly scheduled meeting of the Board of Trustees of the Trust.
Rodman L. Drake, W. Wallace McDowell, and Jonathan Piel are currently
Trustees of the Trust. Each of the other nominees currently serves as a
Director of the Master Funds. As explained more fully under Proposal 1, as part
of the closer alignment of the Funds with the Master Funds, the Trustees of the
Trust have nominated for election those individuals that serve as Directors of
the Master Funds, and it is anticipated that the current Trustees of the Trust
will likewise be nominated for election to the Board of Directors of the Master
Funds. Each nominee has consented to serve as a trustee if elected. If a
designated nominee declines or otherwise becomes unavailable for election,
however, the proxy confers discretionary power on the persons named therein to
vote in favor of a substitute nominee or nominees.
If elected, a Trustee will hold office without limit in time, subject to
resignation, retirement or removal. In case a vacancy shall exist for any
reason, the remaining Trustees may fill the vacancy by appointing another
Trustee, provided that after filling the vacancy at least two-thirds of the
Trustees have been elected by shareholders. If at any time less than a majority
of the Trustees holding office have been elected by shareholders, the Trustees
then in office will call a shareholders' meeting for the purpose of electing
Trustees.
The following table lists the name, age, current position with the Trust, if
any, and principal occupation during the past five years of each nominee and of
the executive officers of the Trust. Nominees who are "interested persons" (as
defined in the 1940 Act) of the Funds are indicated by an asterisk. The table
also lists the year in which each nominee first became a Trustee, the number of
shares of each Fund owned beneficially by such Trustee and by the executive
officers of the Trust, and the percentage of total outstanding shares of such
Fund owned by such Trustee and by the executive officers of the Trust.
<TABLE>
<CAPTION>
SHARES OF EACH
NAME, AGE AND FUND OWNED BENEFICIALLY
YEAR AND PERCENTAGE OF
FIRST BECAME A POSITON WITH TRUST; PRINCIPAL OCCUPATION TOTAL OUTSTANDING
TRUSTEE DURING PAST FIVE YEARS; ADDRESS SHARES OF SUCH FUND
-------------- ---------------------------------------- -----------------------
<S> <C> <C>
NOMINEES TO BECOME TRUSTEES OF THE TRUST
RODMAN L. DRAKE Trustee; Director, Parsons Brinkerhoff, Inc., None
Age 52 (engineering firm) (since 1995); President,
1994 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, Mueller Industries,
Inc. (1992 to 1994). His address is c/o KMR
Power Corp., 30 Rockefeller Plaza,
Suite 5425, New York, NY 10112.
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
SHARES OF EACH
FUND OWNED BENEFICIALLY
AND PERCENTAGE OF
NAME, AGE AND YEAR POSITON WITH TRUST; PRINCIPAL OCCUPATION TOTAL OUTSTANDING
FIRST BECAME A TRUSTEE DURING PAST FIVE YEARS; ADDRESS SHARES OF SUCH FUND
---------------------- ---------------------------------------- -----------------------
<S> <C> <C>
W. WALLACE MCDOWELL, Jr. Trustee; Private Investor (since 1994); None
Age 59 Managing Director, Morgan Lewis Githens & Ahn
1994 (1991 to 1994); Chairman and Chief Executive
Officer, The Prospect Group, Inc. (1983 to
1990) and Director, U.S. Homecare Corporation
(since 1992), Grossmans, 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 Trustee; President and Editor, Scientific None
Age 57 American, Inc. (1969 to 1994); Director,
1994 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, NY 10128.
ALFRED C. TANNACHION* Retired; Chairman of the Board, President, None
Age 69 Treasurer and Director, UST Master Funds,
Inc. (since 1985), UST Master Tax Exempt
Funds, Inc. (since 1985) and UST Master
Variable Series, Inc. (since 1994). His
address is 1135 Hyde Park Court, Mahwah, NJ
07430.
DONALD L. CAMPBELL Retired; Director, UST Master Funds, Inc. None
Age 69 (since 1990); UST Master Tax Exempt Funds,
Inc. (since 1990); UST Master Variable
Series, Inc. (since 1994); Senior Vice
President, Royal Insurance Company, Inc.,
until August, 1989; Director, Royal Life
Insurance Co. of N.Y. (since 1990). His
address is 333 E. 69th Street #10-M, New
York, NY 10021-5559
JOSEPH H. DUGAN Retired; Director, UST Master Funds, Inc. None
Age 70 (since 1984); UST Master Tax Exempt Funds,
Inc. (since 1984); UST Master Variable
Series, Inc. (since 1994); President, CEO and
Director, L.B. Foster Company (tubular
products), (1987 to 1990). His address is 913
Franklin Lake Road, Franklin Lakes, NJ 07417.
WOLFE J. FRANKL Director, UST Master Funds, Inc. (since None
Age 74 1986); UST Master Tax Exempt Funds, Inc.
(since 1986); UST Master Variable Series,
Inc. (since 1994); Director, Deutsche Bank
Financial, Inc. (since 1989); Director, The
Harbus Corporation (since 1951); Trustee,
Mariner Funds Trust (since 1988). His address
is 40 Gooseneck Lane, Charlottesville, VA
22903.
ROBERT A. ROBINSON President Emeritus, The Church Pension Fund None
Age 70 and its affiliated companies, since 1991,
President and Director, 1989-91; Trustee, The
Mariner Funds and The Mariner Tax-Exempt
Funds since 1989; Director, UST Master Funds,
Inc. and UST Tax-Exempt Master Funds, Inc.
(since 1989); Trustee, UST Master Variable
Series, Inc. since 1994; Trustee, H.B. and
F.H. Bugher Foundation; Director, Morehouse
Publishing Co. since 1989; Director, Fenrir,
Inc. since 1993. His address is 2 Hathaway
Common, 117 South Avenue, New Canaan, CT
06840.
</TABLE>
57
<PAGE>
<TABLE>
<CAPTION>
SHARES OF EACH
FUND OWNED BENEFICIALLY
NAME, AGE AND YEAR AND PERCENTAGE OF
FIRST BECAME A POSITON WITH TRUST; PRINCIPAL OCCUPATION TOTAL OUTSTANDING
TRUSTEE DURING PAST FIVE YEARS; ADDRESS SHARES OF SUCH FUND
- ------------------ ---------------------------------------- -----------------------
<S> <C> <C>
CURRENT EXECUTIVE OFFICERS OF THE TRUST
PHILIP W. COOLIDGE President of the Trust; Chairman, Chief
Age 44 Executive Officer and President, Signature
Financial Group, Inc. (since December 1988);
Chairman, Chief Executive Officer and
President, Signature Financial Services, Inc.
(since May 1993).
JOHN ELDER Treasurer; Vice President, Signature
Age 47 Financial Group, Inc. (since April 1995);
Treasurer, Phoenix Family of Mutual Funds
(1983 to 1995).
LINDA T. GIBSON Assistant Secretary; Legal Counsel, Signature
Age 30 Financial Group, Inc. (since June 1991);
Assistant Secretary, Signature Financial
Services, Inc. (since May 1993); law student,
Boston University School of Law (from
September 1989 to May 1992); Product Manager,
SFG (January 1989 to September 1989).
THOMAS M. LENZ Secretary; Vice President and Associate
Age 37 General Counsel, Signature Financial Group,
Inc. (since November 1989); Assistant
Secretary, Signature Financial Services, Inc.
(since May 1993); Attorney, Ropes & Gray
(September 1984 to November 1989).
MOLLY S. MUGLER Assistant Secretary; Legal Counsel, Signature
Age 44 Financial Group, Inc. (since December 1988);
Assistant Secretary, Signature Financial
Services, Inc. (since May 1993).
BARBARA M. O'DETTE Assistant Treasurer; Assistant Treasurer,
Age 36 Signature Financial Group, Inc. (since
December 1988) and Signature Financial
Services, Inc. (since May 1993).
ANDRES E. SALDANA Assistant Secretary; Legal Counsel, Signature
Age 32 Financial Group, Inc. (since November 1992);
Assistant Secretary, Signature Financial
Services, Inc. (since May 1993); Attorney,
Ropes & Gray (law firm) (September 1990 to
November 1992); law student, Yale Law School
(September 1987 to May 1990).
</TABLE>
The Trust has a standing Audit Committee presently consisting of Messrs.
Drake, McDowell and Piel, all of whom are Trustees and are not Interested
Persons. The Audit Committee reviews the scope and results of each Fund's
annual audit with such Fund's independent accountants and recommends the
engagement of accountants. The Trust also has a Nominating Committee presently
consisting of Messrs. Drake, McDowell and Piel. The Nominating Committee
selects and nominates persons to serve as Trustees (other than Trustees who are
"interested persons").
All of the incumbent Trustees of the Trust attended 75% or more of the Board
and committee meetings of the Trust that were held during the Trust's last
fiscal year. During the Trust's last fiscal year, there were six meetings of
the Board of Trustees.
The Trust Instrument of the Trust provides 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 the their offices with
the Trust unless it is finally adjudicated that they engaged in willful
misfeasance, bad faith,
58
<PAGE>
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.
The following table describes the compensation paid during the last fiscal
year to each Trustee or nominee.
COMPENSATION TABLE
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT TOTAL
BENEFITS ESTIMATED COMPENSATION
ACCRUED AS ANNUAL FROM TRUST
AGGREGATE PART OF BENEFITS AND FUND
COMPENSATION TRUST UPON COMPLEX PAID
NAME OF PERSON FROM TRUST EXPENSES RETIREMENT TO TRUSTEES
- -------------- ------------ ---------- ---------- ------------
<S> <C> <C> <C> <C>
Rodman L. Drake................. $5,000 None None $ 5,000
W. Wallace McDowell, Jr. ....... $5,250 None None $ 5,250
Jonathan Piel................... $5,250 None None $ 5,250
Alfred Tannachion............... None None None $40,000
Donald L. Campbell.............. None None None $30,000
Joseph C. Dugan................. None None None $30,000
Wolfe J. Frankl................. None None None $30,000
Robert A. Robinson.............. None None None $30,000
</TABLE>
As used in the above compensation table, the term "Fund Complex" shall
collectively refer to the Trust and the Master Funds. The Trust has no pension
plan.
REQUIRED VOTE
The election of each nominee as a Trustee of the Trust will require the vote
of a plurality of the aggregate votes cast by all of the shareholders of all of
the Funds, present in person or represented by proxy at the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT THE SHAREHOLDERS OF EACH
FUND VOTE FOR EACH OF THE NOMINEES FOR TRUSTEE.
59
<PAGE>
PROPOSAL 5.ALL FUNDS
TO APPROVE OR DISAPPROVE OF THE SELECTION OF ERNST & YOUNG LLP
AS THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS OF EACH OF THE
FUNDS.
It is intended that proxies submitted by shareholders of the Funds not
limited to the contrary will be voted in favor of ratifying the selection,
under Section 32(a) of the 1940 Act, by a majority of the Independent Trustees
of the Trust, of Ernst & Young LLP as independent public accountants, to
certify every financial statement of each of the Funds required by any law or
regulation to be certified by independent public accountants and filed with the
Securities and Exchange Commission (the "SEC") in respect of all or any part of
the fiscal year of the Fund ending May 31, 1996. Ernst & Young LLP has no
direct or material indirect interest in any of the Funds.
Ernst & Young LLP has served as the independent certified public accountants,
providing audit services and consultation with respect to the preparation of
filings with the SEC, for the Equity Fund since the commencement of its
operations on January 16, 1995, for the Income Fund since the commencement of
its operation on January 16, 1995, for the Total Return Bond Fund since the
commencement of its operations on January 19, 1995, for the Equity Index Fund
since the commencement of its operations on July 11, 1994, for the Bond Index
Fund since the commencement of its operations on July 11, 1994, for the Small
Cap Fund since the commencement of its operations on July 11, 1994, for the
Balanced Fund since the commencement of its operations on July 11, 1994, for
the Equity Growth Fund since the commencement of its operations on July 11,
1994, for the Value Equity Fund since the commencement of its operations on
July 11, 1994, and for the International Equity Fund since the commencement of
its operations on January 24, 1995.
Representatives of Ernst & Young LLP are not expected to be present at the
Meeting.
REQUIRED VOTE
Ratification of the selection of Ernst & Young LLP as the independent
certified public accountants of the Trust will require a majority of the
aggregate votes cast by all shareholders of all of the Funds, present in person
or represented by proxy at the Meeting.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT THE SHAREHOLDERS OF EACH
FUND VOTE FOR RATIFICATION OF THE SELECTION OF ERNST & YOUNG LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS FOR SUCH FUND.
PROPOSAL 6.ALL FUNDS
OTHER BUSINESS
The Trust's management knows of no business to be brought before the Meeting
except as described above. However, if any other matters property come before
the Meeting, the persons named in the enclosed
60
<PAGE>
form of proxy intend to vote on these matters in accordance with their best
judgment.
If shareholders would like additional information about the matters proposed
for action, the Trust's management will be glad to hear from them and to
provide further information.
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY PROMPTLY.
By the order of the Board of
Trustees,
EXCELSIOR INSTITUTIONAL TRUST
Thomas M. Lenz, Secretary
October 16, 1995
61
<PAGE>
EXHIBIT A
FORM OF
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of , 19 by and between [EXCELSIOR
INSTITUTIONAL TRUST, a Delaware business trust] or [FEDERATED INVESTMENT
PORTFOLIOS, a Massachusetts business trust] (the "Trust") registered as an
open-end diversified management investment company under the Investment Company
Act of 1940, as amended (the "Investment Company Act"), and [NAME OF ADVISER],
an [ADVISER ENTITY] (the "Adviser").
In consideration of the promises and the mutual covenants herein contained,
the Trust and the Adviser agree as follows:
1. Appointment. The Trust appoints the Adviser to act as investment adviser
to the Trust with respect to the series of the Trust listed on Exhibit A hereto
(the "Series") for the period and on the terms set forth in this Agreement. The
Adviser accepts such appointment and agrees to provide an investment program
for the compensation provided by this Agreement. In providing the services and
assuming the obligations set forth herein, the Adviser may, at its own expense,
employ one or more subadvisers; provided that the Adviser understands and
agrees that it shall remain fully responsible for the performance of all the
duties set forth in this Agreement and that it shall supervise the activities
of each subadviser. Any agreement between the Adviser and a subadviser shall be
subject to the renewal, termination and amendment provisions applicable to this
Agreement.
2. Duties of the Adviser. Subject to the direction and control of the Board
of Trustees of the Trust, the Adviser shall:
(a) prepare (or otherwise obtain) and evaluate on both a macroeconomic
and microeconomic level any pertinent research; statistical, financial and
economic data; and other information necessary or appropriate for the
performance of its duties under this Agreement;
(b) formulate and continuously review, supervise, and administer an
investment program for the Series;
(c) determine the securities to be purchased by the Series, and
continuously monitor such securities and the issuers thereof to determine
whether and when to sell, exchange, or take any other action concerning
such securities;
(d) determine whether and how to exercise warrants, voting rights, or
other rights with respect to the Series' securities;
(e) provide valuations with respect to the securities held by the Series
[if so requested by the Trustees of the Trust];
A-1
<PAGE>
(f) render regular reports to the Trust's officers and the Board of
Trustees concerning the investment performance of the Trust, the Adviser's
discharge of its responsibilities under this Agreement, and any other
subject as the Trust's officers or Board of Trustees reasonably may
request; and
(g) assist the Trust's officers in connection with the operation of the
Trust and perform any further acts that may be necessary to effectuate the
purposes of this Agreement.
3. Supervision and compliance. The activities of the Adviser shall be subject
at all times to the direction and control of the Board of Trustees of the Trust
and shall comply with: (a) the [Trust Instrument] or [Declaration of Trust] and
By-Laws of the Trust; (b) the Registration Statement of the Trust, as it may be
amended from time to time, including the investment objectives and policies set
forth therein; (d) the Investment Company Act and the regulations thereunder;
(e) the Internal Revenue Code of 1986 and the regulations thereunder applicable
to regulated investment companies; (f) any other applicable laws or
regulations; and (g) such other limitations as the Board of Trustees may adopt.
4. Purchase and Sale of Securities. The Adviser shall, at its own expense,
place orders for the purchase, sale or loan of securities by the Trust either
directly with the issuer or with any broker and/or dealer who deals in such
securities.
(a) In placing orders with brokers and/or dealers, the Adviser shall use its
best efforts to obtain the best net price and the most favorable execution of
its orders, after taking into account all factors it deems relevant, including
the breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker and/or dealer, and
the reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis.
Consistent with this obligation, the Adviser may, to the extent permitted by
law, purchase and sell portfolio securities to and from brokers who provide
brokerage and research services (within the meaning of Section 28(e) of the
Securities and Exchange Act of 1934) to or for the benefit of the Trust and/or
other accounts over which the Adviser exercises investment discretion. The
Adviser is authorized to pay a broker who provides such brokerage and research
services a commission for effecting a securities transaction which is in excess
of the amount of commission another broker would have charged for effecting
that transaction, if the Adviser determines in good faith that such commission
was reasonable in relation to the value of brokerage and research services
provided by such broker. This determination may be viewed in terms of either
that particular transaction or of the overall responsibilities of the Adviser
with respect to the accounts as to which it exercises investment discretion.
(b) The Adviser may execute transactions through itself and its affiliates on
a securities exchange provided that the commissions paid by the Trust are
"reasonable and fair" compared to commissions received by other brokers having
comparable execution capability and provided that the transactions are effected
pursuant to procedures established by the Board of Trustees of the Trust. An
affiliated broker may transmit, clear and settle transactions for the Trust
that are executed on a securities exchange provided that the affiliated broker
arranges for unaffiliated brokers to execute the transactions.
(c) Notwithstanding the foregoing, the Board of Trustees periodically shall
review the commissions paid by the Trust and determine whether those
commissions were reasonable in relation to the brokerage and
A-2
<PAGE>
research services received. In addition, the Board of Trustees of the Trust, in
its discretion, may instruct the Adviser to effect all or a portion of its
securities transactions with one or more brokers and/or dealers selected by the
Board of Trustees, if it determines that the use of such brokers and/or dealers
is in the best interest of the Trust.
(d) When the Adviser deems the purchase or sale of a security to be in the
best interest of the Trust as well as other customers, the Adviser, to the
extent permitted by applicable law, may aggregate the securities to be so sold
or purchased in order to obtain the best execution or lower brokerage
commissions. The Adviser also may purchase or sell a particular security for
one or more customers in different amounts. Allocation of the securities
purchased or sold in either manner, as well as the expenses incurred in the
transactions, will be made by the Adviser in a manner that is equitable and
consistent with applicable law and regulations and with its fiduciary
obligations to the Trust and to such other customers.
5. Expenses.
(a) The Adviser shall furnish at its own expense all office space, office
facilities, equipment and personnel necessary or appropriate to the performance
of its duties under this Agreement. The Adviser also shall pay the salaries and
fees of all personnel of the Trust or the Adviser performing services related
to the Adviser's duties under this Agreement.
(b) It is understood that the Trust will pay all of its expenses and
liabilities, including compensation of its independent Trustees; taxes and
governmental fees; interest charges; fees and expenses of the Trust's
independent auditors and legal counsel; trade association membership dues; fees
and expenses of any custodian (including safekeeping of funds and securities,
maintenance of books and accounts and calculation of the net asset value of
beneficial interests of the Series), transfer agent and registrar and dividend
disbursing agent of the Trust; expenses of preparing and mailing reports to
investors and regulatory agencies; expenses relating to the issuance,
registration and qualification of shares of the Series, and the preparation,
printing and mailing of prospectuses for such purposes; insurance premiums;
brokerage and other expenses of executing portfolio transactions; expenses of
investors' and Trustees' meetings; organization expenses; and extraordinary
expenses.
6. Compensation of the Adviser. In consideration of the services to be
rendered by the Adviser under this Agreement, the Trust shall pay the Adviser a
fee accrued daily and paid monthly from the Series at an annual rate equal to
that specified in Exhibit A to this Agreement for the Series' average daily net
assets. The fee for any period in which the Adviser serves as investment
adviser pursuant to this Agreement for less than one full month shall be paid
for that portion of the month accrued. For purposes of calculating fees, the
value of the net assets of the Series shall be computed in the manner specified
in its Registration Statement on Form N-1A.
7. Services to Others. The services of the Adviser to the Trust are not to be
deemed exclusive, and the Adviser is free to render services to others and to
engage in other activities, provided, however, that those services and
activities do not adversely affect the Adviser's ability to perform its
obligations under this Agreement.
A-3
<PAGE>
8. Books, Records, and Information. The Adviser shall provide the Trust with
all records concerning the Adviser's activities that the Trust is required by
law to maintain. Any records required to be maintained and preserved pursuant
to the provisions of Rule 31a-l and Rule 31a-2 under the Investment Company Act
which are prepared or maintained by the Adviser on behalf of the Trust are the
property of the Trust and will be surrendered promptly to the Trust on request.
The Trust also shall comply with all reasonable requests for information by the
Trust's officers or Board of Trustees, including information required for the
Trust's filings with the securities and Exchange Commission and state
securities commissions.
9. Limitations on Liability.
(a) The Adviser hereby is notified expressly of the limitation of shareholder
liability as set forth in the Declaration of Trust and agrees that any
obligation of the Trust or the Series arising in connection with this Agreement
shall be limited in all cases to the Series and its assets, and the Adviser
shall not seek satisfaction of any such obligation from any Trustee or
shareholder of the Series.
(b) The Adviser shall give the Trust the benefit of its best judgment and
efforts in rendering services under this Agreement. In the absence of willful
malfeasance, bad faith, gross negligence or reckless disregard of obligations
or duties hereunder on the part of the Adviser, the Adviser shall not be liable
to the Trust or to any shareholder of the Series for any act or omission in the
course of, or connected with, rendering services under this Agreement or for
any losses that may be sustained in the purchase, holding or sale of any
security.
10. Effective Date; Termination; Amendments.
(a) This Agreement shall be effective as to the Series on the date the Series
commences investment operations, and, unless terminated sooner as provided
herein, shall continue until the second anniversary of the execution of this
Agreement. Thereafter, unless terminated sooner as provided herein, this
Agreement shall continue in effect as to the Series for successive annual
periods, provided that such continuance is specifically approved at least
annually by the vote of a majority of the Board of Trustees of the Trust who
are not parties to this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such continuance,
and either: (i) the vote of a majority of the outstanding voting securities of
the Series; or (ii) the vote of a majority of the full Board of Trustees.
(b) This Agreement may be terminated at any time, without the payment of any
penalty, either by: (i) the Trust, by action of the Board of Trustees or by
vote of a majority of the outstanding voting securities of the Series, on 60
days' written notice to the Adviser; or (ii) the Adviser, on 90 days' written
notice to the Trust. This Agreement shall terminate immediately in the event of
its assignment.
(c) This Agreement may be amended only if such amendment is approved by the
vote of a majority of the outstanding voting securities of the Series or by
vote of a majority of the Board of Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such amendment.
(d) As used in this Agreement, the terms "specifically approved at least
annually," "majority of the outstanding voting securities," "interested
persons" and "assignment" shall have the same meanings as such terms have in
the Investment Company Act and the regulations thereunder.
A-4
<PAGE>
11. Governing Law. This Agreement shall be construed in accordance with the
laws of the Commonwealth of Massachusetts without giving effect to the choice
of law provisions thereof, to the extent that such laws are consistent with
provisions of the Investment Company Act and the regulations thereunder.
12. Miscellaneous. The captions in this Agreement are included for the
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. Should any
part of this Agreement be held or made invalid by a court decision, statute,
regulation, or otherwise, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors, to the extent permitted by law.
IN WITNESS WHEREOF, the Trust and the Adviser have caused this Agreement to
be executed and delivered in their names and on their behalf by the
undersigned, duly authorized officers, all as of the day and year first above
written.
Attest:
[EXCELSIOR INSTITUTIONAL TRUST] or
[FEDERATED INVESTMENT PORTFOLIOS]
By: ____________________________________
- ------------------------------- Name:
Title:
Attest:
[NAME OF ADVISER]
- -------------------------------
By: ____________________________________
Name:
Title:
A-5
<PAGE>
EXHIBIT A
TO INVESTMENT
ADVISORY AGREEMENT
SCHEDULE OF SERIES AND FEES UNDER INVESTMENT
ADVISORY AGREEMENT
ANNUAL FEE (AS A PERCENTAGE OF
SERIES THE AVERAGE DAILY NET
NAME ASSETS OF THE SERIES)
------ ------------------------------
[see text of Proxy Statement for Annual Fees]
A-6
<PAGE>
EXHIBIT B
FORM OF
INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made as of , 19 by and between [NAME OF ADVISER], an
[ADVISER ENTITY] (the "Adviser"), and [NAME OF SUBADVISER], a [SUBADVISER
ENTITY] (the "Subadviser").
In consideration of the promises and the mutual covenants herein contained,
the Adviser and the Subadviser agree as follows:
1. Appointment. The Adviser has been retained by [Excelsior Institutional
Trust, a Delaware business trust] or [Federated Investment Portfolios, a
Massachusetts business trust] (the "Trust") to act as investment adviser to the
Trust with respect to the series of the Trust listed on Exhibit A hereto (the
"Series"). In accordance with and subject to the Investment Advisory Agreement
between the Trust and the Adviser, attached hereto as Exhibit B (the "Advisory
Agreement"), the Adviser appoints the Subadviser to act as subadviser with
respect to the Series for the period and on the terms set forth in this
Agreement. The Subadviser accepts such appointment and agrees to provide an
investment program for the compensation provided by this Agreement.
2. Duties of the Subadviser. Subject to the direction and control of the
Adviser and the Board of Trustees of the Trust, the Subadviser shall:
(a) prepare (or otherwise obtain) and evaluate on both a macroeconomic
and microeconomic level any pertinent research; statistical, financial and
economic data; and other information necessary or appropriate for the
performance of its duties under this Agreement;
(b) formulate and continuously review, supervise, and administer an
investment program for each Series;
(c) determine the securities to be purchased by each Series, and
continuously monitor such securities and the issuers thereof to determine
whether and when to sell, exchange, or take any other action concerning
such securities;
(d) determine whether and how to exercise warrants, voting rights, or
other rights with respect to the Series' securities;
(e) provide valuations with respect to the securities held by each Series
[if so requested by the Trustees of the Trust];
(f) render regular reports to the Trust's officers and the Board of
Trustees concerning the investment performance of the Trust, the
subadviser's discharge of its responsibilities under this Agreement, and
any other subject as the Trust's officers or Board of Trustees reasonably
may request; and
(g) assist the Adviser and the Trust's officers in connection with the
operation of the Trust and perform any further acts that may be necessary
to effectuate the purposes of this Agreement.
B-1
<PAGE>
3. Supervision and Compliance. Notwithstanding any provision of this
Agreement, the Adviser shall retain all rights and ultimate responsibilities to
supervise, and, in its discretion, conduct investment advisory activities
relating to the Trust. The activities of the Subadviser shall be subject at all
times to the direction and control of the Board of Trustees of the Trust and
the Adviser and shall comply with: (a) the [Trust Instrument] or [Declaration
of Trust] and By-Laws of the Trust; (b) the Registration Statement of the
Trust, as it may be amended from time to time, including the investment
objectives and policies set forth therein; (d) the Investment Company Act and
the regulations thereunder; (e) the Internal Revenue Code of 1986 and the
regulations thereunder applicable to regulated investment companies; (f) any
other applicable laws or regulations; and (g) such other limitations as the
Adviser or the Board of Trustees of the Trust may adopt.
4. Purchase and Sale of Securities. The Subadviser shall, at its own expense,
place orders for the purchase, sale or loan of securities by the Trust either
directly with the issuer or with any broker and/or dealer who deals in such
securities.
(a) In placing orders with brokers and/or dealers, the Subadviser shall use
its best efforts to obtain the best net price and the most favorable execution
of its orders, after taking into account all factors it deems relevant,
including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker and/or dealer,
and the reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. Consistent with this obligation, the
Subadviser may, to the extent permitted by law, purchase and sell portfolio
securities to and from brokers who provide brokerage and research services
(within the meaning of Section 28(e) of the Securities and Exchange Act of
1934) to or for the benefit of the Trust and/or other accounts over which the
Subadviser or the Adviser exercises investment discretion. The Subadviser is
authorized to pay a broker who provides such brokerage and research services a
commission for effecting a securities transaction which is in excess of the
amount of commission another broker would have charged for effecting that
transaction, if the Subadviser determines in good faith that such commission
was reasonable in relation to the value of brokerage and research services
provided by such broker. This determination may be viewed in terms of either
that particular transaction or of the overall responsibilities of the
Subadviser with respect to the accounts as to which it exercises investment
discretion.
(b) The Subadviser may execute transactions through itself and its affiliates
on a securities exchange provided that the commissions paid by the Trust are
"reasonable and fair" compared to commissions received by other brokers having
comparable execution capability and provided that the transactions are effected
pursuant to procedures established by the Board of Trustees of the Trust. An
affiliated broker may transmit, clear and settle transactions for the Trust
that are executed on a securities exchange provided that the affiliated broker
arranges for unaffiliated brokers to execute the transactions.
(c) Notwithstanding the foregoing, the Board of Trustees and the Adviser
periodically shall review the commissions paid by the Trust and determine
whether those commissions were reasonable in relation to the brokerage and
research services received. In addition, the Board of Trustees of the Trust, in
its discretion, may instruct the Subadviser to effect all or a portion of its
securities transactions with one or more brokers and/or dealers selected by the
Board of Trustees, if it determines that the use of such brokers and/or dealers
is in the best interest of the Trust.
B-2
<PAGE>
(d) when the Subadviser deems the purchase or sale of a security to be in the
best interest of the Trust as well as other customers, the Subadviser, to the
extent permitted by applicable law, may aggregate the securities to be so sold
or purchased in order to obtain the best execution or lower brokerage
commissions. The Subadviser also may purchase or sell a particular security for
one or more customers in different amounts. Allocation of the securities
purchased or sold in either manner, as well as the expenses incurred in the
transactions, will be made by the Subadviser in a manner that is equitable and
consistent with applicable law and regulations and with its fiduciary
obligations to the Trust and to such other customers.
5. Expenses.
(a) The subadviser shall furnish at its own expense all office space, office
facilities, equipment and personnel necessary or appropriate to the performance
of its duties under this Agreement. The Subadviser also shall pay the salaries
of all personnel performing services related to the Subadviser's duties under
this Agreement.
(b) It is understood that the Trust will pay all of its expenses and
liabilities, including compensation of its independent Trustees; taxes and
governmental fees; interest charges; fees and expenses of the Trust's
independent auditors and legal counsel; trade association membership dues; fees
and expenses of any custodian (including safekeeping of funds and securities,
maintenance of books and accounts and calculation of the net asset value of
beneficial interests of each Series), transfer agent and registrar and dividend
disbursing agent of the Trust; expenses of preparing and mailing reports to
investors and regulatory agencies; expenses relating to the issuance,
registration and qualification of shares of each Series, and the preparation,
printing and mailing of prospectuses for such purposes; insurance premiums;
brokerage and other expenses of executing portfolio transactions; expenses of
investors' and Trustees' meetings; organization expenses; and extraordinary
expenses.
6. Compensation of the Subadviser. In consideration of the services to be
rendered by the Subadviser under this Agreement, the Adviser shall pay the
Subadviser a fee accrued daily and paid monthly at an annual rate equal to that
specified in Exhibit A to this Agreement for that Series' average daily net
assets. The fee for any period in which the Subadviser serves as investment
adviser pursuant to this Agreement for less than one full month shall be paid
for that portion of the month accrued. For purposes of calculating fees, the
value of the net assets of each Series of the Trust shall be computed in the
manner specified in its Registration Statement on Form N-1A.
7. Services to Others. The services of the Subadviser to the Adviser and the
Trust are not to be deemed exclusive, and the Subadviser is free to render
services to others and to engage in other activities, provided, however, that
those services and activities do not adversely affect the Subadviser's ability
to perform its obligations under this Agreement.
8. Books, Records, and Information. The Subadviser shall provide the Adviser
and the Trust with all records concerning the Subadviser's activities that the
Trust is required by law to maintain. Any records required to be maintained and
preserved pursuant to the provisions of Rule 31a-l and Rule 31a-2 under the
B-3
<PAGE>
Investment Company Act which are prepared or maintained by the Subadviser on
behalf of the Trust are the property of the Trust and will be surrendered
promptly to the Trust on request.
The Subadviser also shall comply with all reasonable requests for information
by the Adviser or the Trust's officers or Board of Trustees, including
information required for the Trust's filings with the Securities and Exchange
Commission and state securities commissions.
9. Limitations on Liability.
(a) The Subadviser hereby is notified expressly of the limitation of
shareholder liability as set forth in the Declaration of Trust and agrees that
any obligation of the Trust or the Series arising in connection with this
Agreement shall be limited in all cases to the Series and their assets, and the
Subadviser shall not seek satisfaction of any such obligation from any Trustee
or shareholder of the Series.
(b) The Subadviser shall give the Adviser and the Trust the benefit of its
best judgment and efforts in rendering services under this Agreement. In the
absence of willful malfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Subadviser, the
Subadviser shall not be liable to the Trust, to any shareholder of the Series
or to the Adviser for any act or omission in the course of, or connected with,
rendering services under this Agreement or for any losses that may be sustained
in the purchase, holding or sale of any security. The Adviser agrees that the
Subadviser shall not be liable for, and shall be indemnified and held harmless
by the Adviser for, any losses, liabilities, or expenses that the Subadviser
may incur due to errors of judgment, mistakes, acts or omission of the Adviser.
10. Effective Date; Termination; Amendments.
(a) This Agreement shall be effective as to each Series on the date the
Series commences investment operations, and, unless terminated sooner as
provided herein, shall continue until the second anniversary of the execution
of this Agreement. Thereafter, unless terminated sooner as provided herein,
this Agreement shall continue in effect as to each Series for successive annual
periods, provided that such continuance is specifically approved at least
annually by the vote of a majority of the Board of Trustees of the Trust who
are not parties to this Agreement or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such continuance,
and either: (i) the vote of a majority of the outstanding voting securities of
such Series; or (ii) the vote of a majority of the full Board of Trustees.
(b) This Agreement may be terminated at any time and as to any one or more
Series, without the payment of any penalty, either by: (i) the Trust, by action
of the Board of Trustees or by vote of a majority of the outstanding voting
securities of such Series, on 60 days' written notice to the Subadviser; (ii)
the Adviser, on 60 days' written notice to the Subadviser; or (iii) the
Subadviser, on 90 days' written notice to the Adviser and the Trust. This
Agreement shall terminate immediately in the event of its assignment.
(c) This Agreement may be amended only if such amendment is approved by the
vote of a majority of the outstanding voting securities of the Series or by
vote of a majority of the Board of Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such amendment.
B-4
<PAGE>
(d) As used in this Agreement, the terms "specifically approved at least
annually," "majority of the outstanding voting securities," "interested
persons" and "assignment" shall have the same meanings as such terms have in
the Investment Company Act and the regulations thereunder.
11. Governing Law. This Agreement shall be construed in accordance with the
laws of the Commonwealth of Massachusetts without giving effect to the choice
of law provisions thereof, to the extent that such laws are consistent with
provisions of the Investment Company Act and the regulations thereunder.
12. Miscellaneous. The captions in this Agreement are included for the
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. Should any
part of this Agreement be held or made invalid by a court decision, statute,
regulation, or otherwise, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors, to the extent permitted by law.
IN WITNESS WHEREOF, the Adviser and the Subadviser have caused this Agreement
to be executed and delivered in their names and on their behalf by the
undersigned, duly authorized officers, all as of the day and year first above
written.
Attest: [NAME OF ADVISER]
By: ____________________________________
- ------------------------------- Name:
Title:
Attest:
[NAME OF SUBADVISER]
- -------------------------------
By: ____________________________________
Name:
Title:
B-5
<PAGE>
EXHIBIT A
TO INVESTMENT
SUBADVISORY AGREEMENT
SCHEDULE OF SERIES AND FEES UNDER INVESTMENT
SUBADVISORY AGREEMENT
ANNUAL FEE (AS A PERCENTAGE OF
SERIES THE AVERAGE DAILY NET
NAME ASSETS OF A SERIES)
------ ------------------------------
[see text of Proxy Statement for Annual Fees]
B-6
<PAGE>
EXHIBIT C
Mutual funds with similar investment objectives to any of the Funds for which
U.S. Trust provides investment advisory services:
<TABLE>
<CAPTION>
NET ASSETS CONTRACTUAL ADVISORY FEE
AS OF RATE EXPRESSED AS A
NAME OF FUND MARCH 31, 1995 PERCENTAGE OF NET ASSETS
------------ -------------- ------------------------
($ MILLIONS)
<S> <C> <C>
UST MASTER FUNDS:
Equity Fund........................... 137 .75%*
Managed Income Fund................... 86 .75%*+
</TABLE>
*U.S. Trust has voluntarily agreed to waive a portion of these advisory fees.
+The advisory fee is currently being voluntarily limited to .65%.
C-1
<PAGE>
EXHIBIT D
Mutual funds with similar investment objectives to Excelsior Institutional
Equity Growth Fund for which Luther King provides investment advisory services:
<TABLE>
<CAPTION>
CONTRACTUAL ADVISORY FEE
NET ASSETS AS OF RATE EXPRESSED AS A
NAME OF FUND SEPTEMBER 14, 1995 PERCENTAGE OF NET ASSETS
------------ ------------------ ------------------------
($ MILLIONS)
<S> <C> <C>
LKCM Small Cap. Equity Portfolio.... $100 0.75%*
</TABLE>
*Fee waived as necessary to keep total operating expenses under 1.00%.
D-1
<PAGE>
EXHIBIT E
Mutual funds with similar investment objectives to Excelsior Institutional
International Equity Fund for which Harding Loevner provides investment
advisory services:
<TABLE>
<CAPTION>
NET ASSETS AS CONTRACTUAL ADVISORY FEE
OF RATE EXPRESSED AS A
NAME OF FUND JULY 31, 1995 PERCENTAGE OF NET ASSETS
------------ ------------- ------------------------
<S> <C> <C>
AMT International Equity
Fund................... $43.4 0.75%*
TIFF International $44.7 Determined in accordance with the following
Equity Fund............ formula: Fee= 30 + (.185 x Excess Return-
130)
where Excess Return = Harding Loevner
Return-a benchmark return. Fee has a floor
of 0.10% and a cap of 1.50%
Stalwart International
Equity Fund............. $ 4.4 0.60%
</TABLE>
* Fee waived as necessary to keep total operating expenses under 1.00%.
E-1
<PAGE>
PROXY BALLOT
PROXY EXCELSIOR INSTITUTIONAL EQUITY FUND PROXY
A SERIES OF
PROXY EXCELSIOR INSTITUTIONAL TRUST PROXY
The undersigned, revoking any prior proxy or proxies, hereby appoints Thomas
M. Lenz, Linda T. Gibson and Andres E. Saldana, or any of them individually,
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Excelsior Institutional Equity Fund (the
"Fund"), a series of Excelsior Institutional Trust (the "Trust"), to be held
at the offices of United States Trust Company of New York ("U.S. Trust")
located at 114 West 47th Street, New York, New York, on Wednesday, November
15, 1995, at 10:00 a.m., Eastern Time, notice of which meeting and the Proxy
Statement accompanying the same have been received by the undersigned, or at
any adjournment thereof, upon the following matters as described in the Notice
of Special Meeting and accompanying Proxy Statement:
1. To approve or disapprove of the withdrawal by the Fund of its investment in
the Equity Portfolio of the St. James Portfolios.
[_] FOR [_] AGAINST [_] ABSTAIN
2(a). To approve or disapprove of a new investment advisory agreement between
the Trust, on behalf of the Fund, and U.S. Trust as investment adviser.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Election of Rodman L. Drake, W. Wallace McDowell, Jr., Jonathan Piel,
Alfred C. Tannachion, Donald L. Campbell, Joseph H. Dugan, Wolfe J. Frankl
and Robert A. Robinson Trustees of the Trust.
[_] FOR ALL [_] AGAINST ALL [_] FOR ALL
EXCEPT:
_______________
(LIST ANY
EXCEPTIONS)
(THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE
ENCLOSED ENVELOPE)
<PAGE>
5. To approve or disapprove of the selection of Ernst & Young LLP as the
Independent Certified Public Accountants of the Fund.
[_] FOR [_] AGAINST [_] ABSTAIN
6. In their discretion, upon such other matters as may properly come before
the meeting.
Said proxies will vote this proxy as directed, or if no direction is
indicated, for items 1, 2(a), 4 and 5 unless authority to do so is
specifically withheld in the manner provided, and in accordance with said
proxies' best judgment as to any other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
Dated __________________, 1995
(Please date this proxy)
______________________________
______________________________
Please sign exactly as your
name or names appear at left.
Corporate proxies should be
signed by an authorized
officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
PROXY BALLOT
PROXY EXCELSIOR INSTITUTIONAL INCOME FUND PROXY
A SERIES OF
PROXY EXCELSIOR INSTITUTIONAL TRUST PROXY
The undersigned, revoking any prior proxy or proxies, hereby appoints Thomas
M. Lenz, Linda T. Gibson and Andres E. Saldana, or any of them individually,
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Excelsior Institutional Income Fund (the
"Fund"), a series of Excelsior Institutional Trust (the "Trust"), to be held
at the offices of United States Trust Company of New York ("U.S. Trust")
located at 114 West 47th Street, New York, New York, on Wednesday, November
15, 1995, at 10:00 a.m., Eastern Time, notice of which meeting and the Proxy
Statement accompanying the same have been received by the undersigned, or at
any adjournment thereof, upon the following matters as described in the Notice
of Special Meeting and accompanying Proxy Statement:
1. To approve or disapprove of the withdrawal by the Fund of its investment in
the Income Portfolio of the St. James Portfolios.
[_] FOR [_] AGAINST [_] ABSTAIN
2(a). To approve or disapprove of a new investment advisory agreement between
the Trust, on behalf of the Fund, and U.S. Trust as investment adviser.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Election of Rodman L. Drake, W. Wallace McDowell, Jr., Jonathan Piel,
Alfred C. Tannachion, Donald L. Campbell, Joseph H. Dugan, Wolfe J. Frankl
and Robert A. Robinson Trustees of the Trust.
[_] FOR ALL [_] AGAINST ALL [_] FOR ALL
EXCEPT:
_______________
(LIST ANY
EXCEPTIONS)
(THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE
ENCLOSED ENVELOPE)
<PAGE>
5. To approve or disapprove of the selection of Ernst & Young LLP as the
independent certified public accountants of the Fund.
[_] FOR [_] AGAINST [_] ABSTAIN
6. In their discretion, upon such other matters as may properly come before
the meeting.
Said proxies will vote this proxy as directed, or if no direction is
indicated, for items 1, 2(a), 4 and 5 unless authority to do so is
specifically withheld in the manner provided, and in accordance with said
proxies' best judgment as to any other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
Dated __________________, 1995
(Please date this proxy)
______________________________
______________________________
Please sign exactly as your
name or names appear at left.
Corporate proxies should be
signed by an authorized
officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
PROXY BALLOT
PROXY EXCELSIOR INSTITUTIONAL TOTAL RETURN BOND FUND PROXY
A SERIES OF
PROXY EXCELSIOR INSTITUTIONAL TRUST PROXY
The undersigned, revoking any prior proxy or proxies, hereby appoints Thomas
M. Lenz, Linda T. Gibson and Andres E. Saldana, or any of them individually,
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Excelsior Institutional Total Return Bond
Fund (the "Fund"), a series of Excelsior Institutional Trust (the "Trust"), to
be held at the offices of United States Trust Company of New York ("U.S.
Trust") located at 114 West 47th Street, New York, New York, on Wednesday,
November 15, 1995, at 10:00 a.m., Eastern Time, notice of which meeting and
the Proxy Statement accompanying the same have been received by the
undersigned, or at any adjournment thereof, upon the following matters as
described in the Notice of Special Meeting and accompanying Proxy Statement:
1. To approve or disapprove of the withdrawal by the Fund of its investment in
the Total Return Bond Portfolio of the St. James Portfolios.
[_] FOR [_] AGAINST [_] ABSTAIN
2(a). To approve or disapprove of a new investment advisory agreement between
the Trust, on behalf of the Fund, and U.S. Trust as investment adviser.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Election of Rodman L. Drake, W. Wallace McDowell, Jr., Jonathan Piel,
Alfred C. Tannachion, Donald L. Campbell, Joseph H. Dugan, Wolfe J. Frankl
and Robert A. Robinson Trustees of the Trust.
[_] FOR ALL [_] AGAINST ALL [_] FOR ALL
EXCEPT:
_______________
(LIST ANY
EXCEPTIONS)
(THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE
ENCLOSED ENVELOPE)
<PAGE>
5. To approve or disapprove of the selection of Ernst & Young LLP as the
independent certified public accountants of the Fund.
[_] FOR [_] AGAINST [_] ABSTAIN
6. In their discretion, upon such other matters as may properly come before
the meeting.
Said proxies will vote this proxy as directed, or if no direction is
indicated, for items 1, 2(a), 4 and 5 unless authority to do so is
specifically withheld in the manner provided, and in accordance with said
proxies' best judgment as to any other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
Dated __________________, 1995
(Please date this proxy)
______________________________
______________________________
Please sign exactly as your
name or names appear at left.
Corporate proxies should be
signed by an authorized
officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
PROXY BALLOT
PROXY EXCELSIOR INSTITUTIONAL EQUITY INDEX FUND PROXY
A SERIES OF
PROXY EXCELSIOR INSTITUTIONAL TRUST PROXY
The undersigned, revoking any prior proxy or proxies, hereby appoints Thomas
M. Lenz, Linda T. Gibson and Andres E. Saldana, or any of them individually,
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Excelsior Institutional Equity Index Fund
(the "Fund"), a series of Excelsior Institutional Trust (the "Trust"), to be
held at the offices of United States Trust Company of New York ("U.S. Trust")
located at 114 West 47th Street, New York, New York, on Wednesday, November
15, 1995, at 10:00 a.m., Eastern Time, notice of which meeting and the Proxy
Statement accompanying the same have been received by the undersigned, or at
any adjournment thereof, upon the following matters as described in the Notice
of Special Meeting and accompanying Proxy Statement:
4. Election of Rodman L. Drake, W. Wallace McDowell, Jr., Jonathan Piel,
Alfred C. Tannachion, Donald L. Campbell, Joseph H. Dugan, Wolfe J. Frankl
and Robert A. Robinson Trustees of the Trust.
[_] FOR ALL [_] AGAINST ALL [_] FOR ALL
EXCEPT:
_______________
(LIST ANY
EXCEPTIONS)
5. To approve or disapprove of the selection of Ernst & Young LLP as the
independent certified public accountants of the Fund.
[_] FOR [_] AGAINST [_] ABSTAIN
6. In their discretion, upon such other matters as may properly come before
the meeting.
(THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE
ENCLOSED ENVELOPE)
<PAGE>
Said proxies will vote this proxy as directed, or if no direction is
indicated, for items 4 and 5 unless authority to do so is specifically
withheld in the manner provided, and in accordance with said proxies' best
judgment as to any other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
Dated __________________, 1995
(Please date this proxy)
______________________________
______________________________
Please sign exactly as your
name or names appear at left.
Corporate proxies should be
signed by an authorized
officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
PROXY BALLOT
PROXY EXCELSIOR INSTITUTIONAL BOND INDEX FUND PROXY
A SERIES OF
PROXY EXCELSIOR INSTITUTIONAL TRUST PROXY
The undersigned, revoking any prior proxy or proxies, hereby appoints Thomas
M. Lenz, Linda T. Gibson and Andres E. Saldana, or any of them individually,
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Excelsior Institutional Bond Index Fund
(the "Fund"), a series of Excelsior Institutional Trust (the "Trust"), to be
held at the offices of United States Trust Company of New York ("U.S. Trust")
located at 114 West 47th Street, New York, New York, on Wednesday, November
15, 1995, at 10:00 a.m., Eastern Time, notice of which meeting and the Proxy
Statement accompanying the same have been received by the undersigned, or at
any adjournment thereof, upon the following matters as described in the Notice
of Special Meeting and accompanying Proxy Statement:
1.To approve or disapprove of the withdrawal by the Fund of its investment in
the Bond Market Portfolio of the St. James Portfolios.
[_] FOR [_] AGAINST [_] ABSTAIN
2(b). To approve or disapprove of a new investment advisory agreement between
the Trust, on behalf of the Fund, and United States Trust Company of the
Pacific Northwest ("U.S. Trust Pacific") as investment adviser.
[_] FOR [_] AGAINST [_] ABSTAIN
2(f). To approve or disapprove of a new investment subadvisory agreement
between U.S. Trust Pacific and U.S. Trust as investment subadviser.
[_] FOR [_] AGAINST [_] ABSTAIN
3. To approve or disapprove of the investment by the Fund of its investable
assets in the Bond Index Portfolio of Federated Investment Portfolios.
[_] FOR [_] AGAINST [_] ABSTAIN
3(a). To authorize the Trust to vote to approve or disapprove of a new
investment advisory agreement between Federated Investment Portfolios
and Federated Management as investment adviser with respect to the Bond
Index Portfolio.
[_] FOR [_] AGAINST [_] ABSTAIN
3(b). To authorize the Trust to vote to approve or disapprove of an investment
subadvisory agreement between Federated Management and U.S. Trust as
investment subadviser with respect to the Bond Index Portfolio.
[_] FOR [_] AGAINST [_] ABSTAIN
3(c). To authorize the Trust to vote to elect John F. Donahue, Thomas G.
Bigley, John T. Conroy, Jr., William J. Copeland, James E. Dowd,
Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr., Peter E. Madden,
Gregor F. Meyer, John E. Murray, Jr., Wesley W. Posvar, Marjorie P.
Smuts and J. Christopher Donahue Trustees of Federated Investment
Portfolios.
[_] FOR ALL [_] AGAINST ALL [_] FOR ALL
EXCEPT:
_______________
(LIST ANY
(THIS PROXY IS CONTINUED ON THE REVERSE SIDE EXCEPTIONS)
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE
ENCLOSED ENVELOPE)
<PAGE>
3(d). To authorize the Trust to vote to approve or disapprove of the selection
of Ernst & Young LLP as the independent certified public accountants of
Federated Investment Portfolios.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Election of Rodman L. Drake, W. Wallace McDowell, Jr., Jonathan Piel,
Alfred C. Tannachion, Donald L. Campbell, Joseph H. Dugan, Wolfe J. Frankl
and Robert A. Robinson Trustees of the Trust.
[_] FOR ALL [_] AGAINST ALL [_] FOR ALL
EXCEPT:
_______________
(LIST ANY
EXCEPTIONS)
5. To approve or disapprove of the selection of Ernst & Young LLP as the
independent certified public accountants of the Fund.
[_] FOR [_] AGAINST [_] ABSTAIN
6. In their discretion, upon such other matters as may properly come before
the meeting.
Said proxies will vote this proxy as directed, or if no direction is
indicated, for items 1, 2(b), 2(f), 3, 3(a), 3(b), 3(c), 3(d), 4 and 5 unless
authority to do so is specifically withheld in the manner provided, and in
accordance with said proxies' best judgment as to any other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
Dated __________________, 1995
(Please date this proxy)
______________________________
______________________________
Please sign exactly as your
name or names appear at left.
Corporate proxies should be
signed by an authorized
officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
PROXY BALLOT
PROXY EXCELSIOR INSTITUTIONAL SMALL CAPITALIZATION FUND PROXY
A SERIES OF
PROXY EXCELSIOR INSTITUTIONAL TRUST PROXY
The undersigned, revoking any prior proxy or proxies, hereby appoints Thomas
M. Lenz, Linda T. Gibson and Andres E. Saldana, or any of them individually,
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Excelsior Institutional Small
Capitalization Fund (the "Fund"), a series of Excelsior Institutional Trust
(the "Trust"), to be held at the offices of United States Trust Company of New
York ("U.S. Trust") located at 114 West 47th Street, New York, New York, on
Wednesday, November 15, 1995, at 10:00 a.m., Eastern Time, notice of which
meeting and the Proxy Statement accompanying the same have been received by
the undersigned, or at any adjournment thereof, upon the following matters as
described in the Notice of Special Meeting and accompanying Proxy Statement:
4. Election of Rodman L. Drake, W. Wallace McDowell, Jr., Jonathan Piel,
Alfred C. Tannachion, Donald L. Campbell, Joseph H. Dugan, Wolfe J. Frankl
and Robert A. Robinson Trustees of the Trust.
[_] FOR ALL [_] AGAINST ALL [_] FOR ALL
EXCEPT:
_______________
(LIST ANY
EXCEPTIONS)
5. To approve or disapprove of the selection of Ernst & Young LLP as the
independent certified public accountants of the Fund.
[_] FOR [_] AGAINST [_] ABSTAIN
6. In their discretion, upon such other matters as may properly come before
the meeting.
(THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE
ENCLOSED ENVELOPE)
<PAGE>
Said proxies will vote this proxy as directed, or if no direction is
indicated, for items 4 and 5 unless authority to do so is specifically
withheld in the manner provided, and in accordance with said proxies' best
judgment as to any other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
Dated __________________, 1995
(Please date this proxy)
______________________________
______________________________
Please sign exactly as your
name or names appear at left.
Corporate proxies should be
signed by an authorized
officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
PROXY BALLOT
PROXY EXCELSIOR INSTITUTIONAL BALANCED FUND PROXY
A SERIES OF
PROXY EXCELSIOR INSTITUTIONAL TRUST PROXY
The undersigned, revoking any prior proxy or proxies, hereby appoints Thomas
M. Lenz, Linda T. Gibson and Andres E. Saldana, or any of them individually,
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Excelsior Institutional Balanced Fund (the
"Fund"), a series of Excelsior Institutional Trust (the "Trust"), to be held
at the offices of United States Trust Company of New York ("U.S. Trust")
located at 114 West 47th Street, New York, New York, on Wednesday, November
15, 1995, at 10:00 a.m., Eastern Time, notice of which meeting and the Proxy
Statement accompanying the same have been received by the undersigned, or at
any adjournment thereof, upon the following matters as described in the Notice
of Special Meeting and accompanying Proxy Statement:
1.To approve or disapprove of the withdrawal by the Fund of its investment in
the Balanced Portfolio of the St. James Portfolios.
[_] FOR [_] AGAINST [_] ABSTAIN
2(b). To approve or disapprove of a new investment advisory agreement between
the Trust, on behalf of the Fund, and United States Trust Company of the
Pacific Northwest ("U.S. Trust Pacific") as investment adviser.
[_] FOR [_] AGAINST [_] ABSTAIN
2(c). To approve or disapprove of a new investment subadvisory agreement
between U.S. Trust Pacific and Becker Capital Management, Inc. as
investment subadviser.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Election of Rodman L. Drake, W. Wallace McDowell, Jr., Jonathan Piel,
Alfred C. Tannachion, Donald L. Campbell, Joseph H. Dugan, Wolfe J. Frankl
and Robert A. Robinson Trustees of the Trust.
[_] FOR ALL [_] AGAINST ALL [_] FOR ALL
EXCEPT:
_______________
(LIST ANY
EXCEPTIONS)
(THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE
ENCLOSED ENVELOPE)
<PAGE>
5. To approve or disapprove of the selection of Ernst & Young LLP as the
independent certified public accountants of the Fund.
[_] FOR [_] AGAINST [_] ABSTAIN
6. In their discretion, upon such other matters as may properly come before
the meeting.
Said proxies will vote this proxy as directed, or if no direction is
indicated, for items 1, 2(b), 2(c), 4 and 5 unless authority to do so is
specifically withheld in the manner provided, and in accordance with said
proxies' best judgment as to any other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
Dated __________________, 1995
(Please date this proxy)
______________________________
______________________________
Please sign exactly as your
name or names appear at left.
Corporate proxies should be
signed by an authorized
officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
PROXY BALLOT
PROXY EXCELSIOR INSTITUTIONAL EQUITY GROWTH FUND PROXY
A SERIES OF
PROXY EXCELSIOR INSTITUTIONAL TRUST PROXY
The undersigned, revoking any prior proxy or proxies, hereby appoints Thomas
M. Lenz, Linda T. Gibson and Andres E. Saldana, or any of them individually,
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Excelsior Institutional Equity Growth Fund
(the "Fund"), a series of Excelsior Institutional Trust (the "Trust"), to be
held at the offices of United States Trust Company of New York ("U.S. Trust")
located at 114 West 47th Street, New York, New York, on Wednesday, November
15, 1995, at 10:00 a.m., Eastern Time, notice of which meeting and the Proxy
Statement accompanying the same have been received by the undersigned, or at
any adjournment thereof, upon the following matters as described in the Notice
of Special Meeting and accompanying Proxy Statement:
1. To approve or disapprove of the withdrawal by the Fund of its investment in
the Equity Growth Portfolio of the St. James Portfolios.
[_] FOR [_] AGAINST [_] ABSTAIN
2(b). To approve or disapprove of a new investment advisory agreement between
the Trust, on behalf of the Fund, and United States Trust Company of the
Pacific Northwest ("U.S. Trust Pacific") as investment adviser.
[_] FOR [_] AGAINST [_] ABSTAIN
2(d). To approve or disapprove of a new investment subadvisory agreement
between U.S. Trust Pacific and Luther King Capital Management
Corporation as investment subadviser.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Election of Rodman L. Drake, W. Wallace McDowell, Jr., Jonathan Piel,
Alfred C. Tannachion, Donald L. Campbell, Joseph H. Dugan, Wolfe J. Frankl
and Robert A. Robinson Trustees of the Trust.
[_] FOR ALL [_] AGAINST ALL [_] FOR ALL
EXCEPT:
_______________
(LIST ANY
EXCEPTIONS)
(THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE
ENCLOSED ENVELOPE)
<PAGE>
5. To approve or disapprove of the selection of Ernst & Young LLP as the
independent certified public accountants of the Fund.
[_] FOR [_] AGAINST [_] ABSTAIN
6. In their discretion, upon such other matters as may properly come before
the meeting.
Said proxies will vote this proxy as directed, or if no direction is
indicated, for items 1, 2(b), 2(d), 4 and 5 unless authority to do so is
specifically withheld in the manner provided, and in accordance with said
proxies' best judgment as to any other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
Dated __________________, 1995
(Please date this proxy)
______________________________
______________________________
Please sign exactly as your
name or names appear at left.
Corporate proxies should be
signed by an authorized
officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
PROXY BALLOT
PROXY EXCELSIOR INSTITUTIONAL VALUE EQUITY INCOME FUND PROXY
A SERIES OF
PROXY EXCELSIOR INSTITUTIONAL TRUST PROXY
The undersigned, revoking any prior proxy or proxies, hereby appoints Thomas
M. Lenz, Linda T. Gibson and Andres E. Saldana, or any of them individually,
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Excelsior Institutional Value Equity Income
Fund (the "Fund"), a series of Excelsior Institutional Trust (the "Trust"), to
be held at the offices of United States Trust Company of New York ("U.S.
Trust") located at 114 West 47th Street, New York, New York, on Wednesday,
November 15, 1995, at 10:00 a.m., Eastern Time, notice of which meeting and
the Proxy Statement accompanying the same have been received by the
undersigned, or at any adjournment thereof, upon the following matters as
described in the Notice of Special Meeting and accompanying Proxy Statement:
4. Election of Rodman L. Drake, W. Wallace McDowell, Jr., Jonathan Piel,
Alfred C. Tannachion, Donald L. Campbell, Joseph H. Dugan, Wolfe J. Frankl
and Robert A. Robinson Trustees of the Trust.
[_] FOR ALL [_] AGAINST ALL [_] FOR ALL
EXCEPT:
_______________
(LIST ANY
EXCEPTIONS)
5. To approve or disapprove of the selection of Ernst & Young LLP as the
independent certified public accountants of the Fund.
[_] FOR [_] AGAINST [_] ABSTAIN
6. In their discretion, upon such other matters as may properly come before
the meeting.
(THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE
ENCLOSED ENVELOPE)
<PAGE>
Said proxies will vote this proxy as directed, or if no direction is
indicated, for items 4 and 5 unless authority to do so is specifically
withheld in the manner provided, and in accordance with said proxies' best
judgment as to any other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
Dated __________________, 1995
(Please date this proxy)
______________________________
______________________________
Please sign exactly as your
name or names appear at left.
Corporate proxies should be
signed by an authorized
officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY USING THE
ENCLOSED ENVELOPE.
<PAGE>
PROXY BALLOT
PROXY EXCELSIOR INSTITUTIONAL INTERNATIONAL EQUITY FUND PROXY
A SERIES OF
PROXY EXCELSIOR INSTITUTIONAL TRUST PROXY
The undersigned, revoking any prior proxy or proxies, hereby appoints Thomas
M. Lenz, Linda T. Gibson and Andres E. Saldana, or any of them individually,
proxies, with full powers of substitution, to vote for the undersigned at the
Special Meeting of Shareholders of Excelsior Institutional International
Equity Fund (the "Fund"), a series of Excelsior Institutional Trust (the
"Trust"), to be held at the offices of United States Trust Company of New York
("U.S. Trust") located at 114 West 47th Street, New York, New York, on
Wednesday, November 15, 1995, at 10:00 a.m., Eastern Time, notice of which
meeting and the Proxy Statement accompanying the same have been received by
the undersigned, or at any adjournment thereof, upon the following matters as
described in the Notice of Special Meeting and accompanying Proxy Statement:
1. To approve or disapprove of the withdrawal by the Fund of its investment in
the International Equity Portfolio of the St. James Portfolios.
[_] FOR [_] AGAINST [_] ABSTAIN
2(b). To approve or disapprove of a new investment advisory agreement between
the Trust, on behalf of the Fund, and United States Trust Company of the
Pacific Northwest ("U.S. Trust Pacific") as investment adviser.
[_] FOR [_] AGAINST [_] ABSTAIN
2(e). To approve or disapprove of a new investment subadvisory agreement
between U.S. Trust Pacific and Harding Loevner Management, L.P. as
investment subadviser.
[_] FOR [_] AGAINST [_] ABSTAIN
4. Election of Rodman L. Drake, W. Wallace McDowell, Jr., Jonathan Piel,
Alfred C. Tannachion, Donald L. Campbell, Joseph H. Dugan, Wolfe J. Frankl
and Robert A. Robinson Trustees of the Trust.
[_] FOR ALL [_] AGAINST ALL [_] FOR ALL
EXCEPT:
_______________
(LIST ANY
EXCEPTIONS)
(THIS PROXY IS CONTINUED ON THE REVERSE SIDE
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY, USING THE
ENCLOSED ENVELOPE)
<PAGE>
5. To approve or disapprove of the selection of Ernst & Young LLP as the
independent certified public accountants of the Fund.
[_] FOR [_] AGAINST [_] ABSTAIN
6. In their discretion, upon such other matters as may properly come before
the meeting.
Said proxies will vote this proxy as directed, or if no direction is
indicated, for items 1, 2(b), 2(e), 4 and 5 unless authority to do so is
specifically withheld in the manner provided, and in accordance with said
proxies' best judgment as to any other matter.
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
Dated __________________, 1995
(Please date this proxy)
______________________________
______________________________
Please sign exactly as your
name or names appear at left.
Corporate proxies should be
signed by an authorized
officer.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY BALLOT PROMPTLY USING THE
ENCLOSED ENVELOPE.