Law Offices
Drinker Biddle & Reath LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Telephone: (215) 988-2700
Telex: 834684
Fax: (215) 988-2757
June 20, 1997
VIA EDGAR TRANSMISSION
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, NW
Washington, DC 20549
RE: EXCELSIOR FUNDS, INC.
REGISTRATION NO. 333-27115
-----------------------------
Ladies and Gentlemen:
In connection with the solicitation of shareholder approval of the
transfer of the assets and liabilities of the Productivity Enhancers Fund,
Environmentally-Related Products and Services Fund, Aging of America Fund,
Communication and Entertainment Fund and Global Competitors Fund to the Equity
Fund of the Company (collectively, the "Reorganization"), on behalf of the
Company and pursuant to Rule 14a-6(b) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), enclosed herewith for filing are:
(1) A copy of the proxy card for the acquisitions which comprise the
Reorganization and;
(2) Three forms of a letter sent to shareholders of the Company
regarding the proxy.
Questions and comments concerning the enclosed materials may be
directed to the undersigned at (215) 988-1152.
Very truly yours,
/s/ Kenneth L. Greenberg, Esq.
Dear Client:
As we recently discussed, I am pleased to announce that some important changes
are being considered for the U.S. Trust-advised Excelsior family of funds.
Under the proposed changes, five of the equity funds would be consolidated into
the Excelsior Equity Fund which incorporates our growth, value and small cap
investment strategies. In our opinion, this will allow for more meaningful
measurements of performance against appropriate industry benchmarks, while
potentially reducing portfolio volatility. These changes involve only the
equity funds, and a summary describing these proposed changes in enclosed.
Specifics are outlined in the combined prospectus/proxy statement we are sending
to you today.
I want to emphasize that this restructuring does not constitute a shift away
from our belief in theme equity investing; quite the contrary. We continue to
believe that the major economic and demographic themes we have identified wil
drive business growth into the next century. Therefore, we expect that these
themes will remain the foundation of our equity investment policy.
Going forward, our recommended asset allocation will include greater exposure to
international equities, as we believe it unlikely that domestic equities will
continue their recent stellar performance over the next few years. We now
recommend that international equities compose 20% of the equity portion of most
client portfolios. We also believe that an increased exposure to alternative
investments, such as venture capital, can help to ensure that your portfolio
continues to meet your long-term needs.
Please read carefully the proxy materials we have sent to you regarding the
proposed changes to the Excelsior funds. If you also own Excelsior funds
outside of your Wealth Management Account, you will be receiving separate proxy
material directly from Excelsior. I encourage you to participate in this
important vote by returning the proxies before the deadline. A vote in favor of
the proposal will help us to ensure that we continue to provide the best
selection of funds for your investment needs.
I will continue to review the asset allocation in your account throughout the
transition process to ensure that your investments reflect your objectives and
long-term goals. I will also be speaking to you in the near future to review
proposed changes to your account and to address any issues concerning your
account. Of course, if you have any questions, please do not hesitate to call.
Sincerely,
THE PROPOSED CHANGES TO EXCELSIOR FAMILY OF FUNDS
. Subject to shareholder approval, five of the existing equity theme funds -
the Excelsior Aging of America Fund, the Excelsior Global Competitors Fund,
the Excelsior Communication and Entertainment Fund, the Excelsior
Environmental Fund, and the Excelsior Productivity Enhancers Fund - would
be merged into the Excelsior Equity Fund, which would be renamed the
Excelsior Blended Equity Fund.
. The Excelsior Long-Term Supply of Energy Fund would be renamed the
Excelsior Energy and Natural Resources Fund. The fund would continue to
invest in companies that are likely to benefit from the availability,
development and delivery of clean, secure hydrocarbon and other energy
sources. The fund would also be able to invest in securities representing
other natural resources, including precious metals.
. The Excelsior Business and Industrial Restructuring Fund would be renamed
the Excelsior Value and Restructuring Fund. The fund would continue to
invest in companies that are likely to benefit from a restructuring or
redeployment of their assets and operations in order to become more
competitive or profitable.
. The Excelsior Early Life Cycle Fund would be renamed the Excelsior Small
Capitalization Fund. The Fund would continue to invest in smaller
companies in the earlier stages of their development or in more mature
companies engaged in new and potentially higher growth operations.
. The Excelsior Emerging Americas Fund would be renamed the Excelsior Latin
America Fund. The fund would invest in companies based in South and
Central America and Mexico that are likely to benefit from government
reform policies and improving economic conditions in the region.
The Excelsior family of funds is also planning to introduce two new equity
funds. A large cap growth fund is planned which would invest in equities
believed to be of high quality and high growth potential. In addition, a real
estate fund is planned which would invest primarily in the equity securities of
real estate companies, including real estate investment trusts (REITs). The
Excelsior Income and Growth Fund, as well as the three remaining international
equity funds, the eight fixed-income funds, and the four money market funds,
will be unaffected.
Please see the reverse side for a list of the Excelsior funds that would be
available if the changes are approved. Be sure to participate in the upcoming
proxy vote to ensure that these important changes take place.
THE NEW EXCELSIOR FUNDS
DOMESTIC EQUITY
Excelsior Blended Equity Fund
Excelsior Value and Restructuring Fund
Excelsior Income and Growth Fund
Excelsior Small Capitalization Fund
Excelsior Energy and Natural Resources Fund
VENTURE CAPITAL
Excelsior Private Equity Fund II (closed-end fund)
INTERNATIONAL EQUITY
Excelsior International Fund
Excelsior Latin America Fund
Excelsior Pacific-Asia Fund
Excelsior Pan European Fund
TAXABLE FIXED INCOME
Excelsior Short-Term Government Securities Fund
Excelsior Intermediate-Term Managed Income Fund
Excelsior Managed Income Fund
TAX-EXEMPT FIXED INCOME
Excelsior Short-Term Tax-Exempt Securities Fund
Excelsior Intermediate-Term Tax-Exempt Fund
Excelsior Long-Term Tax-Exempt Fund
Excelsior New York Intermediate-Term Tax-Exempt Fund
Excelsior California Tax-Exempt Income Fund
MONEY MARKET
Excelsior Money Fund
Excelsior Government Fund
Excelsior Treasury Money Fund
Excelsior Short-Term Tax-Exempt Fund
Any mutual funds or other nondeposit investment products in which you invest (i)
are not insured by the FDIC; (ii) are not a deposit or obligation of, or
guaranteed by, United States Trust Company of New York or any other depository
institution; and (iii) are subject to investment risks, including possible loss
of the principal amount invested.
For additional information about these funds, including sales charges and
expenses, please obtain a prospectus and read it carefully before you invest.
June 24, 1997
Dear Client:
As we recently discussed, I am pleased to announce that some important changes
are being considered for the U.S. Trust-advised Excelsior family of funds.
Under the proposed changes, five of the equity funds would be consolidated into
the Excelsior Equity Fund which incorporates our growth, value and small cap
investment strategies. In our opinion, this will allow for more meaningful
measurements of performance against appropriate industry benchmarks, while
potentially reducing portfolio volatility. These changes involve any the equity
funds, and a summary describing these proposed changes is enclosed. Specifics
are outlined in the combined prospectus/proxy statement we are sending to you
today.
I want to emphasize that this restructuring does not constitute a shift away
from our belief in theme equity investing; quite the contrary. We continue to
believe that the major economic and demographic themes we have identified will
drive business growth into the next century. Therefore, we expect that these
themes will remain the foundation of our equity investment policy.
Going forward, our recommended asset allocation will include greater exposure to
international equities, as we believe it unlikely that domestic equities will
continue their recent stellar performance over the next few years. We now
recommend that international equities compose 20% of the equity portion of most
client portfolios. We also believe that an increased exposure to alternative
investments, such as venture capital, can help to ensure that your portfolio
continues to meet your long-term needs.
Please read carefully the proxy materials we have sent to you regarding the
proposed changes to the Excelsior funds. If you also own Excelsior funds
outside of your Wealth Management Account, you will be receiving separate proxy
material directly from Excelsior. I encourage you to participate in this
important vote by returning the proxies before the deadline. A vote in favor of
the proposal will help us to ensure that we continue to provide the best
selection of funds for your investment needs.
Page 2
I will continue to review the asset allocation in your account throughout the
transition process to ensure that your investments reflect your objectives and
long-term goals. I will also be speaking to you in the near future to review
proposed changes to your account and to address any issues concerning your
account. Of course, if you have any questions, please do not hesitate to call.
Sincerely,
Sincerely,
THE PROPOSED CHANGES TO THE EXCELSIOR FAMILY OF FUNDS
. Subject to shareholder approval, five of the existing equity theme funds -
the Excelsior Aging of America Fund, the Excelsior Global Competitors Fund,
the Excelsior Communication and Entertainment Fund, the Excelsior
Environmental Fund, and the Excelsior Productivity Enhancers Fund - would
be merged into the Excelsior Equity Fund, which would be renamed the
Excelsior Blended Equity Fund.
. The Excelsior Long-Term Supply of Energy Fund would be renamed the
Excelsior Energy and Natural Resources Fund. The fund would continue to
invest in companies that are likely to benefit from the availability,
development and delivery of clean, secure hydrocarbon and other energy
sources. The fund would also be able to invest in securities representing
other natural resources, including precious metals.
. The Excelsior Business and Industrial Restructuring Fund would be renamed
the Excelsior Value and Restructuring Fund. The fund would continue to
invest in companies that are likely to benefit from a restructuring or
redeployment of their assets and operations in order to become more
competitive or profitable.
. The Excelsior Early Life Cycle Fund would be renamed the Excelsior Small
Capitalization Fund. The fund would continue to invest in smaller
companies in the earlier stages of their development or in more mature
companies engaged in new and potentially higher growth operations.
. The Excelsior Emerging Americas Fund would be renamed the Excelsior Latin
America Fund. The fund would invest in companies based in South and
Central America and Mexico that are likely to benefit from government
reform politics and improving economic conditions in the region.
The Excelsior family of funds is also planning to introduce two new equity
funds. A large cap growth fund is planned which would invest in equities
believed to be of high quality and high growth potential. In addition, a real
estate fund is planned which would invest primarily in the equity securities of
real estate companies, including real estate investment trusts (REITs). The
Excelsior Income and Growth Fund, as well as the three remaining international
equity funds, the eight fixed-income funds, and the four money market funds,
will be unaffected.
Please see the reverse side for a list of the Excelsior funds that would be
available if the changes are approved. Be sure to participate in the upcoming
proxy vote to ensure that these important changes take place.
THE NEW EXCELSIOR FUNDS
DOMESTIC EQUITY
Excelsior Blended Equity Fund
Excelsior Value and Restructuring Fund
Excelsior Income and Growth Fund
Excelsior Small Capitalization Fund
Excelsior Energy and Natural Resources Fund
VENTURE CAPITAL
Excelsior Private Equity Fund II (closed-end fund)
INTERNATIONAL EQUITY
Excelsior International Fund
Excelsior Latin America Fund
Excelsior Pacific-Asia Fund
Excelsior Pan European Fund
TAXABLE FIXED INCOME
Excelsior Short-Term Government Securities Fund
Excelsior Intermediate-Term Managed Income Fund
Excelsior Managed Income Fund
TAX-EXEMPT FIXED INCOME
Excelsior Short-Term Tax-Exempt Securities Fund
Excelsior Intermediate-Term Tax-Exempt Fund
Excelsior Long-Term Tax-Exempt Fund
Excelsior New York Intermediate-Term Tax-Exempt Fund
Excelsior California Tax-Exempt Income Fund
MONEY MARKET
Excelsior Money Fund
Excelsior Government Fund
Excelsior Treasury Money Fund
Excelsior Short-Term Tax-Exempt Fund
Any mutual funds or other nondeposit investment products in which you invest (i)
are not insured by te FDIC; (ii) are not a deposit or obligation of, or
guaranteed by, United States Trust Company of New York or any other depository
institution; and (iii) are subject to investment risks, including possible loss
of the principal amount invested.
For additional information about these funds, including sales charges and
expenses, please obtain a prospectus and read it carefully before you invest.
Dear Shareholder:
The board of directors of the Excelsior equity funds is proposing certain
changes which we believe will enhance our ability to serve your investment
needs. Very briefly, these proposed changes would merge five of our equity
funds into the Excelsior Equity Fund. These changes are enclosed in the
combination proxy/prospectus.
It is the opinion of United States Trust Company of New York, the advisor to the
funds, that the proposed changes would reduce volatility and potentially enhance
performance. The board of Excelsior encourages you to participate in this very
important vote by returning the proxies before the deadline. We believe that a
vote in favor of the proposal will enhance our ability to serve your investment
needs.
As always, our goal is to provide you with excellent performances and the
highest level of service. If you have any questions about the proposed changes,
please do not hesitate to call your fund representative.
Sincerely,
Frederick S. Wonham
EXCELSIOR FUNDS, INC.
This proxy is solicited by the Board of Directors of Excelsior Funds,
Inc. ("Excelsior") for use at a special meeting of shareholders to be held at
the offices of United States Trust Company of New York, 114 West 47th Street,
New York, New York 10036, on August 18, 1997 at 10:00 a.m. (Eastern Time).
The undersigned hereby appoints Frank Bruno, Michael P. Malloy, Daniel
A. Moonay and Rose Ann Munoz, and each of them, with full power of substitution,
as proxies of the undersigned to vote at the above-stated special meeting, and
at all adjournments or postponements thereof, all shares of common stock in the
below referenced fund held of record by the undersigned on June 2, 1997, the
record date for the meeting, upon the following matters and upon any other
matter that may come before the meeting, in their discretion.
Every properly signed proxy will be voted in the manner specified
hereon (except that if you vote on a proposal regarding a fund of which you are
not a shareholder, such vote will not be counted) and, in the absence of
specification, will be treated as granting authority to vote "FOR" the
Proposals.
To vote mark an X in blue or black ink on the proxy card below. Keep this
portion for your records.
- --------------------------------------------------------------------------------
(Detach here and return this portion only)
Proposals to approve the plan of reorganization and the transactions
contemplated thereby, including the transfer of all of the assets and
liabilities of the Fund specified below ("Transferor Fund") to Excelsior's
Equity Fund ("Surviving Fund") in exchange for retail shares of the Surviving
Fund, and a liquidating distribution of such shares to holders of retail shares
of the Transferor Fund:
1. Vote on Proposal for AGING OF AMERICA FUND ONLY
--------------------------
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
2. Vote on Proposal for PRODUCTIVITY ENHANCERS FUND ONLY
--------------------------------
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Vote on Proposal for COMMUNICATION AND ENTERTAINMENT FUND ONLY
-----------------------------------------
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Vote on Proposal for GLOBAL COMPETITORS FUND ONLY
----------------------------
FOR AGAINST ABSTAIN
-------------------------
[ ] [ ] [ ]
5. Vote on Proposal for ENVIRONMENTALLY-RELATED PRODUCTS AND SERVICES
---------------------------------------------
FUND ONLY
-------------------------
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
LONG-TERM SUPPLY OF ENERGY FUND (ONLY)
--------------------------------------
6(a). Vote on Proposal
FOR AGAINST ABSTAIN
[ ] [ ] [ ] Vote on Proposal to approve a change to
the Fund's sub-classification from
diversified to non-diversified and to
eliminate a related investment limitation.
(b). Vote on Proposal
FOR AGAINST ABSTAIN
[ ] [ ] [ ] Vote on Proposal to approve a change to
the Fund's fundamental investment policies
to permit the Fund to invest in precious
metal bullion and coins and futures
contracts on commodities.
(c). Vote on Proposal
FOR AGAINST ABSTAIN
[ ] [ ] [ ] Vote on Proposal to adopt a fundamental
investment policy that will allow the Fund
to invest more than 25% of the value of
its total assets in companies in the
energy and other natural resources groups
of industries.
7. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
Please sign, date and return the proxy card promptly using the enclosed
envelope.
Please sign exactly as name appears hereon. When signing as attorney or
executor, administrator, trustee or guardian, please give full title as
such. If a corporation, please sign in full corporate name by president or
other authorized officer. If a partnership, please sign in partnership
name by authorized person.
________________________________________
Signature Date