SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to
Section 14(A) of the
Securities Exchange
Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant toss.240.14a-12
EXCELSIOR INCOME SHARES, INC.
(Name of Registrant as Specified In Its Charter
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $.0001 per share
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(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:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
PRELIMINARY PROXY MATERIALS FOR THE INFORMATION OF THE SECURITIES AND EXCHANGE
COMMISSION.
[LOGO]
Excelsior Income Shares, Inc.
114 West 47th Street
New York, New York 10036
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held April 10, 2001
The Annual Meeting of Shareholders (the "Meeting") of Excelsior Income
Shares, Inc. (the "Fund") will be held at the offices of United States Trust
Company of New York at 114 West 47th Street, Conference Room 14B, New York, N.Y.
10036, on Tuesday, April 10, 2001, at 11:00 a.m., New York City time, for the
following purposes:
(1) To elect five Directors to hold office until the next Annual Meeting and
until their respective successors have been duly elected and qualified;
(2) To consider and approve a new Investment Advisory Agreement between the Fund
and Rafferty Capital Markets, LLC;
(3) To ratify the appointment of PricewaterhouseCoopers LLP as the independent
certified public accountants of the Fund for the fiscal year ending December
31, 2001; and
(4) To transact such other business as may properly come before the Meeting or
any adjournments thereof.
The Board of Directors of the Fund recommends that you vote in favor of all
items.
The Board of Directors has fixed the close of business on February 21,
2001 as the record date (the "Record Date") for determining the shareholders who
are entitled to receive notice of the Meeting and to vote their shares at the
Meeting or any adjournments or postponements thereof. You are entitled to cast
one vote for each full share and a fractional vote for each fractional share
that you own on the Record Date.
The Board of Directors has also approved a resolution changing the name
of the Fund to EIS Fund, Ltd. Shareholder approval of this change is not
required. This new name will be effective as of April 10, 2001.
ROBERT D. CUMMINGS
Secretary
New York, New York
February 28, 2001
Your vote is important. Whether or not you intend to attend the
Meeting, please fill in, date, sign and promptly return the enclosed proxy card
in the postage paid return envelope provided in order to avoid the additional
expense of further proxy solicitation and to ensure that a quorum will be
present at the meeting. Your proxy is revocable at any time before its use. You
may also vote by phone by calling 1-800-________.
Questions and Answers
What proposals am I being asked to vote on?
You are being asked to vote on the following proposals:
1. The election of five Directors
2. To approve a new Investment Advisory Agreement
3. To ratify the appointment of independent public accountants
Have the Directors approved the Proposals?
Yes. The Board of Directors unanimously approved these proposals on
February 6, 2000, and recommends that you vote to approve each
proposal.
Why is the Fund having a Shareholder Meeting?
Under New York law, the Fund, as a New York corporation, must elect
Directors annually. In addition, shareholders must approve the
appointment of independent public accountants and investment advisory
agreements.
When will the Shareholder Meeting be held?
A Shareholder Meeting will be held on April 10, 2001
Why does the Fund need a new investment advisory agreement?
The 1940 Act requires that shareholders approve investment advisory
agreements. The Fund's old investment adviser, U.S. Trust Company of
New York, decided last year that they did not want to serve as
investment adviser to the Fund. They asked the Fund to find a new
adviser, and the Fund has selected Rafferty Capital Markets, LLC. If
the selection of Rafferty Capital Markets, LLC is approved, the Fund
will terminate the agreement with U. S. Trust Company of New York.
Will the Fund pay greater fees to the new adviser?
No. The new investment advisory agreement is identical to the old
investment advisory agreement, except for the name of the adviser and
the date. There is no change in the fee provisions.
Why am I being asked to ratify the selection of the Fund's independent public
accountants?
The 1940 Act requires that shareholders approve independent public
accountants.
How do I vote my shares?
You can vote your shares by completing and signing the enclosed proxy
card, and mailing it in the enclosed postage paid envelope. You may
also vote your shares by phone at 1-800-______. If you need assistance,
or have any questions regarding the proposals or how to vote your
shares, please call the Fund at 1-800-840-1208.
PRELIMINARY PROXY MATERIALS FOR THE INFORMATION OF THE SECURITIES AND EXCHANGE.
COMMISSION.
EXCELSIOR INCOME SHARES, INC.
114 West 47th Street
New York, New York 10036
PROXY STATEMENT
GENERAL INFORMATION:
The Directors of Excelsior Income Shares, Inc., a New York corporation
(the "Fund") are soliciting your proxy for use at an Annual Meeting of
Shareholders or any adjournment thereof (the "Meeting"), to be held at the
offices of United States Trust Company of New York, at 114 West 47th Street,
Conference Room 14B, New York, N.Y. 10036, on Tuesday, April 10, 2001, at 11:00
a.m., Eastern standards time, to approve proposals that have already been
approved by the Fund's Board of Directors. For your convenience, we have divided
this proxy statement into four parts:
Part 1-- An Overview
Part 2-- The Proposals
Part 3-- More on Proxy Voting
Part 4-- Additional Information
Your vote is important! You should read the entire proxy statement
before voting. If you have any questions, please call the Fund at 1-800-_______.
Even if you sign and return the accompanying proxy card, you may revoke it by
giving written notice of such revocation to the Secretary of the Fund prior to
the Meeting or by delivering a subsequently dated proxy card or by attending and
voting at the Meeting in person. Management expects to solicit proxies
principally by mail, but Management, or agents appointed by Management, may also
solicit proxies by telephone, telegraph or personal interview. Automatic Data
Processing, Inc. has been retained to serve as the Fund's proxy solicitor. If
solicitation is required, ADP will be paid proxy solicitation fees of
approximately $5,300. The costs of solicitation will be borne by the Fund.
We began mailing this Notice of Annual Meeting, Proxy Statement and
Proxy Card to shareholders on or about February 28, 2001.
The Fund is required by federal law to file reports, proxy statements
and other information with the Securities and Exchange Commission (the "SEC").
The SEC maintains a Web site that contains information about the Fund
(www.sec.gov). Any such proxy material, reports and other information can be
inspected and copied at the public reference facilities of the SEC, 450 Fifth
Street, N.W., Washington DC 20549 and at the SEC's New York Regional Office,
Seven World Trade Center, New York, NY 10048. Copies of such materials can be
obtained from the Public Reference Branch, Office of Consumer Affairs and
Information Services of the SEC at 450 Fifth Street, N.W., Washington DC 20549,
at prescribed rates.
The Fund's Annual Report for the year ended December 31, 2000 is
enclosed. The Fund's most recent annual, semi-annual and quarterly reports to
shareholders are available at no cost. To request a report, please call the Fund
toll-free at 1-800-840-1208 or write to the Fund at 114 West 47th Street, New
York, N.Y. 10036. Effective April 10, 2001, the Fund's name will be changed to
EIS Fund, Ltd.
PART 1 - AN OVERVIEW
This Proxy Statement is being furnished by the Board of Directors of
the Fund in connection with the solicitation of proxies by the Board of
Directors for use at the Annual Meeting of its shareholders, or any adjournment
thereof, to be held at the offices of United States Trust Company of New York,
at 114 West 47th Street, Conference Room 14B, New York, N.Y. 10036, on Tuesday,
April 10, 2001, at 11:00 a.m., New York City time.
The Board of Directors have fixed the close of business on February 21,
2001 as the record date (the "Record Date") for determining the shareholders who
are entitled to notice of the Meeting and to vote their shares at the Meeting or
any adjournments or postponements thereof. Shareholders are entitled to cast one
vote for each full share and a fractional vote for each fractional share they
own on the Record Date.
The Fund is a registered investment company organized as a corporation
under the Business Corporation Law of the State of New York. The Fund's mailing
address is 114 West 47th Street, New York, New York 10036. The Fund commenced
operations on May 15, 1973. The Fund's Annual Report for the year ended December
31, 2000, including audited financial statements, is enclosed.
PART 2 - THE PROPOSALS
PROPOSAL 1
THE ELECTION OF DIRECTORS
The persons named as proxies on the proxy card enclosed with this Proxy
Statement intend to vote at the Meeting for the election of the nominees named
below (the "Nominees") to serve as Directors of the Fund until the next Annual
Meeting and until their successors are duly elected and qualified. Each Nominee
was previously elected as a Director of the Fund by the Fund's shareholders at
the meeting of shareholders held on May 9, 2000. Each Nominee has consented to
be named in this Proxy Statement and has agreed to serve if elected. If any
Nominee should be unable to serve, an event not now anticipated, the persons
named as proxies will vote for such other Nominee as may be proposed by
Management.
Information Concerning Nominees
The following table sets forth the ages, positions and offices with the
Fund, principal occupation or employment during the past five years and other
directorships, if any, of each Nominee.
--------------------- -------- ---------------------- ------------------------------------------
Age Positions and Offices Principal Occupation or Employment;
Name with the Fund Other Directorships
--------------------- -------- ---------------------- ------------------------------------------
Townsend Brown, II* 70 Chairman since 1992 President and CEO of the Fund since
1992; Attorney; Senior Vice President
of United States Trust Company of New
York, 1978 to 1992.
--------------------- -------- ---------------------- ------------------------------------------
Geoffrey J. O'Connor 54 Director since 1999 Attorney, private practice.
--------------------- -------- ---------------------- ------------------------------------------
John H. Reilly 73 Director since 1996 Attorney, Member of Dickerson & Reilly.
--------------------- -------- ---------------------- ------------------------------------------
Perry W. Skjelbred 53 Director since 1993 Founder, CEO, Enterprise Capital Inc.,
since 1993; Founder, CEO, American
Infrastructure, Inc., 1989 to 1993;
Senior Vice President and Chief
Investment Officer, NATIONAR, Inc., 1986
to 1989; Director: Enterprise Capital,
Inc., Medical Marketing Group, Inc.
--------------------- -------- ---------------------- ------------------------------------------
Philip J. Tilearcio 47 Director since 1993 Investor
--------------------- -------- ---------------------- ------------------------------------------
----------------
*An "interested person" of the Fund within the meaning of the Investment Company
Act of 1940 (the "1940 Act").
The Board of Directors has a standing Audit Committee consisting of Mr.
Geoffrey J. O'Connor, Mr. John H. Reilly, Mr. Perry W. Skjelbred and Mr. Philip
J. Tilearcio, none of whom is an "interested person" of the Fund within the
meaning of the 1940 Act. The Audit Committee held one meeting during the year
ended December 31, 2000. The functions performed by the Audit Committee include
making recommendations with respect to engaging and discharging the Fund's
independent auditors, reviewing with the Fund's independent auditors the plan
and results of the annual examination of the Fund's financial statements,
reviewing the scope and results of the Fund's procedures for internal auditing,
reviewing the independence of the Fund's auditors, considering the range of
audit fees and reviewing the adequacy of the Fund's system of internal
accounting controls.
The Fund's Board of Directors held six meetings during the year ended
December 31, 2000.
The By-Laws of the Fund provide that the Fund will indemnify its
officers and Directors on the terms, to the extent and subject to the conditions
prescribed by the Business Corporation Law of the State of New York, the 1940
Act, and the rules and regulations thereunder, and subject to such other
conditions as the Board of Directors may in its discretion impose.
To the extent permitted by the Business Corporation Law of the State of
New York, the 1940 Act, and the rules and regulations thereunder, the Fund may
purchase and maintain on behalf of any person who may be indemnified under the
By-Laws, insurance covering any risks in respect of which he may be indemnified
by the Fund.
Information Concerning Executive Officers
The following table sets forth the ages, positions and offices with the Fund and
principal occupation or employment during the past five years of each of the
Fund's executive officers.
----------------------------- -------- --------------------------- ------------------------------------------
Name Age Positions and Offices Principal Occupation or Employment;
with the Fund Other Directorships
----------------------------- -------- --------------------------- ------------------------------------------
Townsend Brown, II 70 Chairman, President and Chairman, President and Chief Executive
Chief Executive Officer Officer of the Fund.
since April 9, 1992
----------------------------- -------- --------------------------- ------------------------------------------
Robert D. Cummings 56 Secretary and Treasurer Manager of the Common Trust Funds
since April 9, 1992 Department of United States Trust
Company of New York since 1980;
Vice President since April 1987.
----------------------------- -------- --------------------------- ------------------------------------------
The Fund's executive officers were re-elected by the Board of Directors
on May 9, 2000, to serve until the meeting of the Board of Directors scheduled
to take place immediately after the Annual Meeting of the Fund's shareholders on
April 10, 2001, and until their successors are duly elected and qualified.
Compensation of and Transactions with Executive Officers and Directors
The following table describes the compensation paid during the last
fiscal year to each Director and Nominee.
----------------------------- -------------------- -------------------------------- -------------------------
Name of Person Total Compensation Pension or Retirement Benefits Estimated Annual
From Fund Accrued as Part of Fund Benefit Upon Retirement
Expenses
----------------------------- -------------------- -------------------------------- -------------------------
Townsend Brown, II $53,603 None None
----------------------------- -------------------- -------------------------------- -------------------------
Edwin A. Heard $1,950* None None
----------------------------- -------------------- -------------------------------- -------------------------
Geoffrey J. O'Connor $-0- None None
----------------------------- -------------------- -------------------------------- -------------------------
John H. Reilly $6,900 None None
----------------------------- -------------------- -------------------------------- -------------------------
Perry W. Skjelbred $6,900 None None
----------------------------- -------------------- -------------------------------- -------------------------
Philip J. Tilearcio $6,900 None None
----------------------------- -------------------- -------------------------------- -------------------------
-------------------
*Edwin A. Heard resigned as a Director on March 10, 2000 and thus was only
compensated up until that date.
Townsend Brown II has an employment agreement (the "Employment
Agreement") with the Fund which took effect on May 4, 1994, continuing through
May 3, 2004. Pursuant to the Employment Agreement, Mr. Brown acts as President
and Chief Executive Officer of the Fund, and has such duties as are assigned to
him by the Fund. The Employment Agreement provides that Mr. Brown is not
required to spend any specific amount of time on the business of the Fund,
subject to the performance of his duties to the Fund.
The Employment Agreement provides Mr. Brown with an annual base salary,
payable in equal monthly installments at an annual rate of not less than
$40,000, subject to adjustments on each January 1 to reflect increases in the
Urban Consumer Price Index for the New York Metropolitan Area from the prior
January 1. The Employment Agreement may be terminated by the Fund or Mr. Brown
upon proper notice, pursuant to the terms of the Employment Agreement.
Under the Employment Agreement, in the event of a termination of Mr.
Brown by the Fund without "Cause," or by Mr. Brown for "Good Reason" (as each
such term is defined in the Employment Agreement), the Fund must pay Mr. Brown a
lump sum payment equal to his current salary for the remainder of the employment
term and an annualized 3% compound interest on such amount. In the event of a
termination of Mr. Brown's employment by reason of his death or disability, or
termination by the Fund for Cause or voluntary termination by Mr. Brown without
Good Reason, the Fund must pay Mr. Brown (or, in the case of his death, to his
estate), all accrued but unpaid salary as of the termination date. The
Employment Agreement provides that the Fund will make Mr. Brown whole for any
excise taxes imposed upon him under Section 4999 of the Internal Revenue Code
due to payments made to him in connection with his termination.
Security Ownership of Officers and Directors and Nominees
The following table sets forth information as of December 31, 2000,
with respect to beneficial ownership of the Fund's Common Stock, par value $.01
per share, by Directors individually and officers and Directors as a group.
---------------------------------------- ------------------------------- ------------------------------------
Name of Individual or Number of Number of Shares and Nature Percentage of Total Outstanding
Persons in Group of Beneficial Ownership Shares of Common Stock
---------------------------------------- ------------------------------- ------------------------------------
Townsend Brown, II 1,100 (1) (2)
---------------------------------------- ------------------------------- ------------------------------------
Geoffrey J. O'Connor 100 (1) (2)
---------------------------------------- ------------------------------- ------------------------------------
John H. Reilly 100 (1) (2)
---------------------------------------- ------------------------------- ------------------------------------
Perry W. Skjelbred 1,000 (1) (2)
---------------------------------------- ------------------------------- ------------------------------------
Philip J. Tilearcio 100 (1) (2)
---------------------------------------- ------------------------------- ------------------------------------
Robert D. Cummings -0- (2)
---------------------------------------- ------------------------------- ------------------------------------
All Officers and Directors of the Fund 2,400(of record)(1) (2)
as a group (six)
---------------------------------------- ------------------------------- ------------------------------------
(1) Sole voting and sole investment power.
(2) Amount does not exceed 1%.
Directors are elected by the affirmative vote of a plurality of the
shares present in person or by proxy at the Meeting.
The Board of Directors recommends that you vote For election of the Nominees as
Directors of the Fund.
PROPOSAL 2
THE APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
General Information
United States Trust Company of New York, the Fund's current investment
adviser, no longer wants to provide investment management services to the Fund.
The Fund believes that this decision is not related to any particular Fund
activity, including performance, but represents a business decision on the part
of United States Trust Company of New York to focus on different areas of the
financial services industry. The Directors seek shareholder approval of a new
investment advisory agreement with Rafferty Capital Markets, LLC (the "New
Adviser"). If approved, the Fund will terminate its current advisory agreement
with United States Trust Company of New York and execute a new investment
advisory agreement with the New Adviser.
In order to change investment advisors, a new investment advisory
agreement must be approved by shareholder vote. Importantly, at the Meeting,
shareholders are being asked to approve a proposed new advisory agreement
between the Fund and the New Adviser (the "Proposed Advisory Agreement"). The
Board of Directors, including a majority of the independent Directors, approved
the Proposed Advisory Agreement at a meeting held on February 6, 2001. A form of
the Proposed Advisory Agreement is attached as Appendix A. The Fund will not pay
any additional advisory fees under the Proposed Advisory Agreement. If approved,
the New Adviser will have the same duties and responsibilities and will receive
the same compensation under the Proposed Advisory Agreement as United States
Trust Company of New York does under the Fund's current investment advisory
agreement.
The Current Advisory Agreement
The Fund's current investment adviser is United States Trust Company of
New York (the "Current Adviser"), which has provided investment advisory and
administrative services to the Fund since the Fund's commencement of operations
on May 15, 1973. The current Advisory Agreement was approved by the Board of
Directors on March 14, 2000 and ratified by the shareholders of the Fund on May
9, 2000 ("Current Advisory Agreement").
Under the Current Advisory Agreement, the Current Adviser formulates a
continuing program for the management of the assets and resources of the Fund,
provides a full range of advice and recommendations, including recommendations
regarding specific securities to be purchased or sold by the Fund, and obtains
and evaluates statistical, economic and other research information with respect
to the economy, business, securities markets and types of securities, all in
conformity with the Fund's investment objectives and policies. In addition to
providing investment advisory services, the Current Adviser, at its own expense,
provides portfolio trading facilities and makes available to the Fund
appropriate executive, investment, clerical and other personnel as well as
computer and other services for the conduct of its investment business and the
administration of its affairs. The Current Adviser compensates all Fund
personnel and officers (other than the President) and those Fund Directors who
are officers or employees of the Current Adviser. The Current Adviser at its
expense also provides the Fund with office space and facilities and business
equipment and pays the cost of keeping the Fund's books and records.
For the services rendered and the expenses assumed by the Current
Adviser under the Current Advisory Agreement, the Fund pays the Current Adviser
an annual fee at the rate of 0.5% of the Fund's net asset value up to and
including $100,000,000, 0.4% of such net asset value over $100,000,000 up to and
including $200,000,000 and 0.3% of such asset value over $200,000,000. The
investment advisory fee is computed quarterly on the basis of the net asset
value as of last day of each quarter.
The Fund is responsible for the payment of all its expenses that are
not specifically assumed by the Current Adviser under the Current Advisory
Agreement. However, in the event in any year the sum of the Fund's expenses
(including the Current Adviser's investment advisory fee but excluding interest,
taxes and brokerage commissions relating to the purchase or sale of portfolio
securities, the Fund's expenses of future public offerings of its shares and
extraordinary expenses beyond the control of the Current Adviser) exceed 1 1/2%
of the average value of the Fund's net assets during such year up to
$30,000,000, plus 1% of the average value of the Fund's net assets during such
year in excess of $30,000,000, the Current Adviser is obligated to reimburse the
Fund promptly for such excess expenses. In addition, under the Current Advisory
Agreement, the Current Adviser is not responsible for any mistake in judgment or
in any event whatsoever except for lack of good faith or for any conduct on the
part of the Current Adviser constituting a breach of fiduciary duty involving
personal misconduct in respect of the Fund, so long as such judgment or other
event does not constitute willful malfeasance, bad faith, gross negligence in
the performance of the Current Adviser's duties or reckless disregard of its
obligations and duties under the current Advisory Agreement.
Under the Current Advisory Agreement, the Current Adviser is not liable
to the Fund for any error of judgment by the Current Adviser or any loss
sustained by the Fund except in the case of a breach of fiduciary duty with
respect to the receipt of compensation for services (in which case any award of
damages will be limited as provided in the 1940 Act) or of willful misfeasance,
bad faith, gross negligence or reckless disregard of duty.
The terms of the Proposed Advisory Agreement (including the investment advisory
fee) are identical to the terms of the Current Advisory Agreement, except that
the Proposed Advisory Agreement will continue in effect for two years after its
first approval by shareholders, and thereafter from year to year, subject to its
annual approval by the Board of Directors.
Description of the Proposed Advisory Agreement
A copy of the Proposed Advisory Agreement is attached to the Proxy
Statement as Appendix A. The description of the Proposed Advisory Agreement that
follows is qualified in its entirety by reference to Appendix A.
Under the Proposed Advisory Agreement, the New Adviser would formulate
a continuing program for the management of the assets and resources of the Fund,
provide a full range of advice and recommendations, including recommendations
regarding specific securities to be purchased or sold by the Fund, and obtain
and evaluate statistical, economic and other research information with respect
to the economy, business, securities markets and types of securities, all in
conformity with the Fund's investment objectives and policies. In addition to
providing investment advisory services, the New Adviser, at its own expense,
would provide portfolio trading facilities and make available to the Fund
appropriate executive, investment, clerical and other personnel as well as
computer and other services for the conduct of its investment business and the
administration of its affairs. The New Adviser would compensate all Fund
personnel and officers (other than the President) and those Fund Directors who
are officers or employees of the New Adviser. The New Adviser at its expense
would also provide the Fund with office space and facilities and business
equipment and pay the cost of keeping the Fund's books and records.
For the services rendered and the expenses assumed by the New Adviser
under the Proposed Advisory Agreement, the Fund would pay the New Adviser an
annual fee at the rate of 0.5% of the Fund's net asset value up to and including
$100,000,000, 0.4% of such net asset value over $100,000,000 up to and including
$200,000,000 and 0.3% of such asset value over $200,000,000. The investment
advisory fee would be computed quarterly on the basis of the net asset value as
of last day of each quarter.
The Fund would be responsible for the payment of all its expenses,
which are not specifically assumed by the Adviser under the Investment Advisory
Agreement. However, in the event in any year the sum of the Fund's expenses
(including the Adviser's investment advisory fee but excluding interest, taxes
and brokerage commissions relating to the purchase or sale of portfolio
securities, the Fund's expenses of future public offerings of its shares and
extraordinary expenses beyond the control of the Adviser) were to exceed 1 1/2%
of the average value of the Fund's net assets during such year up to
$30,000,000, plus 1% of the average value of the Fund's net assets during such
year in excess of $30,000,000, the New Adviser would be obligated to reimburse
the Fund promptly for such excess expenses. In addition, under the Proposed
Advisory Agreement, the New Adviser would not be responsible for any mistake in
judgment or in any event whatsoever except for lack of good faith or for any
conduct on the part of the New Adviser constituting a breach of fiduciary duty
involving personal misconduct in respect of the Fund, so long as such judgment
or other event does not constitute wilful malfeasance, bad faith, gross
negligence in the performance of the New Adviser's duties or reckless disregard
of its obligations and duties under the Proposed Advisory Agreement.
The Proposed Advisory Agreement will be dated April 11, 2001 (or the
next day after receipt of shareholder approval). The Proposed Advisory Agreement
would continue in effect for two years from April 11, 2001 and thereafter would
continue from year to year provided such continuance is specifically approved at
least annually (i) by the vote of a majority of the Fund's outstanding voting
securities, as defined in the Investment Company Act of 1940, entitled to vote
at the Annual Meeting or by its Board of Directors or (ii) by the vote of a
majority of the Directors of the Fund who are not parties to the contract or
"interested persons" (as defined in the Investment Company Act of 1940) of the
Fund, or the New Adviser. The Proposed Advisory Agreement is terminable on 60
days' written notice by any party thereto and will terminate automatically if
assigned.
The Proposed Advisory Agreement would reserve to the New Adviser all
rights to the use of the term "EIS" and the symbol used by the Fund, which
appears on the Notice of Annual Meeting. The Proposed Advisory Agreement further
provides that if the New Adviser (or an organization which has succeeded to the
business of the New Adviser) ceases to be the investment adviser to the Fund,
the Fund will cease to use in its name the term "EIS" or any name suggesting
that the Fund is or has been advised by the New Adviser, and the use of such
symbol.
The foregoing description of the Proposed Advisory Agreement does not
purport to be complete but contains a summary of the material provisions
thereof. The complete Proposed Advisory Agreement is attached as Appendix A.
Information Regarding the Proposed New Adviser
Rafferty Capital Markets LLC, the New Adviser, has its principal
offices at 1311 Mamaroneck Avenue, Suite 140, White Plains, New York 10036. The
New Adviser is a New York limited liability company and a wholly owned
subsidiary of the Rafferty Holdings, LLC, a holding company comprised of several
service-oriented businesses. As of December 31, 2000, the New Adviser had
approximately $150,000,000 in aggregate assets under management. The New Adviser
is also a registered broker-dealer providing mutual fund distribution services
to mutual fund companies around the country. The principals of the New Adviser
and their principal occupations are as follows:
Members of Rafferty Capital Markets, LLC and Rafferty Holdings, LLC
----------------------- -------------------------------- ---------------------------------------
Name Position with Rafferty Capital Position with Rafferty Holdings, LLC
Markets, LLC
----------------------- -------------------------------- ---------------------------------------
Thomas A. Mulrooney President & Manager N/A
----------------------- -------------------------------- ---------------------------------------
Stephen P. Sprague Secretary, Treasurer, and Chief Chief Financial Officer and Secretary
Financial Officer
----------------------- -------------------------------- ---------------------------------------
Lawrence C. Rafferty N/A Chief Executive Officer
----------------------- -------------------------------- ---------------------------------------
No officer or member of the Fund is an officer, employee or shareholder
of the New Adviser or owns securities or has any other material direct or
indirect interest in the New Adviser or any other person controlling, controlled
by or under common control with the New Adviser. The New Adviser renders
investment advisory and related services to clients other than the Fund,
including other investment companies, with similar or different investment
objectives and policies.
The Evaluation by the Board of Directors
At a meeting held on February 6, 2001, the Directors of the Fund
considered information with respect to whether the Proposed Advisory Agreement
with the New Adviser was in the best interests of the Fund and its shareholders.
As in the past, the Board of Directors of the Fund considered the nature and
quality of services expected to be provided by the New Adviser and information
regarding fees, expense ratios and performance. In evaluating the New Adviser's
ability to provide services to the Fund, the Directors considered the management
experience and other information as to the New Adviser's business organization,
financial resources and personnel. The Directors noted that the Proposed
Advisory Agreement is substantially the same as the Current Advisory Agreement
(except as noted above) and that the contractual advisory fee rate payable by
the Fund under the Proposed Advisory Agreement would be identical to that
payable under the Current Advisory Agreement. The Directors also considered that
the New Advisor has voluntarily agreed to waive 0.25% on the first $100,000,000
of assets of the Fund. (The voluntary waiver by the New Advisor was arranged
with Firstar Mutual Fund Services, LLC ("Firstar") so that Firstar can be
compensated for fund administration and compliance, fund accounting, custody,
and transfer agency services. Firstar will arrange separate service agreements
for each of the above-mentioned services with the Fund.) With respect to the
provisions of the Proposed Advisory Agreement regarding use of employees and
affiliates of the Adviser, the Directors considered that such provisions would
allow the Adviser to use the best talent within its organization to provide
services to the Fund. Finally, the Directors considered that the provision
permitting them to approve an amendment to the Proposed Advisory Agreement
unless shareholder approval was required under the 1940 Act was permitted by
current law and would provide the Fund with the flexibility to make non-material
changes to the agreement without the expense of a shareholder vote.
Based upon its review, the Board of Directors of the Fund concluded
that the Proposed Advisory Agreement with the New Adviser is reasonable, fair
and in the best interests of the Fund and its shareholders, and that the fees
provided in the Proposed Advisory Agreement are fair and reasonable in light of
the usual and customary charges made by others for services of the same nature
and quality.
Approval of the Proposed Advisory Agreement requires the affirmative
vote of the holders of (i) 67% of the Fund's voting securities, as defined in
the Investment Company Act of 1940, present and entitled to vote at the Annual
Meeting, if the holders of more than 50% of the Fund's outstanding voting
securities are present or represented by proxy at the Annual Meeting or (ii) a
majority of the Fund's outstanding voting securities, whichever is less.
The Board of Directors of the Fund recommends that you vote FOR
approval of the new investment advisory agreement.
PROPOSAL 3
TO RATIFY THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit Committee of the Board of Directors recommends, and the Board
of Directors of the Fund, including a majority of those Directors who are not
"interested persons" of the Fund, has selected PricewaterhouseCoopers LLP to act
as the independent certified public accountants of the Fund for the fiscal year
ending December 31, 2001. PricewaterhouseCoopers LLP has no material direct or
indirect financial interest in the Fund. Management expects that representatives
of PricewaterhouseCoopers LLP will be present at the Meeting with the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions.
PricewaterhouseCoopers LLP has served as auditors since April of 1995.
During the year ended December 31, 2000, PricewaterhouseCoopers LLP was engaged
by the Fund: (1) to examine its financial statements as of December 31, 2000;
(2) to assist and consult with the Fund in connection with the preparation of
the Fund's reports on Forms N-SAR and N-2 for filing with the Securities and
Exchange Commission; and (3) to assist and consult with the Fund on tax matters.
For audit services rendered in connection with the Fund,
PricewaterhouseCoopers LLP has been paid $19,751. Audit services included
auditing the Fund's year-end financial statements and review of financial
statements. PricewaterhouseCoopers LLP has not performed financial information
systems design and implementation services, or any other services, other than
audit services for the Fund.
The ratification of the selection of PricewaterhouseCoopers LLP as
auditors of the Fund requires the affirmative vote of the holders of (i) 67% of
the Fund's voting securities, as defined in the Investment Company Act of 1940,
present and entitled to vote at the Annual Meeting, if the holders of more than
50% of the Fund's outstanding voting securities are present or represented by
proxy at the Annual Meeting or (ii) a majority of the Fund's outstanding voting
securities, whichever is less.
The Board of Directors recommends that you vote FOR
ratification of PricewaterhouseCoopers LLP as the independent certified public
accountants of the Fund.
PROPOSAL 4
OTHER MATTERS
The Board of Directors knows of no other matters to be presented at the
Meeting other than those set forth in this Proxy Statement. If, however, any
other business should properly come before the Meeting, the persons named on the
accompanying proxy card will vote on such matters in accordance with their best
judgment.
Part 3 - More on Proxy Voting:
Record Date
Only shareholders of record of the Fund at the close of business on the
Record Date, February 21, 2001, are entitled to receive notice of the Meeting
and may vote at the Meeting. As of the close of business on February 21, 2001,
___________shares of Common Stock, par value $.01 per share, of the Fund were
issued and outstanding. Each share is entitled to one vote at the Meeting and
each fractional share is entitled to a fractional vote. To the knowledge of the
Fund, no person is the beneficial owner of more than 5% of the Fund's
outstanding shares. Karpus Management Inc. d/b/a Karpus Investment Management,
is the record owner of more than 5% of the Fund's shares, but the Fund
understands that it is not the beneficial owner of those shares.
Quorum
At least 51% of the Fund's shareholders must be present at the Meeting
in person or by proxy to constitute a quorum for the transaction of business by
the Fund. If a quorum of shareholders is not present, the persons names as
proxies will have the power to adjourn the Meeting. The Meeting shall be
reconvened without additional notice within a period not to exceed 60 days from
April 10, 2001, the date originally set for the Meeting. If a quorum is present,
but sufficient votes to approve a proposal are not received, the persons named
as proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of a majority of those shares voted at the Meeting. A shareholder vote may be
taken on one or more of the proposals in this Proxy Statement prior to any
adjournment if a quorum is present and sufficient votes have been received.
If a proxy represents a broker "non-vote" (that is, a proxy from a
broker or nominee indicating that such person has not received instructions from
the beneficial owner or other person entitled to vote shares on a particular
matter with respect to which the broker or nominee does not have discretionary
power) or if a proxy is marked with an abstention, the shares represented
thereby will be considered to be present at the Meeting for purposes of
determining the existence of a quorum for the transaction of business but will
not be voted. For this reason, abstentions and broker "non-votes" will have the
affect of a "no" vote for purposes of obtaining the requisite approval of some
of the proposals.
How Proxies Will Be Voted
If the accompanying proxy card is executed properly and returned,
shares represented by it will be voted at the Meeting in accordance with the
instructions on the proxy card. If no instructions are specified, shares will be
voted for proposed Items 1, 2 and 3. Even if the enclosed proxy card is executed
and returned, it may be revoked prior to its exercise by a signed writing
delivered at the Meeting or filed with the Secretary of the Fund. You may revoke
your proxy at any time prior to the meeting, by submitting a new proxy card or
by attending the Meeting and casting your vote in person.
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.
Proxy Solicitation
The cost of solicitation will be borne by the Fund. The solicitation is
to be made primarily by mail. The Fund's officers and investment adviser and
administrators may also solicit proxies by telephone, telegraph, facsimile or
personal interview. Any shareholder giving a proxy may revoke it at any time
before it is exercised by submitting to the Fund a written notice of revocation
or a subsequently executed proxy or by attending the shareholder meeting and
electing to vote in person.
If a proxy represents a broker "non-vote" (that is, a proxy from a
broker or nominee indicating that such person has not received instructions from
the beneficial owner or other person entitled to vote shares on a particular
matter with respect to which the broker or nominee does not have discretionary
power) or if a proxy is marked with an abstention, the shares represented
thereby will be considered to be present at the Meeting for purposes of
determining the existence of a quorum for the transaction of business but will
not be voted. For this reason, abstentions and broker "non-votes" will have the
affect of a "no" vote for purposes of obtaining the requisite approval of some
of the proposals.
IF YOU DO NOT EXPECT TO ATTEND THE MEETING,
PLEASE SIGN YOUR PROXY CARD PROMPTLY AND RETURN IT IN THE
ENCLOSED ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY.
NO POSTAGE IS NECESSARY.
PART 4 - ADDITIONAL INFORMATION
Name Change
The Board of Directors of the Fund has approved a proposal to change
the name of the Fund to EIS Fund, Ltd. Shareholder approval is not required for
this change. The change will become effective April 10, 2001.
Brokerage Commissions On Portfolio Transactions
In accordance with the Fund's investment policies, its investments are
in debt securities, which are generally traded through dealers acting for their
own account as principals and not as brokers; no brokerage commissions are
payable in such transactions. During the year ended December 31, 2000, all
portfolio transactions were with principals. During 2000, the Fund's portfolio
turnover rate was 15.87%.
Deadline for Shareholder Proposals
Proposals of shareholders intended to be presented at the Fund's Annual
Meeting of Shareholders to be held in April 2002, must be received by the Fund,
at its principal executive offices, by January 5, 2002, for inclusion in the
Fund's Proxy Statement and proxy card relating to that meeting.
Your vote is important. Whether or not you intend to attend the Meeting, please
fill in, date, sign and promptly return the enclosed proxy card in the postage
paid return envelope provided in order to avoid the additional expense of
further proxy solicitation and to ensure that a quorum will be present at the
meeting. Your proxy is revocable at any time before its use. You may also vote
by phone by calling 1-800-_________.
By Order of the Board of Directors,
Robert D. Cummings, Secretary
February 28, 2001
APPENDIX A
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT made this ______ day of ________________, 2001, by and
between EIS FUND, LTD., a New York Corporation ( the "Company"), and Rafferty
Capital Markets, LLC, a New York Limited Liability Company ( the "Adviser").
In consideration of the mutual promises hereinafter set forth, the
parties hereto agree as follows:
1. The Adviser shall act as investment adviser for and shall make
available trading desk facilities to the Company, subject to and upon the terms
and conditions set forth in this Agreement. The Adviser may, in its discretion,
provide such services through its own employees or the employees of one or more
affiliated companies that are qualified to act as investment adviser to the
Company under applicable law provided (i) that all persons, when providing
services hereunder, are functioning as part of an organized group of persons;
(ii) the use of an affiliate's employees does not result in a change in control
or management of the Adviser under the Investment Company Act of 1940 (the "1940
Act"); and (iii) the use of an affiliate's employees has been approved by the
Board of Directors of the Company.
2. In acting as investment adviser to the Company, the Adviser shall,
on a non-discretionary basis, (a) formulate a continuing program to provide
advice and recommendations for the management of the assets and resources of the
Company in a manner consistent with the Company's investment objectives,
policies and restrictions and the provisions of the 1940 Act and other
applicable laws, and in this connection make specific recommendations and
furnish advice to the Company regarding securities proposed for purchase and
sale by the Company and the portion of its assets to be held in cash or cash
equivalents in order to carry out such a program; (b) obtain and evaluate such
research information relating to the economy, industries, businesses, securities
markets and types of securities as it may deem necessary or useful in the
discharge of its obligations hereunder or as may be reasonably requested by the
Company; (c) generally take such other steps as the Adviser may deem necessary
or appropriate in assisting in the implementation by the Company of such
program, recommendations, advice and research information; and (d) make
available to the Company, upon reasonable notice, officers, or investment
personnel of the Adviser for consultation with the officers and directors of the
Company in connection with the Company's investment objectives and policies and
also furnish to or place at the disposal of the Company such of the information,
reports, evaluations, analyses and opinions formulated or obtained by the
Adviser in the discharge of its duties hereunder as the Company may, at any time
or from time to time, reasonably request or as the Adviser may deem helpful to
the Company.
3. In making available trading-desk facilities to the Company for the
placement of purchase and sale orders to carry out portfolio transactions of the
Company or for the clearance of transactions placed on behalf of the Company,
orders acted upon by the Adviser will be done on a non-discretionary basis, and
will be placed through such facilities consistent with the statements set forth
under "Brokerage Commissions on Portfolio Transactions" in the Company's proxy
statement dated April 5, 2000 (the "Proxy Statement"), receipt of a copy of
which is hereby acknowledged by the Adviser. In accordance with the Company's
investment policies, and as stated in the "Proxy Statement", the Company's
investments are in debt securities, which are generally traded through Dealers
acting for their own account, as principals and not as brokers; no brokerage
commissions are payable in such transactions.
4. The Adviser shall permit the Company to use the Adviser's corporate
address as the Company's address of record. From time to time, the Adviser
agrees to provide office space for the Company, as reasonably requested, for
such events as Company board meetings.
5. The Company shall pay or provide for the payment for its own account
of all its expenses not specifically assumed by the Adviser as hereinbefore
provided, which expenses shall include, without limitation, interest, taxes,
brokerage commissions, compensation and expenses of directors of the Company,
out-of-pocket expenses of officers of the Company in connection with any travel
or other activities carried out on behalf of the Company other than in its
office, legal and auditing expenses, fees and expenses of the custodian,
transfer agent or other institutional agents, all expenses in connection with
maintaining the registration of the Company under the 1940 Act and making
reports thereunder and registering and qualifying the shares of Common Stock of
the Company for issuance and sale under the Securities Act of 1933 and under
"Blue Sky" laws of the various states, costs of engraving or printing the
Company's stock certificates, the expenses of stockholders' meetings and of
printing and mailing proxy materials, reports and notices to its shareholders,
corporate filing fees, dues, fees and expenses relative to stock-exchange
listings and for membership in trade associations and costs of fidelity bonds
and other bonding or insurance coverage requisite to the operations of the
Company.
6. For the services rendered and expenses assumed by the Adviser for
the Company pursuant to this Agreement, the Company shall pay to the Adviser an
annual fee at the rate of (a) 0.5% of the Company's net assets up to and
including $100,000,000; plus (b) 0.4% of the Company's net assets over
$100,000,000 up to and including $200,000,000; plus (c) 0.3% of the Company's
net assets over and above $200,000,000 ( see attached Advisory Fee Schedule).
The Adviser agrees to a voluntary waiver of .25% (25 basis points on
the first $100,000,000 of the Company's assets). The voluntary waiver by the
Adviser has been arranged with Firstar Mutual Fund Services, LLC so that Firstar
can be compensated for fund administration and compliance, fund accounting,
custody and transfer agency services. Firstar will arrange separate service
agreements for each of the above-mentioned services with the Company.
Said fees shall be computed by the Company, with the assistance of the
Adviser and Firstar, quarterly on the basis of the net asset value as of the
last day of each quarter, provided, however, that for the initial quarterly
period and upon any termination of this Agreement before the end of any quarter
the amount of the annual fee which shall be accrued by the Company for payment
to the Adviser at the end of the initial quarter or date of termination shall be
prorated according to the proportion such period bears to the full quarterly
period. For the purpose of computing the annual fee, the Adviser and Firstar
shall determine the value of the Company's net assets on the same basis as such
net assets are determined for the Company's Annual report to the Securities and
Exchange Commission.
7. If, in any calendar year, the sum of the expenses to be paid by the
Company as provided in Section 5 hereof (other than interest, taxes and
brokerage commissions relating to the purchase or sale of portfolio securities,
expenses of any public offerings of the Company's Common Stock and extraordinary
expenses beyond the control of the Adviser) plus the Adviser's fee as provided
under Section 6 hereof shall exceed 11/2% of the average of the closing value of
the Company's net assets, computed each week on the last day on which the New
York Stock Exchange is open, during such year (or portion thereof, if
applicable, as to the years during which the Agreement is commenced and
terminated) up to and including $30,000,000 plus 1% of the average of the
closing values of the Company's net assets (computed on the same basis) over
$30,000,000, the Adviser shall promptly reimburse the Company for the amount of
such excess expenses prior to the publication of the Company's annual report to
shareholders in the next succeeding calendar year.
8. The Adviser shall at all times maintain a staff of officers and
other trained personnel in order to enable it to perform its obligations under
this Agreement. The Adviser agrees to use its best efforts to achieve the
Company's objectives in acting as the non-discretionary investment adviser and
to provide trading desk facilities and render administrative services to the
Company as provided in this Agreement; but nothing herein contained shall be
deemed to preclude the Adviser, at its expense and at no additional expense to
the Company, from employing, retaining or otherwise availing itself of the
services of other persons or organizations for the purpose of providing the
Adviser or the Company with such services, advice or assistance as the Adviser
may deem necessary, appropriate or convenient for the discharge of its
obligations hereunder or, in its opinion, otherwise helpful to the Company.
The services of the Adviser to the Company are not to be deemed to be
exclusive, and the Adviser shall be free to render investment-advisory,
management, administrative or other services to others, including, without
limitation, other investment companies with the same or different investment
objectives and policies and to engage in other activities without limitation. It
is understood and agreed that, to the extent permitted by law, officers or
directors of the Adviser may serve as officers or directors of the Company, and
that officers or directors of the Company may serve as officers or directors of
the Adviser, and that, to the extent permitted by law, the officers and
directors of the Adviser are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from serving as
partners, officers, or directors of any other firm or corporation, including
other investment companies with the same or different investment objectives and
policies.
9. The Adviser shall be held harmless by the Company and shall not be
subject to liability to the Company or to any stockholder of the Company for any
mistake in judgement or in any event whatsoever except for the lack of good
faith on the part of the Adviser or for any conduct on the part of the Adviser
constituting a breach of fiduciary duty involving personal misconduct in respect
of the Company, provided that nothing herein shall be deemed to protect or
purport to protect the Adviser against any liability to the Company or to any
stockholder of the Company to which the Adviser would otherwise be subject by
reasons of an act or practice by the Adviser constituting willful malfeasance,
bad faith, gross negligence in the performance of its duties, or reckless
disregard to its obligations and duties hereunder.
No provisions of this Agreement shall be deemed to protect any director
or officer of the Company against any such liability to which he might otherwise
be subject by reason of any willful malfeasance, bad faith or gross negligence
in the performance of his duties or the reckless disregard of the duties
involved in the conduct of his affairs.
10. This Agreement (unless terminated as hereinafter provided) shall
continue in effect until the second anniversary of the date hereof, and
thereafter from year to year; provided, however, that this Agreement shall be
specifically approved at least annually by (a) a majority of the Board of
Directors of the Company or the vote of a majority of the outstanding voting
securities (as such term is used in the 1940 Act and the rules and regulations
thereunder) of the Company and (b) the vote of a majority of such directors who
are not interested persons (as such term is used in the 1940 Act and the rules
and regulations thereunder) of any party of this Agreement, cast in person at a
meeting called for the purpose of voting on such approval. If approval of the
continuation of this Agreement is not obtained pursuant to the foregoing, this
Agreement shall expire by its terms twelve (12) months after the date of the
last approval.
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought, and no
amendment of this Agreement shall be effective until approved by a majority of
the Company's outstanding voting securities, if such vote is required by the
1940 Act, or by a majority of the Board of Directors of the Company who are not
parties to this Agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such amendment.
In each event that the stockholders of the Company are asked to approve
the continuation or amendment of this Agreement, the prior approval of a
majority of the Board of Directors who are not interested persons (as such term
is used in the 1940 Act and the rules and regulations thereunder) of any party
to this Agreement shall also be required.
11. This Agreement may be terminated at any time without the payment of
any penalty (a) by the Company, upon sixty (60) days' notice in writing to the
Adviser, provided such termination be authorized by resolution of the Board of
Directors of the Company or by a vote of the majority of the outstanding voting
securities ( as such term is used in the 1940 Act and the rules and regulations
thereunder) of the Company; or (b) by the Adviser upon sixty (60) days' notice
in writing to the Company. (An affiliate of the Adviser may assume the Adviser's
obligations under this Agreement provided that (i) the affiliate is qualified to
act as an investment adviser to the Company under applicable law; (ii) the
assumption will not result in a change of actual control or management of the
Adviser under the 1940 Act; and (iii) the assumption of the Adviser's
obligations by the affiliate is approved by the Board of Directors of the
Company.)
12. This Agreement shall automatically and immediately terminate in the
event of its assignment (as such term is used in the 1940 Act and the rules and
regulations thereunder).
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day and year first above written.
EIS Fund, LTD.
by: ______________________________________
Authorized Officer
Title: ___________________________________
Date: ____________________________________
ATTEST:
----------------------------------
Rafferty Capital Markets, LLC
by: ______________________________________
Authorized Officer
Title: ___________________________________
Date: ____________________________________
ATTEST:
----------------------------------
RAFFERTY CAPITAL MARKETS, LLC
ADVISORY FEE SCHEDULE
For The
EIS FUND, LTD
Advisory Fee:
------------
Adviser's Annual Fee is 50 basis points on the first $100,000,000 with a
voluntary waiver of .25% (25 basis points on the first $100,000,000 of
assets of the Fund). The voluntary waiver of .25% by Rafferty Capital Markets,
LLC has been arranged with Firstar Mutual Fund Services, LLC so that
Firstar can be compensated for fund administration and compliance, fund
accounting, custody, and transfer agency services. Firstar will arrange
separate service agreements for each of the above-mentioned services with the
EIS Fund.
Advisory Fee Schedule:
---------------------
.5% (50 bps) of the Company's net assets up to and including $100,000,000 (less
the voluntary waiver of 25 BPS) plus .4% (40 bps) of the Company's net assets
over $100,000,000 up to and including $200,000,000 plus .3% (30 bps) of
the Company's net assets over and above $200,000,000 plus any out-of-pocket
expenses
LOGO
Excelsior Income Shares, Inc.
114 West 47th Street
New York, New York 10036
MEETING: April 10, 2001 AT 11:00 AM
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned holder of shares of Excelsior Income Shares, Inc. (the "Fund")
hereby appoints Townsend Brown II, Robert D. Cummings and Robert R. Johnson,
attorneys with full powers of substitution and revocation, to represent the
undersigned and to vote on behalf of the undersigned all shares of the Fund that
the undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Fund to be held at 114 West 47th Street, Conference Room 14B, New York, New York
at the date and time indicated above and at any postponements or adjournments
thereof. The undersigned hereby acknowledges receipt of the enclosed Notice of
Annual Meeting and Proxy Statement and hereby instructs said attorneys and
proxies to vote said shares as indicated herein. Every properly signed proxy
will be voted in the manner specified thereon and, in the absence of
specification, will be treated as GRANTING authority to vote FOR all of the
above items. In their discretion, the proxies are authorized to vote on such
other business as may properly come before the Annual Meeting. A majority of the
proxies present and acting at the Annual Meeting in person or by substitute (or,
if only one shall be so present, then that one) shall have and may exercise all
of the power and authority of said attorneys or proxies hereunder. The
undersigned hereby revokes any proxy previously given.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [X]
KEEP THIS PORTION FOR YOUR RECORDS
--------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY IS VALID ONLY WHEN SIGNED AND DATED.
Vote on Directors
1. To elect Directors for a term of office to commence upon the completion
of the acquisition described in the accompanying proxy statement.
01) Townsend Brown, II, 02) Geoffrey J. O'Connor, 03) John H. Reilly,
04) Perry W. Skjelbred, 05)Philip J. Tilearcio
FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
|-| |-| |-|
To withhold authority to vote, mark "For All Except" and write the Nominee's
number on the line below:
-------------------------------
Vote on Proposals
2. To approve a new Investment Management Agreement between the Fund and
Rafferty Capital Markets, LLC.
FOR FOR ALL ABSTAIN
ALL EXCEPT ALL
|-| |-| |-|
3. To ratify the selection of PricewaterhouseCoopers LLP as the Fund's
independent public accountants for the fiscal year ending December 31,
2001.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. To transact such other business as may properly come before the Annual
Meeting or any adjournment(s) thereof.
FOR AGAINST ABSTAIN
|_| |_| |_|
PLEASE SIGN IN THE BOX BELOW
Please sign exactly as your name appears on this Proxy. If Joint owners, EITHER
may sign the Proxy. When signing as attorney, executor, administrator, trustee,
guardian or corporate officer, please give title.
X______________________________________________
Signature (PLEASE SIGN WITHIN BOX) (Date)
X______________________________________________
Signature (JOINT OWNERS) (Date)