As filed with the Securities and Exchange Commission on December 27, 1996
File No. 811-7529
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 1 [X]
ASIAN SMALL COMPANIES PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
24 Federal Street
Boston, Massachusetts 02110
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (617) 482-8260
Thomas Otis
24 Federal Street, Boston, Massachusetts 02110
(Name and Address of Agent for Service)
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EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant
to Section 8(b) of the Investment Company Act of 1940, as amended. However,
interests in the Registrant are not being registered under the Securities Act of
1933, as amended (the "1933 Act"), because such interests will be issued solely
in private placement transactions that do not involve any "public offering"
within the meaning of Section 4(2) of the 1933 Act. Investments in the
Registrant may be made only by U.S. and foreign investment companies, common or
commingled trust funds, organizations or trusts described in Section 401(a) or
501(a) of the Internal Revenue Code of 1986, as amended, or similar
organizations or entities that are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This Registration Statement does not constitute
an offer to sell, or the solicitation of an offer to buy, any interests in the
Registrant.
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Throughout this Registration Statement, information concerning Asian
Small Companies Portfolio (the "Portfolio") is incorporated herein by reference
from Amendment No. 65 to the Registration Statement of Eaton Vance Growth Trust
(File No. 2-22019 under the Securities Act of 1933, as amended (the "1933
Act"))(the "Feeder Funds Registration Statement"), which was filed
electronically with the Securities and Exchange Commission (the "Commission") on
December 20, 1996 (Accession No. 0000950156-96-000967). The Feeder Funds
Registration Statement contains the prospectus and statement of additional
information ("SAI") of EV Traditional Asian Small Companies Fund (the "Feeder
Fund"), which invests substantially all of its assets in the Portfolio.
PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
Paragraph 4 of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant
Asian Small Companies Portfolio (the "Portfolio") is a diversified,
open-end management investment company that was organized as a trust under the
laws of the State of New York on January 19, 1996. Interests in the Portfolio
are issued solely in private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Investments in the Portfolio may be made only by U.S. and foreign investment
companies, common or commingled trust funds, organizations or trusts described
in Sections 401(a) or 501(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), or similar organizations or entities that are "accredited
investors" within the meaning of Regulation D under the 1933 Act. This
Registration Statement does not constitute an offer to sell, or the solicitation
of an offer to buy, any "security" within the meaning of the 1933 Act.
Additional information about the investment policies of the Portfolio
appears in Part B. The Portfolio is not intended to be a complete investment
program, and a prospective investor should take into account its objectives and
other investments when considering the purchase of an interest in the Portfolio.
The Portfolio cannot assure achievement of its investment objective. Asian
Region investments may offer higher potential for gains and losses than
investments in the United States.
Registrant incorporates by reference information concerning the
Portfolio's investment objective and investment practices and the risk factors
associated with investments in the Portfolio from the "Investment Opportunities
in the Asian Region", "The Fund's Investment Objective" and "Investment Policies
and Risks" in the Feeder Fund's prospectus (the "Feeder Fund Prospectus"). The
Registrant incorporates by reference further information about the risk factors
associated with investments in the Portfolio from "Appendix A" in Part I of the
Feeder Fund's SAI (the "Feeder Fund SAI").
Item 5. Management of the Portfolio
Registrant incorporates by reference information concerning the
Portfolio's management from "Management of the Fund and the Portfolio" in the
Feeder Fund Prospectus.
Item 6. Capital Stock and Other Securities
An interest in the Portfolio has no preemptive or conversion rights and
is fully paid and nonassessable by the Portfolio, except as described in the
Feeder Fund Prospectus. Registrant incorporates by reference information
concerning the Portfolio's capital stock from "Organization of the Fund and the
Portfolio" in the Feed Fund Prospectus.
As of November 29, 1996, Eaton Vance Management controlled the
Portfolio by virtue of owning approximately 99.97% of the outstanding voting
interests in the Portfolio.
The Portfolio's net asset value is determined each day on which the New
York Stock Exchange (the "Exchange") is open for trading ("Portfolio Business
Day") and on such other days as are deemed necessary in order to comply with
Rule 22c-1 under the 1940 Act. This determination is made each Portfolio
Business Day as of the close of regular trading on the Exchange (normally 4:00
p.m., New York time) (the "Portfolio Valuation Time").
Each investor in the Portfolio may add to or reduce its investment in
the Portfolio on each Portfolio Business Day as of the Portfolio Valuation Time.
The value of each investor's interest in the Portfolio will be determined by
multiplying the net asset value of the Portfolio by the percentage, determined
on the prior Portfolio Business Day, which represents that investor's share of
the aggregate interests in the Portfolio on such prior day. Any additions or
withdrawals for the current Portfolio Business Day will then be recorded. Each
investor's percentage of the aggregate interests in the Portfolio will then be
recomputed as the percentage equal to a fraction (i) the numerator of which is
the value of such investor's investment in the Portfolio as of the Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, the amount of any additions to or withdrawals from the investor's
investment in the Portfolio on the current Portfolio Business Day, and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
Portfolio Valuation Time on the prior Portfolio Business Day plus or minus, as
the case may be, the amount of the net additions to or withdrawals from the
aggregate investments in the Portfolio on the current Portfolio Business Day by
all investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio for
the current Portfolio Business Day.
The Portfolio will allocate at least annually among its investors its
net investment income, net realized capital gains, and any other items of
income, gain, loss, deduction or credit. The Portfolio's net investment income
consists of all income accrued on the Portfolio's assets, less all actual and
accrued expenses of the Portfolio, determined in accordance with generally
accepted accounting principals.
Under the anticipated method of operation of the Portfolio, the
Portfolio will not be subject to any federal income tax. (See Part B, Item 20.)
However, each investor in the Portfolio will take into account its allocable
share of the Portfolio's ordinary income and capital gain in determining its
federal income tax liability. The determination of each such share will be made
in accordance with the governing instruments of the Portfolio, which are
intended to comply with the requirements of the Code and regulations promulgated
thereunder.
It is intended that the Portfolio's assets, income and distributions
will be managed in such a way that an investor in the Portfolio that seeks to
qualify as a regulated investment company under the Code will be able to satisfy
the requirements for such qualification.
Item 7. Purchase of Interests in the Portfolio
Interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. See "General Description of Registrant" above.
Registrant incorporates by reference information concerning the
computation of the Portfolio's net asset value and valuation of Portfolio assets
from "Valuing Fund Shares" in the Feeder Fund Prospectus. For further
information regarding the valuation of the Portfolio's assets, see Part B, Item
19.
There is no minimum initial or subsequent investment in the Portfolio.
The Portfolio reserves the right to cease accepting investments at any time or
to reject any investment order.
The placement agent for the Portfolio is Eaton Vance Distributors, Inc.
("EVD"), which is a wholly-owned subsidiary of Eaton Vance Management. The
principal business address of EVD is 24 Federal Street, Boston, Massachusetts
02210. EVD receives no compensation for serving as the placement agent for the
Portfolio.
Item 8. Redemption or Decrease of Interest
An investor in the Portfolio may withdraw all of (redeem) or any
portion of (decrease) its interest in the Portfolio if a withdrawal request in
proper form is furnished by the investor to the Portfolio. All withdrawals will
be effected as of the next Portfolio Valuation Time. The proceeds of a
withdrawal will be paid by the Portfolio normally on the Portfolio Business Day
the withdrawal is effected, but in any event within seven days. The Portfolio
reserves the right to pay the proceeds of a withdrawal (whether a redemption or
decrease) by a distribution in kind of portfolio securities (instead of cash).
The securities so distributed would be valued at the same amount as that
assigned to them in calculating the net asset value for the interest (whether
complete or partial) being withdrawn. If an investor received a distribution in
kind upon such withdrawal, the investor could incur brokerage and other charges
in converting the securities to cash. The Portfolio has filed with the
Commission a notification of election on Form N-18F-1 committing to pay in cash
all requests for withdrawals by any investor, limited in amount with respect to
such investor during any 90-day period to the lesser of (a) $250,000 or (b) 1%
of the net asset value of the Portfolio at the beginning of such period.
Investments in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any
withdrawal may be suspended or the payment of the withdrawal proceeds postponed
during any period in which the Exchange is closed (other than weekends or
holidays) or trading on the Exchange is restricted or, to the extent otherwise
permitted by the 1940 Act, if an emergency exists, or during any other period
permitted by order of the Commission for the protection or investors.
Item 9. Pending Legal Proceedings
Not applicable.
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PART B
Item 10. Cover Page
Not applicable.
Item 11. Table of Contents
Page
General Information and History.............................. B-1
Investment Objectives and Policies........................... B-1
Management of the Portfolio.................................. B-1
Control Persons and Principal Holder of Securities........... B-2
Investment Advisory and Other Services....................... B-2
Brokerage Allocation and Other Practices..................... B-2
Capital Stock and Other Securities Purchase, Redemption and
Pricing of Securities.................................... B-4
Tax Status................................................... B-4
Underwriters................................................. B-6
Calculations of Performance Data............................. B-6
Financial Statements......................................... B-6
Item 12. General Information and History
The Portfolio has no prior history.
Item 13. Investment Objectives and Policies
Part A contains additional information about the investment objective
and policies of Asian Small Companies Portfolio. This Part B should be read in
conjunction with Part A. Capitalized terms used in this Part B and not otherwise
defined have the meanings given them in Part A.
Registrant incorporates by reference additional information concerning
the investment policies of the Portfolio as well as information concerning the
investment restrictions of the Portfolio from "Additional Information About
Investment Policies", "Appendix A" and "Investment Restrictions" in Part I of
the Feeder Fund SAI.
Item 14. Management of the Portfolio
Registrant incorporates by reference information concerning the
management of the Portfolio from "Trustees and Officers" in Part I of the Feeder
Fund SAI and "Fees and Expenses" in Part II of the Feeder Fund SAI.
Item 15. Control Persons and Principal Holder of Securities
As of November 29, 1996, Eaton Vance Management controlled the
Portfolio by virtue of owning approximately 99.97% of the outstanding voting
interests in the Portfolio.
Item 16. Investment Advisory and Other Services
Registrant incorporates by reference information concerning the
investment advisory and other services provided for or on behalf of the
Portfolio from "Management of the Fund", "Custodian" and "Independent Certified
Public Accountants" in Part I of the Feeder Fund SAI and "Fees and Expenses" in
Part II of the Feeder Fund SAI.
Item 17. Brokerage Allocation and Other Practices
Registrant incorporates by reference information concerning the
brokerage practices of the Portfolio from "Portfolio Security Transactions" in
Part I of the Feeder Fund SAI and "Fees and Expenses" in Part II of the Feeder
Fund SAI.
Item 18. Capital Stock and Other Securities
Under the Portfolio's Declaration of Trust, the Trustees are authorized
to issue interests in the Portfolio. Investors are entitled to participate pro
rata in distributions of taxable income, loss, gain and credit of the Portfolio.
Upon dissolution of the Portfolio, the Trustees shall liquidate the assets of
the Portfolio and apply and distribute the proceeds thereof as follows: (a)
first, to the payment of all debts and obligations of the Portfolio to third
parties including, without limitation, the retirement of outstanding debt,
including any debt owed to holders of record of interests in the Portfolio
("Holders") or their affiliates, and the expenses of liquidation, and to the
setting up of any reserves for contingencies which may be necessary; and (b)
second, then in accordance with the Holders' positive Book Capital Account
balances after adjusting Book Capital Accounts for certain allocations provided
in the Declaration of Trust and in accordance with the requirements described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(b) (2). Notwithstanding the
foregoing, if the Trustees shall determine that an immediate sale of part or all
of the assets of the Portfolio would cause undue loss to the Holders, the
Trustees, in order to avoid such loss, may, after having given notification to
all the Holders, to the extent not then prohibited by the law of any
jurisdiction in which the Portfolio is then formed or qualified and applicable
in the circumstances, either defer liquidation of and withhold from distribution
for a reasonable time any assets of the Portfolio except those necessary to
satisfy the Portfolio's debts and obligations or distribute the Portfolio's
assets to the Holders in liquidation. Interests in the Portfolio have no
preference, preemptive, conversion or similar rights and are fully paid and
nonassessable, except as set forth below. Interests in the Portfolio may not be
transferred. Certificates representing an investor's interest in the Portfolio
are issued only upon the written request of a Holder.
Each Holder is entitled to vote in proportion to the amount of its
interest in the Portfolio. Holders do not have cumulative voting rights. The
Portfolio is not required and has no current intention to hold annual meetings
of Holders but the Portfolio will hold meetings of Holders when in the judgment
of the Portfolio's Trustees it is necessary or desirable to submit matters to a
vote of Holders at a meeting. Any action which may be taken by Holders may be
taken without a meeting if Holders holding more than 50% of all interests
entitled to vote (or such larger proportion thereof as shall be required by any
express provision of the Declaration of Trust of the Portfolio) consent to the
action in writing and the consents are filed with the records of meetings of
Holders.
The Portfolio's Declaration of Trust may be amended by vote of Holders
of more than 50% of all interests in the Portfolio at any meeting of Holders or
by an instrument in writing without a meeting, executed by a majority of the
Trustees and consented to by the Holders of more than 50% of all interests. The
Trustees may also amend the Declaration of Trust (without the vote or consent of
Holders) to change the Portfolio's name or the state or other jurisdiction whose
law shall be the governing law, to supply any omission or to cure, correct or
supplement any ambiguous, defective or inconsistent provision, to conform the
Declaration of Trust to applicable federal law or regulations or to the
requirements of the Code, or to change, modify or rescind any provision,
provided that such change, modification or rescission is determined by the
Trustees to be necessary or appropriate and not to have a materially adverse
effect on the financial interests of the Holders. No amendment of the
Declaration of Trust which would change any rights with respect to any Holder's
interest in the Portfolio by reducing the amount payable thereon upon
liquidation of the Portfolio may be made, except with the vote or consent of the
Holders of two-thirds of all interests. References in the Declaration of Trust
and in Part A or this Part B to a specified percentage of, or fraction of,
interests in the Portfolio, means Holders whose combined Book Capital Account
balances represent such specified percentage or fraction of the combined Book
Capital Account balance of all, or a specified group of, Holders.
The Portfolio may merge or consolidate with any other corporation,
association, trust or other organization or may sell or exchange all or
substantially all of its assets upon such terms and conditions and for such
consideration when and as authorized by the Holders of (a) 67% or more of the
interests in the Portfolio present or represented at the meeting of Holders, if
Holders of more than 50% of all interests are present or represented by proxy,
or (b) more than 50% of all interests, whichever is less. The Portfolio may be
terminated (i) by the affirmative vote of Holders of not less than two-thirds of
all interests at any meeting of Holders or by an instrument in writing without a
meeting, executed by a majority of the Trustees and consented to by Holders of
not less than two-thirds of all interests, or (ii) by the Trustees by written
notice to the Holders.
In accordance with the Declaration of Trust, there normally will be no
meetings of the investors for the purpose of electing Trustees unless and until
such time as less than a majority of the Trustees holding office have been
elected by investors. In such an event, the Trustees of the Portfolio then in
office will call an investors' meeting for the election of Trustees. Except for
the foregoing circumstances, and unless removed by action of the investors in
accordance with the Portfolio's Declaration of Trust, the Trustees shall
continue to hold office and may appoint successor Trustees.
The Declaration of Trust provides that no person shall serve as a
Trustee if investors holding two-thirds of the outstanding interests have
removed him from that office either by a written declaration or by votes cast at
a meeting called for that purpose. The Declaration of Trust further provides
that under certain circumstances, the investors may call a meeting to remove a
Trustee and that the Portfolio is required to provide assistance in
communicating with investors about such a meeting.
The Portfolio is organized as a trust under the laws of the State of
New York. Investors in the Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the
Portfolio in the event that there is imposed upon an investor a greater portion
of the liabilities and obligations of the Portfolio than its proportionate
interest in the Portfolio. The Portfolio intends to maintain fidelity and errors
and omissions insurance deemed adequate by the Trustees. Thus, the risk of an
investor incurring financial loss on account of investor liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio itself
is unable to meet its obligations.
The Declaration of Trust further provides that obligations of the
Portfolio are not binding upon the Trustees individually but only upon the
property of the Portfolio and that the Trustees will not be liable for any
action or failure to act, but nothing in the Declaration of Trust protects a
Trustee against any liability to which he would otherwise be subject by reason
of willful misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office.
Item 19. Purchase, Redemption and Pricing of Securities
Interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. See "Purchase of Interests in the Portfolio" and
"Redemption or Decrease of Interest" in Part A.
Registrant incorporates by reference information concerning valuation
of the Portfolio's assets from "Determination of Net Asset Value" in Part I of
the Feeder Fund SAI.
Item 20. Tax Status
The Portfolio has been advised by tax counsel that, provided the
Portfolio is operated at all times during its existence in accordance with
certain organizational and operational documents, the Portfolio should be
classified as a partnership under the Code, and it should not be a "publicly
traded partnership" within the meaning of Section 7704 of the Code.
Consequently, the Portfolio does not expect that it will be required to pay any
federal income tax, and each investor in the Portfolio will be required to take
into account in determining its federal income tax liability its share of the
Portfolio's income, gains, losses, deductions and tax preference items.
Under Subchapter K of the Code, a partnership is considered to be
either an aggregate of its members or a separate entity, depending upon the
factual and legal context in which the question arises. Under the aggregate
approach, each partner is treated as an owner of an undivided interest in
partnership assets and operations. Under the entity approach, the partnership is
treated as a separate entity in which partners have no direct interest in
partnership assets and operations. The Portfolio has been advised by tax counsel
that, in the case of an investor in the Portfolio that seeks to qualify as a
regulated investment company (a "RIC") under the Code, the aggregate approach
should apply, and each such investor should accordingly be deemed to own a
proportionate share of each of the assets of the Portfolio and to be entitled to
the gross income of the Portfolio attributable to that share for purposes of all
requirements of Sections 851(b) and 852(b)(5) of the Code. Further, the
Portfolio has been advised by tax counsel that each investor in the Portfolio
that seeks to qualify as a RIC should be deemed to hold its proportionate share
of the Portfolio's assets for the period the Portfolio has held the assets or
for the period the investor has been a partner, for purposes of Subchapter K of
the Code, in the Portfolio, whichever is shorter. Investors should consult their
tax advisers regarding whether the entity or the aggregate approach applies to
their investment in the Portfolio in light of their particular tax status and
any special tax rules applicable to them.
In order to enable a Holder that is otherwise eligible to qualify as a
RIC, the Portfolio intends to satisfy the requirements of Subchapter M of the
Code relating to sources of income and diversification of assets as if they were
applicable to the Portfolio and to allocate and permit withdrawals in a manner
that will enable a Holder which is a RIC to comply with those requirements. The
Portfolio will allocate at least annually to each Holder it's distributive share
of the Portfolio's net investment income, net realized capital gains, and any
other items of income, gain, loss, deduction or credit in a manner intended to
comply with the Code and applicable Treasury regulations. Tax counsel has
advised the Portfolio that the Portfolio's allocations of taxable income and
loss should have "economic effect" under applicable Treasury regulations.
To the extent the cash proceeds of any withdrawal (or, under certain
circumstances, such proceeds plus the value of any marketable securities
distributed to an investor) ("liquid proceeds") exceed a Holder's adjusted basis
of his interest in the Portfolio, the Holder will generally realize a gain for
federal income tax purposes. If, upon a complete withdrawal (redemption of the
entire interest), the Holder's adjusted basis of his interest exceeds the liquid
proceeds of such withdrawal, the Holder will generally realize a loss for
federal income tax purposes. The tax consequences of a withdrawal of property
(instead of or in addition to liquid proceeds) will be different and will depend
on the specific factual circumstances. A Holder's adjusted basis of an interest
in the Portfolio will generally be the aggregate prices paid therefor (including
the adjusted basis of contributed property and any gain recognized on such
contribution), increased by the amounts of the Holder's distributive share of
items of income (including interest income exempt from federal income tax) and
realized net gain of the Portfolio, and reduced, but not below zero, by (i) the
amounts of the Holder's distributive share of items of Portfolio loss, and (ii)
the amount of any cash distributions (including distributions of interest income
exempt from federal income tax and cash distributions on withdrawals from the
Portfolio) and the basis to the Holder of any property received by such Holder
other than in liquidation, and (iii) the Holder's distributive share of the
Portfolio's nondeductible expenditures not properly chargeable to capital
account. Increases or decreases in a Holder's share of the Portfolio's
liabilities may also result in corresponding increases or decreases in such
adjusted basis. Distributions of liquid proceeds in excess of a Holder's
adjusted basis in its interest in the Portfolio immediately prior thereto
generally will result in the recognition of gain to the Holder in the amount of
such excess.
Foreign exchange gains and losses realized by the Portfolio and
allocated to the investors in connection with the Portfolio's investments in
foreign securities and certain foreign currency related options, futures or
forward contracts or foreign currency may be treated as ordinary income and
losses under special tax rules. Certain options, futures or forward contracts of
the Portfolio may be required to be marked to market (i.e., treated as if closed
out) on the last day of each taxable year, and any gain or loss realized with
respect to these contracts may be required to be treated as 60% long-term and
40% short-term gain or loss. Positions of the Portfolio in foreign securities
and offsetting options, futures or forward contracts may be treated as
"straddles" and be subject to other special rules that may affect the amount,
timing and character of the Portfolio's income, gain or loss and its allocations
among investors. Certain uses of foreign currency and foreign currency
derivatives such as options, futures, forward contracts and swaps and investment
by the Portfolio in the stock of certain "passive foreign investment companies"
may be limited or a tax election may be made, if available, in order to enable
an investor that is a RIC to preserve its qualification as a RIC or to avoid
imposition of a tax on such an investor.
The Portfolio anticipates that it will be subject to foreign taxes on
its income (including, in some cases, capital gains) from foreign securities.
Tax conventions between certain countries and the U.S. may reduce or eliminate
such taxes.
The Portfolio will allocate at least annually to its investors their
respective distributive shares of any net investment income and net capital
gains which have been recognized for federal income tax purposes (including
unrealized gains at the end of the Portfolio's fiscal year on certain options
and futures transactions that are required to be marked-to-market).
An entity that is treated as a partnership under the Code, such as the
Portfolio, is generally treated as a partnership under state and local tax laws,
but certain states may have different entity classification criteria and may
therefore reach a different conclusion. Entities that are classified as
partnerships are not treated as separate taxable entities under most state and
local tax laws, and the income of a partnership is considered to be income of
partners both in timing and in character. The laws of the various states and
local taxing authorities vary with respect to the status of a partnership
interest under state and local tax laws, and each holder of an interest in the
Portfolio is advised to consult his own tax adviser.
The foregoing discussion does not address the special tax rules
applicable to certain classes of investors, such as tax-exempt entities,
insurance companies and financial institutions. Investors should consult their
own tax advisers with respect to special tax rules that may apply in their
particular situations, as well as the state, local or foreign tax consequences
of investing in the Portfolio.
Item 21. Underwriters
The placement agent for the Portfolio is Eaton Vance Distributors,
Inc., which is a wholly-owned subsidiary of Eaton Vance Management and which
receives no compensation for serving in this capacity. U.S. and foreign
investment companies, common and commingled trust funds and similar
organizations and entities may continuously invest in the Portfolio.
Item 22. Calculation of Performance Data
Not applicable.
Item 23. Financial Statements
The following financial statements included herein have been included
in reliance upon the report of Deloitte and Touche LLP, independent certified
public accountants, as experts in accounting and auditing.
Statement of Assets and Liabilities as of August 31, 1996.
Independent Auditors' Report.
<PAGE>
FINANCIAL STATEMENTS
Asian Small Companies Portfolio
Statement of Assets and Liabilities
August 31, 1996
Assets:
Cash......................................................... $100,030
Deferred organization expenses............................... 7,000
Total assets....................................... $107,030
Liabilities:
Accrued organization expenses................................ 7,000
Net assets................................................... $100,030
NOTES:
(1) Organization expenses are being deferred and will be amortized on a
straight-line basis over a period not to exceed five years, commencing on the
effective date of the Portfolio's initial offering of its interests. The amount
paid by the Portfolio on any withdrawal by the holders of the Initial Interests
of any of the respective Initial Interests will be reduced by a portion of any
unamortized organization expenses, determined by the proportion of the amount of
the Initial Interests withdrawn to the Initial Interests then outstanding.
(2) At 4:00 p.m., New York City time, on each business day of the Portfolio, the
value of an investor's interest in the Portfolio is equal to the product of (1)
the aggregate net asset value of the Portfolio multiplied by (ii) the percentage
representing that investor's share of the aggregate interest in the Portfolio
effective for that day.
(3) Asian Small Companies Portfolio (the "Portfolio") was organized as a New
York Trust on January 19, 1996 and has been inactive since that date, except for
matters relating to its organization and registration as an investment company
under the Investment Company Act of 1940 and the sale of interests therein at
the purchase price of $100,000 to Eaton Vance Management, $10 to Boston
Management & Research, $10 to EV Marathon Asian Small Companies Fund and $10 to
EV Traditional Asian Small Companies Fund (the "Initial Interests").
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of Asian Small Companies Portfolio:
We have audited the accompanying statement of assets and liabilities of
Asian Small Companies Portfolio (a New York Trust) as of August 31, 1996. This
financial statement is the responsibility of the Trust's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such statement of assets and liabilities presents
fairly, in all material respects, the financial position of Asian Small
Companies Portfolio as of August 31, 1996, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
September 5, 1996
<PAGE>
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements called for by this Item are included
in Part B and listed in Item 23 hereof.
(b) Exhibits
1. Declaration of Trust dated January 19, 1996 filed electronically as Exhibit
No. 1 to the Registrant's original Registration Statement filed with the
Commission on February 5, 1996 (Accession No. 0001003291-96-000015) and
incorporated herein by reference (the "Original Registration Statement").
2. By-Laws of the Registrant as adopted January 19, 1996 filed electronically
as Exhibit No. 2 to the Original Registration Statement and incorporated
herein by reference.
5. Investment Advisory Agreement between the Registrant and Lloyd George
Investment Management (Bermuda) Limited dated February 21, 1996 filed
herewith.
6. Placement Agent Agreement with Eaton Vance Distributors, Inc. dated
November 1, 1996 a substantially similar copy of which was filed
electronically as Exhibit No. 6 to Amendment No. 3 to the Registration
Statement of Growth Portfolio, File No. 811-8558, filed with the Commission
on December 27, 1996 (Accession No. 0001003291-96-000067) and is
incorporated herein by reference. (The document differs only with respect
to the name of the executing parties.)
7. The Securities and Exchange Commission has granted the Registrant an
exemptive order that permits the Registrant to enter into deferred
compensation arrangements with its independent Trustees. See In the Matter
of Capital Exchange Fund, Inc., Release No. IC-20671 (November 1, 1994).
8. Custodian Agreement with Investors Bank & Trust Company dated February 21,
1996 filed herewith.
9. Administration Agreement between the Registrant and Eaton Vance Management
dated February 21, 1996 filed herewith.
13. Investment representation letter of Eaton Vance Management dated January
26, 1996 filed herewith filed electronically as Exhibit No. 13 to the
Original Registration Statement and incorporated herein by reference.
Item 25. Persons Controlled by or under Common Control with Registrant
Not applicable.
Item 26. Number of Holders of Securities
(1) (2)
Title of Class As of November 29, 1996
Interests Number of Record Holders
4
Item 27. Indemnification
Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed electronically as Exhibit 1(a) to the Original Registration
Statement and incorporated herein by reference.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser
Lloyd George Investment Management (Bermuda) Limited ("Lloyd George")
serves as investment adviser to the Portfolio. Lloyd George, a corporation
organized under the laws of Bermuda, is a wholly-owned subsidiary of Lloyd
George Management (B.V.I.) Limited ("LGM"). LGM and its subsidiaries act as
investment adviser to various individual and institutional clients.
To the knowledge of the Portfolio, none of the directors or officers of
Lloyd George, except as set forth on its Form ADV as filed with the Securities
and Exchange Commission, is engaged in any other business, profession, vocation
or employment of a substantial nature, except that certain directors and
officers also hold various positions with and engage in business for affiliates
of Lloyd George.
Item 29. Principal Underwriters
Not applicable.
Item 30. Location of Accounts and Records
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and at the following locations:
Name Address
Eaton Vance Distributors, Inc. 24 Federal Street
(placement agent) Boston, MA 02110
Lloyd George Investment 3808 One Exchange Square
Management (Bermuda) Limited Central, Hong Kong
(investment adviser)
Eaton Vance Management 24 Federal Street
(administrator) Boston, MA 02110
Investors Bank & Trust Company 89 South Street
(custodian) Boston, MA 02110
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment No. 1 to the Registrant's Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Boston and Commonwealth of Massachusetts on the
20th day of December, 1996.
ASIAN SMALL COMPANIES PORTFOLIO
By: /s/ James L. O'Connor
James L. O'Connor, Treasurer
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
5. Investment Advisory Agreement between the Registrant
and Lloyd George Investment Management
(Bermuda) Limited dated February 21, 1996
8. Custodian Agreement with Investors Bank & Trust
Company dated February 21, 1996
9. Administration Agreement between the Registrant and
Eaton Vance Management dated February 21, 1996
ASIAN SMALL COMPANIES PORTFOLIO
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 21st day of February, 1996 between Asian Small
Companies Portfolio, a New York trust (the "Trust"), and Lloyd George Investment
Management (Bermuda) Limited, a Bermuda corporation (the "Adviser").
1. Duties of the Adviser. The Trust hereby employs the Adviser to act
as investment adviser for and to manage the investment and reinvestment of the
assets of the Trust, subject to the supervision of the Trustees of the Trust,
for the period and on the terms set forth in this Agreement.
The Adviser hereby accepts such employment, and undertakes to afford to
the Trust the advice and assistance of the Adviser's organization in the choice
of investments and in the purchase and sale of securities for the Trust and to
furnish for the use of the Trust office space and all necessary office
facilities, equipment and personnel for servicing the investments of the Trust
and to pay the salaries and fees of all officers and Trustees of the Trust who
are members of the Adviser's organization and all personnel of the Adviser
performing services relating to research and investment activities. The Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as otherwise expressly provided or authorized, have no authority
to act for or represent the Trust in any way or otherwise be deemed an agent of
the Trust.
The Adviser shall provide the Trust with such investment management and
supervision as the Trust may from time to time consider necessary for the proper
supervision of the Trust's investments. As investment adviser to the Trust, the
Adviser shall furnish continuously an investment program and shall determine
from time to time what securities shall be purchased, sold or exchanged and what
portion of the Trust's assets shall be held uninvested, subject always to the
applicable restrictions of the Declaration of Trust, By-Laws and registration
statement of the Trust under the Investment Company Act of 1940, all as from
time to time amended. Should the Trustees of the Trust at any time, however,
make any specific determination as to investment policy for the Trust and notify
the Adviser thereof in writing, the Adviser shall be bound by such determination
for the period, if any, specified in such notice or until similarly notified
that such determination has been revoked. The Adviser shall take, on behalf of
the Trust, all actions which it deems necessary or desirable to implement the
investment policies of the Trust.
The Adviser shall place all orders for the purchase or sale of
portfolio securities for the account of the Trust with brokers or dealers or
banks or firms or other persons selected by the Adviser, and to that end the
Adviser is authorized as the agent of the Trust to give instructions to the
custodian of the Trust as to deliveries of securities and payment of cash for
the account of the Trust. In connection with the selection of such brokers or
dealers or banks or firms or other persons and the placing of such orders, the
Adviser shall use its best efforts to seek to execute security transactions at
prices which are advantageous to the Trust and (when a disclosed commission is
being charged) at reasonably competitive commission rates. In selecting brokers
or dealers qualified to execute a particular transaction, brokers or dealers may
be selected who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) to the Adviser
and the Adviser is expressly authorized to pay any broker or dealer who provides
such brokerage and research services a commission for executing a security
transaction which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Adviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer, viewed in terms of either that particular transaction or the
overall responsibilities which the Adviser and its affiliates have with respect
to accounts over which they exercise investment discretion. Subject to the
requirement set forth in the second sentence of this paragraph, the Adviser is
authorized to consider, as a factor in the selection of any broker or dealer
with whom purchase or sale orders may be placed, the fact that such broker or
dealer has sold or is selling shares of any one or more investment companies
sponsored by the Adviser or its affiliates or shares of any other investment
company or series thereof that invests substantially all of its assets in the
Trust.
The Adviser shall not be responsible for providing certain special
administrative services to the Trust under this Agreement. Eaton Vance
Management, in its capacity as Administrator of the Trust, shall be responsible
for providing such services to the Trust under the Trust's separate
Administration Agreement with the Administrator.
2. Compensation of the Adviser. For the services, payments and
facilities to be furnished hereunder by the Adviser, the Adviser shall be
entitled to receive from the Trust, a monthly advisory fee computed by applying
the annual asset rate applicable to that portion of the average daily net assets
of the Trust throughout the month in each Category as indicated below:
Annual
Category Average Daily Net Assets Asset Rate
1 less than $500 million 0.75%
2 $500 million but less than $1 billion 0.70%
3 $1 billion but less than $1.5 billion 0.65%
4 $1.5 billion but less than $2 billion 0.60%
5 $2 billion but less than $3 billion 0.55%
6 $3 billion and over 0.50%
Such advisory fee shall be paid monthly in arrears on the last business
day of each month. The Trust's net asset value shall be computed in accordance
with the Declaration of Trust of the Trust and any applicable votes and
determinations of the Trustees of the Trust. In case of initiation or
termination of the Agreement during any month, the fee for that month shall be
based on the number of calendar days during which it is in effect.
The Adviser may, from time to time, waive all or a part of the above
compensation.
3. Allocation of Charges and Expenses. It is understood that the Trust
will pay all its expenses other than those expressly stated to be payable by the
Adviser hereunder, which expenses payable by the Trust shall include, without
implied limitation, (i) expenses of maintaining the Trust and continuing its
existence, (ii) registration of the Trust under the Investment Company Act of
1940, (iii) commissions, fees and other expenses connected with the acquisition,
holding and disposition of securities and other investments, (iv) auditing,
accounting and legal expenses, (v) taxes and interest, (vi) governmental fees,
(vii) expenses of issue, sale and redemption of Interests in the Trust, (viii)
expenses of registering and qualifying the Trust and Interests in the Trust
under federal and state securities laws and of preparing and printing
registration statements or other offering documents or memoranda for such
purposes and for distributing the same to Holders and investors, and fees and
expenses of registering and maintaining registrations of the Trust and of the
Trust's placement agent as broker-dealer or agent under state securities laws,
(ix) expenses of reports and notices to Holders and of meetings of Holders and
proxy solicitations therefor, (x) expenses of reports to governmental officers
and commissions, (xi) insurance expenses, (xii) association membership dues,
(xiii) fees, expenses and disbursements of custodians and subcustodians for all
services to the Trust (including without limitation safekeeping of funds,
securities and other investments, keeping of books, accounts and records, and
determination of net asset values, book capital account balances and tax capital
account balances), (xiv) fees, expenses and disbursements of transfer agents,
dividend disbursing agents, Holder servicing agents and registrars for all
services to the Trust, (xv) expenses for servicing the accounts of Holders,
(xvi) any direct charges to Holders approved by the Trustees of the Trust,
(xvii) compensation and expenses of Trustees of the Trust who are not members of
the Adviser's organization, (xviii) the administration fees payable by the Trust
under any administration or similar agreement to which the Trust is a party, and
(xvix) such non-recurring items as may arise, including expenses incurred in
connection with litigation, proceedings and claims and the obligation of the
Trust to indemnify its Trustees, officers and Holders with respect thereto.
4. Other Interests. It is understood that Trustees and officers of the
Trust and Holders of Interests in the Trust are or may be or become interested
in the Adviser as directors, officers, employees, shareholders or otherwise and
that directors, officers, employees and shareholders of the Adviser are or may
be or become similarly interested in the Trust, and that the Adviser may be or
become interested in the Trust as a shareholder or otherwise. It is also
understood that directors, officers, employees and shareholders of the Adviser
may be or become interested (as directors, trustees, officers, employees,
shareholders or otherwise) in other companies or entities (including, without
limitation, other investment companies) which the Adviser may organize, sponsor
or acquire, or with which it may merge or consolidate, and that the Adviser or
its subsidiaries or affiliates may enter into advisory or management agreements
or other contracts or relationships with such other companies or entities.
5. Limitation of Liability of the Adviser. The services of the Adviser
to the Trust are not to be deemed to be exclusive, the Adviser being free to
render services to others and engage in other business activities. In the
absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of obligations or duties hereunder on the part of the Adviser, the
Adviser shall not be subject to liability to the Trust or to any Holder for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses which may be sustained in the acquisition, holding
or disposition of any security or other investment.
6. Duration and Termination of this Agreement. This Agreement shall
become effective upon the date of its execution, and, unless terminated as
herein provided, shall remain in full force and effect through and including
February 28, 1998 and shall continue in full force and effect indefinitely
thereafter, but only so long as such continuance after February 28, 1998 is
specifically approved at least annually (i) by the Board of Trustees of the
Trust or by vote of a majority of the outstanding voting securities of the Trust
and (ii) by the vote of a majority of those Trustees of the Trust who are not
interested persons of the Adviser or the Trust cast in person at a meeting
called for the purpose of voting on such approval.
Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Agreement without the payment of any
penalty, by action of the Trustees of the Trust or the directors of the Adviser,
as the case may be, and the Trust may, at any time upon such written notice to
the Adviser, terminate this Agreement by vote of a majority of the outstanding
voting securities of the Trust. This Agreement shall terminate automatically in
the event of its assignment.
7. Amendments of the Agreement. This Agreement may be amended by a
writing signed by both parties hereto, provided that no amendment to this
Agreement shall be effective until approved (i) by the vote of a majority of
those Trustees of the Trust who are not interested persons of the Adviser or the
Trust cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by vote of a majority of the outstanding voting securities of
the Trust.
8. Limitation of Liability. The Adviser expressly acknowledges the
provision in the Declaration of Trust of the Trust (Sections 5.2 and 5.6)
limiting the personal liability of the Trustees and officers of the Trust, and
the Adviser hereby agrees that it shall have recourse to the Trust for payment
of claims or obligations as between the Trust and the Adviser arising out of
this Agreement and shall not seek satisfaction from any Trustee or officer of
the Trust.
9. Certain Definitions. The terms "assignment" and "interested persons"
when used herein shall have the respective meanings specified in the Investment
Company Act of 1940 as now in effect or as hereafter amended subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
by any rule, regulation or order. The term "vote of a majority of the
outstanding voting securities" shall mean the vote, at a meeting of Holders, of
the lesser of (a) 67 per centum or more of the Interests in the Trust present or
represented by proxy at the meeting if the Holders of more than 50 per centum of
the outstanding Interests in the Trust are present or represented by proxy at
the meeting, or (b) more than 50 per centum of the outstanding Interests in the
Trust. The terms "Holders" and "Interests" when used herein shall have the
respective meanings specified in the Declaration of Trust of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
ASIAN SMALL COMPANIES PORTFOLIO LLOYD GEORGE INVESTMENT
MANAGEMENT (BERMUDA) LIMITED
By: /s/ James B. Hawkes By: /s/ Robert Lloyd George
Vice President President
ASIAN SMALL COMPANIES PORTFOLIO
February 21, 1996
Asian Small Companies Portfolio hereby adopts and agrees to become a party to
the attached Custodian Agreement with Investors Bank & Trust Company.
ASIAN SMALL COMPANIES PORTFOLIO
BY: /s/ James B. Hawkes
Vice President
Accepted and agreed to:
INVESTORS BANK & TRUST COMPANY
BY: /s/ Michael Rogers
Title: Executive Managing Director
<PAGE>
CUSTODIAN AGREEMENT
between
ASIAN SMALL COMPANIES PORTFOLIO et al
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Definitions.......................................................1-3
2. Employment of Custodian and Property to be Held by it...............3
3. Duties of the Custodian with Respect to Property of
the Trust...........................................................4
A. Safekeeping and Holding of Property.............................4
B. Delivery of Securities........................................4-7
C. Registration of Securities......................................7
D. Bank Accounts.................................................7-8
E. Payments for Interests, or Increases in Interests,
in the Trust...................................................8
F. Investment and Availability of Federal Funds....................8
G. Collections...................................................8-9
H. Payment of Trust Monies......................................9-11
I. Liability for Payment in Advance of Receipt of
Securities Purchased........................................11
J. Payments for Repurchases or Redemptions of
` Interests of the Trust......................................11
K. Appointment of Agents by the Custodian......................11-12
L. Deposit of Trust Portfolio Securities
in Securities Systems....................................12-14
M. Deposit of Trust Commercial Paper
in an Approved Book-Entry System for
Commercial Paper...........................................14-16
N. Segregated Account..........................................16-17
O. Ownership Certificates for Tax Purposes........................17
P. Proxies........................................................17
Q. Communications Relating to Trust Portfolio
Securities...................................................17
R. Exercise of Rights; Tender Offers..........................17-18
S. Depository Receipts............................................18
T. Interest Bearing Call or Time Deposits......................18-19
U. Options, Futures Contracts and
Foreign Currency Transactions............................19-21
V. Actions Permitted Without Express Authority....................21
4. Duties of Bank with Respect to Books of
Account and Calculations of Net Asset Value....................21-22
5. Records and Miscellaneous Duties................................22-23
6. Opinion of Trust's Independent Public Accountants..................23
7. Compensation and Expenses of Bank..................................23
8. Responsibility of Bank.................... ....................23-24
9. Persons Having Access to Assets of the Trust... ...................24
10. Effective Period, Termination and Amendment;
Successor Custodian...........................................24-25
11. Interpretive and Additional Provisions..........................25-26
12. Notices............................................................26
13. Massachusetts Law to Apply.........................................26
14. Adoption of the Agreement by the Trust ........................... 26
<PAGE>
CUSTODIAN AGREEMENT
This Agreement is made between Asian Small Companies Portfolio and each
of the investment companies listed on Schedule A attached hereto, each of which
has adopted this Agreement in the manner provided herein and Investors Bank &
Trust Company (hereinafter called "Bank", "Custodian" and "Agent"), a trust
company established under the laws of Massachusetts with a principal place of
business in Boston, Massachusetts.
Whereas, each such investment company is registered under the
Investment Company Act of 1940 and has appointed the Bank to act as Custodian of
its property and to perform certain duties as its Agent, as more fully
hereinafter set forth; and
Whereas, the Bank is willing and able to act as each such investment
company's Custodian and Agent, subject to and in accordance with the provisions
hereof;
Now, therefore, in consideration of the premises and of the mutual
covenants and agreements herein contained, each such investment company and the
Bank agree as follows:
1. Definitions
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
(a) "Trust" shall mean the investment company which has adopted this
Agreement.
(b) "Board" shall mean the board of trustees of the Trust.
(c) "The Depository Trust Company", a clearing agency registered with
the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Trust by the Board.
(d) "Participants Trust Company", a clearing agency registered with the
Securities and Exchange Commission under Section 17A of the Securities Exchange
Act of 1934 which acts as a securities depository and which has been
specifically approved as a securities depository for the Trust by the Board.
(e) "Approved Clearing Agency" shall mean any other domestic clearing
agency registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934 which acts as a securities depository but
only if the Custodian has received a certified copy of a resolution of the Board
approving such clearing agency as a securities depository for the Trust.
(f) "Federal Book-Entry System" shall mean the book-entry system
referred to in Rule 17f-4(b) under the Investment Company Act of 1940 for United
States and federal agency securities (i.e., as provided in Subpart O of Treasury
Circular No. 300, 31 CFR 306, Subpart B of 31 CFR Part 350, and the book-entry
regulations of federal agencies substantially in the form of Subpart O).
(g) "Approved Foreign Securities Depository" shall mean a foreign
securities depository or clearing agency referred to in Rule 17f-4 under the
Investment Company Act of 1940 for foreign securities but only if the Custodian
has received a certified copy of a resolution of the Board approving such
depository or clearing agency as a foreign securities depository for the Trust.
(h) "Approved Book-Entry System for Commercial Paper" shall mean a
system maintained by the Custodian or by a subcustodian employed pursuant to
Section 2 hereof for the holding of commercial paper in book-entry form but only
if the Custodian has received a certified copy of a resolution of the Board
approving the participation by the Trust in such system.
(i) The Custodian shall be deemed to have received "proper
instructions" in respect of any of the matters referred to in this Agreement
upon receipt of written or facsimile instructions signed by such one or more
person or persons as the Board shall have from time to time authorized to give
the particular class of instructions in question. Different persons may be
authorized to give instructions for different purposes. A certified copy of a
resolution of the Board may be received and accepted by the Custodian as
conclusive evidence of the authority of any such person to act and may be
considered as in full force and effect until receipt of written notice to the
contrary. Such instructions may be general or specific in terms and, where
appropriate, may be standing instructions. Unless the resolution delegating
authority to any person or persons to give a particular class of instructions
specifically requires that the approval of any person, persons or committee
shall first have been obtained before the Custodian may act on instructions of
that class, the Custodian shall be under no obligation to question the right of
the person or persons giving such instructions in so doing. Oral instructions
will be considered proper instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Trust shall cause all oral instructions to be
confirmed in writing. The Trust authorizes the Custodian to tape record any and
all telephonic or other oral instructions given to the Custodian. Upon receipt
of a certificate signed by two officers of the Trust as to the authorization by
the President and the Treasurer of the Trust accompanied by a detailed
description of the communication procedures approved by the President and the
Treasurer of the Trust, "proper instructions" may also include communications
effected directly between electromechanical or electronic devices provided that
the President and Treasurer of the Trust and the Custodian are satisfied that
such procedures afford adequate safeguards for the Trust's assets. In performing
its duties generally, and more particularly in connection with the purchase,
sale and exchange of securities made by or for the Trust, the Custodian may take
cognizance of the provisions of the governing documents and registration
statement of the Trust as the same may from time to time be in effect (and
resolutions or proceedings of the holders of interests in the Trust or the
Board), but, nevertheless, except as otherwise expressly provided herein, the
Custodian may assume unless and until notified in writing to the contrary that
so-called proper instructions received by it are not in conflict with or in any
way contrary to any provisions of such governing documents and registration
statement, or resolutions or proceedings of the holders of interests in the
Trust or the Board.
(j) The term "Vote" when used with respect to the Board or the Holders
of Interests in the Trust shall include a vote, resolution, consent, proceeding
and other action taken by the Board or Holders in accordance with the
Declaration of Trust or By-Laws of the Trust.
2. Employment of Custodian and Property to be Held by It
The Trust hereby appoints and employs the Bank as its Custodian and
Agent in accordance with and subject to the provisions hereof, and the Bank
hereby accepts such appointment and employment. The Trust agrees to deliver to
the Custodian all securities, participation interests, cash and other assets
owned by it, and all payments of income, payments of principal and capital
distributions and adjustments received by it with respect to all securities and
participation interests owned by the Trust from time to time, and the cash
consideration received by it from time to time in exchange for an interest in
the Trust or for an increase in such an interest. The Custodian shall not be
responsible for any property of the Trust held by the Trust and not delivered by
the Trust to the Custodian. The Trust will also deliver to the Bank from time to
time copies of its currently effective declaration of trust, by-laws,
registration statement and placement agent agreement with its placement agent,
together with such resolutions, and other proceedings of the Trust as may be
necessary for or convenient to the Bank in the performance of its duties
hereunder.
The Custodian may from time to time employ one or more subcustodians to
perform such acts and services upon such terms and conditions as shall be
approved from time to time by the Board. Any such subcustodian so employed by
the Custodian shall be deemed to be the agent of the Custodian, and the
Custodian shall remain primarily responsible for the securities, participation
interests, moneys and other property of the Trust held by such subcustodian. Any
foreign subcustodian shall be a bank or trust company which is an eligible
foreign custodian within the meaning of Rule 17f-5 under the Investment Company
Act of 1940, and the foreign custody arrangements shall be approved by the Board
and shall be in accordance with and subject to the provisions of said Rule. For
the purposes of this Agreement, any property of the Trust held by any such
subcustodian (domestic or foreign) shall be deemed to be held by the Custodian
under the terms of this Agreement.
3. Duties of the Custodian with Respect to Property of the Trust
A. Safekeeping and Holding of Property The Custodian shall keep safely all
property of the Trust and on behalf of the Trust shall from time to time receive
delivery of Trust property for safekeeping. The Custodian shall hold, earmark
and segregate on its books and records for the account of the Trust all property
of the Trust, including all securities, participation interests and other assets
of the Trust (1) physically held by the Custodian, (2) held by any subcustodian
referred to in Section 2 hereof or by any agent referred to in Paragraph K
hereof, (3) held by or maintained in The Depository Trust Company or in
Participants Trust Company or in an Approved Clearing Agency or in the Federal
Book-Entry System or in an Approved Foreign Securities Depository, each of which
from time to time is referred to herein as a "Securities System", and (4) held
by the Custodian or by any subcustodian referred to in Section 2 hereof and
maintained in any Approved Book-Entry System for Commercial Paper.
B. Delivery of Securities The Custodian shall release and deliver
securities or participation interests owned by the Trust held (or deemed to be
held) by the Custodian or maintained in a Securities System account or in an
Approved Book-Entry System for Commercial Paper account only upon receipt of
proper instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities or participation interests for the account
of the Trust, but only against receipt of payment therefor; if delivery is made
in Boston or New York City, payment therefor shall be made in accordance with
generally accepted clearing house procedures or by use of Federal Reserve Wire
System procedures; if delivery is made elsewhere payment therefor shall be in
accordance with the then current "street delivery" custom or in accordance with
such procedures agreed to in writing from time to time by the parties hereto; if
the sale is effected through a Securities System, delivery and payment therefor
shall be made in accordance with the provisions of Paragraph L hereof; if the
sale of commercial paper is to be effected through an Approved Book-Entry System
for Commercial Paper, delivery and payment therefor shall be made in accordance
with the provisions of Paragraph M hereof; if the securities are to be sold
outside the United States, delivery of the securities for the account of the
Trust may be made either (a) in advance of receipt of payment therefor in the
absence of specific instructions to do so provided such actions are consistent
with local settlement practices and customs, subject to the Custodian's standard
of care, or (b) in accordance with procedures agreed to in writing from time to
time by the parties hereto; for the purposes of this subparagraph, the term
"sale" shall include the disposition of a portfolio security (i) upon the
exercise of an option written by the Trust and (ii) upon the failure by the
Trust to make a successful bid with respect to a portfolio security, the
continued holding of which is contingent upon the making of such a bid;
2) Upon the receipt of payment in connection with any repurchase agreement
or reverse repurchase agreement relating to such securities and entered into by
the Trust;
3) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Trust;
4) To the issuer thereof or its agent when such securities or participation
interests are called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be delivered to
the Custodian or any subcustodian employed pursuant to Section 2 hereof;
5) To the issuer thereof, or its agent, for transfer into the name of the
Trust or into the name of any nominee of the Custodian or into the name or
nominee name of any agent appointed pursuant to Paragraph K hereof or into the
name or nominee name of any subcustodian employed pursuant to Section 2 hereof;
or for exchange for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units; provided that,
in any such case, the new securities or participation interests are to be
delivered to the Custodian or any subcustodian employed pursuant to Section 2
hereof;
6) To the broker selling the same for examination in accordance with the
"street delivery" custom; provided that the Custodian shall adopt such
procedures as the Trust from time to time shall approve to ensure their prompt
return to the Custodian by the broker in the event the broker elects not to
accept them;
7) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions for
conversion of such securities, or pursuant to any deposit agreement; provided
that, in any such case, the new securities and cash, if any, are to be delivered
to the Custodian or any subcustodian employed pursuant to Section 2 hereof;
8) In the case of warrants, rights or similar securities, the surrender
thereof in connection with the exercise of such warrants, rights or similar
securities, or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian or any subcustodian employed
pursuant to Section 2 hereof;
9) For delivery in connection with any loans of securities made by the
Trust (such loans to be made pursuant to the terms of the Trust's current
registration statement), but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Trust, which may be in
the form of cash or obligations issued by the United States government, its
agencies or instrumentalities; except that in connection with any securities
loans for which collateral is to be credited to the Custodian's account in the
book-entry system authorized by the U.S. Department of Treasury, the Custodian
will not be held liable or responsible for the delivery of securities loaned by
the Trust prior to the receipt of such collateral;
10) For delivery as security in connection with any borrowings by the Trust
requiring a pledge or hypothecation of assets by the Trust (if then permitted
under circumstances described in the current registration statement of the
Trust), provided, that the securities shall be released only upon payment to the
Custodian of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, further securities
may be released for that purpose; upon receipt of proper instructions, the
Custodian may pay any such loan upon redelivery to it of the securities pledged
or hypothecated therefor and upon surrender of the note or notes evidencing the
loan;
11) When required for delivery in connection with any reduction of or
redemption of an interest in the Trust in accordance with the provisions of
Paragraph J hereof;
12) For delivery in accordance with the provisions of any agreement between
the Custodian (or a subcustodian employed pursuant to Section 2 hereof) and a
broker-dealer registered under the Securities Exchange Act of 1934 and, if
necessary, the Trust, relating to compliance with the rules of The Options
Clearing Corporation or of any registered national securities exchange, or of
any similar organization or organizations, regarding deposit or escrow or other
arrangements in connection with options transactions by the Trust;
13) For delivery in accordance with the provisions of any agreement among
the Trust, the Custodian (or a subcustodian employed pursuant to Section 2
hereof), and a futures commissions merchant, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or of any contract market
or commodities exchange or similar organization, regarding futures margin
account deposits or payments in connection with futures transactions by the
Trust;
14) For any other proper corporate purpose, but only upon receipt of, in
addition to proper instructions, a certified copy of a resolution of the Board
specifying the securities to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be proper corporate
purpose, and naming the person or persons to whom delivery of such securities
shall be made.
C. Registration of Securities Securities held by the Custodian (other than
bearer securities) for the account of the Trust shall be registered in the name
of the Trust or in the name of any nominee of the Trust or of any nominee of the
Custodian, or in the name or nominee name of any agent appointed pursuant to
Paragraph K hereof, or in the name or nominee name of any subcustodian employed
pursuant to Section 2 hereof, or in the name or nominee name of The Depository
Trust Company or Participants Trust Company or Approved Clearing Agency or
Federal Book-Entry System or Approved Book-Entry System for Commercial Paper;
provided, that securities are held in an account of the Custodian or of such
agent or of such subcustodian containing only assets of the Trust or only assets
held by the Custodian or such agent or such subcustodian as a custodian or
subcustodian or in a fiduciary capacity for customers. All certificates for
securities accepted by the Custodian or any such agent or subcustodian on behalf
of the Trust shall be in "street" or other good delivery form or shall be
returned to the selling broker or dealer who shall be advised of the reason
thereof.
D. Bank Accounts The Custodian shall open and maintain a separate bank
account or accounts in the name of the Trust, subject only to draft or order by
the Custodian acting pursuant to the terms of this Agreement, and shall hold in
such account or accounts, subject to the provisions hereof, all cash received by
it from or for the account of the Trust other than cash maintained by the Trust
in a bank account established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for the Trust may be
deposited by it to its credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as the Custodian may in its
discretion deem necessary or desirable; provided, however, that every such bank
or trust company shall be qualified to act as a custodian under the Investment
Company Act of 1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be approved in writing by
two officers of the Trust. Such funds shall be deposited by the Custodian in its
capacity as Custodian and shall be subject to withdrawal only by the Custodian
in that capacity.
E. Payment for Interests, or Increases in Interests, in the Trust The
Custodian shall make appropriate arrangements with the Transfer Agent of the
Trust to enable the Custodian to make certain it promptly receives the cash or
other consideration due to the Trust for payment of interests in the Trust, or
increases in such interests, in accordance with the governing documents and
registration statement of the Trust. The Custodian will provide prompt
notification to the Trust of any receipt by it of such payments.
F. Investment and Availability of Federal Funds Upon agreement between the
Trust and the Custodian, the Custodian shall, upon the receipt of proper
instructions, which may be continuing instructions when deemed appropriate by
the parties, invest in such securities and instruments as may be set forth in
such instructions on the same day as received all federal funds received after a
time agreed upon between the Custodian and the Trust.
G. Collections The Custodian shall promptly collect all income and other
payments with respect to registered securities held hereunder to which the Trust
shall be entitled either by law or pursuant to custom in the securities
business, and shall promptly collect all income and other payments with respect
to bearer securities if, on the date of payment by the issuer, such securities
are held by the Custodian or agent thereof and shall credit such income, as
collected, to the Trust's custodian account. The Custodian shall do all things
necessary and proper in connection with such prompt collections and, without
limiting the generality of the foregoing, the Custodian shall
1) Present for payment all coupons and other income items requiring
presentations;
2) Present for payment all securities which may mature or be called,
redeemed, retired or otherwise become payable;
3) Endorse and deposit for collection, in the name of the Trust, checks,
drafts or other negotiable instruments;
4) Credit income from securities maintained in a Securities System or in an
Approved Book-Entry System for Commercial Paper at the time funds become
available to the Custodian; in the case of securities maintained in The
Depository Trust Company funds shall be deemed available to the Trust not later
than the opening of business on the first business day after receipt of such
funds by the Custodian. The Custodian shall notify the Trust as soon as
reasonably practicable whenever income due on any security is not promptly
collected. In any case in which the Custodian does not receive any due and
unpaid income after it has made demand for the same, it shall immediately so
notify the Trust in writing, enclosing copies of any demand letter, any written
response thereto, and memoranda of all oral responses thereto and to telephonic
demands, and await instructions from the Trust; the Custodian shall in no case
have any liability for any nonpayment of such income provided the Custodian
meets the standard of care set forth in Section 8 hereof. The Custodian shall
not be obligated to take legal action for collection unless and until reasonably
indemnified to its satisfaction.
The Custodian shall also receive and collect all stock dividends, rights
and other items of like nature, and deal with the same pursuant to proper
instructions relative thereto.
H. Payment of Trust Monies Upon receipt of proper instructions, which may
be continuing instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of the Trust in the following cases only:
1) Upon the purchase of securities, participation interests, options,
futures contracts, forward contracts and options on futures contracts purchased
for the account of the Trust but only (a) against the receipt of
(i) such securities registered as provided in Paragraph C hereof or in
proper form for transfer or
(ii) detailed instructions signed by an officer of the Trust regarding the
participation interests to be purchased or
(iii) written confirmation of the purchase by the Trust of the options,
futures contracts, forward contracts or options on futures contracts by the
Custodian (or by a subcustodian employed pursuant to Section 2 hereof or by a
clearing corporation of a national securities exchange of which the Custodian is
a member or by any bank, banking institution or trust company doing business in
the United States or abroad which is qualified under the Investment Company Act
of 1940 to act as a custodian and which has been designated by the Custodian as
its agent for this purpose or by the agent specifically designated in such
instructions as representing the purchasers of a new issue of privately placed
securities); (b) in the case of a purchase effected through a Securities System,
upon receipt of the securities by the Securities System in accordance with the
conditions set forth in Paragraph L hereof; (c) in the case of a purchase of
commercial paper effected through an Approved Book-Entry System for Commercial
Paper, upon receipt of the paper by the Custodian or subcustodian in accordance
with the conditions set forth in Paragraph M hereof; (d) in the case of
repurchase agreements entered into between the Trust and another bank or a
broker-dealer, against receipt by the Custodian of the securities underlying the
repurchase agreement either in certificate form or through an entry crediting
the Custodian's segregated, non-proprietary account at the Federal Reserve Bank
of Boston with such securities along with written evidence of the agreement by
the bank or broker-dealer to repurchase such securities from the Trust; or (e)
in the case of securities purchased outside the United States, the Custodian may
make payment therefor either (i) in advance of receipt of such securities in the
absence of specific instructions to do so provided such actions are consistent
with local settlement practices and customs, subject to the Custodian's standard
of care, or (ii) in accordance with procedures agreed to in writing from time to
time by the parties hereto;
2) When required in connection with the conversion, exchange or surrender
of securities owned by the Trust as set forth in Paragraph B hereof;
3) When required for the reduction or redemption of an interest in the
Trust in accordance with the provisions of Paragraph J hereof;
4) For the payment of any expense or liability incurred by the Trust,
including but not limited to the following payments for the account of the
Trust: advisory fees, interest, taxes, management compensation and expenses,
accounting, transfer agent and legal fees, and other operating expenses of the
Trust whether or not such expenses are to be in whole or part capitalized or
treated as deferred expenses;
5) For distributions or payments to Holders of Interest of the Trust; and
6) For any other proper corporate purpose, but only upon receipt of, in
addition to proper instructions, a certified copy of a resolution of the Board,
specifying the amount of such payment, setting forth the purpose for which such
payment is to be made, declaring such purpose to be a proper corporate purpose,
and naming the person or persons to whom such payment is to be made.
I. Liability for Payment in Advance of Receipt of Securities Purchased In
any and every case where payment for purchase of securities for the account of
the Trust is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions signed by two officers
of the Trust to so pay in advance, the Custodian shall be absolutely liable to
the Trust for such securities to the same extent as if the securities had been
received by the Custodian; except that in the case of a repurchase agreement
entered into by the Trust with a bank which is a member of the Federal Reserve
System, the Custodian may transfer funds to the account of such bank prior to
the receipt of (i) the securities in certificate form subject to such repurchase
agreement or (ii) written evidence that the securities subject to such
repurchase agreement have been transferred by book-entry into a segregated
non-proprietary account of the Custodian maintained with the Federal Reserve
Bank of Boston or (iii) the safekeeping receipt, provided that such securities
have in fact been so transferred by book-entry and the written repurchase
agreement is received by the Custodian in due course; and except that if the
securities are to be purchased outside the United States, payment may be made in
accordance with procedures agreed to in writing from time to time by the parties
hereto. Notwithstanding any other provision in this Agreement to the contrary,
where securities are purchased or sold outside the United States, delivery of
securities for the account of the Trust may be made by the Custodian in advance
of receipt of payment for the securities sold, and the Custodian may pay for
securities in advance of receipt of the securities purchased for the account of
the Trust, in the absence of specific instructions to do so provided such
actions are consistent with local settlement practices and customs, subject to
the Custodian's standard of care.
J. Payments for Repurchases or Redemptions of Interests in the Trust From
such funds as may be available for the purpose, but subject to any applicable
resolutions of the Board and the current procedures of the Trust, the Custodian
shall, upon receipt of written instructions from the Trust or from the Trust's
transfer agent make funds and/or portfolio securities available for payment to
holders of interest in the Trust which have caused the amount of their interests
to be reduced, or for their interest to be redeemed.
K. Appointment of Agents by the Custodian The Custodian may at any time or
times in its discretion appoint (and may at any time remove) any other bank or
trust company (provided such bank or trust company is itself qualified under the
Investment Company Act of 1940 to act as a custodian or is itself an eligible
foreign custodian within the meaning of Rule 17f-5 under said Act) as the agent
of the Custodian to carry out such of the duties and functions of the Custodian
described in this Section 3 as the Custodian may from time to time direct;
provided, however, that the appointment of any such agent shall not relieve the
Custodian of any of its responsibilities or liabilities hereunder, and as
between the Trust and the Custodian the Custodian shall be fully responsible for
the acts and omissions of any such agent. For the purposes of this Agreement,
any property of the Trust held by any such agent shall be deemed to be held by
the Custodian hereunder.
L. Deposit of Trust Portfolio Securities in Securities Systems The
Custodian may deposit and/or maintain securities owned by the Trust
(1) in The Depository Trust Company;
(2) in Participants Trust Company;
(3) in any other Approved Clearing Agency;
(4) in the Federal Book-Entry System; or
(5) in an Approved Foreign Securities Depository
in each case only in accordance with applicable Federal
Reserve Board and Securities and Exchange Commission rules and
regulations, and at all times subject to the following
provisions:
(a) The Custodian may (either directly or through one
or more subcustodians employed pursuant to Section 2 keep
securities of the Trust in a Securities System provided that
such securities are maintained in a non-proprietary account
("Account") of the Custodian or such subcustodian in the
Securities System which shall not include any assets of the
Custodian or such subcustodian or any other person other than
assets held by the Custodian or such subcustodian as a
fiduciary, custodian, or otherwise for its customers.
(b) The records of the Custodian with respect to
securities of the Trust which are maintained in a Securities
System shall identify by book-entry those securities belonging
to the Trust, and the Custodian shall be fully and completely
responsible for maintaining a recordkeeping system capable of
accurately and currently stating the Trust's holdings
maintained in each such Securities System.
(c) The Custodian shall pay for securities purchased
in book-entry form for the account of the Trust only upon (i)
receipt of notice or advice from the Securities System that
such securities have been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the
Trust; except that when such securities are purchased outside
the United States, payment therefor may be made by the
Custodian in advance of receipt of such notice or advice and
the making of such entry in the absence of specific
instructions to do so provided such actions are consistent
with local settlement practices and customs, subject to the
Custodian's standard of care. The Custodian shall transfer
securities sold for the account of the Trust only upon (i)
receipt of notice or advice from the Securities System that
payment for such securities has been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account
of the Trust; except that when such securities are sold
outside the United States, transfer thereof may be made by the
Custodian in advance of receipt of such notice or advice and
the making of such entry in the absence of specific
instructions to do so provided such actions are consistent
with local settlement practices and customs, subject to the
Custodian's standard of care. Copies of all notices or advices
from the Securities System of transfers of securities for the
account of the Trust shall identify the Trust, be maintained
for the Trust by the Custodian and be promptly provided to the
Trust at its request. The Custodian shall promptly send to the
Trust confirmation of each transfer to or from the account of
the Trust in the form of a written advice or notice of each
such transaction, and shall furnish to the Trust copies of
daily transaction sheets reflecting each day's transactions in
the Securities System for the account of the Trust on the next
business day.
(d) The Custodian shall promptly send to the Trust
any report or other communication received or obtained by the
Custodian relating to the Securities System's accounting
system, system of internal accounting controls or procedures
for safeguarding securities deposited in the Securities
System; the Custodian shall promptly send to the Trust any
report or other communication relating to the Custodian's
internal accounting controls and procedures for safeguarding
securities deposited in any Securities System; and the
Custodian shall ensure that any agent appointed pursuant to
Paragraph K hereof or any subcustodian employed pursuant to
Section 2 hereof shall promptly send to the Trust and to the
Custodian any report or other communication relating to such
agent's or subcustodian's internal accounting controls and
procedures for safeguarding securities deposited in any
Securities System. The Custodian's books and records relating
to the Trust's participation in each Securities System will at
all times during regular business hours be open to the
inspection of the Trust's authorized officers, employees or
agents.
(e) The Custodian shall not act under this Paragraph
L in the absence of receipt of a certificate of an officer of
the Trust that the Board has approved the use of a particular
Securities System; the Custodian shall also obtain appropriate
assurance from the officers of the Trust that the Board has
annually reviewed the continued use by the Trust of each
Securities System, and the Trust shall promptly notify the
Custodian if the use of a Securities System is to be
discontinued; at the request of the Trust, the Custodian will
terminate the use of any such Securities System as promptly as
practicable.
(f) Anything to the contrary in this Agreement
notwithstanding, the Custodian shall be liable to the Trust
for any loss or damage to the Trust resulting from use of the
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or
subcustodians or of any of its or their employees or from any
failure of the Custodian or any such agent or subcustodian to
enforce effectively such rights as it may have against the
Securities System or any other person; at the election of the
Trust, it shall be entitled to be subrogated to the rights of
the Custodian with respect to any claim against the Securities
System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent
that the Trust has not been made whole for any such loss or
damage.
M. Deposit of Trust Commercial Paper in an Approved Book-Entry
System for Commercial Paper Upon receipt of proper
instructions with respect to each issue of direct issue
commercial paper purchased by the Trust, the Custodian may
deposit and/or maintain direct issue commercial paper owned by
the Trust in any Approved Book-Entry System for Commercial
Paper, in each case only in accordance with applicable
Securities and Exchange Commission rules, regulations, and
no-action correspondence, and at all times subject to the
following provisions:
(a) The Custodian may (either directly or through one
or more subcustodians employed pursuant to Section 2) keep
commercial paper of the Trust in an Approved Book-Entry System
for Commercial Paper, provided that such paper is issued in
book entry form by the Custodian or subcustodian on behalf of
an issuer with which the Custodian or subcustodian has entered
into a book-entry agreement and provided further that such
paper is maintained in a non-proprietary account ("Account")
of the Custodian or such subcustodian in an Approved
Book-Entry System for Commercial Paper which shall not include
any assets of the Custodian or such subcustodian or any other
person other than assets held by the Custodian or such
subcustodian as a fiduciary, custodian, or otherwise for its
customers.
(b) The records of the Custodian with respect to
commercial paper of the Trust which is maintained in an
Approved Book-Entry System for Commercial Paper shall identify
by book-entry each specific issue of commercial paper
purchased by the Trust which is included in the System and
shall at all times during regular business hours be open for
inspection by authorized officers, employees or agents of the
Trust. The Custodian shall be fully and completely responsible
for maintaining a recordkeeping system capable of accurately
and currently stating the Trust's holdings of commercial paper
maintained in each such System.
(c) The Custodian shall pay for commercial paper
purchased in book-entry form for the account of the Trust only
upon contemporaneous (i) receipt of notice or advice from the
issuer that such paper has been issued, sold and transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such purchase, payment and
transfer for the account of the Trust. The Custodian shall
transfer such commercial paper which is sold or cancel such
commercial paper which is redeemed for the account of the
Trust only upon contemporaneous (i) receipt of notice or
advice that payment for such paper has been transferred to the
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer or redemption and payment
for the account of the Trust. Copies of all notices, advices
and confirmations of transfers of commercial paper for the
account of the Trust shall identify the Trust, be maintained
for the Trust by the Custodian and be promptly provided to the
Trust at its request. The Custodian shall promptly send to the
Trust confirmation of each transfer to or from the account of
the Trust in the form of a written advice or notice of each
such transaction, and shall furnish to the Trust copies of
daily transaction sheets reflecting each day's transactions in
the System for the account of the Trust on the next business
day.
(d) The Custodian shall promptly send to the Trust
any report or other communication received or obtained by the
Custodian relating to each System's accounting system, system
of internal accounting controls or procedures for safeguarding
commercial paper deposited in the System; the Custodian shall
promptly send to the Trust any report or other communication
relating to the Custodian's internal accounting controls and
procedures for safeguarding commercial paper deposited in any
Approved Book-Entry System for Commercial Paper; and the
Custodian shall ensure that any agent appointed pursuant to
Paragraph K hereof or any subcustodian employed pursuant to
Section 2 hereof shall promptly send to the Trust and to the
Custodian any report or other communication relating to such
agent's or subcustodian's internal accounting controls and
procedures for safeguarding securities deposited in any
Approved Book-Entry System for Commercial Paper.
(e) The Custodian shall not act under this Paragraph
M in the absence of receipt of a certificate of an officer of
the Trust that the Board has approved the use of a particular
Approved Book-Entry System for Commercial Paper; the Custodian
shall also obtain appropriate assurance from the officers of
the Trust that the Board has annually reviewed the continued
use by the Trust of each Approved Book-Entry System for
Commercial Paper, and the Trust shall promptly notify the
Custodian if the use of an Approved Book-Entry System for
Commercial Paper is to be discontinued; at the request of the
Trust, the Custodian will terminate the use of any such System
as promptly as practicable.
(f) The Custodian (or subcustodian, if the Approved
Book-Entry System for Commercial Paper is maintained by the
subcustodian) shall issue physical commercial paper or
promissory notes whenever requested to do so by the Trust or
in the event of an electronic system failure which impedes
issuance, transfer or custody of direct issue commercial paper
by book-entry.
(g) Anything to the contrary in this Agreement
notwithstanding, the Custodian shall be liable to the Trust
for any loss or damage to the Trust resulting from use of any
Approved Book-Entry System for Commercial Paper by reason of
any negligence, misfeasance or misconduct of the Custodian or
any of its agents or subcustodians or of any of its or their
employees or from any failure of the Custodian or any such
agent or subcustodian to enforce effectively such rights as it
may have against the System, the issuer of the commercial
paper or any other person; at the election of the Trust, it
shall be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the System, the
issuer of the commercial paper or any other person which the
Custodian may have as a consequence of any such loss or damage
if and to the extent that the Trust has not been made whole
for any such loss or damage.
N. Segregated Account The Custodian shall upon receipt of proper
instructions establish and maintain a segregated account or accounts for and on
behalf of the Trust, into which account or accounts may be transferred cash
and/or securities, including securities maintained in an account by the
Custodian pursuant to Paragraph L hereof, (i) in accordance with the provisions
of any agreement among the Trust, the Custodian and any registered broker-dealer
(or any futures commission merchant), relating to compliance with the rules of
the Options Clearing Corporation and of any registered national securities
exchange (or of the Commodity Futures Trading Commission or of any contract
market or commodities exchange), or of any similar organization or
organizations, regarding escrow or deposit or other arrangements in connection
with transactions by the Trust, (ii) for purposes of segregating cash or U.S.
Government securities in connection with options purchased, sold or written by
the Trust or futures contracts or options thereon purchased or sold by the
Trust, (iii) for the purposes of compliance by the Trust with the procedures
required by Investment Company Act Release No. 10666, or any subsequent release
or releases of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered investment companies and (iv)
for other proper purposes, but only, in the case of clause (iv), upon receipt
of, in addition to proper instructions, a certificate signed by two officers of
the Trust, setting forth the purpose such segregated account and declaring such
purpose to be a proper purpose.
O. Ownership Certificates for Tax Purposes The Custodian shall execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments with respect to
securities of the Trust held by it and in connection with transfers of
securities.
P. Proxies The Custodian shall, with respect to the securities held by it
hereunder, cause to be promptly delivered to the Trust all forms of proxies and
all notices of meetings and any other notices or announcements or other written
information affecting or relating to the securities, and upon receipt of proper
instructions shall execute and deliver or cause its nominee to execute and
deliver such proxies or other authorizations as may be required. Neither the
Custodian nor its nominee shall vote upon any of the securities or execute any
proxy to vote thereon or give any consent or take any other action with respect
thereto (except as otherwise herein provided) unless ordered to do so by proper
instructions.
Q. Communications Relating to Trust Portfolio Securities The Custodian
shall deliver promptly to the Trust all written information (including, without
limitation, pendency of call and maturities of securities and participation
interests and expirations of rights in connection therewith and notices of
exercise of call and put options written by the Trust and the maturity of
futures contracts purchased or sold by the Trust) received by the Custodian from
issuers and other persons relating to the securities and participation interests
being held for the Trust. With respect to tender or exchange offers, the
Custodian shall deliver promptly to the Trust all written information received
by the Custodian from issuers and other persons relating to the securities and
participation interests whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer.
R. Exercise of Rights; Tender Offers In the case of tender offers, similar
offers to purchase or exercise rights (including, without limitation, pendency
of calls and maturities of securities and participation interests and
expirations of rights in connection therewith and notices of exercise of call
and put options and the maturity of futures contracts) affecting or relating to
securities and participation interests held by the Custodian under this
Agreement, the Custodian shall have responsibility for promptly notifying the
Trust of all such offers in accordance with the standard of reasonable care set
forth in Section 8 hereof. For all such offers for which the Custodian is
responsible as provided in this Paragraph R, the Trust shall have responsibility
for providing the Custodian with all necessary instructions in timely fashion.
Upon receipt of proper instructions, the Custodian shall timely deliver to the
issuer or trustee thereof, or to the agent of either, warrants, puts, calls,
rights or similar securities for the purpose of being exercised or sold upon
proper receipt therefor and upon receipt of assurances satisfactory to the
Custodian that the new securities and cash, if any, acquired by such action are
to be delivered to the Custodian or any subcustodian employed pursuant to
Section 2 hereof. Upon receipt of proper instructions, the Custodian shall
timely deposit securities upon invitations for tenders of securities upon proper
receipt therefor and upon receipt of assurances satisfactory to the Custodian
that the consideration to be paid or delivered or the tendered securities are to
be returned to the Custodian or subcustodian employed pursuant to Section 2
hereof. Notwithstanding any provision of this Agreement to the contrary, the
Custodian shall take all necessary action, unless otherwise directed to the
contrary by proper instructions, to comply with the terms of all mandatory or
compulsory exchanges, calls, tenders, redemptions, or similar rights of security
ownership, and shall thereafter promptly notify the Trust in writing of such
action.
S. Depository Receipts The Custodian shall, upon receipt of proper
instructions, surrender or cause to be surrendered foreign securities to the
depository used by an issuer of American Depository Receipts or International
Depository Receipts (hereinafter collectively referred to as "ADRs") for such
securities, against a written receipt therefor adequately describing such
securities and written evidence satisfactory to the Custodian that the
depository has acknowledged receipt of instructions to issue with respect to
such securities ADRs in the name of a nominee of the Custodian or in the name or
nominee name of any subcustodian employed pursuant to Section 2 hereof, for
delivery to the Custodian or such subcustodian at such place as the Custodian or
such subcustodian may from time to time designate. The Custodian shall, upon
receipt of proper instructions, surrender ADRs to the issuer thereof against a
written receipt therefor adequately describing the ADRs surrendered and written
evidence satisfactory to the Custodian that the issuer of the ADRs has
acknowledged receipt of instructions to cause its depository to deliver the
securities underlying such ADRs to the Custodian or to a subcustodian employed
pursuant to Section 2 hereof.
T. Interest Bearing Call or Time Deposits The Custodian shall, upon receipt
of proper instructions, place interest bearing fixed term and call deposits with
the banking department of such banking institution (other than the Custodian)
and in such amounts as the Trust may designate. Deposits may be denominated in
U.S. Dollars or other currencies. The Custodian shall include in its records
with respect to the assets of the Trust appropriate notation as to the amount
and currency of each such deposit, the accepting banking institution and other
appropriate details and shall retain such forms of advice or receipt evidencing
the deposit, if any, as may be forwarded to the Custodian by the banking
institution. Such deposits shall be deemed portfolio securities of the Trust for
the purposes of this Agreement, and the Custodian shall be responsible for the
collection of income from such accounts and the transmission of cash to and from
such accounts.
U. Options, Futures Contracts and Foreign Currency Transactions
1. Options The Custodian shall, upon receipt of
proper instructions and in accordance with the
provisions of any agreement between the Custodian,
any registered broker-dealer and, if necessary, the
Trust, relating to compliance with the rules of the
Options Clearing Corporation or of any registered
national securities exchange or similar organization
or organizations, receive and retain confirmations or
other documents, if any, evidencing the purchase or
writing of an option on a security or securities
index or other financial instrument or index by the
Trust; deposit and maintain in a segregated account
for the Trust, either physically or by book-entry in
a Securities System, securities subject to a covered
call option written by the Trust; and release and/or
transfer such securities or other assets only in
accordance with a notice or other communication
evidencing the expiration, termination or exercise of
such covered option furnished by the Options Clearing
Corporation, the securities or options exchange on
which such covered option is traded or such other
organization as may be responsible for handling such
options transactions. The Custodian and the
broker-dealer shall be responsible for the
sufficiency of assets held in the Trust's segregated
account in compliance with applicable margin
maintenance requirements.
2. Futures Contracts The Custodian shall, upon
receipt of proper instructions, receive and retain
confirmations and other documents, if any, evidencing
the purchase or sale of a futures contract or an
option on a futures contract by the Trust; deposit
and maintain in a segregated account, for the benefit
of any futures commission merchant, assets designated
by the Trust as initial, maintenance or variation
"margin" deposits (including mark-to-market payments)
intended to secure the Trust's performance of its
obligations under any futures contracts purchased or
sold or any options on futures contracts written by
the Trust, in accordance with the provisions of any
agreement or agreements among the Trust, the
Custodian and such futures commission merchant,
designed to comply with the rules of the Commodity
Futures Trading Commission and/or of any contract
market or commodities exchange or similar
organization regarding such margin deposits or
payments; and release and/or transfer assets in such
margin accounts only in accordance with any such
agreements or rules. The Custodian and the futures
commission merchant shall be responsible for the
sufficiency of assets held in the segregated account
in compliance with the applicable margin maintenance
and mark-to-market payment requirements.
3. Foreign Exchange Transactions The Custodian shall,
pursuant to proper instructions, enter into or cause
a subcustodian to enter into foreign exchange
contracts or options to purchase and sell foreign
currencies for spot and future delivery on behalf and
for the account of the Trust. Such transactions may
be undertaken by the Custodian or subcustodian with
such banking or financial institutions or other
currency brokers, as set forth in proper
instructions. Foreign exchange contracts and options
shall be deemed to be portfolio securities of the
Trust; and accordingly, the responsibility of the
Custodian therefor shall be the same as and no
greater than the Custodian's responsibility in
respect of other portfolio securities of the Trust.
The Custodian shall be responsible for the
transmittal to and receipt of cash from the currency
broker or banking or financial institution with which
the contract or option is made, the maintenance of
proper records with respect to the transaction and
the maintenance of any segregated account required in
connection with the transaction. The Custodian shall
have no duty with respect to the selection of the
currency brokers or banking or financial institutions
with which the Trust deals or for their failure to
comply with the terms of any contract or option.
Without limiting the foregoing, it is agreed that
upon receipt of proper instructions and insofar as
funds are made available to the Custodian for the
purpose, the Custodian may (if determined necessary
by the Custodian to consummate a particular
transaction on behalf and for the account of the
Trust) make free outgoing payments of cash in the
form of U.S. dollars or foreign currency before
receiving confirmation of a foreign exchange contract
or confirmation that the countervalue currency
completing the foreign exchange contract has been
delivered or received. The Custodian shall not be
responsible for any costs and interest charges which
may be incurred by the Trust or the Custodian as a
result of the failure or delay of third parties to
deliver foreign exchange; provided that the Custodian
shall nevertheless be held to the standard of care
set forth in, and shall be liable to the Trust in
accordance with, the provisions of Section 8.
V. Actions Permitted Without Express Authority The Custodian may in its
discretion, without express authority from the Trust:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Agreement,
provided, that all such payments shall be accounted for by the Custodian to the
Treasurer of the Trust;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Trust, checks, drafts and
other negotiable instruments; and
4) in general, attend to all nondiscretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of the Trust except as otherwise directed by the Trust.
4. Duties of Bank with Respect to Books of Account and Calculations of Net
Asset Value
Inasmuch as the Trust is treated as a partnership for federal income
tax purposes, the Bank shall as Agent (or as Custodian, as the case may be) keep
and maintain the books and records of the Trust in accordance with the
Procedures for Allocations and Distributions adopted by the Trustees of the
Trust, as such Procedures may be in effect from time to time. A copy of the
current Procedures is attached to this Agreement, and the Trust agrees promptly
to furnish all revisions to or restatements of such Procedures to the Bank.
The Bank shall as Agent (or as Custodian, as the case may be) keep such
books of account (including records showing the adjusted tax costs of the
Trust's portfolio securities) and render as at the close of business on each day
a detailed statement of the amounts received or paid out and of securities
received or delivered for the account of the Trust during said day and such
other statements, including a daily trial balance and inventory of the Trust's
portfolio securities; and shall furnish such other financial information and
data as from time to time requested by the Treasurer or any executive officer of
the Trust; and shall compute and determine, as of the close of business of the
New York Stock Exchange, or at such other time or times as the Board may
determine, the net asset value of the Trust and the net asset value of each
interest in the Trust, such computations and determinations to be made in
accordance with the governing documents of the Trust and the votes and
instructions of the Board and of the investment adviser at the time in force and
applicable, and promptly notify the Trust and its investment adviser and such
other persons as the Trust may request of the result of such computation and
determination. In computing the net asset value the Custodian may rely upon
security quotations received by telephone or otherwise from sources or pricing
services designated by the Trust by proper instructions, and may further rely
upon information furnished to it by any authorized officer of the Trust relative
(a) to liabilities of the Trust not appearing on its books of account, (b) to
the existence, status and proper treatment of any reserve or reserves, (c) to
any procedures or policies established by the Board regarding the valuation of
portfolio securities or other assets, and (d) to the value to be assigned to any
bond, note, debenture, Treasury bill, repurchase agreement, subscription right,
security, participation interests or other asset or property for which market
quotations are not readily available. The Custodian shall also compute and
determine at such time or times as the Trust may designate the portion of each
item which has significance for a holder of an interest in the Trust in
computing and determining its federal income tax liability including, but not
limited to, each item of income, expense and realized and unrealized gain or
loss of the Trust which is attributable for Federal income tax purposes to each
such holder.
5. Records and Miscellaneous Duties
The Bank shall create, maintain and preserve all records relating to
its activities and obligations under this Agreement in such manner as will meet
the obligations of the Trust under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Trust. All books of account and
records maintained by the Bank in connection with the performance of its duties
under this Agreement shall be the property of the Trust, shall at all times
during the regular business hours of the Bank be open for inspection by
authorized officers, employees or agents of the Trust, and in the event of
termination of this Agreement shall be delivered to the Trust or to such other
person or persons as shall be designated by the Trust. Disposition of any
account or record after any required period of preservation shall be only in
accordance with specific instructions received from the Trust. The Bank shall
assist generally in the preparation of reports to holders of interest in the
Trust, to the Securities and Exchange Commission, including Form N-SAR, and to
others, audits of accounts, and other ministerial matters of like nature; and,
upon request, shall furnish the Trust's auditors with an attested inventory of
securities held with appropriate information as to securities in transit or in
the process of purchase or sale and with such other information as said auditors
may from time to time request. The Custodian shall also maintain records of all
receipts, deliveries and locations of such securities, together with a current
inventory thereof, and shall conduct periodic verifications (including sampling
counts at the Custodian) of certificates representing bonds and other securities
for which it is responsible under this Agreement in such manner as the Custodian
shall determine from time to time to be advisable in order to verify the
accuracy of such inventory. The Bank shall not disclose or use any books or
records it has prepared or maintained by reason of this Agreement in any manner
except as expressly authorized herein or directed by the Trust, and the Bank
shall keep confidential any information obtained by reason of this Agreement.
6. Opinion of Trust's Independent Public Accountants
The Custodian shall take all reasonable action, as the Trust may from
time to time request, to enable the Trust to obtain from year to year favorable
opinions from the Trust's independent public accountants with respect to its
activities hereunder in connection with the preparation of the Trust's
registration statement and Form N-SAR or other periodic reports to the
Securities and Exchange Commission and with respect to any other requirements of
such Commission.
7. Compensation and Expenses of Bank
The Bank shall be entitled to reasonable compensation for its services
as Custodian and Agent, as agreed upon from time to time between the Trust and
the Bank. The Bank shall be entitled to receive from the Trust on demand
reimbursement for its cash disbursements, expenses and charges, including
counsel fees, in connection with its duties as Custodian and Agent hereunder,
but excluding salaries and usual overhead expenses.
8. Responsibility of Bank
So long as and to the extent that it is in the exercise of reasonable
care, the Bank as Custodian and Agent shall be held harmless in acting upon any
notice, request, consent, certificate or other instrument reasonably believed by
it to be genuine and to be signed by the proper party or parties.
The Bank as Custodian and Agent shall be entitled to rely on and may
act upon advice of counsel (who may be counsel for the Trust) on all matters,
and shall be without liability for any action reasonably taken or omitted
pursuant to such advice.
The Bank as Custodian and Agent shall be held to the exercise of
reasonable care in carrying out the provisions of this Agreement but shall be
liable only for its own negligent or bad faith acts or failures to act.
Notwithstanding the foregoing, nothing contained in this paragraph is intended
to nor shall it be construed to modify the standards of care and responsibility
set forth in Section 2 hereof with respect to subcustodians and in subparagraph
f of Paragraph L of Section 3 hereof with respect to Securities Systems and in
subparagraph g of Paragraph M of Section 3 hereof with respect to an Approved
Book-Entry System for Commercial Paper.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
subcustodians generally in Section 2 hereof, provided that, regardless of
whether assets are maintained in the custody of a foreign banking institution, a
foreign securities depository or a branch of a U.S. bank, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim resulting
from, or caused by, the direction of or authorization by the Trust to maintain
custody of any securities or cash of the Trust in a foreign country including,
but not limited to, losses resulting from governmental actions and restrictions,
nationalization, expropriation, currency restrictions, acts of war, civil war or
terrorism, insurrection, revolution, military or usurped powers, nuclear
fission, fusion or radiation, earthquake, storm or other disturbance of nature
or acts of God.
If the Trust requires the Bank in any capacity to take any action with
respect to securities, which action involves the payment of money or which
action may, in the opinion of the Bank, result in the Bank or its nominee
assigned to the Trust being liable for the payment of money or incurring
liability of some other form, the Trust, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
9. Persons Having Access to Assets of the Trust
(i) No trustee, officer, employee or agent of the Trust shall have
physical access to the assets of the Trust held by the Custodian or be
authorized or permitted to withdraw any investments of the Trust, nor shall the
Custodian deliver any assets of the Trust to any such person. No officer or
director, employee or agent of the Custodian who holds any similar position with
the Trust or the investment adviser or the administrator of the Trust shall have
access to the assets of the Trust.
(ii) Access to assets of the Trust held hereunder shall only be
available to duly authorized officers, employees, representatives or agents of
the Custodian or other persons or entities for whose actions the Custodian shall
be responsible to the extent permitted hereunder, or to the Trust's independent
public accountants in connection with their auditing duties performed on behalf
of the Trust.
(iii) Nothing in this Section 9 shall prohibit any officer, employee or
agent of the Trust or of the investment adviser of the Trust from giving
instructions to the Custodian or executing a certificate so long as it does not
result in delivery of or access to assets of the Trust prohibited by paragraph
(i) of this Section 9.
10. Effective Period, Termination and Amendment; Successor Custodian
This Agreement shall become effective as of its execution, shall
continue in full force and effect until terminated by either party after August
31, 2000 by an instrument in writing delivered or mailed, postage prepaid to the
other party, such termination to take effect not sooner than sixty (60) days
after the date of such delivery or mailing; provided, that the Trust may at any
time by action of its Board, (i) substitute another bank or trust company for
the Custodian by giving notice as described above to the Custodian in the event
the Custodian assigns this Agreement to another party without consent of the
noninterested Trustees of the Trust, or (ii) immediately terminate this
Agreement in the event of the appointment of a conservator or receiver for the
Custodian by the Federal Deposit Insurance Corporation or by the Banking
Commissioner of The Commonwealth of Massachusetts or upon the happening of a
like event at the direction of an appropriate regulatory agency or court of
competent jurisdiction. Upon termination of the Agreement, the Trust shall pay
to the Custodian such compensation as may be due as of the date of such
termination (and shall likewise reimburse the Custodian for its costs, expenses
and disbursements).
This Agreement may be amended at any time by the written agreement of
the parties hereto. If a majority of the non-interested trustees of any of the
Trusts determines that the performance of the Custodian has been unsatisfactory
or adverse to the interests of Trust holders of any Trust or Trusts or that the
terms of the Agreement are no longer consistent with publicly available industry
standards, then the Trust or Trusts shall give written notice to the Custodian
of such determination and the Custodian shall have 60 days to (1) correct such
performance to the satisfaction of the non-interested trustees or (2)
renegotiate terms which are satisfactory to the non-interested trustees of the
Trusts. If the conditions of the preceding sentence are not met then the Trust
or Trusts may terminate this Agreement on sixty (60) days written notice.
The Board of the Trust shall, forthwith, upon giving or receiving
notice of termination of this Agreement, appoint as successor custodian, a bank
or trust company having the qualifications required by the Investment Company
Act of 1940 and the Rules thereunder. The Bank, as Custodian, Agent or
otherwise, shall, upon termination of the Agreement, deliver to such successor
custodian, all securities then held hereunder and all funds or other properties
of the Trust deposited with or held by the Bank hereunder and all books of
account and records kept by the Bank pursuant to this Agreement, and all
documents held by the Bank relative thereto. In the event that no written order
designating a successor custodian shall have been delivered to the Bank on or
before the date when such termination shall become effective, then the Bank
shall not deliver the securities, funds and other properties of the Trust to the
Trust but shall have the right to deliver to a bank or trust company doing
business in Boston, Massachusetts of its own selection meeting the above
required qualifications, all funds, securities and properties of the Trust held
by or deposited with the Bank, and all books of account and records kept by the
Bank pursuant to this Agreement, and all documents held by the Bank relative
thereto. Thereafter such bank or trust company shall be the successor of the
Custodian under this Agreement.
11. Interpretive and Additional Provisions
In connection with the operation of this Agreement, the Custodian and
the Trust may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement.
Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the governing instruments of the Trust. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Agreement.
12. Notices
Notices and other writings delivered or mailed postage prepaid to the
Trust addressed to 3808 One Exchange Square, Central Hong Kong, or to such other
address as the Trust may have designated to the Bank, in writing with a copy to
Eaton Vance Management at 24 Federal Street, Boston, Massachusetts 02110, or to
Investors Bank & Trust Company, 89 South Street, Boston, Massachusetts 02111
with a copy to Eaton Vance Management at 24 Federal Street, Boston,
Massachusetts 02110, shall be deemed to have been properly delivered or given
hereunder to the respective addressees.
13. Massachusetts Law to Apply
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts.
The Custodian expressly acknowledges the provision in the Declaration
of Trust of the Trust (Section 5.2 and 5.6) limiting the personal liability of
the Trustees and officers of the Trust, and the Custodian hereby agrees that it
shall have recourse to the Trust for payment of claims or obligations as between
the Trust and the Custodian arising out of this Agreement and shall not seek
satisfaction from any Trustee or officer of the Trust.
14. Adoption of the Agreement by the Trust
The Trust represents that its Board has approved this Agreement and has
duly authorized the Trust to adopt this Agreement, such adoption to be evidenced
by a letter agreement between the Trust and the Bank reflecting such adoption,
which letter agreement shall be dated and signed by a duly authorized officer of
the Trust and duly authorized officer of the Bank. This Agreement shall be
deemed to be duly executed and delivered by each of the parties in its name and
behalf by its duly authorized officer as of the date of such letter agreement,
and this Agreement shall be deemed to supersede and terminate, as of the date of
such letter agreement, all prior agreements between the Trust and the Bank
relating to the custody of the Trust's assets.
* * * * *
<PAGE>
SCHEDULE A
TO CUSTODIAN AGREEMENT
BETWEEN
ASIAN SMALL COMPANIES PORTFOLIO
AND
INVESTORS BANK & TRUST COMPANY
Additional Parties to the Agreement Date of Agreement
Emerging Markets Portfolio March 8, 1994
Greater China Growth Portfolio October 27, 1992, as amended
February 7, 1994
South Asia Portfolio March 8, 1994
<PAGE>
ASIAN SMALL COMPANIES PORTFOLIO
PROCEDURES FOR ALLOCATIONS AND DISTRIBUTIONS
February 21, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I--Introduction .....................................................1
ARTICLE II--Definitions .....................................................1
ARTICLE III--Capital Accounts
Section 3.1 Capital Accounts of Holders ........................4
Section 3.2 Book Capital Accounts ..............................4
Section 3.3 Tax Capital Accounts ...............................4
Section 3.4 Compliance with Treasury Regulations ...............5
ARTICLE IV--Distributions of Cash and Assets
Section 4.1 Distributions of Distributable Cash ................5
Section 4.2 Division Among Holders .............................5
Section 4.3 Distributions Upon Liquidation of a Holder's
Interest in the Trust ..........................5
Section 4.4 Amounts Withheld ...................................5
ARTICLE V--Allocations
Section 5.1 Allocation of Items to Book Capital Accounts .......6
Section 5.2 Allocation of Taxable Income and Tax Loss
to Tax Capital Accounts.........................6
Section 5.3 Special Allocations to Book and Tax Capital
Accounts .......................................7
Section 5.4 Other Adjustments to Book and Tax Capital
Accounts .......................................7
Section 5.5 Timing of Tax Allocations to Book and Tax
Capital Accounts ...............................7
Section 5.6 Redemptions During the Fiscal Year .................8
ARTICLE VI--Withdrawals
Section 6.1 Partial Withdrawals ................................8
Section 6.2 Redemptions ........................................8
Section 6.3 Distribution in Kind................................8
ARTICLE VII--Liquidation
Section 7.1 Liquidation Procedure .............................8
Section 7.2 Alternative Liquidation Procedure .................9
Section 7.3 Cash Distributions Upon Liquidation ...............9
Section 7.4 Treatment of Negative Book Capital
Account Balance ...............................9
<PAGE>
PROCEDURES FOR
ALLOCATIONS AND DISTRIBUTIONS
OF
ASIAN SMALL COMPANIES PORTFOLIO
(the "Trust")
ARTICLE I
Introduction
The Trust is treated as a partnership for federal income tax purposes.
These procedures have been adopted by the Trustees of the Trust and will be
furnished to the Trust's accountants for the purpose of allocating Trust gains,
income or loss and distributing Trust assets. The Trust will maintain its books
and records, for both book and tax purposes, using the accrual method of
accounting.
ARTICLE II
Definitions
Except as otherwise provided herein, a term referred to herein shall
have the same meaning as that ascribed to it in the Declaration. References in
this document to "hereof", "herein" and "hereunder" shall be deemed to refer to
this document in its entirety rather than the article or section in which any
such word appears.
"Book Capital Account" shall mean, for any Holder at any time in any
Fiscal Year, the Book Capital Account balance of the Holder on the first day of
the Fiscal Year, as adjusted each day pursuant to the provisions of Section 3.2
hereof.
"Capital Contribution" shall mean, with respect to any Holder, the
amount of money and the Fair Market Value of any assets actually contributed
from time to time to the Trust with respect to the Interest held by such Holder.
"Code" shall mean the U.S. Internal Revenue Code of 1986, as amended
from time to time, as well as any non-superseded provisions of the Internal
Revenue Code of 1954, as amended (or any corresponding provision or provisions
of succeeding law).
"Declaration" shall mean the Trust's Declaration of Trust, dated
January 19, 1996, as amended from time to time.
"Designated Expenses" shall mean extraordinary Trust expenses
attributable to a particular Holder that are to be borne by such Holder.
"Distributable Cash" for any Fiscal Year shall mean the gross cash
proceeds from Trust activities, less the portion thereof used to pay or
establish Reserves, plus such portion of the Reserves as the Trustees, in their
sole discretion, no longer deem necessary to be held as Reserves. Distributable
Cash shall not be reduced by depreciation, amortization, cost recovery
deductions, or similar allowances.
"Fair Market Value" of a security, instrument or other asset on any
particular day shall mean the fair value thereof as determined in good faith by
or on behalf of the Trustees in the manner set forth in the Registration
Statement.
"Fiscal Year" shall mean an annual period determined by the Trustees
which ends on such day as is permitted by the Code.
"Holders" shall mean as of any particular time all holders of
record of Interests in the Trust.
"Interest(s)" shall mean the interest of a Holder in the Trust,
including all rights, powers and privileges accorded to Holders by the
Declaration, which interest may be expressed as a percentage, determined by
calculating, at such times and on such bases as the Trustees shall from time to
time determine, the ratio of each Holder's Book Capital Account balance to the
total of all Holders' Book Capital Account balances.
"Investments" shall mean all securities, instruments or other assets of
the Trust of any nature whatsoever, including, but not limited to, all equity
and debt securities, futures contracts, and all property of the Trust obtained
by virtue of holding such assets.
"Matched Income or Loss" shall mean Taxable Income, Tax-Exempt Income
or Tax Loss of the Trust comprising interest, original issue discount and
dividends and all other types of income or loss to the extent the Taxable
Income, Tax-Exempt Income, Tax Loss or Loss items not included in Tax Loss
arising from such items are recognized for tax purposes at the same time that
Profit or Loss are accrued for book purposes by the Trust.
"Net Unrealized Gain" shall mean the excess, if any, of the aggregate
Fair Market Value of all Investments over the aggregate adjusted bases, for
federal income tax purposes, of all Investments.
"Net Unrealized Loss" shall mean the excess, if any, of the aggregate
adjusted bases, for federal income tax purposes, of all Investments over the
aggregate Fair Market Value of all Investments.
"Profit" and "Loss" shall mean, for each Fiscal Year or other period,
an amount equal to the Taxable Income or Tax Loss for such Fiscal Year or period
with the following adjustments:
(i) Any Tax-Exempt Income shall be added to such Taxable
Income or subtracted from such Tax Loss; and
(ii) Any expenditures of the Trust for such year or period
described in Section 705(a)(2)(B) of the Code or treated as
expenditures under Section 705(a)(2)(B) of the Code pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(i), and not otherwise
taken into account in computing Profit or Loss or specially allocated
shall be subtracted from such Taxable Income or added to such Tax Loss.
"Redemption" shall mean the complete withdrawal of an Interest of a
Holder the result of which is to reduce the Book Capital Account balance of that
Holder to zero.
"Registration Statement" shall mean the Registration Statement of the
Trust on Form N-1A as filed with the U.S. Securities and Exchange Commission
under the 1940 Act, as the same may be amended from time to time.
"Reserves" shall mean, with respect to any Fiscal Year, funds set aside
or amounts allocated during such period to reserves which shall be maintained in
amounts deemed sufficient by the Trustees for working capital and to pay taxes,
insurance, debt service, renewals, or other costs or expenses, incident to the
ownership of the Investments or to its operations.
"Tax Capital Account" shall mean, for any Holder at any time in any
Fiscal Year, the Tax Capital Account balance of the Holder on the first day of
the Fiscal Year, as adjusted each day pursuant to the provisions of Section 3.3
hereof.
"Tax-Exempt Income" shall mean income of the Trust for such Fiscal Year
or period that is exempt from federal income tax and not otherwise taken into
account in computing Profit or Loss.
"Tax Lot" shall mean securities or other property which are both
purchased or acquired, and sold or otherwise disposed of, as a unit.
"Taxable Income" or "Tax Loss" shall mean the taxable income or tax
loss of the Trust, determined in accordance with Section 703(a) of the Code, for
each Fiscal Year as determined for federal income tax purposes, together with
each of the Trust's items of income, gain, loss or deduction which is separately
stated or otherwise not included in computing taxable income and tax loss.
"Treasury Regulations" shall mean the Income Tax Regulations
promulgated under the Code, as such regulations may be amended from time to time
(including corresponding provisions of succeeding regulations).
"Trust" shall mean Asian Small Companies Portfolio, a trust fund formed
under the laws of the State of New York by the Declaration.
"Trustees" shall mean each signatory to the Declaration, so long as
such signatory shall continue in office in accordance with the terms thereof,
and all other individuals who at the time in question have been duly elected or
appointed and have qualified as Trustees in accordance with the provisions
thereof and are then in office.
The "1940 Act" shall mean the U.S. Investment Company Act of 1940, as
amended from time to time, and the rules and regulations thereunder.
ARTICLE III
Capital Accounts
3.1. Capital Accounts of Holders. A separate Book Capital Account and a
separate Tax Capital Account shall be maintained for each Holder pursuant to
Section 3.2 and Section 3.3. hereof, respectively. In the event the Trustees
shall determine that it is prudent to modify the manner in which the Book
Capital Accounts or Tax Capital Accounts, or any debits or credits thereto, are
computed in order to comply with the Treasury Regulations, the Trustees may make
such modification, provided that it is not likely to have a material effect on
the amounts distributable to any Holder pursuant to Article VII hereof upon the
dissolution of the Trust.
3.2. Book Capital Accounts. The Book Capital Account balance of each Holder
shall be adjusted each day by the following amounts:
(a) increased by any increase in Net Unrealized Gains or decrease in Net
Unrealized Losses allocated to such Holder pursuant to Section 5.1(a) hereof;
(b) decreased by any decrease in Net Unrealized Gains or increase in Net
Unrealized Losses allocated to such Holder pursuant to Section 5.1(b) hereof;
(c) increased or decreased, as the case may be, by the amount of Profit or
Loss, respectively, allocated to such Holder pursuant to Section 5.1(c) hereof;
(d) increased by any Capital Contribution made by such Holder; and,
(e) decreased by any distribution, including any distribution to effect a
withdrawal or Redemption, made to such Holder by the Trust.
Any adjustment pursuant to Section 3.2 (a), (b) or (c) above shall be
prorated for increases in each Holder's Book Capital Account balance resulting
from Capital Contributions, or distributions or withdrawals from the Trust or
Redemptions by the Trust occurring, during such Fiscal Year as of the day after
the Capital Contribution, distribution, withdrawal or Redemption is accepted,
made or effected by the Trust.
3.3. Tax Capital Accounts. The Tax Capital Account balance of each Holder
shall be adjusted at the following times by the following amounts:
(a) increased daily by the adjusted tax bases of any Capital Contribution
made by such Holder to the Trust;
(b) increased daily by the amount of Taxable Income and Tax-Exempt Income
allocated to such Holder pursuant to Section 5.2 hereof at such times as
the allocations are made under Section 5.2 hereof;
(c) decreased daily by the amount of cash distributed to the Holder
pursuant to any of these procedures including any distribution made to effect a
withdrawal or Redemption; and
(d) decreased by the amount of Tax Loss allocated to such Holder
pursuant to Section 5.2 hereof at such times as the allocations are made under
Section 5.2 hereof.
3.4. Compliance with Treasury Regulations. The foregoing provisions and
other provisions contained herein relating to the maintenance of Book Capital
Accounts and Tax Capital Accounts are intended to comply with Treasury
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Treasury Regulations.
The Trustees shall make any appropriate modifications in the event
unanticipated events might otherwise cause these procedures not to comply with
Treasury Regulations Section 1.704-1(b), including the requirements described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(1) and Treasury Regulations
Section 1.704-1(b)(2)(iv). Such modifications are hereby incorporated into these
procedures by this reference as though
fully set forth herein.
ARTICLE IV
Distributions of Cash and Assets
4.1. Distributions of Distributable Cash. Except as otherwise provided
in Article VII hereof, Distributable Cash for each Fiscal Year may be
distributed to the Holders at such times, if any, and in such amounts as shall
be determined in the sole discretion of the Trustees. In exercising such
discretion, the Trustees shall distribute such Distributable Cash so that
Holders that are regulated investment companies can comply with the distribution
requirements set forth in Code Section 852 and avoid the excise tax imposed by
Code Section 4982.
4.2. Division Among Holders. All distributions to the Holders with
respect to any Fiscal Year pursuant to Section 4.1 hereof shall be made to the
Holders in proportion to the Taxable Income, Tax-Exempt Income or Tax Loss
allocated to the Holders with respect to such Fiscal Year pursuant to the terms
of these procedures.
4.3. Distributions Upon Liquidation of a Holder's Interest in the
Trust. Upon liquidation of a Holder's interest in the Trust, the proceeds will
be distributed to the Holder as provided in Section 5.6, Article VI, and Article
VII hereof. If such Holder has a negative book capital account balance, the
provisions of Section 7.4 will apply.
4.4. Amounts Withheld. All amounts withheld pursuant to the Code or any
provision of any state or local tax law with respect to any payment or
distribution to the Trust or the Holders shall be treated as amounts distributed
to such Holders pursuant to this Article IV for all purposes under these
procedures. The Trustees may allocate any such amount among the Holders in any
manner that is in accordance with applicable law.
ARTICLE V
Allocations
5.1. Allocation of Items to Book Capital Accounts.
(a) Increase in Net Unrealized Gains or Decrease in Net Unrealized
Losses. Any decrease in Net Unrealized Loss due to realization of items shall be
allocated to the Holder receiving the allocation of Loss, in the same amount,
under Section 5.1(c) hereof. Subject to Section 5.1(d) hereof, any increase in
Net Unrealized Gains or decrease in Net Unrealized Loss on any day during the
Fiscal Year shall be allocated to the Holders' Book Capital Accounts at the end
of such day, in proportion to the Holders' respective Book Capital Account
balances at the commencement of such day.
(b) Decrease in Net Unrealized Gains or Increase in Net Unrealized
Losses. Any decrease in Net Unrealized Gains due to realization of items shall
be allocated to the Holder receiving the allocation of Profit, in the same
amount, under Section 5.1(c) hereof. Subject to Section 5.1(d) hereof, any
decrease in Net Unrealized Gains or increase in Net Unrealized Loss on any day
during the Fiscal Year shall be allocated to the Holders' Book Capital Accounts
at the end of such day, in proportion to the Holders' respective Book Capital
Account balances at the commencement of such day.
(c) Profit and Loss. Subject to Section 5.1(d) hereof, Profit and Loss
occurring on any day during the Fiscal Year shall be allocated to the Holders'
Book Capital Accounts at the end of such day in proportion to the Holders'
respective Book Capital Account balances at the commencement of such day.
(d) Other Book Capital Account Adjustments.
(i) Any allocation pursuant to Section 5.1(a), (b) or (c)
above shall be prorated for increases in each Holder's Book Capital
Account resulting from Capital Contributions, or distributions or
withdrawals from the Trust or Redemptions by the Trust occurring,
during such Fiscal Year as of the day after the Capital Contribution,
distribution, withdrawal or Redemption is accepted, made or effected by
the Trust.
(ii) For purposes of determining the Profit, Loss, and Net
Unrealized Gain or Net Unrealized Loss or any other item allocable to
any Fiscal Year, Profit, Loss, and Net Unrealized Gain or Net
Unrealized Loss and any such other item shall be determined by or on
behalf of the Trustees using any reasonable method under Code Section
706 and the Treasury Regulations thereunder.
5.2. Allocation of Taxable Income and Tax Loss to Tax Capital Accounts.
(a) Taxable Income and Tax Loss. Subject to Section 5.2(b) and Section
5.3 hereof, which shall take precedence over this Section 5.2(a), Taxable Income
or Tax Loss for any Fiscal Year shall be allocated at least annually to the
Holders' Tax Capital Accounts as follows:
(i) First, Taxable Income and Tax Loss, whether constituting
ordinary income (or loss) or capital gain (or loss), derived from the
sale or other disposition of a Tax Lot of securities or other property
shall be allocated as of the date such income, gain or loss is
recognized for federal income tax purposes solely in proportion to the
amount of unrealized appreciation (in the case of such income or
capital gain, but not in the case of any such loss) or depreciation (in
the case of any such loss, but not in the case of any such income or
capital gain) from that Tax Lot which was allocated to the Holders'
Book Capital Accounts each day that such securities or other property
was held by the Trust pursuant to Section 5.1(a) and (b) hereof; and
(ii) Second, any remaining amounts at the end of the Fiscal
Year, to the Holders in proportion to their respective daily average
Book Capital Account balances determined for the Fiscal Year of the
allocation.
(b) Matched Income or Loss. Notwithstanding the provisions of Section
5.2(a) hereof, Taxable Income, Tax-Exempt Income or Tax Loss accruing on any day
during the Fiscal Year constituting Matched Income or Loss, shall be allocated
daily to the Holders' Tax Capital Accounts solely in proportion to and to the
extent of corresponding allocations of Profit or Loss to the Holders' Book
Capital Accounts pursuant to the first sentence of Section 5.1(c) hereof.
5.3. Special Allocations to Book and Tax Capital Accounts.
(a) The Designated Expenses computed for each Holder shall be allocated
separately (not included in the allocations of Matched Income or Loss, Loss or
Tax Loss) to the Book Capital Account and Tax Capital Account of each Holder.
(b) If the Trust incurs any nonrecourse indebtedness, then allocations
of items attributable to nonrecourse indebtedness shall be made to the Tax
Capital Account of each Holder in accordance with the requirements of Treasury
Regulations Section 1.704-1(b)(4)(iv)(d).
(c) In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, Taxable Income and Tax Loss with respect to any property contributed
to the capital of the Trust shall be allocated to the Tax Capital Account of
each Holder so as to take into account any variation between the adjusted tax
basis of such property to the Trust for federal income tax purposes and such
property's Fair Market Value at the time of contribution to the Trust.
5.4. Other Adjustments to Book and Tax Capital Accounts.
(a) Any election or other decision relating to such allocations shall
be made by the Trustees in any manner that reasonably reflects the purpose and
intention of these procedures.
(b) Each Holder will report its share of Trust income and loss for
federal income tax purposes in accordance with the allocations effected pursuant
to Section 5.2 hereof.
5.5. Timing of Tax Allocations to Book and Tax Capital Accounts.
Allocation of Taxable Income, Tax-Exempt Income and Tax Loss pursuant to Section
5.2 hereof for any Fiscal Year, unless specified above to the contrary, shall be
made only after corresponding adjustments have been made to the Book Capital
Accounts of the Holders for the Fiscal Year as provided pursuant to Section 5.1
hereof.
5.6. Redemptions During the Fiscal Year. If a Redemption occurs prior
to the end of a Fiscal Year, the Trust will treat the Fiscal Year as ended for
the purposes of computing the redeeming Holder's distributive share of Trust
items and allocations of all items to such Holder will be made as though each
Holder were receiving its allocable share of Trust items at such time. All items
so allocated to the redeeming Holder will be subtracted from the items to be
allocated among the other non-redeeming Holders at the actual end of the Fiscal
Year. All items allocated among the redeeming and non-redeeming Holders will be
made subject to the rules of Code Sections 702, 704, 706 and 708 and the
Treasury Regulations promulgated thereunder.
ARTICLE VI
Withdrawals
6.1. Partial Withdrawals. At any time any Holder shall be entitled to
request a withdrawal of such portion of the Interest held by such Holder as such
Holder shall request.
6.2. Redemptions. At any time a Holder shall be entitled to request a
Redemption of all of its Interest. A Holder's Interest may be redeemed at any
time during the Fiscal Year as provided in Section 6.3 hereof by a cash
distribution or, at the option of a Holder, by a distribution of a proportionate
amount except for fractional shares of each Trust asset at the option of the
Trust. However, the Holder may be redeemed by a distribution of a proportionate
amount of the Trust's assets only at the end of a Fiscal Year. However, if the
Holder has contributed any property to the Trust other than cash, if such
property remains in the Trust at the time the Holder requests withdrawal, then
such property will be sold by the Trust prior to the time at which the Holder
withdraws from the Trust.
6.3. Distribution in Kind. If a withdrawing Holder receives a distribution
in kind of its proportionate part of Trust property, then unrealized income,
gain, loss or deduction attributable to such property shall be allocated among
the Holders as if there had been a disposition of the property on the date of
distribution in compliance with the requirements of Treasury Regulations Section
1.704-1(b)(2)(iv)(e).
ARTICLE VII
Liquidation
7.1. Liquidation Procedure. Subject to Section 7.4 hereof, upon dissolution
of the Trust, the Trustees shall liquidate the assets of the Trust, apply and
distribute the proceeds thereof as follows:
(a) first to the payment of all debts and obligations of the Trust to
third parties, including without limitation the retirement of outstanding debt,
including any debt owed to Holders or their affiliates, and the expenses of
liquidation, and to the setting up of any Reserves for contingencies which may
be necessary; and
(b) then in accordance with the Holders' positive Book Capital Account
balances after adjusting Book Capital Accounts for allocations provided in
Article V hereof and in accordance with the requirements described in Treasury
Regulations Section 1.704-1(b)(2) (ii)(b)(2).
7.2. Alternative Liquidation Procedure. Notwithstanding the foregoing, if
the Trustees shall determine that an immediate sale of part or all of the Trust
assets would cause undue loss to the Holders, the Trustees, in order to avoid
such loss, may, after having given notification to all the Holders, to the
extent not then prohibited by the law of any jurisdiction in which the Trust is
then formed or qualified and applicable in the circumstances, either defer
liquidation of and withhold from distribution for a reasonable time any assets
of the Trust except those necessary to satisfy the Trust's debts and obligations
or distribute the Trust's assets to the Holders in liquidation.
7.3. Cash Distributions Upon Liquidation. Except as provided in Section 7.2
hereof, amounts distributed in liquidation of the Trust shall be paid solely in
cash.
7.4. Treatment of Negative Book Capital Account Balance. If a Holder has a
negative balance in its Book Capital Account following the liquidation of its
Interest, as determined after taking into account all capital account
adjustments for the Fiscal Year during which the liquidation occurs, then such
Holder shall restore the amount of such negative balance to the Trust by the
later of the end of the Fiscal Year or 90 days after the date of such
liquidation so as to comply with the requirements of Treasury Regulations
Section 1.704-1(b)(2)(ii)(b)(3). Such amount shall, upon liquidation, be paid to
creditors of the Trust or distributed to other Holders in accordance with their
positive Book Capital Account balances.
ASIAN SMALL COMPANIES PORTFOLIO
ADMINISTRATION AGREEMENT
AGREEMENT made this 21st day of February, 1996 between Asian Small
Companies Portfolio, a New York trust (the "Trust"), and Eaton Vance Management,
a Massachusetts business trust (the "Administrator"):
1. Duties of the Administrator. The Trust hereby employs the
Administrator to act as administrator for and to manage and administer the
affairs of the Trust, subject to the supervision of the Trustees of the Trust,
for the period and on the terms set forth in this Agreement.
The Administrator hereby accepts such employment, and agrees to manage
and administer the Trust's business affairs and, in connection therewith, to
furnish for the use of the Trust office space and all necessary office
facilities, equipment and personnel for administering the affairs of the Trust.
The Administrator's services include monitoring and providing reports
to the Trustees of the Trust concerning the investment performance achieved by
the Adviser for the Trust, recordkeeping, preparation and filing of documents
required to comply with Federal and state securities laws, supervising the
activities of the custodian of the Trust, providing assistance in connection
with meetings of the Trustees and of Holders of Interests in the Trust and other
management and administrative services necessary to conduct the business of the
Trust.
The Administrator shall not be responsible for providing investment
management or advisory services to the Trust under this Agreement. Lloyd George
Investment Management (Bermuda) Limited in its capacity of investment adviser to
the Trust, shall be responsible for managing the investment and reinvestment of
the assets of the Trust under the Trust's separate Investment Advisory Agreement
with the investment adviser.
2. Compensation of the Administrator. For the services, payments and
facilities to be furnished hereunder by the Administrator, the Trust shall pay
to the Administrator on the last day of such month a fee computed by applying
the annual asset rate applicable to that portion of the average daily net assets
of the Trust throughout the month in each Category as indicated below:
Annual
Category Average Daily Net Assets Asset Rate
1 less than $500 million 0.25000%
2 $500 million but less than $1 billion 0.23333%
3 $1 billion but less than $1.5 billion 0.21667%
4 $1.5 billion but less than $2 billion 0.20000%
5 $2 billion but less than $3 billion 0.18333%
6 $3 billion and over 0.16667%
The average daily net assets of the Trust will be computed in accordance with
the Declaration of Trust, and any applicable votes and determinations of the
Trustees of the Trust. In case of initiation or termination of this Agreement
during any month, the fee for that month shall be reduced proportionately on the
basis of the number of calendar days during which it is in effect and the fee
shall be computed upon the average net assets for the business days it is so in
effect for that month.
The Administrator may, from time to time, waive all or a part of the
above compensation.
3. Allocation of Charges and Expenses. It is understood that the Trust
will pay all its expenses other than those expressly stated to be payable by the
Administrator hereunder, which expenses payable by the Trust shall include,
without implied limitation, (i) expenses of maintaining the Trust and continuing
its existence, (ii) registration of the Trust under the Investment Company Act
of 1940, (iii) commissions, fees and other expenses connected with the
acquisition, holding and disposition of securities and other investments, (iv)
auditing, accounting and legal expenses, (v) taxes and interest, (vi)
governmental fees, (vii) expenses of issue, sale and redemption of Interests in
the Trust, (viii) expenses of registering and qualifying the Trust and Interests
in the Trust under federal and state securities laws and of preparing and
printing registration statements or other offering documents or memoranda for
such purposes and for distributing the same to Holders and investors, and fees
and expenses of registering and maintaining registrations of the Trust and of
the Trust's placement agent as broker-dealer or agent under state securities
laws, (ix) expenses of reports and notices to Holders and of meetings of Holders
and proxy solicitations therefor, (x) expenses of reports to governmental
officers and commissions, (xi) insurance expenses, (xii) association membership
dues, (xiii) fees, expenses and other disbursements, if any, of custodians and
sub-custodians for all services to the Trust (including without limitation
safekeeping of funds, securities and other investments, keeping of books,
accounts and records, and determination of net asset values, book capital
account balances and tax capital account balances), (xiv) fees, expenses and
disbursements of transfer agents, dividend disbursing agents, Holder servicing
agents and registrars for all services to the Trust, (xv) expenses of servicing
the accounts of Holders, (xvi) any direct charges to Holders approved by the
Trustees of the Trust, (xvii) compensation and expenses of Trustees of the Trust
who are not members of the Administrator's organization, (xviii) the advisory
fees payable under any advisory agreement to which the Trust is a party and
(xix) such non-recurring items as may arise, including expenses incurred in
connection with litigation, proceedings and claims and the obligation of the
Trust to indemnify its Trustees, officers and Holders with respect thereto.
4. Other Interests. It is understood that Trustees, officers and
Holders of Interest in the Trust are or may be or become interested in the
Administrator as Trustees, officers, or employees, or otherwise and that
Trustees, officers and employees of the Administrator are or may be or become
similarly interested in the Trust, and that the Administrator may be or become
interested in the Trust as a shareholder or otherwise. It is also understood
that Trustees, officers and employees of the Administrator may be or become
interested (as directors, trustees, officers, employees, shareholders or
otherwise) in other companies or entities (including, without limitation, other
investment companies) which the Administrator may organize, sponsor or acquire,
or with which it may merge or consolidate, and that the Administrator or its
subsidiaries or affiliates may enter into advisory or management agreements or
other contracts or relationships with such other companies or entities.
5. Limitation of Liability of the Administrator. The services of the
Administrator of the Trust are not to be deemed to be exclusive, the
Administrator being free to render services to others and engage in other
business activities. In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on the part
of the Administrator, the Administrator shall not be subject to liability to the
Trust or to any Holder of the Trust for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses which may be
sustained in the acquisition, holding or disposition of any security or other
investment.
6. Duration and Termination of the Agreement. This Agreement shall
become effective upon the date of its execution, and, unless terminated as
herein provided, shall remain in full force and effect to and including February
28, 1998 and shall continue in full force and effect indefinitely thereafter,
but only so long as such continuance after February 28, 1998 is specifically
approved at least annually by the Trustees of the Trust.
Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Agreement, without the payment of any
penalty, by action of its Trustees, and the Trust may, at any time upon such
written notice to the Administrator, terminate this Agreement by vote of a
majority of the outstanding voting securities of the Trust. This Agreement shall
terminate automatically in the event of its assignment.
7. Amendment of the Agreement. This Agreement may be amended by a
writing signed by both parties hereto, provided that no amendment to this
Agreement shall be effective until approved by the vote of a majority of the
Trustees of the Trust.
8. Limitation of Liability. The Administrator expressly acknowledges
the provision in the Declaration of Trust of the Trust (Sections 5.2 and 5.6)
limiting the personal liability of the Trustees and officers of the Trust, and
the Administrator hereby agrees that it shall have recourse to the Trust for
payment of claims or obligations as between the Trust and the Administrator
arising out of this Agreement and shall not seek satisfaction from any Trustee
or officer of the Trust.
9. Certain Definitions. The term "assignment" when used herein shall
have the meaning specified in the Investment Company Act of 1940 as now in
effect or as hereafter amended subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission by any rule, regulation or
order. The terms "Holders" and "Interests" when used herein shall have the
respective meanings specified in the Declaration of Trust of the Trust.
ASIAN SMALL COMPANIES PORTFOLIO EATON VANCE MANAGEMENT
By /s/ James B. Hawkes By /s/ H. Day Brigham, Jr.
Vice President Vice President,
and not individually
