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As filed with the Securities and Exchange Commission on July 22, 1996
File No. 811-07723
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
WORLDWIDE HEALTH SCIENCES PORTFOLIO
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(Exact Name of Registrant as Specified in Charter)
The Bank of Nova Scotia Building
P.O. Box 501, George Town, Grand Cayman
Cayman Islands, British West Indies
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(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (809) 949-2001
Thomas Otis
24 Federal Street, Boston, Massachusetts 02110
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(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 Sections 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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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
Worldwide Health Sciences Portfolio (the "Portfolio") is a
diversified, open-end management investment company which was organized as
a trust under the laws of the State of New York on March 26, 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 Securities Act of 1933, as amended (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 Section 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.
The Portfolio's investment objective is long-term capital growth.
The Portfolio seeks to achieve its objective by investing in a global and
diversified portfolio of securities of health sciences companies.
The Portfolio is intended for long-term investors who can accept
international investment risk and little or no current income. Because
the Portfolio concentrates its investments in medical research and the
health care industry, the Portfolio is not intended to be a complete
investment program. Prospective investors should take into account their
objectives and other investments when considering the purchase of an
interest in the Portfolio. The Portfolio cannot assure achievement of its
investment objective. See "Investment Policies and Risks" for further
information. The investment objective of the Portfolio is nonfundamental.
Additional information about the investment policies of the Portfolio
appears in Part B.
Health Science Investments
Markets for health sciences products and services have undergone
significant growth over the last 25 years. In the U.S., the Department of
Health and Human Services estimates healthcare expenditures alone could
increase to over 16% of gross national product by the year 2000, compared
to 7.6%, 10.3% and 14.0% in 1972, 1982 and 1992, respectively. Outside
the U.S., most developed countries are seeing similar growth in health
care expenditures. In emerging markets, health care spending is
increasing as standards of living are improving and as revenues become
available to fund government and private programs to address basic health
needs. Factors contributing to this growth include demographic shifts
tending to a higher world population and a larger elderly population in
industrialized nations, technological advances, and popular acceptance of
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and worldwide familiarity with healthcare products, resulting in high
consumer demand. In addition to increased demand for health science
products and services, substantial public and private expenditures on
basic medical research and advances in technology have accelerated the
pace of medical discoveries. The Portfolio's investment adviser, G/A
Capital Management, Inc. ("G/A" or the "Adviser"), believes that the rate
of change may accelerate in the future, causing certain segments of the
business to decline and others to experience growth. Favorable investment
opportunities may be found in companies that provide products or services
designed for the prevention, diagnosis and treatment of physical and
mental disorders.
In making portfolio selections, in addition to evaluating trends
in corporate revenues, earnings and dividends, the Adviser generally
considers the amount of capital currently being expended on research and
development, and the nature thereof. The Adviser believes that dollars
invested in research and development today frequently have significant
bearing on future growth.
Portfolio securities generally will be selected from companies in
the following groups:
Biotechnology - Companies which are producing or plan to produce
as a result of current research, diagnostic and therapeutic drugs and
reagents based on genetic engineering and the use of monoclonal antibodies
or on recombinant DNA; also, specialty companies catering to the unique
requirements of biotechnology companies such as those providing enzymes,
media and purification equipment.
Diagnostics - Private organizations that develop or maintain
sophisticated diagnostic equipment such as CAT scanners and Magnetic
Resonance Imaging as well as urological and serological assays.
Managed Healthcare - Operators of investor-owned hospital chains
(including acute care psychiatric hospitals), nursing centers for the
elderly, health maintenance organizations, and rehabilitation clinics
which seek to deliver hospital care on an efficient cost basis.
Medical Equipment and Supplies - Companies engaged in the
manufacture of inpatient and outpatient medical (and dental), surgical,
laboratory and diagnostic products (ranging from cotton swabs through
kidney dialyses equipment to CAT scanners).
Pharmaceuticals - Companies involved with new types of drugs and
their delivery systems.
By focusing on companies such as the foregoing, the Adviser
believes that the opportunity for long-term capital growth exists. Of
course, there can be no assurance that the Portfolio will be able to take
advantage of the foregoing opportunities, or that such investment
opportunities will be favorable.
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Investment Policies and Risks
The Portfolio invests in a global and diversified portfolio of
securities of health sciences companies. These companies principally are
engaged in the development, production or distribution of products or
services related to scientific advances in healthcare, including
biotechnology, diagnostics, managed healthcare, medical equipment and
supplies, and pharmaceuticals. At the time the Portfolio makes an
investment, 50% or more of such a company's sales, earnings or assets will
arise from or will be dedicated to the application of scientific advances
related to healthcare. The Portfolio may invest in securities of both
established and emerging companies, some of which may be denominated in
foreign currencies.
Under normal market conditions, the Portfolio will invest at
least 65% of its assets in securities of health science companies,
including common and preferred stocks; equity interests in partnerships;
convertible preferred stocks; and other convertible instruments.
Convertible debt instruments generally will be rated below investment
grade (i.e., rated lower than Baa by Moody's Investors Service, Inc. or
lower than BBB by Standard & Poor's) or, if unrated, determined by the
Adviser to be of equivalent quality. Convertible debt securities so rated
are commonly called "junk bonds" and have risks similar to equity
securities; they are speculative and changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case with higher grade debt
securities. Such below investment grade debt securities will not exceed
20% of total assets. For temporary defensive purposes, the Portfolio may
invest without limit in debt securities of foreign and United States
companies, foreign governments and the U.S. Government, and their
respective agencies, instrumentalities, political subdivisions and
authorities, as well as in high quality money market instruments.
An investment in the Portfolio entails the risk that the
principal value of interests in the Portfolio may not increase or may
decline. The Portfolio's investments are subject to the risk of adverse
developments affecting particular companies, the health science industries
and securities markets generally. The value of interests in the Portfolio
may fluctuate more than investments in a broader range of industries.
Many health science companies are subject to substantial governmental
regulations that can affect their prospects. Changes in governmental
policies, such as reductions in the funding of third-party payment
programs, may have a material effect on the demand for particular health
care products and services. Regulatory approvals (often entailing lengthy
application and testing procedures) are also generally required before new
drugs and certain medical devices and procedures may be introduced. Many
of the products and services of companies engaged in medical research and
health care are also subject to relatively high risks of rapid
obsolescence caused by progressive scientific and technological advances.
The enforcement of patent, trademark and other intellectual property laws
will affect the value of many of such companies. The Portfolio will
invest in securities of emerging growth health science companies, which
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may offer limited products or services or which are at the research and
development stage with no marketable or approved products or technologies.
The securities of smaller, less-seasoned companies, which may include
legally restricted securities, are generally subject to greater price
fluctuations, limited liquidity and higher investment risk. The Portfolio
may invest up to 15% of its net assets in illiquid securities (which
excludes securities eligible for resale under Rule 144A of the 1933 Act).
In addition, the Portfolio may temporarily borrow up to 5% of the value of
its total assets to satisfy redemption requests or settle securities
transactions.
Investing in Foreign Securities. Investing in securities issued by
foreign companies and governments involves considerations and possible
risks not typically associated with investing in securities issued by the
U.S. Government and domestic corporations. The values of foreign invest-
ments are affected by changes in currency rates or exchange control
regulations, application of foreign tax laws (including withholding tax),
changes in governmental administration or economic or monetary policy (in
this country or abroad), or changed circumstances in dealings between
nations. Because investment in foreign securities will usually involve
currencies of foreign countries, the value of the assets of the Portfolio
as measured in U.S. dollars may be adversely affected by changes in
foreign currency exchange rates. Such rates may fluctuate significantly
over short periods of time causing the Portfolio's net asset value to
fluctuate as well. Costs are incurred in connection with conversions
between various currencies. In addition, foreign brokerage commissions,
custody fees and other costs of investing are generally higher than in the
United States, and foreign securities markets may be less liquid, more
volatile and less subject to governmental supervision than in the United
States. Investments in foreign issuers could be adversely affected by
other factors not present in the United States, including expropriation,
confiscatory taxation, lack of uniform accounting and auditing standards,
and potential difficulties in enforcing contractual obligations. In
addition to investing in foreign companies of countries which represent
established and developed economies, the Portfolio may also invest some of
its assets in the emerging economies of lesser developed countries such as
China and India, and countries located in Latin America and Eastern
Europe. Consistent with its investment objective, the Portfolio is not
limited in the percentage of assets it may invest in such securities but
the number of health science issuers in lesser developed countries is
relatively small. The relative risk and cost of investing in the
securities of companies in such emerging economies may be higher than an
investment in securities of companies in more developed countries. As of
the date hereof, the Adviser initially expects to invest 50% of the
Portfolio's assets in foreign securities.
Derivative Instruments. The Portfolio may purchase or sell derivative
instruments (which are instruments that derive their value from another
instrument, security, index or currency) to enhance return (which may be
considered speculative), to hedge against fluctuations in securities
prices, interest rates or currency exchange rates, or as a substitute for
the purchase or sale of securities or currencies. The Portfolio's
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transactions in derivative instruments may be in the U.S. or abroad and
may include the purchase or sale of futures contracts on securities,
securities indices, other indices, other financial instruments or
currencies; options on futures contracts; exchange-traded and over-the-
counter options on securities, indices or currencies; and forward foreign
currency exchange contracts. The Portfolio's transactions in derivative
instruments involve a risk of loss or depreciation due to: unanticipated
adverse changes in securities prices, interest rates, the other financial
instruments' prices, or currency exchange rates; the inability to close
out a position; default by the counterparty; imperfect correlation between
a position and the desired hedge; tax constraints on closing out
positions; and portfolio management constraints on securities subject to
such transactions. The loss on derivative instruments (other than
purchased options) may substantially exceed the Portfolio's initial
investment in these instruments. In addition, the Portfolio may lose the
entire premium paid for purchased options that expire before they can be
profitably exercised by the Portfolio. The Portfolio incurs transaction
costs in opening and closing positions in derivative instruments. There
can be no assurance that the Adviser's use of derivative instruments will
be advantageous to the Portfolio.
To the extent that the Portfolio enters into futures contracts,
options on futures contracts and options on foreign currencies traded on
an exchange regulated by the Commodity Futures Trading Commission
("CFTC"), in each case that are not for bona fide hedging purposes (as
defined by the CFTC), the aggregate initial margin and premiums required
to establish these positions (excluding the amount by which options are
"in-the-money") may not exceed 5% of the liquidation value of the
Portfolio's investments, after taking into account unrealized profits and
unrealized losses on any contracts the Portfolio has entered into. There
is no current intention to use derivative instruments for non-hedging
purposes.
Forward contracts are individually negotiated and privately
traded by currency traders and their customers. A forward contract
involves an obligation to purchase or sell a specific currency (or basket
of currencies) for an agreed price at a future date, which may be any
fixed number of days from the date of the contract. The Portfolio may
engage in cross-hedging by using forward contracts in one currency (or
basket of currencies) to hedge against fluctuations in the value of
securities denominated in a different currency if the Adviser determines
that there is an established historical pattern or correlation between the
two currencies (or the basket of currencies and the underlying currency).
Use of a different foreign currency magnifies the Portfolio's exposure to
foreign currency exchange rate fluctuations. The Portfolio may also use
forward contracts to shift its exposure to foreign currency exchange rate
changes from one currency to another.
Currency Swaps. The Portfolio may enter into currency swaps for both
hedging and non-hedging purposes. Currency swaps involve the exchange of
rights to make or receive payments in specified currencies. Since
currency swaps are individually negotiated, the Portfolio expects to
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achieve an acceptable degree of correlation between its portfolio
investments and its currency swap positions. Currency swaps usually
involve the delivery of the entire principal value of one designated
currency in exchange for the other designated currency. Therefore, the
entire principal value of a currency swap is subject to the risk that the
other party to the swap will default on its contractual delivery
obligations. The use of currency swaps is a highly specialized activity
which involves special investment techniques and risks. If the Adviser is
incorrect in its forecasts of market values and currency exchange rates,
the Portfolio's performance will be adversely affected.
Repurchase Agreements. The Portfolio may enter into repurchase agreements
with respect to its permitted investments, but currently intends to do so
only with member banks of the Federal Reserve System or with primary
dealers in U.S. Government securities. In the event of the bankruptcy of
the other party to a repurchase agreement, the Portfolio might experience
delays in recovering its cash. To the extent that, in the meantime, the
value of the securities the Portfolio purchased may have decreased, the
Portfolio could experience a loss. The Portfolio does not expect to
invest more than 5% of its total assets in repurchase agreements under
normal circumstances.
Other Investment Companies. The Portfolio reserves the right to invest up
to 10% of its total assets in the securities of other investment companies
unaffiliated with the Adviser or Eaton Vance Management ("Eaton Vance")
that have the characteristics of closed-end investment companies. The
Portfolio will indirectly bear its proportionate share of any management
fees paid by investment companies in which it invests in addition to the
advisory fee paid by the Portfolio. The value of closed-end investment
securities, which are usually traded on an exchange, is affected by the
demand for the securities themselves, independent of the demand for the
underlying portfolio assets and, accordingly, such securities can trade at
a discount from their net asset values.
Certain Investment Policies. The Portfolio has adopted certain
fundamental investment restrictions which are enumerated in detail in Part
B and which may not be changed unless authorized by an investor vote.
Investment restrictions are considered at the time of acquisition of
assets; the sale of portfolio assets generally is not required in the
event of a subsequent change in circumstances. As a matter of fundamental
policy the Portfolio will not invest 25% or more of its total assets in
the securities of issuers in any one industry, other than U.S. Government
securities and securities of health sciences companies. However, the
Portfolio is permitted to invest 25% or more of its total assets in (i)
the securities of issuers located in any one country and (ii) securities
denominated in the currency of any one country.
Except for the fundamental investment restrictions and policies
specifically identified above and those enumerated in Part B, the
investment objective and policies of the Portfolio are not fundamental
policies and accordingly may be changed by the Trustees without obtaining
the approval of the investors in the Portfolio. The Portfolio's investors
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will receive written notice thirty days prior to any change in the
investment objective of the Portfolio. If any changes were made, the
Portfolio might have an investment objective different from the objective
which an investor considered appropriate at the time of its initial
investment.
Item 5. Management of the Portfolio
The Portfolio is organized as a trust under the laws of the State
of New York. The Portfolio intends to comply with all applicable federal
and state securities laws.
Adviser. The Portfolio has engaged G/A, located at 41 Madison Avenue,
40th Floor, New York, New York 10010-2202, as its investment adviser. G/A
was incorporated in Delaware on February 24, 1989 and is principally owned
by Samuel D. Isaly, who serves as the President of G/A. The Portfolio is
the only investment company registered under the Investment Company Act of
1940 (the "1940 Act") advised by G/A.
Investment decisions for the Portfolio are made by the portfolio
manager, Samuel D. Isaly. Mr. Isaly has been active in international and
health care investing throughout his career, beginning at Chase Manhattan
Bank in New York in 1968. He studied international economics, mathematics
and econometrics at Princeton and the London School of Economics. His
company, Gramercy Associates, was the first to develop an integrated
worldwide system of analysis on the 100 leading worldwide pharmaceutical
companies, with investment recommendations conveyed to 50 leading
financial institutions in the United States and Europe beginning in 1982.
Gramercy Associates was absorbed into S.G. Warburg & Company Inc. in 1986,
where Mr. Isaly became a Senior Vice President. In July of 1989, Mr.
Isaly joined with Dr. Viren Mehta to found the partnership of Mehta and
Isaly. The operations of the combined effort are (1) to provide
investment ideas to institutional investors on the subject of worldwide
health care, (2) to undertake cross-border merger and acquisition projects
in the industry and (3) to provide investment management services to
selected investors. The latter activity is undertaken through the legal
entity G/A Capital Management, Inc., which is an SEC-registered investment
advisory firm.
For its services, G/A receives a fee computed daily and payable
monthly at an annual rate of 1.00% of the Portfolio's average daily net
assets up to $30 million of such assets, 0.90% of the next $20 million of
such assets, and 0.75% on such assets in excess of $50 million. The fee
rate declines for net assets of $500 million and greater. After September
1, 1997, G/A may receive a performance based adjustment of up to 0.25% of
the net assets of the Portfolio. G/A has agreed to pay Eaton Vance
Distributors, Inc. ("EVD") the equivalent of one-third of its advisory fee
receipts out of G/A's own resources for EVD's activities as placement
agent of the Portfolio.
The Adviser furnishes for the use of the Portfolio office space
and all necessary office facilities, equipment and personnel for servicing
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the investments of the Portfolio. The Adviser places the portfolio
securities transactions of the Portfolio with many broker-dealer firms and
uses its best efforts to obtain execution of such transactions at prices
which are advantageous to the Portfolio and at reasonably competitive
commission rates. Subject to the foregoing, the Adviser may consider
sales of shares of one or more investment companies sponsored by the
Adviser, Eaton Vance or their affiliates or shares of any investment
company investing in the Portfolio as a factor in the selection of firms
to execute portfolio transactions.
Administrator. Eaton Vance, its affiliates and its predecessor companies
have been managing assets of individuals and institutions since 1924 and
managing investment companies since 1931. Eaton Vance acts as investment
adviser to investment companies and various individual and institutional
clients with assets under management of over $16 billion. Eaton Vance is
a wholly-owned subsidiary of Eaton Vance Corp., a publicly-held holding
company that, through its subsidiaries and affiliates, engages primarily
in investment management, administration and marketing activities.
Acting under the general supervision of the Board of Trustees of
the Portfolio, Eaton Vance administers the business affairs of the
Portfolio. Eaton Vance's services include monitoring and providing
reports to the Trustees of the Portfolio concerning the investment
performance achieved by the Adviser for the Portfolio, recordkeeping,
preparation and filing of documents required to comply with federal and
state securities laws, supervising the activities of the custodian of the
Portfolio, providing assistance in connection with Trustees' and
interestholders' meetings and other administrative services necessary to
conduct the business of the Portfolio. Eaton Vance also furnishes for the
use of the Portfolio office space and all necessary office facilities,
equipment and personnel for administering the business affairs of the
Portfolio. Eaton Vance does not provide any investment management or
advisory services to the Portfolio.
Under its administration agreement with the Portfolio, Eaton
Vance receives a monthly administration fee in the amount of 1/48 of 1%
(equal to 0.25% annually) of the average daily net assets of the Portfolio
up to $500 million, which fee declines at intervals above $500 million.
The combined investment advisory and administration fees payable by the
Portfolio are higher than similar fees charged by most other investment
companies.
The Portfolio will be responsible for the payment of all of its
costs and expenses not expressly stated to be payable by the Adviser under
the investment advisory agreement or by Eaton Vance under the
administration agreement. Such costs and expenses to be borne by the
Portfolio include, without limitation: custody fees and expenses,
including those incurred for determining net asset value and keeping
accounting books and records; expenses of pricing and valuation services;
membership dues in investment company organizations; brokerage commissions
and fees; fees and expenses of registering under the securities laws;
expenses of reports to investors; proxy statements, and other expenses of
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investors' meetings; insurance premiums; printing and mailing expenses;
interest, taxes and corporate fees; legal and accounting expenses;
compensation and expenses of Trustees not affiliated with Eaton Vance or
the Adviser; and investment advisory and administration fees. The
Portfolio will also bear expenses incurred in connection with litigation
in which the Portfolio is a party and any legal obligation to indemnify
its officers and Trustees with respect thereto.
Transfer Agent. IBT Fund Services (Canada) Inc., 1 First Canadian Place,
King Street West, Suite 2800, P.O. Box 231, Toronto, Ontario, Canada M5X
1C8, a subsidiary of Investors Bank & Trust Company, the Portfolio's
custodian, serves as transfer agent and dividend-paying agent of the
Portfolio and computes the daily net asset value of interests in the
Portfolio.
Item 6. Capital Stock and Other Securities
The Portfolio is organized as a trust under the laws of the State
of New York and intends to be treated as a partnership for federal tax
purposes. Under the Declaration of Trust, the Trustees are authorized to
issue interests in the Portfolio. Each investor is entitled to a vote in
proportion to the amount of its investment in the Portfolio. Investments
in the Portfolio may not be transferred, but an investor may withdraw all
or any portion of its investment at any time at net asset value.
Investors in the Portfolio will each be liable for all obligations of the
Portfolio. However, the risk of an investor in the Portfolio incurring
financial loss on account of such liability is limited to circumstances in
which both adequate insurance exists and the Portfolio itself is unable to
meet its obligations.
The Declaration of Trust provides that the Portfolio will
terminate 120 days after the complete withdrawal of any investor in the
Portfolio unless either the remaining investors, by unanimous vote at a
meeting of such investors, or a majority of the Trustees of the Portfolio,
by written instrument consented to by all investors, agree to continue the
business of the Portfolio. This provision is consistent with the
treatment of the Portfolio as a partnership for federal income tax
purposes.
Investments in the Portfolio have no preemptive or conversion
rights and are fully paid and nonassessable, except as set forth above.
The Portfolio is not required and has no current intention to hold annual
meetings of investors, but the Portfolio may hold special meetings of
investors when in the judgment of the Trustees it is necessary or
desirable to submit matters for an investor vote. Changes in fundamental
policies or restrictions will be submitted to investors for approval. The
investment objective and all nonfundamental investment policies of the
Portfolio may be changed by the Trustees of the Portfolio without
obtaining the approval of the investors in the Portfolio. Investors have
under certain circumstances (e.g., upon application and submission of
certain specified documents to the Trustees by a specified number of
investors) the right to communicate with other investors in connection
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with requesting a meeting of investors for the purpose of removing one or
more Trustees. Any Trustee may be removed by the affirmative vote of
holders of two-thirds of the interests in the Portfolio. Upon liquidation
of the Portfolio, investors would be entitled to share pro rata in the net
assets of the Portfolio available for distribution to investors.
Information regarding pooled investment entities or funds that
invest in the Portfolio may be obtained by contacting Eaton Vance
Distributors, Inc., 24 Federal Street, Boston, MA 02110, (617) 482-8260.
Smaller investors in the Portfolio may be adversely affected by the
actions of a larger investor in the Portfolio. For example, if a large
investor withdraws from the Portfolio, the remaining investors may
experience higher pro rata operating expenses, thereby producing lower
returns. Additionally, the Portfolio may hold fewer securities, resulting
in increased portfolio risk, and experience decreasing economies of scale.
However, this possibility exists as well for historically structured funds
that have large or institutional investors.
As of June 30, 1996, Boston Management and Research, a wholly-
owned subsidiary of Eaton Vance, controlled the Portfolio by virtue of
owning approximately 99.9% of the outstanding interests in the Portfolio.
The net asset value of the Portfolio is determined each day on
which the New York Stock Exchange (the "Exchange") is open for trading
("Portfolio Business Day"). This determination is made each Portfolio
Business Day as of the close of regular trading on the Exchange (currently
4:00 p.m., New York time) (the "Portfolio Valuation Time").
Each investor in the Portfolio may add to or reduce its invest-
ment 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
represented that investor's share of the aggregate interest in the
Portfolio on such day. Any additions or withdrawals, which are to be
effected on that day, will then be effected. 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 close of regular
trading on the Exchange (normally 4:00 p.m., New York time), on such day
plus or minus, as the case may be, that amount of any additions to or
withdrawals from the investor's investment in the Portfolio effected on
such day, and (ii) the denominator of which is the aggregate net asset
value of the Portfolio as of the close of such trading on such day plus or
minus, as the case may be, the amount of the net additions to or
withdrawals from the aggregate investment in the Portfolio by all
investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio
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
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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 principles.
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 the regulations promulgated thereunder.
It is intended that the Portfolio's assets and income will be
managed in such a way that an investor in the Portfolio which 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.
An investment in the Portfolio will be made without a sales load.
All investments received by the Portfolio will be effected as of the next
Portfolio Valuation Time. The net asset value of the Portfolio is
determined at the Portfolio Valuation Time on each Portfolio Business Day.
The Portfolio will be closed for business and will not determine its net
asset value on the following business holidays: New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. The Portfolio's net asset value is
computed in accordance with procedures established by the Portfolio's
Trustees.
The Portfolio's net asset value is determined by IBT Fund
Services (Canada) Inc. (as agent for the Portfolio) based on market or
fair value in the manner authorized by the Trustees of the Portfolio, with
special provisions for valuing debt obligations, short-term investments,
foreign securities, direct investments, hedging instruments and assets not
having readily available market quotations, if any. The net asset value
is computed by subtracting the liabilities of the Portfolio from the value
of its total assets. 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
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Distributors, Inc. ("EVD"). The principal business address of EVD is 24
Federal Street, Boston, Massachusetts 02110. EVD receives no compensation
from the Portfolio 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
Securities and Exchange Commission (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 of 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-10
Control Persons and Principal Holder of Securities . . . B-14
Investment Advisory and Other Services . . . . . . . . . B-14
Brokerage Allocation and Other Practices . . . . . . . . B-17
Capital Stock and Other Securities . . . . . . . . . . . B-19
Purchase, Redemption and Pricing of Securities . . . . . B-21
Tax Status . . . . . . . . . . . . . . . . . . . . . . . B-22
Underwriters . . . . . . . . . . . . . . . . . . . . . . B-24
Calculation of Performance Data . . . . . . . . . . . . B-24
Financial Statements . . . . . . . . . . . . . . . . . . B-24
Item 12. General Information and History
Effective June 24, 1996, the Portfolio's name was changed from
"Global Health Sciences Portfolio" to "Worldwide Health Sciences
Portfolio."
Item 13. Investment Objectives and Policies
Part A contains additional information about the investment
objective and policies of Worldwide Health Sciences Portfolio (the
"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.
Foreign Investments. Under normal market conditions, the Portfolio will
invest in securities of issuers located in at least three different
countries. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant
risks not present in domestic investments. For example, there is
generally less publicly available information about foreign companies,
particularly those not subject to the disclosure and reporting
requirements of the U.S. securities laws. Foreign issuers are generally
not bound by uniform accounting, auditing, and financial reporting
requirements and standards of practice comparable to those applicable to
domestic issuers. Investments in foreign securities also involve the risk
of possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitation on the removal of funds
or other assets of the Portfolio, political or financial instability or
diplomatic and other developments which could affect such investments.
Further, economies of particular countries or areas of the world may
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differ favorably or unfavorably from the economy of the United States. It
is anticipated that in most cases the best available market for foreign
securities will be on exchanges or in over-the-counter markets located
outside of the United States. Foreign stock markets, while growing in
volume and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly those
located in developing countries) may be less liquid and more volatile than
securities of comparable U.S. companies. In addition, foreign brokerage
commissions are generally higher than commissions on securities traded in
the United States and may be non-negotiable. In general, there is less
overall governmental supervision and regulation of foreign securities
markets, broker-dealers, and issuers than in the United States.
Foreign Currency Transactions. Because investments in companies whose
principal business activities are located outside of the United States
will frequently be denominated in foreign currencies, and because assets
of the Portfolio may temporarily be held in bank deposits in foreign
currencies during the completion of investment programs, the value of the
assets of the Portfolio as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations. Currency exchange rates can also be
affected unpredictably by intervention by U.S. or foreign governments or
central banks, or the failure to intervene, or by currency controls or
political developments in the U.S. or abroad. The Portfolio may conduct
its foreign currency exchange transactions on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market or
through entering into swaps, forward contracts, options or futures on
currency. On spot transactions, foreign exchange dealers do not charge a
fee for conversion, but they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling
various currencies. Thus, a dealer may offer to sell a foreign currency
to the Portfolio at one rate, while offering a lesser rate of exchange
should the Portfolio desire to resell that currency to the dealer.
Emerging Companies. The investment risk associated with emerging
companies is higher than that normally associated with larger, older
companies due to the greater business risks associated with small size,
the relative age of the company, limited product lines, distribution
channels and financial and managerial resources. Further, there is
typically less publicly available information concerning smaller companies
than for larger, more established ones. The securities of small companies
are often traded only over-the-counter and may not be traded in the
volumes typical of trading on a national securities exchange. As a
result, in order to sell this type of holding, the Portfolio may need to
discount the securities from recent prices or dispose of the securities
over a long period of time. The prices of this type of security may be
more volatile than those of larger companies which are often traded on a
national securities exchange.
Currency Swaps. Currency swaps require maintenance of a segregated
account described under "Asset Coverage for Derivative Instruments" below.
The Portfolio will not enter into any currency swap unless the credit
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quality of the unsecured senior debt or the claims-paying ability of the
other party thereto is considered to be investment grade by the Adviser.
If there is a default by the other party to such a transaction, the
Portfolio will have contractual remedies pursuant to the agreements
related to the transaction. The swap market has grown substantially in
recent years with a large number of banks and investment banking firms
acting both as principals and as agents utilizing standardized swap
documentation. As a result, the swap market has become relatively liquid
in comparison with the markets for other similar instruments which are
traded in the interbank market.
Forward Foreign Currency Exchange Transactions. The Portfolio may enter
into forward foreign currency exchange contracts in several circumstances.
First, when the Portfolio enters into a contract for the purchase or sale
of a security denominated in a foreign currency, or when the Portfolio
anticipates the receipt in a foreign currency of dividend or interest
payments on such a security which it holds, the Portfolio may desire to
"lock in" the U.S. dollar price of the security or the U.S. dollar
equivalent of such dividend or interest payment, as the case may be. By
entering into a forward contract for the purchase or sale, for a fixed
amount of dollars, of the amount of foreign currency involved in the
underlying transactions, the Portfolio will attempt to protect itself
against an adverse change in the relationship between the U.S. dollar and
the subject foreign currency during the period between the date on which
the security is purchased or sold, or on which the dividend or interest
payment is declared, and the date on which such payments are made or
received.
Additionally, when management of the Portfolio believes that the
currency of a particular foreign country may suffer a substantial decline
against the U.S. dollar, it may enter into a forward contract to sell, for
a fixed amount of dollars, the amount of foreign currency approximating
the value of some or all of the securities held by the Portfolio
denominated in such foreign currency. The precise matching of the forward
contract amounts and the value of the securities involved will not
generally be possible because the future value of such securities in
foreign currencies will change as a consequence of market movements in the
value of those securities between the date on which the contract is
entered into and the date it matures. The precise projection of
short-term currency market movements is not possible, and short-term
hedging provides a means of fixing the dollar value of only a portion of
the Portfolio's foreign assets.
Special Risks Associated With Currency Transactions. Transactions in
forward contracts, as well as futures and options on foreign currencies,
are subject to the risk of governmental actions affecting trading in or
the prices of currencies underlying such contracts, which could restrict
or eliminate trading and could have a substantial adverse effect on the
value of positions held by the Portfolio. In addition, the value of such
positions could be adversely affected by a number of other complex
political and economic factors applicable to the countries issuing the
underlying currencies.
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Furthermore, unlike trading in most other types of instruments,
there is no systematic reporting of last sale information with respect to
the foreign currencies underlying forward contracts, futures contracts and
options. As a result, the available information on which the Portfolio's
trading systems will be based may not be as complete as the comparable
data on which the Portfolio makes investment and trading decisions in
connection with securities and other transactions. Moreover, because the
foreign currency market is a global, twenty-four hour market, events could
occur on that market which will not be reflected in the forward, futures
or options markets until the following day, thereby preventing the
Portfolio from responding to such events in a timely manner.
Settlements of over-the-counter forward contracts or of the
exercise of foreign currency options generally must occur within the
country issuing the underlying currency, which in turn requires parties to
such contracts to accept or make delivery of such currencies in conformity
with any United States or foreign restrictions and regulations regarding
the maintenance of foreign banking relationships, fees, taxes or other
charges.
Unlike currency futures contracts and exchange-traded options,
options on foreign currencies and forward contracts are not traded on
contract markets regulated by the Commodities Futures Trading Commission
("CFTC") or (with the exception of certain foreign currency options) the
Securities and Exchange Commission ("Commission"). To the contrary, such
instruments are traded through financial institutions acting as market-
makers. (Foreign currency options are also traded on the Philadelphia
Stock Exchange subject to Commission regulation). In an over-the-counter
trading environment, many of the protections associated with transactions
on exchanges will not be available. For example, there are no daily price
fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of
an option cannot lose more than the amount of the premium plus related
transaction costs, this entire amount could be lost. Moreover, an option
writer could lose amounts substantially in excess of its initial
investment due to the margin and collateral requirements associated with
such option positions. Similarly, there is no limit on the amount of
potential losses on forward contracts to which the Portfolio is a party.
In addition, over-the-counter transactions can only be entered
into with a financial institution willing to take the opposite side, as
principal, of the Portfolio's position unless the institution acts as
broker and is able to find another counterparty willing to enter into the
transaction with the Portfolio. Where no such counterparty is available,
it will not be possible to enter into a desired transaction. There also
may be no liquid secondary market in the trading of over-the-counter
contracts, and the Portfolio may be unable to close out options purchased
or written, or forward contracts entered into, until their exercise,
expiration or maturity. This in turn could limit the Portfolio's ability
to realize profits or to reduce losses on open positions and could result
in greater losses.
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<PAGE>
Furthermore, over-the-counter transactions are not backed by the
guarantee of an exchange's clearing corporation. The Portfolio will
therefore be subject to the risk of default by, or the bankruptcy of, the
financial institution serving as its counterparty. One or more of such
institutions also may decide to discontinue its role as market-maker in a
particular currency, thereby restricting the Portfolio's ability to enter
into desired hedging transactions. The Portfolio will enter into over-
the-counter transactions only with parties whose creditworthiness has been
reviewed and found satisfactory by the Adviser.
The purchase and sale of exchange-traded foreign currency
options, however, are subject to the risks of the availability of a liquid
secondary market described above, as well as the risks regarding adverse
market movements, margining of options written, the nature of the foreign
currency market, possible intervention by governmental authorities and the
effect of other political and economic events. In addition, exchange-
traded options on foreign currencies involve certain risks not presented
by the over-the-counter market. For example, exercise and settlement of
such options must be made exclusively through the Options Clearing
Corporation ("OCC"), which has established banking relationships in
applicable foreign countries for this purpose. As a result, the OCC may,
if it determines that foreign governmental restrictions or taxes would
prevent the orderly settlement of foreign currency option exercises, or
would result in undue burdens on the OCC or its clearing member, impose
special procedures for exercise and settlement, such as technical changes
in the mechanics of delivery of currency, the fixing of dollar settlement
prices of prohibitions on exercise.
Risks Associated With Derivative Instruments. Entering into a derivative
instrument involves a risk that the applicable market will move against
the Portfolio's position and that the Portfolio will incur a loss. For
derivative instruments other than purchased options, this loss may exceed
the amount of the initial investment made or the premium received by the
Portfolio. Derivative instruments may sometimes increase or leverage the
Portfolio's exposure to a particular market risk. Leverage enhances the
Portfolio's exposure to the price volatility of derivative instruments it
holds. The Portfolio's success in using derivative instruments to hedge
portfolio assets depends on the degree of price correlation between the
derivative instruments and the hedged asset. Imperfect correlation may be
caused by several factors, including temporary price disparities among the
trading markets for the derivative instrument, the assets underlying the
derivative instrument and the Portfolio assets. Over-the-counter ("OTC")
derivative instruments involve an enhanced risk that the issuer or
counterparty will fail to perform its contractual obligations. Some
derivative instruments are not readily marketable or may become illiquid
under adverse market conditions. In addition, during periods of market
volatility, a commodity exchange may suspend or limit trading in an
exchange-traded derivative instrument, which may make the contract
temporarily illiquid and difficult to price. Commodity exchanges may also
establish daily limits on the amount that the price of a futures contract
or futures option can vary from the previous day's settlement price. Once
the daily limit is reached, no trades may be made that day at the price
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beyond the limit. This may prevent the Portfolio from closing out
positions and limiting its losses. The staff of the Commission takes the
position that purchased OTC options, and assets used as cover for written
OTC options, are subject to the Portfolio's 15% limit on illiquid
investments. However, with respect to options written with primary
dealers in U.S. Government securities pursuant to an agreement requiring a
closing purchase transaction at a formula price, the amount of illiquid
securities may be calculated with reference to the formula price. The
Portfolio's ability to terminate OTC derivative instruments may depend on
the cooperation of the counterparties to such contracts. For thinly
traded derivative instruments, the only source of price quotations may be
the selling dealer or counterparty. In addition, certain provisions of
the Internal Revenue Code of 1986, as amended ("Code"), limit the extent
to which the Portfolio may purchase and sell derivative instruments. The
Portfolio will engage in transactions in futures contracts and related
options only to the extent such transactions are consistent with the
requirements of the Code for maintaining the qualification of each of the
Portfolio's investment company investors as a regulated investment company
for federal income tax purposes. See "Tax Status."
Asset Coverage for Derivative Instruments. Transactions using forward
contracts, futures contracts and options (other than options that the
Portfolio has purchased) expose the Portfolio to an obligation to another
party. The Portfolio will not enter into any such transactions unless it
owns either (1) an offsetting ("covered") position in securities,
currencies, or other options or futures contracts or forward contracts, or
(2) cash, receivables and short-term debt securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. The Portfolio will comply with Commission
guidelines regarding cover for these instruments and, if the guidelines so
require, set aside cash, U.S. Government securities or other liquid, high-
grade debt securities in a segregated account with its custodian in the
prescribed amount.
Assets used as cover or held in a segregated account cannot be
sold while the position in the corresponding forward contract, futures
contract or option is open, unless they are replaced with other
appropriate assets. As a result, the commitment of a large portion of the
Portfolio's assets to cover or segregated accounts could impede portfolio
management or the Portfolio's ability to meet redemption requests or other
current obligations.
Limitations on Futures Contracts and Options. If the Portfolio has not
complied with the 5% CFTC test set forth in the Fund's prospectus, to
evidence its hedging intent, the Portfolio expects that, on 75% or more of
the occasions on which it takes a long futures or option on futures
position, it will have purchased or will be in the process of purchasing,
equivalent amounts of related securities at the time when the futures or
options position is closed out. However, in particular cases, when it is
economically advantageous for the Portfolio to do so, a long futures or
options position may be terminated (or an option may expire) without a
corresponding purchase or securities.
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The Portfolio may enter into futures contracts, and options on
futures contracts, traded on an exchange regulated by the CFTC and on
foreign exchanges, but, with respect to foreign exchange-traded futures
contracts an options on such futures contracts, only if the Adviser
determines that trading on each such foreign exchange does not subject the
Portfolio to risks, including credit and liquidity risks, that are
materially greater than the risks associated with training on CFTC-
regulated exchanges.
In order to hedge its current or anticipated portfolio positions,
the Portfolio may use futures contracts on securities held in its
portfolio or on securities with characteristics similar to those of the
securities held by the Portfolio. If, in the opinion of the Adviser,
there is a sufficient degree of correlation between price trends for the
securities held by the Portfolio and futures contracts based on other
financial instruments, securities indices or other indices, the Portfolio
may also enter into such futures contracts as part of its hedging
strategy.
All call and put options on securities written by the Portfolio
will be covered. This means that, in the case of a call option, the
Portfolio will own the securities subject to the call option or an
offsetting call option so long as the call option is outstanding. In the
case of a put option, the Portfolio will own an offsetting put option or
will have deposited with its custodian cash or liquid, high-grade debt
securities with a value at least equal to the exercise price of the put
option. The Portfolio may only write a put option on a security that it
intends ultimately to acquire for its investment portfolio.
Repurchase Agreements. Under a repurchase agreement the Portfolio buys a
security at one price and simultaneously promises to sell that same
security back to the seller at a higher price. At no time will the
Portfolio commit more than 15% of its net assets to repurchase agreements
which mature in more than seven days and other illiquid securities. The
Portfolio's repurchase agreements will provide that the value of the
collateral underlying the repurchase agreement will always be at least
equal to the repurchase price, including any accrued interest earned on
the repurchase agreement, and will be marked to market daily.
Reverse Repurchase Agreements. The Portfolio may enter into reverse
repurchase agreements. Under a reverse repurchase agreement, the
Portfolio temporarily transfers possession of a portfolio instrument to
another party, such as a bank or broker-dealer, in return for cash. At
the same time, the Portfolio agrees to repurchase the instrument at an
agreed upon time (normally within seven days) and price, which reflects an
interest payment. The Portfolio expects that it will enter into reverse
repurchase agreements when it is able to invest the cash so acquired at a
rate higher than the cost of the agreement, which would increase the
income earned by the Portfolio. The Portfolio could also enter into
reverse repurchase agreements as a means of raising cash to satisfy
redemption requests without the necessity of selling portfolio assets.
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When the Portfolio enters into a reverse repurchase agreement,
any fluctuations in the market value of either the securities transferred
to another party or the securities in which the proceeds may be invested
would affect the market value of the Portfolio's assets. As a result,
such transactions may increase fluctuations in the market value of the
Portfolio's assets. While there is a risk that large fluctuations in the
market value of the Portfolio's assets could affect the Portfolio's net
asset value, this risk is not significantly increased by entering into
reverse repurchase agreements, in the opinion of the Adviser. Because
reverse repurchase agreements may be considered to be the practical
equivalent of borrowing funds, they constitute a form of leverage. If the
Portfolio reinvests the proceeds of a reverse repurchase agreement at a
rate lower than the cost of the agreement, entering into the agreement
will lower the Portfolio's yield.
At all times that a reverse repurchase agreement is outstanding,
the Portfolio will maintain cash or high grade liquid debt securities in a
segregated account at its custodian bank with a value at least equal to
its obligation under the agreement. Securities and other assets held in
the segregated account may not be sold while the reverse repurchase
agreement is outstanding, unless other suitable assets are substituted.
While the Adviser does not consider reverse repurchase agreements to
involve a traditional borrowing of money, reverse repurchase agreements
will be included in the Portfolio's borrowing restrictions.
Portfolio Turnover. The Portfolio cannot accurately predict its portfolio
turnover rate, but it is anticipated that the annual turnover rate will
generally not exceed 100% (excluding turnover of securities having a
maturity of one year or less). A 100% annual turnover rate would occur,
for example, if all the securities in the portfolio were replaced once in
a period of one year. A high turnover rate (100% or more) necessarily
involves greater expenses to the Portfolio. The Portfolio engages in
portfolio trading (including short-term trading) if it believes that a
transaction including all costs will help in achieving its investment
objective either by increasing income or by enhancing the Portfolio's net
asset value. Short-term trading may be advisable in light of a change in
circumstances of a particular company or within a particular industry, or
in light of general market, economic or political conditions. High
portfolio turnover may also result in the realization of substantial net
short-term capital gains.
Lending Portfolio Securities. If the Adviser decides to make securities
loans, the Portfolio may seek to increase its income by lending portfolio
securities to broker-dealers or other institutional borrowers. Under
present regulatory policies of the Commission, such loans are required to
be secured continuously by collateral in cash, cash equivalents or U.S.
Government securities held by the Portfolio's custodian and maintained on
a current basis at an amount at least equal to market value of the
securities loaned, which will be marked to market daily. Cash equivalents
include certificates of deposit, commercial paper and other short-term
money market instruments. The financial condition of the borrower will be
monitored by the Adviser on an ongoing basis. The Portfolio would
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continue to receive the equivalent of the interest or dividends paid by
the issuer on the securities loaned and would also receive a fee, or all
or a portion of the interest on investment of the collateral. The
Portfolio would have the right to call a loan and obtain the securities
loaned at any time on up to five business days' notice. The Portfolio
would not have the right to vote any securities having voting rights
during the existence of a loan, but could call the loan in anticipation of
an important vote to be taken among holders of the securities or the
giving or withholding of their consent on a material matter affecting the
investment. Securities lending involves administrative expenses including
finders' fees. If the Adviser decides to make securities loans, it is
intended that the value of the securities loaned would not exceed 1/3 of
the Portfolio's total assets. As of the present time, the Trustees of the
Portfolio have not made a determination to engage in this activity, and
have no present intention of making such a determination during the
current fiscal year.
Investment Restrictions
The Portfolio has adopted the following investment restrictions
which may not be changed without the approval of the holders of a
"majority of the outstanding voting securities" of the Portfolio, which as
used in this Part B means the lesser of (a) 67% or more of the outstanding
voting securities of the Portfolio present or represented by proxy at a
meeting if the holders of more than 50% of the outstanding voting
securities of the Portfolio are present or represented at the meeting or
(b) more than 50% of the outstanding voting securities of the Portfolio.
The term "voting securities" as used in this paragraph has the same
meaning as in the 1940 Act. As a matter of fundamental policy, the
Portfolio may not:
(1) Borrow money or issue senior securities except as permitted
by the Investment Company Act of 1940;
(2) Purchase any securities on margin (but the Portfolio may
obtain such short-term credits as may be necessary for the
clearance of purchases and sales of securities);
(3) Underwrite securities of other issuers;
(4) Invest in real estate including interests in real estate
limited partnerships (although it may purchase and sell
securities which are secured by real estate and securities of
companies which invest or deal in real estate) or purchase or
sell commodities or commodity contracts with respect to physical
commodities;
(5) Make loans to any person except by (a) the acquisition of
debt securities and making portfolio investments, (b) entering
into repurchase agreements and (c) lending portfolio securities;
(6) With respect to 75% of its total assets, invest more than 5%
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of its total assets (taken at current value) in the securities of
any one issuer, or invest in more than 10% of the outstanding
voting securities of any one issuer, except obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities and except securities of other investment
companies; or
(7) Invest in the securities of any one industry, except the
medical research and health care industry (and except securities
of health sciences companies or securities issued or guaranteed
by the U.S. Government, its agencies or instrumentalities) if as
a result 25% or more of the Portfolio's total assets would be
invested in the securities of such industry.
Notwithstanding the investment policies and restrictions of the
Portfolio, the Portfolio may invest part of its assets in another
investment company consistent with the 1940 Act.
The Portfolio has adopted the following nonfundamental investment
policies which may be changed by the Portfolio without the approval of its
investors. The Portfolio may not invest more than 15% of its net assets
in investments which are not readily marketable, including restricted
securities and repurchase agreements with a maturity longer than seven
days. Restricted securities for the purposes of this limitation do not
include securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 and commercial paper issued pursuant to Section
4(2) of said Act that the Board of Trustees of the Portfolio, or its
delegate, determines to be liquid. Except for obligations issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities, the Portfolio will not knowingly purchase a security
issued by a company (including predecessors) with less than three years
operating history (unless such security is rated at least B or a
comparable rating at the time of purchase by at least one nationally
recognized rating service) if, as a result of such purchase, more than 5%
of the Portfolio's total assets (taken at current value) would be invested
in such securities. The Portfolio will not purchase warrants if, as a
result of such purchase, more than 5% of the Portfolio's net assets (taken
at current value) would be invested in warrants, and the value of such
warrants which are not listed on the New York or American Stock Exchange
may not exceed 2% of the Portfolio's net assets; this policy does not
apply to or restrict warrants acquired by the Portfolio in units or
attached to securities, inasmuch as such warrants are deemed to be without
value. The Portfolio will not purchase oil, gas or other mineral leases
or purchase partnership interests in oil, gas or other mineral exploration
or development programs. The Portfolio will not purchase or retain in its
portfolio any securities issued by an issuer any of whose officers,
directors, trustees or security holders is an officer or Trustee of the
Portfolio or is a member, officer, director or trustee of any investment
adviser of the Portfolio if after the purchase of the securities of such
issuer by the Portfolio one or more of such persons owns beneficially more
than 1/2 of 1% of the shares or securities or both (all taken at market
value) of such issuer and such persons owning more than 1/2 of 1% of such
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shares or securities together own beneficially more than 5% of such shares
or securities or both (all taken at market value). The Portfolio will not
purchase an option on a security if, after such transaction, more than 5%
of its net assets measured by the aggregate of all premiums paid for such
options held by the Portfolio, would be so invested.
Whenever an investment policy or investment restriction set forth
in Part A or this Part B states a maximum percentage of assets that may be
invested in any security or other asset or describes a policy regarding
quality standards, such percentage limitation or standard shall be
determined immediately after and as a result of the Portfolio's
acquisition of such security or other asset. Accordingly, any later
increase or decrease resulting from a change in values, assets or other
circumstances, other than a subsequent rating change below investment
grade made by a rating service, will not compel the Portfolio to dispose
of such security or other asset. Nevertheless, under normal market
conditions the Portfolio must take actions necessary to comply with its
policy of investing at least 65% of its total assets in equity securities
of health science companies. Moreover, the Portfolio must always be in
compliance with the borrowing policy set forth above.
In order to permit the sale in certain states of shares of
certain open-end investment companies that are investors in the Portfolio,
the Portfolio may make commitments more restrictive than the policies
described above. Should the Portfolio determine that any such commitment
is no longer in the best interests of the Portfolio and its investors, it
will revoke such commitment.
Item 14. Management of the Portfolio
The Portfolio's Trustees and officers are listed below. Except as
indicated, each individual has held the office shown or other offices in
the same company for the last five years. Unless otherwise noted, the
business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of Eaton Vance Management
("Eaton Vance"); of Eaton Vance's wholly-owned subsidiary, Boston
Management and Research ("BMR"); of Eaton Vance's parent, Eaton Vance
Corp. ("EVC"); and of Eaton Vance's trustee, Eaton Vance, Inc. ("EV").
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. Those
Trustees who are "interested persons" of the Portfolio, Eaton Vance, BMR,
EVC, EV or the Adviser, as defined in the 1940 Act by virtue of their
affiliation with any one or more of the Portfolio, Eaton Vance, BMR, EVC,
EV or the Adviser, are indicated by an asterisk (*).
TRUSTEES
JAMES B. HAWKES (54), President and Trustee*
Executive Vice President of Eaton Vance, BMR, EVC and EV, and a Director
of EVC and EV. Director or Trustee and officer of various
investment companies managed by Eaton Vance or BMR.
DONALD R. DWIGHT (65), Trustee
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President of Dwight Partners, Inc. (a corporate relations and
communications company)
founded in 1988; Chairman of the Board of Newspapers of New
England, Inc. since 1983. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768.
SAMUEL L. HAYES, III (61), Trustee
Jacob H. Schiff Professor of Investment Banking at Harvard University
Graduate School of Business Administration. Director or Trustee
of various investment companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02134
NORTON H. REAMER (60), Trustee
President and Director, United Asset Management Corporation (a holding
company owning institutional management firms). Chairman,
President and Director, UAM Funds (mutual funds). Director or
Trustee of various investment companies managed by Eaton Vance or
BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (69), Trustee
Director, Fiduciary Company Incorporated. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (66), Trustee
Investment Adviser and Consultant. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS
SAMUEL D. ISALY (51), Vice President
President of G/A Capital Management, Inc. and founding partner of Mehta
and Isaly.
Address: G/A Capital Management, Inc., 41 Madison Avenue, 40th Floor, New
York, New York 10010.
JAMES L. O'CONNOR (50), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
THOMAS OTIS (64), Secretary
Vice President and Secretary of Eaton Vance, BMR, EVC and EV. Officer of
various investment companies managed by Eaton Vance or BMR.
JANET E. SANDERS (60), Assistant Secretary and Assistant Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
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A. JOHN MURPHY (33), Assistant Secretary
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations
Supervisor, The Boston Company (1991-1993) and Registration
Specialist, Fidelity Management & Research Co. (1986-1991).
Officer of various investment companies managed by Eaton Vance or
BMR.
ERIC G. WOODBURY (39), Assistant Secretary
Vice President of BMR, Eaton Vance and EV since February 1993; formerly,
associate attorney at Dechert Price & Rhoads and Gaston & Snow.
Officer of various investment companies managed by Eaton Vance or
BMR.
Messrs. Thorndike (Chairman), Hayes and Reamer are members of the
Special Committee of the Board of Trustees of the Portfolio. The purpose
of the Special Committee is to consider, evaluate and make recommendations
to the full Board of Trustees concerning (i) all contractual arrangements
with service providers to the Portfolio, including investment advisory,
custodial and fund accounting services, and (ii) all other matters in
which Eaton Vance or its affiliates has any actual or potential conflict
of interest with the Portfolio or its interestholders.
The Nominating Committee is compromised of four Trustees who are
not "interested persons" as that term is defined under the 1940 Act
("noninterested Trustees"). The Committee has four-year staggered terms,
with one member rotating off the Committee to be replaced by another
noninterested Trustee of the Portfolio. Messrs. Hayes (Chairman), Reamer,
Thorndike and Treynor are currently serving on the Committee. The purpose
of the Committee is to recommend to the Board nominees for the position of
noninterested Trustee and to assure that at least a majority of the Board
of Trustees is independent of Eaton Vance and its affiliates.
Messrs. Treynor (Chairman) and Dwight are members of the Audit
Committee of the Board of Trustees. The Audit Committee's functions
include making recommendations to the Trustees regarding the selection of
the independent certified public accountants, and reviewing with such
accountants and the Treasurer of the Portfolio matters relative to trading
and brokerage policies and practices, accounting and auditing practices
and procedures, accounting records, internal accounting controls, and the
functions performed by the custodian and transfer agent of the Portfolio.
The fees and expenses of those Trustees who are not members of
the Eaton Vance organization (the noninterested Trustees) are paid by the
Portfolio. (The Trustees who are members of the Eaton Vance organization
receive no compensation from the Portfolio.) For the fiscal year ending
August 31, 1997, it is estimated that the noninterested Trustees of the
Portfolio will earn the following compensation in their capacities as
Trustees of the Portfolio, and, during the year ended December 31, 1995,
the noninterested Trustees of the Portfolio earned the following
compensation in their capacities as Trustees of the funds in the Eaton
Vance fund complex(1):
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Estimated
Aggregate
Compensation Total Compensation
Name from Portfolio From Fund Complex
---- -------------- --------------------
Donald R.
Dwight $90 $135,000(2)
Samuel L.
Hayes, III 90 150,000(3)
Norton H.
Reamer 90 135,000
John L.
Thorndike 90 140,000
Jack L.
Treynor 90 140,000
(1) The Eaton Vance fund complex consists of 217 registered
investment companies or series thereof.
(2) Includes $35,000 of deferred compensation.
(3) Includes $33,750 of deferred compensation.
Trustees of the Portfolio who are not affiliated with the Adviser
or Eaton Vance may elect to defer receipt of all or a percentage of their
annual fees in accordance with the terms of a Trustees Deferred
Compensation Plan (the "Plan"). Under the Plan, an eligible Trustee may
elect to have his deferred fees invested by the Portfolio in the shares of
one or more funds in the Eaton Vance Family of Funds, and the amount paid
to the Trustees under the Plan will be determined based upon the
performance of such investments. Deferral of Trustees' fees in accordance
with the Plan will have a negligible effect on the Portfolio's assets,
liabilities, and net income per share, and will not obligate the Portfolio
to retain the services of any Trustee or obligate the Portfolio to pay any
particular level of compensation to the Trustee. The Portfolio does not
have a retirement plan for its Trustees.
The Portfolio's Declaration of Trust provides that it will
indemnify its Trustees and officers against liabilities and expenses
incurred in connection with litigation in which they may be involved
because of their offices with the Portfolio, unless, as to liability to
the Portfolio or its investors, it is finally adjudicated that they
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect
to any other matter it is finally adjudicated that they did not act in
good faith in the reasonable belief that their actions were in the best
interests of the Portfolio. In the case of settlement, such
indemnification will not be provided unless it has been determined by a
court or other body approving the settlement, such indemnification will
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not be provided unless it has been determined by a court or other body
approving the settlement or other disposition, or by a reasonable
determination, based upon a review of readily available facts, by vote of
a majority of noninterested Trustees or in a written opinion of
independent counsel, that such officers or Trustees have not engaged in
willful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.
Item 15. Control Persons and Principle Holders of Securities
As of June 30, 1996, Boston Management and Research ("BMR"), a
wholly-owned subsidiary of Eaton Vance, controlled the Portfolio by virtue
of owning approximately 99.9% of the outstanding interests in the
Portfolio. BMR is a Massachusetts business trust.
Item 16. Investment Advisory and Other Services
The Adviser. The Portfolio engages G/A Capital Management, Inc.
("G/A" or the "Adviser") as its investment adviser pursuant to an
investment advisory agreement dated June 24, 1996. As investment adviser
to the Portfolio, the Adviser manages the Portfolio's investments, subject
to the supervision of the Board of Trustees of the Portfolio. The Adviser
is also responsible for effecting all security transactions on behalf of
the Portfolio, including the allocation of principal transactions and
portfolio brokerage and the negotiation of commissions. See "Brokerage
Allocation and Other Practices."
For a description of the compensation that the Portfolio pays G/A
under the investment advisory agreement, see "Management of the Portfolio"
in Part A. The advisory fee rate on average daily net assets is reduced
to 0.70% on assets of $500 million but less than $1 billion, to 0.65% on
assets of $1 billion but less than $1.5 billion, to 0.60% on assets of
$1.5 billion but less than $2 billion, to 0.55% on assets of $2 billion
but less than $3 billion, and 0.50% on assets of $3 billion and over.
The performance fee adjustment to the advisory fee is as follows:
after 12 months, the basic advisory fee is subject to upward or downward
adjustment depending upon whether and to what extent the investment
performance of the Portfolio differs by at least one percentage point from
the record of the Standard & Poor's Index of 500 Common Stocks over the
same period. Each percentage point difference is multiplied by a
performance adjustment rate of 0.025%. The maximum adjustment plus/minus
is 0.25%. One twelfth (1/12) of this adjustment is applied each month to
the average daily net assets of the Portfolio over the entire performance
period. This adjustment shall be based on a rolling period of up to and
including the most recent 36 months. Portfolio performance shall be total
return as computed under Rule 482 under the 1933 Act.
The Portfolio's investment advisory agreement with the Adviser
remains in effect until February 28, 1997; it may be continued
indefinitely thereafter so long as such continuance is approved at least
annually (i) by the vote of a majority of the Trustees of the Portfolio
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who are not interested persons of the Adviser or the Portfolio cast in
person at a meeting specifically called for the purpose of voting on such
approval and (ii) by the Board of Trustees of the Portfolio or by vote of
a majority of the outstanding voting securities of the Portfolio. The
agreement may be terminated at any time without penalty on sixty days'
written notice by the Board of Trustees of the Portfolio or the Board of
Directors of the Adviser or by vote of a majority of the outstanding
voting securities of the Portfolio. The agreement will terminate
automatically in the event of its assignment. The agreement provides that
the Adviser may render services to others. The agreement also provides
that, in the absence of willful misfeasance, bad faith, gross negligence
or reckless disregard of obligations or duties under the agreement on the
part of the Adviser, the Adviser shall not be liable to the Portfolio or
to any interestholder for any act or omission in the course of or
connected with rendering services or for any losses sustained in the
purchase, holding or sale of any security.
The Administrator. See "Management of the Portfolio" in
Part A for a description of the services Eaton Vance performs as
administrator of the Portfolio. Under Eaton Vance's administration
agreement with the Portfolio, Eaton Vance receives a monthly
administration fee from the Portfolio. This fee is computed by applying
the annual asset rate applicable to that portion of the average daily net
assets of the Portfolio throughout the month in each Category as indicated
below:
Annual
Category Average Daily Net Assets Asset Rate
-------- ------------------------ ----------
1 less than $500 million 0.25%
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 0.20
5 $2 billion but less than $3 billion 0.18333
6 $3 billion and over 0.16667
Eaton Vance's administration agreement with the Portfolio will
remain in effect until February 28, 1998. The administration agreement
may be continued from year to year after such date so long as such
continuance is approved annually by the vote of a majority of the Trustees
of the Portfolio. The administration agreement may be terminated at any
time without penalty on sixty days' written notice by the Board of
Trustees of either party thereto, or by a vote of a majority of the
outstanding voting securities of the Portfolio. The administration
agreement will terminate automatically in the event of its assignment.
The administration agreement provides that, in the absence of Eaton
Vance's willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations or duties to the Portfolio under such
agreement, Eaton Vance will not be liable to the Portfolio or to any
interestholder for any loss incurred. The agreement was initially
approved by the Trustees, including the non-interested Trustees, of the
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<PAGE>
Portfolio at a meeting held on June 24, 1996.
To the extent necessary to comply with U.S. tax laws, Eaton Vance
has employed IBT Trust Company (Cayman) Ltd. to serve as the sub-
administrator of the Portfolio. The sub-administrator maintains the
Portfolio's principal office and certain of its records and provides
administrative assistance in connection with meetings of the Portfolio's
Trustees and interestholders.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are
both Massachusetts business trusts, and EV is the trustee of Eaton Vance
and BMR. The Directors of EV are Landon T. Clay, H. Day Brigham, Jr., M.
Dozier Gardner, James B. Hawkes and Benjamin A. Rowland, Jr. The
Directors of EVC consist of the same persons and John G.L. Cabot and Ralph
Z. Sorenson. Mr. Clay is chairman and Mr. Gardner is president and chief
executive officer of EVC, Eaton Vance, BMR and EV. All of the issued and
outstanding shares of Eaton Vance and of EV are owned by EVC. All of the
issued and outstanding shares of BMR are owned by Eaton Vance. All shares
of the outstanding Voting Common Stock of EVC are deposited in a Voting
Trust which expires December 31, 1996, the Voting Trustees of which are
Messrs. Brigham, Clay, Gardner, Hawkes and Rowland. The Voting Trustees
have unrestricted voting rights for the election of Directors of EVC. All
of the outstanding voting trust receipts issued under said Voting Trust
are owned by certain of the officers of Eaton Vance and BMR who are also
officers and Directors of EVC and EV. As of June 30, 1996, Messrs. Clay,
Gardner and Hawkes each owned 24% and Messrs. Rowland and Brigham owned
15% and 13%, respectively, of such voting trust receipts. Messrs. Hawkes
and Otis are officers or Trustees of the Portfolio and are members of the
EVC, Eaton Vance, BMR and EV organizations. Messrs. Murphy, O'Connor and
Woodbury and Ms. Sanders are officers of the Portfolio and are also
members of the Eaton Vance, BMR and/or EV organizations. Eaton Vance will
receive the fees paid under the administration agreement.
EVC owns all of the stock of Energex Energy Corporation, which is
engaged in oil and gas exploration and development. In addition, Eaton
Vance owns all of the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC also owns 24% of the Class A
shares of Lloyd George Management (B.V.I.) Limited, a registered
investment adviser. EVC owns all of the stock of Fulcrum Management, Inc.
and MinVen Inc., which are engaged in precious metal mining venture
investment and management. EVC, BMR, Eaton Vance and EV may also enter
into other businesses.
Custodian. Investors Bank & Trust Company ("IBT"), 89 South
Street, Boston, Massachusetts, acts as custodian for the Portfolio. IBT
has the custody of all securities of the Portfolio purchased in the United
States, and its subsidiary, IBT Fund Services (Canada) Inc., First
Canadian Place, King Street West, Toronto, Ontario, Canada, maintains the
Portfolio's general ledger and computes the daily net asset value of
interests in the Portfolio. In its capacity as custodian, IBT attends to
details in connection with the sale, exchange, substitution, or transfer
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of or other dealings with the Portfolio's investments, receives and
disburses all funds, and performs various other ministerial duties upon
receipt of proper instructions from the Portfolio.
Portfolio securities, if any, purchased by the Portfolio in the
U.S. are maintained in the custody of IBT or of other domestic banks or
depositories. Portfolio securities purchased outside of the U.S. are
maintained in the custody of foreign banks and trust companies that are
members of IBT's Global Custody Network, or foreign depositories used by
such foreign banks and trust companies. Each of the domestic and foreign
custodial institutions holding portfolio securities has been approved by
the Board of Trustees of the Portfolio in accordance with regulations
under the 1940 Act.
IBT charges fees which are competitive within the industry.
These fees for the Portfolio relate to (1) custody services based upon a
percentage of the market values of Portfolio securities; (2) bookkeeping
and valuation services provided at an annual rate; (3) activity charges,
primarily the result of the number of portfolio transactions; and (4)
reimbursement of out-of-pocket expenses. These fees are then reduced by a
credit for cash balances of the Portfolio at the custodian equal to 75% of
the 91-day U.S. Treasury Bill auction rate applied to the Portfolio's
average daily collected balances. Landon T. Clay, a Director of EVC and
an officer, Trustee or Director of other entities in the Eaton Vance
organization, owns approximately 13% of the voting stock of Investors
Financial Services Corp., the holding company parent of IBT. Management
believes that such ownership does not create an affiliated person
relationship between the Portfolio and IBT under the 1940 Act.
Independent Accountants. Coopers & Lybrand Chartered
Accountants, Toronto, Ontario, Canada, are the independent accountants of
the Portfolio, providing audit services, tax return preparation, and
assistance and consultation with respect to the preparation of filings
with the Commission.
Item 17. Brokerage Allocation and Other Practices
Decisions concerning the execution of portfolio security
transactions by the Portfolio, including the selection of the market and
the broker-dealer firm, are made by the Adviser.
The Adviser places the portfolio security transactions of the
Portfolio and of certain other accounts managed by the Adviser for
execution with many broker-dealer firms. The Adviser uses its best
efforts to obtain execution of portfolio transactions at prices that are
advantageous to the Portfolio and (when a disclosed commission is being
charged) at reasonably competitive commission rates. In seeking such
execution, the Adviser will use its best judgment in evaluating the terms
of a transaction, and will give consideration to various relevant factors,
including without limitation the size and type of the transaction, the
general execution and operational capabilities of the broker-dealer, the
nature and character of the market for the security, the confidentiality,
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<PAGE>
speed and certainty of effective execution required for the transaction,
the reputation, reliability, experience and financial condition of the
broker-dealer, the value and quality of services rendered by the broker-
dealer in this and other transactions, and the reasonableness of the
commission, if any. Transactions on stock exchanges and other agency
transactions involve the payment by the Portfolio of negotiated brokerage
commissions. Such commissions vary among different broker-dealer firms,
and a particular broker-dealer may charge different commissions according
to such factors as the difficulty and size of the transaction and the
volume of business done with such broker-dealer. Transactions in foreign
securities usually involve the payment of fixed brokerage commissions,
which are generally higher than those in the United States. There is
generally no stated commission in the case of securities traded in the
over-the-counter markets, but the price paid or received by the Portfolio
usually includes an undisclosed dealer markup or markdown. In an
underwritten offering the price paid by the Portfolio includes a disclosed
fixed commission or discount retained by the underwriter or dealer.
Although commissions paid on portfolio transactions will, in the judgment
of the Adviser, be reasonable in relation to the value of the services
provided, commissions exceeding those which another firm might charge may
be paid to broker-dealers who were selected to execute transactions on
behalf of the Portfolio and the Adviser's other clients in part for
providing brokerage and research services to the Adviser.
As authorized in Section 28(e) of the 1934 Act, a broker or
dealer who executes a portfolio transaction on behalf of the Portfolio may
receive a commission which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if the Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research services
provided. This determination may be made on the basis of either that
particular transaction or on the basis of the overall responsibilities
which the Adviser and its affiliates have for accounts over which they
exercise investment discretion. In making any such determination, the
Adviser will not attempt to place a specific dollar value on the brokerage
and research services provided or to determine what portion of the
commission should be related to such services. Brokerage and research
services may include advice as to the value of securities, the
advisability of investing in, purchasing, or selling securities, and the
availability of securities or purchasers or sellers of securities;
furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the
performance of accounts; and effecting securities transactions and
performing functions incidental thereto (such as clearance and
settlement); and the "Research Services" referred to in the next
paragraph.
It is a common practice in the investment advisory industry for
the advisers of investment companies, institutions and other investors to
receive research, statistical and quotation services, data, information
and other services, products and materials which assist such advisers in
the performance of their investment responsibilities ("Research Services")
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<PAGE>
from broker-dealers which execute portfolio transactions for the clients
of such advisers and from third parties with which such broker-dealers
have arrangements. Consistent with this practice, the Adviser may receive
Research Services from broker-dealer firms with which the Adviser places
the portfolio transactions of the Portfolio and from third parties with
which these broker-dealers have arrangements. These Research Services may
include such matters as general economic and market reviews, industry and
company reviews, evaluations of securities and portfolio strategies and
transactions, recommendations as to the purchase and sale of securities
and other portfolio transactions, financial, industry and trade
publications, news and information services, pricing and quotation
equipment and services, and research oriented computer hardware, software,
data bases and services. Any particular Research Service obtained through
a broker-dealer may be used by the Adviser in connection with client ac-
counts other than those accounts which pay commissions to such broker-
dealer. Any such Research Service may be broadly useful and of value to
the Adviser in rendering investment advisory services to all or a
significant portion of its clients, or may be relevant and useful for the
management of only one client's account or of a few clients' accounts, or
may be useful for the management of merely a segment of certain clients'
accounts, regardless of whether any such account or accounts paid
commissions to the broker-dealer through which such Research Service was
obtained. The advisory fee paid by the Portfolio is not reduced because
the Adviser receives such Research Services. The Adviser evaluates the
nature and quality of the various Research Services obtained through
broker-dealer firms and attempts to allocate sufficient commissions to
such firms to ensure the continued receipt of Research Services which the
Adviser believes are useful or of value to it in rendering investment
advisory services to its clients.
Subject to the requirement that the Adviser shall use its best
efforts to seek to execute portfolio security transactions of the
Portfolio at advantageous prices and at reasonably competitive commission
rates or spreads, the Adviser is authorized to consider as a factor in the
selection of any broker-dealer firm with whom Portfolio orders may be
placed the fact that such firm has sold or is selling shares of investment
companies sponsored by Eaton Vance. This policy is not inconsistent with
a rule of the National Association of Securities Dealers, Inc., which rule
provides that no firm which is a member of the Association shall favor or
disfavor the distribution of shares of any particular investment company
or group of investment companies on the basis of brokerage commissions
received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also
be appropriate for other investment accounts managed by the Adviser or its
affiliates. The Adviser will attempt to allocate equitably portfolio
transactions among the Portfolio and the portfolios of its other
investment accounts whenever decisions are made to purchase or sell
securities by the Portfolio and one or more of such other accounts
simultaneously. In making such allocations, the main factors to be
considered are the respective investment objectives of the Portfolio and
such other accounts, the relative size of portfolio holdings of the same
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or comparable securities, the availability of cash for investment by the
Portfolio and such accounts, the size of investment commitments generally
held by the Portfolio and such accounts and the opinions of the persons
responsible for recommending investments to the Portfolio and such
accounts. While this procedure could have a detrimental effect on the
price or amount of the securities available to the Portfolio from time to
time, it is the opinion of the Trustees of the Portfolio that the benefits
available from the Adviser's organization outweigh any disadvantage that
may arise from exposure to simultaneous transactions.
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 owned
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, 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
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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
B - 22
<PAGE>
Trustee if investors holding two-thirds of the outstanding interests have
removed him from that office either by a written declaration filed with
the Portfolio's custodian 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. Therefore, 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 Securities Act of 1933. See "Purchase of Interests
in the Portfolio" and "Redemption or Decrease of Interest" in Part A. See
Part A, Item 7 regarding the pricing of interests in the Portfolio.
To the extent sales prices are available, securities that are
traded on a recognized stock exchange, whether U.S. or foreign, are valued
at the last sale price on that exchange prior to the time when assets are
valued or prior to the close of trading on the New York Stock Exchange.
In the event that there are no sales, the last available sale price will
be used. If a security is traded on more than one exchange, the latest
price on the exchange where the stock is primarily traded will be used.
If there is no sale that day or if the security is not listed, the
security is valued at its last sale quotation. The calculation of the
Portfolio's net asset value may not take place contemporaneously with the
times noted above for determining the prices of certain portfolio
securities, including foreign securities. If events materially effecting
the value of such securities occur between the time when their prices are
determined and the time the Portfolio's net asset value is calculated,
such securities will be valued at fair value as determined in good faith
by the Trustees of the Portfolio. Also, for any security for which
B - 23
<PAGE>
application of the preceding methods of valuation results in a price for a
security that is deemed not to be representative of the market value of
such security, the security will be valued at fair value under the
supervision and responsibility of the Board of Trustees.
Futures contracts and call options written on portfolio
securities will be priced at the latest sales price on the principal
exchange on which such options are normally traded or, if there have been
no sales on such exchange on that day, at the closing asked price. Short-
term investments having a maturity of 60 days or less are valued on the
basis of amortized cost. All other assets and securities held by the
Portfolio (including restricted securities) are valued at fair value as
determined in good faith under the supervision and responsibility of the
Board of Trustees. Any assets that are denominated in a foreign currency
are translated in U.S. dollars of the last quoted spot rate of exchange
prevailing on each valuation date.
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.
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 a Holder that seeks to
qualify as a regulated investment company (a "RIC"), the aggregate
approach should apply, and each such Holder 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
Holder 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 Holder has been an investor 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
B - 24
<PAGE>
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 RIC in connection with the Portfolio's investments in
foreign securities and certain 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 securities and offsetting options, futures or forward contracts may be
treated as "straddles" and be subject to other special rules that may,
upon allocation of the Portfolio's income, gain or loss to the RIC, affect
B - 25
<PAGE>
the amount, timing and character of the RIC's distributions to
shareholders. 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 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.
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 difference 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 exemption of interest income for federal income tax
purposes does not necessarily result in exemption under the income or tax
laws of any state or local taxing authority. The laws of the various
states and local taxing authorities vary with respect to the taxation of
such interest income, as well as 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 receives no compensation from the Portfolio for
serving in this capacity. 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 Coopers & Lybrand Chartered
Accountants, as experts in accounting and auditing.
B - 26
<PAGE>
Statement of Assets and Liabilities as of June 3, 1996
Report of Independent Accountants
B - 27
<PAGE>
Financial Statements
GLOBAL HEALTH SCIENCES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
June 3, 1996
Assets:
Cash . . . . . . . . . . . . . . . . . . . . . . $100,010
Deferred organization expenses . . . . . . . . . 12,000
Total assets . . . . . . . . . . . . . $112,010
Liabilities:
Accrued organization expenses . . . . . . . . . . 12,000
Net assets . . . . . . . . . . . . . . . . . . . . . . . $100,010
NOTES:
(1) Global Health Sciences Portfolio (the "Portfolio") was organized as a
New York Trust on March 26, 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 Boston
Management & Research and the sale of interest therein at the purchase
price of $10 to Eaton Vance Management (the "Initial Interests").
(2) 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.
(3) 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 (i) 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.
B - 28
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Investors of
Global Health Sciences Portfolio:
We have audited the accompanying statement of assets and
liabilities of Global Health Sciences Portfolio (a New York Trust) as of
June 3, 1996. This financial statement is the responsibility of the
Portfolio'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, the financial statement referred to above
presents fairly, in all material respects, the financial position of
Global Health Sciences Portfolio as of June 3, 1996, in conformity with
generally accepted accounting principles.
/s/Coopers & Lybrand Chartered
Accountants
Toronto, Ontario
June 21, 1996
B - 29
<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. (a) Declaration of Trust dated March 26, 1996 filed
herewith.
(b) Amendment to Declaration of Trust dated June 24, 1996
filed herewith.
2. By-Laws of the Registrant adopted March 26, 1996 filed
herewith.
5. Investment Advisory Agreement between the Registrant and
G/A Capital Management, Inc. dated June 24, 1996 filed
herewith.
6. Placement Agent Agreement with Eaton Vance Distributors,
Inc. dated June 24, 1996 filed herewith.
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 June 24, 1996 filed herewith.
9. (a) Form of Accounting and Interestholder Services
Agreement with IBT Fund Services (Canada) Inc. filed
herewith.
(b) Administration Agreement between the Registrant and
Eaton Vance Management dated June 24, 1996 filed
herewith.
13. Investment representation letter of Boston Management and
Research dated May 31, 1996 filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant
Not applicable.
C - 1
<PAGE>
Item 26. Number of Holders of Securities
(1) (2)
Number of
Title of Class Record Holders as of
-------------- June 3, 1996
--------------------
Interests 2
Item 27. Indemnification
Reference is hereby made to Article V of the Registrant's
Declaration of Trust, filed as Exhibit 1(a) herewith.
The Trustees and officers of the Registrant and the personnel of
the Registrant's investment adviser 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
To the knowledge of the Portfolio, none of the directors or
officers of the Portfolio's investment adviser, except as set forth on
their Forms 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 may also
hold various positions with and engage in business for affiliates of the
investment adviser.
Item 29. Principal Underwriters
Not applicable.
Item 30. Location of Accounts and Records
All applicable accounts, books and documents required to be
maintained by the Registrant by Section 31(a) of the Investment Company
Act of 1940 and the Rules promulgated thereunder are in the possession and
custody of the Registrant's custodian, Investors Bank & Trust Company, 89
South Street, Boston, MA 02111, with the exception of certain corporate
documents and portfolio trading documents, which are in the possession and
custody of the Registrant's administrator at 24 Federal Street, Boston, MA
02110. Certain corporate documents are also maintained by IBT Trust
Company (Cayman) Ltd., The Bank of Nova Scotia Building, P. O. Box 501,
George Town, Grand Cayman, Cayman Islands, British West Indies, and
certain investor account and Portfolio accounting records are held by IBT
Fund Services (Canada) Inc., 1 First Canadian Place, King Street West,
Suite 2800, P.O. Box 231, Toronto, Ontario, Canada M5X 1C8. The
Registrant is informed that all applicable accounts, books and documents
required to be maintained by registered investment advisers are in the
C - 2
<PAGE>
custody and possession of the Registrant's investment adviser.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
C - 3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of
1940, the Registrant has duly caused this Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereunto duly
authorized in Hamilton, Bermuda on the 24th day of June, 1996.
WORLDWIDE HEALTH SCIENCES PORTFOLIO
By: /s/ James B. Hawkes
------------------------------
James B. Hawkes, President
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
----------- -----------------------
1. (a) Declaration of Trust dated March 26, 1996.
(b) Amendment to Declaration of Trust dated June 24,
1996.
2. By-Laws of the Registrant adopted March 26, 1996.
5. Investment Advisory Agreement between the Registrant and
G/A Capital Management, Inc. dated June 24, 1996.
6. Placement Agent Agreement with Eaton Vance Distributors,
Inc. dated June 24, 1996.
8. Custodian Agreement with Investors Bank & Trust Company
dated June 24, 1996.
9. (a) Form of Accounting and Interestholder Services
Agreement with IBT Fund Services (Canada) Inc.
(b) Administration Agreement between the Registrant and
Eaton Vance Management dated June 24, 1996.
13. Investment representation letter of Boston Management and
Research dated May 31, 1996.
<PAGE>
GLOBAL HEALTH SCIENCES PORTFOLIO
--------------------------------
DECLARATION OF TRUST
Dated as of March 26, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I--The Trust . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Name . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Definitions . . . . . . . . . . . . . . . . . 1
ARTICLE II--Trustees . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.1 Number and Qualification . . . . . . . . . . 3
Section 2.2 Term and Election . . . . . . . . . . . . . . 3
Section 2.3 Resignation, Removal and Retirement . . . . . 3
Section 2.4 Vacancies . . . . . . . . . . . . . . . . . . 4
Section 2.5 Meetings . . . . . . . . . . . . . . . . . . 4
Section 2.6 Officers; Chairman of the Board . . . . . . . 5
Section 2.7 By-Laws . . . . . . . . . . . . . . . . . . . 5
ARTICLE III--Powers of Trustees . . . . . . . . . . . . . . . . . . . . 5
Section 3.1 General . . . . . . . . . . . . . . . . . . . 5
Section 3.2 Investments . . . . . . . . . . . . . . . . . 5
Section 3.3 Legal Title . . . . . . . . . . . . . . . . . 6
Section 3.4 Sale and Increases of Interests . . . . . . . 6
Section 3.5 Decreases and Redemptions of Interests . . . 6
Section 3.6 Borrow Money . . . . . . . . . . . . . . . . 6
Section 3.7 Delegation; Committees . . . . . . . . . . . 6
Section 3.8 Collection and Payment . . . . . . . . . . . 7
Section 3.9 Expenses . . . . . . . . . . . . . . . . . . 7
Section 3.10 Miscellaneous Powers . . . . . . . . . . . . 7
Section 3.11 Further Powers . . . . . . . . . . . . . . . 7
Section 3.12 Litigation . . . . . . . . . . . . . . . . . 8
ARTICLE IV--Investment Advisory, Administration and Placement Agent
Arrangements . . . . . . . . . . . . . . . . 8
Section 4.1 Investment Advisory, Administration and Other
Arrangements . . . . . . . . . . . . 8
Section 4.2 Parties to Contract . . . . . . . . . . . . . 8
ARTICLE V--Liability of Holders; Limitations of Liability of Trustees,
Officers, etc. . . . . . . . . . . . . . . . 9
Section 5.1 Liability of Holders; Indemnification . . . . 9
Section 5.2 Limitations of Liability of Trustees,
Officers, Employees, Agents, Independent
Contractors to Third Parties . . . . . . . . 9
Section 5.3 Limitations of Liability of Trustees,
Officers, Employees, Agents, Independent
Contractors to Trust, Holders, etc. . . . . 9
Section 5.4 Mandatory Indemnification . . . . . . . . . . 9
i
<PAGE>
Section 5.5 No Bond Required of Trustees . . . . . . . . 10
Section 5.6 No Duty of Investigation; Notice in Trust
Instruments, etc . . . . . . . . . . . . . 10
Section 5.7 Reliance on Experts, etc . . . . . . . . . . 11
ARTICLE VI--Interests . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 6.1 Interests . . . . . . . . . . . . . . . . . . 11
Section 6.2 Non-Transferability . . . . . . . . . . . . . 11
Section 6.3 Register of Interests . . . . . . . . . . . . 11
ARTICLE VII--Increases, Decreases And Redemptions of Interests . . . . 11
ARTICLE VIII--Determination of Book Capital Account Balances,
and Distributions . . . . . . . . . . . . . . 12
Section 8.1 Book Capital Account Balances . . . . . . . . 12
Section 8.2 Allocations and Distributions to Holders . . 12
Section 8.3 Power to Modify Foregoing Procedures . . . . 12
ARTICLE IX--Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 9.1 Rights of Holders . . . . . . . . . . . . . . 12
Section 9.2 Meetings of Holders . . . . . . . . . . . . . 13
Section 9.3 Notice of Meetings . . . . . . . . . . . . . 13
Section 9.4 Record Date for Meetings, Distributions, etc. 13
Section 9.5 Proxies, etc. . . . . . . . . . . . . . . . . 13
Section 9.6 Reports . . . . . . . . . . . . . . . . . . . 14
Section 9.7 Inspection of Records . . . . . . . . . . . . 14
Section 9.8 Holder Action by Written Consent . . . . . . 14
Section 9.9 Notices . . . . . . . . . . . . . . . . . . . 14
ARTICLE X--Duration; Termination; Amendment; Mergers; Etc. . . . . . . 14
Section 10.1 Duration . . . . . . . . . . . . . . . . . . 14
Section 10.2 Termination . . . . . . . . . . . . . . . . . 15
Section 10.3 Dissolution . . . . . . . . . . . . . . . . . 16
Section 10.4 Amendment Procedure . . . . . . . . . . . . . 16
Section 10.5 Merger, Consolidation and Sale of Assets . . 17
Section 10.6 Incorporation . . . . . . . . . . . . . . . . 17
ARTICLE XI--Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 18
Section 11.1 Governing Law . . . . . . . . . . . . . . . . 18
Section 11.2 Counterparts . . . . . . . . . . . . . . . . 18
Section 11.3 Reliance by Third Parties . . . . . . . . . . 18
Section 11.4 Provisions in Conflict With Law or
Regulations . . . . . . . . . . . . . . . . 18
ii
<PAGE>
DECLARATION OF TRUST
OF
GLOBAL HEALTH SCIENCES PORTFOLIO
--------------------------------
This DECLARATION OF TRUST of Global Health Sciences Portfolio is
made as of the 26th day of March, 1996 by the parties signatory hereto, as
Trustees (as defined in Section 1.2 hereof).
W I T N E S S E T H:
WHEREAS, the Trustees desire to form a trust fund under the law
of the State of New York for the investment and reinvestment of its
assets; and
WHEREAS, it is proposed that the trust assets be composed of
money and property contributed thereto by the holders of interests in the
trust entitled to ownership rights in the trust;
NOW, THEREFORE, the Trustees hereby declare that they will hold
in trust all money and property contributed to the trust fund and will
manage and dispose of the same for the benefit of the holders of interests
in the Trust and subject to the provisions hereof, to wit:
ARTICLE I
The Trust
1.1. Name. The name of the trust created hereby (the "Trust")
shall be Global Health Sciences Portfolio and so far as may be practicable
the Trustees shall conduct the Trust's activities, execute all documents
and sue or be sued under that name, which name (and the word "Trust"
wherever hereinafter used) shall refer to the Trustees as Trustees, and
not individually, and shall not refer to the officers, employees, agents
or independent contractors of the Trust or holders of interests in the
Trust.
1.2. Definitions. As used in this Declaration, the following
terms shall have the following meanings:
"Administrator" shall mean any party furnishing services to the
Trust pursuant to any administration contract described in Section 4.1
hereof.
"Book Capital Account" shall mean, for any Holder at any time,
the Book Capital Account of the Holder for such day, determined in
accordance with Section 8.1 hereof.
"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
U.S. Internal Revenue Code of 1954, as amended (or any corresponding
provision or provisions of succeeding law).
<PAGE>
"Commission" shall mean the U.S. Securities and Exchange
Commission.
"Declaration" shall mean this Declaration of Trust as amended
from time to time. References in this Declaration to "Declaration",
"hereof", "herein" and "hereunder" shall be deemed to refer to this
Declaration rather than the article or section in which any such word
appears.
"Fiscal Year" shall mean an annual period determined by the
Trustees which ends on August 31 of each year or on such other day as is
permitted or required by the Code.
"Holders" shall mean as of any particular time all holders of
record of Interests in the Trust.
"Institutional Investor(s)" shall mean any regulated investment
company, segregated asset account, foreign investment company, common
trust fund, group trust or other investment arrangement, whether organized
within or without the United States of America, other than an individual,
S corporation, partnership or grantor trust beneficially owned by any
individual, S corporation or partnership.
"Interest(s)" shall mean the interest of a Holder in the Trust,
including all rights, powers and privileges accorded to Holders by this
Declaration, which interest may be expressed as a percentage, determined
by calculating, at such times and on such basis 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.
Reference herein to a specified percentage of, or fraction of, Interests,
means Holders whose combined Book Capital Account balances represent such
specified percentage or fraction of the combined Book Capital Account
balances of all, or a specified group of, Holders.
"Interested Person" shall have the meaning given it in the 1940
Act.
"Investment Adviser" shall mean any party furnishing services to
the Trust pursuant to any investment advisory contract described in
Section 4.1 hereof.
"Majority Interests Vote" shall mean the vote, at a meeting of
Holders, of (A) 67% or more of the Interests present or represented at
such meeting, 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.
"Person" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities,
whether or not legal entities, and governments and agencies and political
subdivisions thereof.
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"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, and the term "redeem" shall mean to effect a
Redemption.
"Trustees" shall mean each signatory to this Declaration, so long
as such signatory shall continue in office in accordance with the terms
hereof, 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 hereof and are then in office, and reference in this
Declaration to a Trustee or Trustees shall refer to such individual or
individuals in their capacity as Trustees hereunder.
"Trust Property" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time is
owned or held by or for the account of the Trust or the Trustees.
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 II
Trustees
2.1. Number and Qualification. The number of Trustees shall
be fixed from time to time by action of the Trustees taken as provided in
Section 2.5 hereof; provided, however, that the number of Trustees so
fixed shall in no event be less than two or more than 15. Any vacancy
created by an increase in the number of Trustees may be filled by the
appointment of an individual having the qualifications described in this
Section 2.1 made by action of the Trustees taken as provided in Section
2.5 hereof. Any such appointment shall not become effective, however,
until the individual named in the written instrument of appointment shall
have accepted in writing such appointment and agreed in writing to be
bound by the terms of this Declaration. No reduction in the number of
Trustees shall have the effect of removing any Trustee from office.
Whenever a vacancy occurs, until such vacancy is filled as provided in
Section 2.4 hereof, the Trustees continuing in office, regardless of their
number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration. A
Trustee shall be an individual at least 21 years of age who is not under
legal disability.
2.2. Term and Election. Each Trustee named herein, or elected
or appointed prior to the first meeting of Holders, shall (except in the
event of resignations, retirements, removals or vacancies pursuant to
Section 2.3 or Section 2.4 hereof) hold office until a successor to such
Trustee has been elected at such meeting and has qualified to serve as
Trustee, as required under the 1940 Act. Subject to the provisions of
Section 16(a) of the 1940 Act and except as provided in Section 2.3
hereof, each Trustee shall hold office during the lifetime of the Trust
and until its termination as hereinafter provided.
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2.3. Resignation, Removal and Retirement. Any Trustee may
resign his or her trust (without need for prior or subsequent accounting)
by an instrument in writing executed by such Trustee and delivered or
mailed to the Chairman, if any, the President or the Secretary of the
Trust and such resignation shall be effective upon such delivery, or at a
later date according to the terms of the instrument. Any Trustee may be
removed by the affirmative vote of Holders of two-thirds of the Interests
or (provided the aggregate number of Trustees, after such removal and
after giving effect to any appointment made to fill the vacancy created by
such removal, shall not be less than the number required by Section 2.1
hereof) with cause, by the action of two-thirds of the remaining Trustees.
Removal with cause includes, but is not limited to, the removal of a
Trustee due to physical or mental incapacity or failure to comply with
such written policies as from time to time may be adopted by at least
two-thirds of the Trustees with respect to the conduct of the Trustees and
attendance at meetings. Any Trustee who has attained a mandatory
retirement age, if any, established pursuant to any written policy adopted
from time to time by at least two-thirds of the Trustees shall,
automatically and without action by such Trustee or the remaining
Trustees, be deemed to have retired in accordance with the terms of such
policy, effective as of the date determined in accordance with such
policy. Any Trustee who has become incapacitated by illness or injury as
determined by a majority of the other Trustees, may be retired by written
instrument executed by a majority of the other Trustees, specifying the
date of such Trustee's retirement. Upon the resignation, retirement or
removal of a Trustee, or a Trustee otherwise ceasing to be a Trustee, such
resigning, retired, removed or former Trustee shall execute and deliver
such documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property held
in the name of such resigning, retired, removed or former Trustee. Upon
the death of any Trustee or upon removal, retirement or resignation due to
any Trustee's incapacity to serve as Trustee, the legal representative of
such deceased, removed, retired or resigning Trustee shall execute and
deliver on behalf of such deceased, removed, retired or resigning Trustee
such documents as the remaining Trustees shall require for the purpose set
forth in the preceding sentence.
2.4. Vacancies. The term of office of a Trustee shall
terminate and a vacancy shall occur in the event of the death,
resignation, retirement, adjudicated incompetence or other incapacity to
perform the duties of the office, or removal, of a Trustee. No such
vacancy shall operate to annul this Declaration or to revoke any existing
agency created pursuant to the terms of this Declaration. In the case of
a vacancy, Holders of at least a majority of the Interests entitled to
vote, acting at any meeting of Holders held in accordance with Section 9.2
hereof, or, to the extent permitted by the 1940 Act, a majority vote of
the Trustees continuing in office acting by written instrument or
instruments, may fill such vacancy, and any Trustee so elected by the
Trustees or the Holders shall hold office as provided in this Declaration.
2.5. Meetings. Meetings of the Trustees shall be held from
time to time upon the call of the Chairman, if any, the President, the
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Secretary, an Assistant Secretary or any two Trustees, at such time, on
such day and at such place, as shall be designated in the notice of the
meeting. The Trustees shall hold an annual meeting for the election of
officers and the transaction of other business which may come before such
meeting. Regular meetings of the Trustees may be held without call or
notice at a time and place fixed by the By-Laws or by resolution of the
Trustees. Notice of any other meeting shall be given by mail, by telegram
(which term shall include a cablegram), by telecopier or delivered
personally (which term shall include by telephone). If notice is given by
mail, it shall be mailed not later than 48 hours preceding the meeting and
if given by telegram, telecopier or personally, such notice shall be sent
or delivery made not later than 24 hours preceding the meeting. Notice of
a meeting of Trustees may be waived before or after any meeting by signed
written waiver. Neither the business to be transacted at, nor the purpose
of, any meeting of the Trustees need be stated in the notice or waiver of
notice of such meeting. The attendance of a Trustee at a meeting shall
constitute a waiver of notice of such meeting except in the situation in
which a Trustee attends a meeting for the express purpose of objecting, at
the commencement of such meeting, to the transaction of any business on
the ground that the meeting was not lawfully called or convened. The
Trustees may act with or without a meeting, but no notice need be given of
action proposed to be taken by written consent. A quorum for all meetings
of the Trustees shall be a majority of the Trustees. Unless provided
otherwise in this Declaration, any action of the Trustees may be taken at
a meeting by vote of a majority of the Trustees present (a quorum being
present) or without a meeting by written consent of a majority of the
Trustees.
Any committee of the Trustees, including an executive committee,
if any, may act with or without a meeting. A quorum for all meetings of
any such committee shall be a majority of the members thereof. Unless
provided otherwise in this Declaration, any action of any such committee
may be taken at a meeting by vote of a majority of the members present (a
quorum being present) or without a meeting by written consent of a
majority of the members.
With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust or otherwise
interested in any action to be taken may be counted for quorum purposes
under this Section 2.5 and shall be entitled to vote to the extent
permitted by the 1940 Act.
All or any one or more Trustees may participate in a meeting of
the Trustees or any committee thereof by means of a conference telephone
or similar communications equipment by means of which all individuals
participating in the meeting can hear each other and participation in a
meeting by means of such communications equipment shall constitute
presence in person at such meeting.
2.6. Officers; Chairman of the Board. The Trustees shall,
from time to time, elect a President, a Secretary and a Treasurer. The
Trustees may elect or appoint, from time to time, a Chairman of the Board
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who shall preside at all meetings of the Trustees and carry out such other
duties as the Trustees may designate. The Trustees may elect or appoint
or authorize the President to appoint such other officers, agents or
independent contractors with such powers as the Trustees may deem to be
advisable. The Chairman, if any, shall be and each other officer may, but
need not, be a Trustee.
2.7. By-Laws. The Trustees may adopt and, from time to time,
amend or repeal By-Laws for the conduct of the business of the Trust.
ARTICLE III
Powers of Trustees
3.1. General. The Trustees shall have exclusive and absolute
control over the Trust Property and over the business of the Trust to the
same extent as if the Trustees were the sole owners of the Trust Property
and such business in their own right, but with such powers of delegation
as may be permitted by this Declaration. The Trustees may perform such
acts as in their sole discretion they deem proper for conducting the
business of the Trust. The enumeration of or failure to mention any
specific power herein shall not be construed as limiting such exclusive
and absolute control. The powers of the Trustees may be exercised without
order of or resort to any court.
3.2. Investments. The Trustees shall have power to:
(a) conduct, operate and carry on the business of an
investment company;
(b) subscribe for, invest in, reinvest in, purchase
or otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute or otherwise deal in or dispose of U.S. and foreign currencies
and related instruments including forward contracts, and securities,
including common and preferred stock, warrants, bonds, debentures, time
notes and all other evidences of indebtedness, negotiable or non-
negotiable instruments, obligations, certificates of deposit or
indebtedness, commercial paper, repurchase agreements, reverse repurchase
agreements, convertible securities, forward contracts, options, futures
contracts, and other securities, including, without limitation, those
issued, guaranteed or sponsored by any state, territory or possession of
the United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities, or by the U.S. Government,
any foreign government, or any agency, instrumentality or political
subdivision of the U.S. Government or any foreign government, or any
international instrumentality, or by any bank, savings institution,
corporation or other business entity organized under the laws of the
United States or under any foreign laws; and to exercise any and all
rights, powers and privileges of ownership or interest in respect of any
and all such investments of any kind and description, including, without
limitation, the right to consent and otherwise act with respect thereto,
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with power to designate one or more Persons to exercise any of such
rights, powers and privileges in respect of any of such investments; and
the Trustees shall be deemed to have the foregoing powers with respect to
any additional instruments in which the Trustees may determine to invest.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust, nor shall the
Trustees be limited by any law limiting the investments which may be made
by fiduciaries.
3.3. Legal Title. Legal title to all Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall
have the power to cause legal title to any Trust Property to be held by or
in the name of one or more of the Trustees, or in the name of the Trust,
or in the name or nominee name of any other Person on behalf of the Trust,
on such terms as the Trustees may determine.
The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each individual who may hereafter
become a Trustee upon his due election and qualification. Upon the
resignation, removal or death of a Trustee, such resigning, removed or
deceased Trustee shall automatically cease to have any right, title or
interest in any Trust Property, and the right, title and interest of such
resigning, removed or deceased Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of
title shall be effective whether or not conveyancing documents have been
executed and delivered.
3.4. Sale and Increases of Interests. The Trustees, in their
discretion, may, from time to time, without a vote of the Holders, permit
any Institutional Investor to purchase an Interest, or increase its
Interest, for such type of consideration, including cash or property, at
such time or times (including, without limitation, each business day), and
on such terms as the Trustees may deem best, and may in such manner
acquire other assets (including the acquisition of assets subject to, and
in connection with the assumption of, liabilities) and businesses.
Individuals, S corporations, partnerships and grantor trusts that are
beneficially owned by any individual, S corporation or partnership may not
purchase Interests. A Holder which has redeemed its Interest may not be
permitted to purchase an Interest until the later of 60 calendar days
after the date of such Redemption or the first day of the Fiscal Year next
succeeding the Fiscal Year during which such Redemption occurred.
3.5 Decreases and Redemptions of Interests. Subject to
Article VII hereof, the Trustees, in their discretion, may, from time to
time, without a vote of the Holders, permit a Holder to redeem its
Interest, or decrease its Interest, for either cash or property, at such
time or times (including, without limitation, each business day), and on
such terms as the Trustees may deem best.
3.6. Borrow Money. The Trustees shall have power to borrow
money or otherwise obtain credit and to secure the same by mortgaging,
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pledging or otherwise subjecting as security the assets of the Trust,
including the lending of portfolio securities, and to endorse, guarantee,
or undertake the performance of any obligation, contract or engagement of
any other Person.
3.7. Delegation; Committees. The Trustees shall have power,
consistent with their continuing exclusive and absolute control over the
Trust Property and over the business of the Trust, to delegate from time
to time to such of their number or to officers, employees, agents or
independent contractors of the Trust the doing of such things and the
execution of such instruments in either the name of the Trust or the names
of the Trustees or otherwise as the Trustees may deem expedient.
3.8. Collection and Payment. The Trustees shall have power to
collect all property due to the Trust; and to pay all claims, including
taxes, against the Trust Property; to prosecute, defend, compromise or
abandon any claims relating to the Trust or the Trust Property; to
foreclose any security interest securing any obligation, by virtue of
which any property is owed to the Trust; and to enter into releases,
agreements and other instruments.
3.9. Expenses. The Trustees shall have power to incur and pay
any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of this Declaration, and to
pay reasonable compensation from the Trust Property to themselves as
Trustees. The Trustees shall fix the compensation of all officers,
employees and Trustees. The Trustees may pay themselves such compensation
for special services, including legal and brokerage services, as they in
good faith may deem reasonable, and reimbursement for expenses reasonably
incurred by themselves on behalf of the Trust.
3.10. Miscellaneous Powers. The Trustees shall have power to:
(a) employ or contract with such Persons as the Trustees may deem
appropriate for the transaction of the business of the Trust and terminate
such employees or contractual relationships as they consider appropriate;
(b) enter into joint ventures, partnerships and any other combinations or
associations; (c) purchase, and pay for out of Trust Property, insurance
policies insuring the Investment Adviser, Administrator, placement agent,
Holders, Trustees, officers, employees, agents or independent contractors
of the Trust against all claims arising by reason of holding any such
position or by reason of any action taken or omitted by any such Person in
such capacity, whether or not the Trust would have the power to indemnify
such Person against such liability; (d) establish pension, profit-sharing
and other retirement, incentive and benefit plans for the Trustees,
officers, employees or agents of the Trust; (e) make donations,
irrespective of benefit to the Trust, for charitable, religious,
educational, scientific, civic or similar purposes; (f) to the extent
permitted by law, indemnify any Person with whom the Trust has dealings,
including the Investment Adviser, Administrator, placement agent, Holders,
Trustees, officers, employees, agents or independent contractors of the
Trust, to such extent as the Trustees shall determine; (g) guarantee
indebtedness or contractual obligations of others; (h) determine and
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change the Fiscal Year and the method by which the accounts of the Trust
shall be kept; and (i) adopt a seal for the Trust, but the absence of such
a seal shall not impair the validity of any instrument executed on behalf
of the Trust.
3.11. Further Powers. The Trustees shall have power to conduct
the business of the Trust and carry on its operations in any and all of
its branches and maintain offices, whether within or without the State of
New York, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, colonies, possessions, agencies or instrumentalities of the
United States of America and of foreign governments, and to do all such
other things and execute all such instruments as they deem necessary,
proper, appropriate or desirable in order to promote the interests of the
Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust which is made by
the Trustees in good faith shall be conclusive. In construing the
provisions of this Declaration, the presumption shall be in favor of a
grant of power to the Trustees. The Trustees shall not be required to
obtain any court order in order to deal with Trust Property.
3.12 Litigation. The Trustees shall have full power and
authority, in the name and on behalf of the Trust, to engage in and to
prosecute, defend, compromise, settle, abandon, or adjust by arbitration
or otherwise, any actions, suits, proceedings, disputes, claims and
demands relating to the Trust, and out of the assets of the Trust to pay
or to satisfy any liabilities, losses, debts, claims or expenses
(including without limitation attorneys' fees) incurred in connection
therewith, including those of litigation, and such power shall include
without limitation the power of the Trustees or any committee thereof, in
the exercise of their or its good faith business judgment, to dismiss or
terminate any action, suit, proceeding, dispute, claim or demand,
derivative or otherwise, brought by any Person, including a Holder in its
own name or in the name of the Trust, whether or not the Trust or any of
the Trustees may be named individually therein or the subject matter
arises by reason of business for or on behalf of the Trust.
ARTICLE IV
Investment Advisory, Administration
and Placement Agent Arrangements
4.1. Investment Advisory, Administration and Other
Arrangements. The Trustees may in their discretion, from time to time,
enter into investment advisory contracts, administration contracts or
placement agent agreements whereby the other party to such contract or
agreement shall undertake to furnish the Trustees such investment
advisory, administration, placement agent and/or other services as the
Trustees shall, from time to time, consider appropriate or desirable and
all upon such terms and conditions as the Trustees may in their sole
discretion determine. Notwithstanding any provision of this Declaration,
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the Trustees may authorize any Investment Adviser (subject to such general
or specific instructions as the Trustees may, from time to time, adopt) to
effect purchases, sales, loans or exchanges of Trust Property on behalf of
the Trustees or may authorize any officer, employee or Trustee to effect
such purchases, sales, loans or exchanges pursuant to recommendations of
any such Investment Adviser (all without any further action by the
Trustees). Any such purchase, sale, loan or exchange shall be deemed to
have been authorized by the Trustees.
4.2. Parties to Contract. Any contract of the character
described in Section 4.1 hereof or in the By-Laws of the Trust may be
entered into with any corporation, firm, trust or association, although
one or more of the Trustees or officers of the Trust may be an officer,
director, Trustee, shareholder or member of such other party to the
contract, and no such contract shall be invalidated or rendered voidable
by reason of the existence of any such relationship, nor shall any
individual holding such relationship be liable merely by reason of such
relationship for any loss or expense to the Trust under or by reason of
any such contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this
Article IV or the By-Laws of the Trust. The same Person may be the other
party to one or more contracts entered into pursuant to Section 4.1 hereof
or the By-Laws of the Trust, and any individual may be financially
interested or otherwise affiliated with Persons who are parties to any or
all of the contracts mentioned in this Section 4.2 or in the By-Laws of
the Trust.
ARTICLE V
Liability of Holders; Limitations of
Liability of Trustees, Officers, etc.
5.1. Liability of Holders; Indemnification. Each Holder shall
be jointly and severally liable (with rights of contribution inter se in
proportion to their respective Interests in the Trust) for the liabilities
and obligations of the Trust in the event that the Trust fails to satisfy
such liabilities and obligations; provided, however, that, to the extent
assets are available in the Trust, the Trust shall indemnify and hold each
Holder harmless from and against any claim or liability to which such
Holder may become subject by reason of being or having been a Holder to
the extent that such claim or liability imposes on the Holder an
obligation or liability which, when compared to the obligations and
liabilities imposed on other Holders, is greater than such Holder's
Interest (proportionate share), and shall reimburse such Holder for all
legal and other expenses reasonably incurred by such Holder in connection
with any such claim or liability. The rights accruing to a Holder under
this Section 5.1 shall not exclude any other right to which such Holder
may be lawfully entitled, nor shall anything contained herein restrict the
right of the Trust to indemnify or reimburse a Holder in any appropriate
situation even though not specifically provided herein. Notwithstanding
the indemnification procedure described above, it is intended that each
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Holder shall remain jointly and severally liable to the Trust's creditors
as a legal matter.
5.2. Limitations of Liability of Trustees, Officers, Employees,
Agents, Independent Contractors to Third Parties. No Trustee, officer,
employee, agent or independent contractor (except in the case of an agent
or independent contractor to the extent expressly provided by written
contract) of the Trust shall be subject to any personal liability
whatsoever to any Person, other than the Trust or the Holders, in
connection with Trust Property or the affairs of the Trust; and all such
Persons shall look solely to the Trust Property for satisfaction of claims
of any nature against a Trustee, officer, employee, agent or independent
contractor (except in the case of an agent or independent contractor to
the extent expressly provided by written contract) of the Trust arising in
connection with the affairs of the Trust.
5.3. Limitations of Liability of Trustees, Officers,
Employees, Agents, Independent Contractors to Trust, Holders, etc. No
Trustee, officer, employee, agent or independent contractor (except in the
case of an agent or independent contractor to the extent expressly
provided by written contract) of the Trust shall be liable to the Trust or
the Holders for any action or failure to act (including, without
limitation, the failure to compel in any way any former or acting Trustee
to redress any breach of trust) except for such Person's own bad faith,
willful misfeasance, gross negligence or reckless disregard of such
Person's duties.
5.4. Mandatory Indemnification. The Trust shall indemnify, to
the fullest extent permitted by law (including the 1940 Act), each
Trustee, officer, employee, agent or independent contractor (except in the
case of an agent or independent contractor to the extent expressly
provided by written contract) of the Trust (including any Person who
serves at the Trust's request as a director, officer or trustee of another
organization in which the Trust has any interest as a shareholder,
creditor or otherwise) against all liabilities and expenses (including
amounts paid in satisfaction of judgments, in compromise, as fines and
penalties, and as counsel fees) reasonably incurred by such Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which such Person may be
involved or with which such Person may be threatened, while in office or
thereafter, by reason of such Person being or having been such a Trustee,
officer, employee, agent or independent contractor, except with respect to
any matter as to which such Person shall have been adjudicated to have
acted in bad faith, willful misfeasance, gross negligence or reckless
disregard of such Person's duties; provided, however, that as to any
matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for such payment or
for any other expenses shall be provided unless there has been a
determination that such Person did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of such Person's office by the court or other body approving
the settlement or other disposition or by a reasonable determination,
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based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that such Person did not engage in such conduct by
written opinion from independent legal counsel approved by the Trustees.
The rights accruing to any Person under these provisions shall not exclude
any other right to which such Person may be lawfully entitled; provided
that no Person may satisfy any right of indemnity or reimbursement granted
in this Section 5.4 or in Section 5.2 hereof or to which such Person may
be otherwise entitled except out of the Trust Property. The Trustees may
make advance payments in connection with indemnification under this
Section 5.4, provided that the indemnified Person shall have given a
written undertaking to reimburse the Trust in the event it is subsequently
determined that such Person is not entitled to such indemnification.
5.5. No Bond Required of Trustees. No Trustee shall, as such,
be obligated to give any bond or surety or other security for the
performance of any of such Trustee's duties hereunder.
5.6. No Duty of Investigation; Notice in Trust Instruments,
etc. No purchaser, lender or other Person dealing with any Trustee,
officer, employee, agent or independent contractor of the Trust shall be
bound to make any inquiry concerning the validity of any transaction
purporting to be made by such Trustee, officer, employee, agent or
independent contractor or be liable for the application of money or
property paid, loaned or delivered to or on the order of such Trustee,
officer, employee, agent or independent contractor. Every obligation,
contract, instrument, certificate or other interest or undertaking of the
Trust, and every other act or thing whatsoever executed in connection with
the Trust shall be conclusively taken to have been executed or done by the
executors thereof only in their capacity as Trustees, officers, employees,
agents or independent contractors of the Trust. Every written obligation,
contract, instrument, certificate or other interest or undertaking of the
Trust made or sold by any Trustee, officer, employee, agent or independent
contractor of the Trust, in such capacity, shall contain an appropriate
recital to the effect that the Trustee, officer, employee, agent or
independent contractor of the Trust shall not personally be bound by or
liable thereunder, nor shall resort be had to their private property for
the satisfaction of any obligation or claim thereunder, and appropriate
references shall be made therein to the Declaration, and may contain any
further recital which they may deem appropriate, but the omission of such
recital shall not operate to impose personal liability on any Trustee,
officer, employee, agent or independent contractor of the Trust. Subject
to the provisions of the 1940 Act, the Trust may maintain insurance for
the protection of the Trust Property, the Holders, and the Trustees,
officers, employees, agents and independent contractors of the Trust in
such amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole judgment
shall deem advisable.
5.7. Reliance on Experts, etc. Each Trustee, officer,
employee, agent or independent contractor of the Trust shall, in the
performance of such Person's duties, be fully and completely justified and
protected with regard to any act or any failure to act resulting from
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reliance in good faith upon the books of account or other records of the
Trust (whether or not the Trust would have the power to indemnify such
Persons against such liability), upon an opinion of counsel, or upon
reports made to the Trust by any of its officers or employees or by any
Investment Adviser or Administrator, accountant, appraiser or other
experts or consultants selected with reasonable care by the Trustees,
officers or employees of the Trust, regardless of whether such counsel or
expert may also be a Trustee.
ARTICLE VI
Interests
6.1. Interests. The beneficial interest in the Trust Property
shall consist of non-transferable Interests. The Interests shall be
personal property giving only the rights in this Declaration specifically
set forth. The value of an Interest shall be equal to the Book Capital
Account balance of the Holder of the Interest.
6.2. Non-Transferability. A Holder may not transfer, sell or
exchange its Interest.
6.3. Register of Interests. A register shall be kept at the
Trust under the direction of the Trustees which shall contain the name,
address and Book Capital Account balance of each Holder. Such register
shall be conclusive as to the identity of the Holders, and the Trust shall
not be bound to recognize any equitable or legal claim to or interest in
an Interest which is not contained in such register. No Holder shall be
entitled to receive payment of any distribution, nor to have notice given
to it as herein provided, until it has given its address to such officer
or agent of the Trust as is keeping such register for entry thereon.
ARTICLE VII
Increases, Decreases And Redemptions of Interests
Subject to applicable law, to the provisions of this Declaration
and to such restrictions as may from time to time be adopted by the
Trustees, each Holder shall have the right to vary its investment in the
Trust at any time without limitation by increasing (through a capital
contribution) or decreasing (through a capital withdrawal) or by a
Redemption of its Interest. An increase in the investment of a Holder in
the Trust shall be reflected as an increase in the Book Capital Account
balance of that Holder and a decrease in the investment of a Holder in the
Trust or the Redemption of the Interest of a Holder shall be reflected as
a decrease in the Book Capital Account balance of that Holder. The Trust
shall, upon appropriate and adequate notice from any Holder increase,
decrease or redeem such Holder's Interest for an amount determined by the
application of a formula adopted for such purpose by resolution of the
Trustees; provided that (a) the amount received by the Holder upon any
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such decrease or Redemption shall not exceed the decrease in the Holder's
Book Capital Account balance effected by such decrease or Redemption of
its Interest, and (b) if so authorized by the Trustees, the Trust may, at
any time and from time to time, charge fees for effecting any such
decrease or Redemption, at such rates as the Trustees may establish, and
may, at any time and from time to time, suspend such right of decrease or
Redemption. The procedures for effecting decreases or Redemptions shall
be as determined by the Trustees from time to time.
ARTICLE VIII
Determination of Book Capital Account
Balances and Distributions
8.1. Book Capital Account Balances. The Book Capital Account
balance of each Holder shall be determined on such days and at such time
or times as the Trustees may determine. The Trustees shall adopt
resolutions setting forth the method of determining the Book Capital
Account balance of each Holder. The power and duty to make calculations
pursuant to such resolutions may be delegated by the Trustees to the
Investment Adviser, Administrator, custodian, or such other Person as the
Trustees may determine. Upon the Redemption of an Interest, the Holder of
that Interest shall be entitled to receive the balance of its Book Capital
Account. A Holder may not transfer, sell or exchange its Book Capital
Account balance.
8.2. Allocations and Distributions to Holders. The Trustees
shall, in compliance with the Code, the 1940 Act and generally accepted
accounting principles, establish the procedures by which the Trust shall
make (i) the allocation of unrealized gains and losses, taxable income and
tax loss, and profit and loss, or any item or items thereof, to each
Holder, (ii) the payment of distributions, if any, to Holders, and
(iii) upon liquidation, the final distribution of items of taxable income
and expense. Such procedures shall be set forth in writing and be
furnished to the Trust's accountants. The Trustees may amend the
procedures adopted pursuant to this Section 8.2 from time to time. The
Trustees may retain from the net profits such amount as they may deem
necessary to pay the liabilities and expenses of the Trust, to meet
obligations of the Trust, and as they may deem desirable to use in the
conduct of the affairs of the Trust or to retain for future requirements
or extensions of the business.
8.3. Power to Modify Foregoing Procedures. Notwithstanding
any of the foregoing provisions of this Article VIII, the Trustees may
prescribe, in their absolute discretion, such other bases and times for
determining the net income of the Trust, the allocation of income of the
Trust, the Book Capital Account balance of each Holder, or the payment of
distributions to the Holders as they may deem necessary or desirable to
enable the Trust to comply with any provision of the 1940 Act or any order
of exemption issued by the Commission or with the Code.
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ARTICLE IX
Holders
9.1. Rights of Holders. The ownership of the Trust Property
and the right to conduct any business described herein are vested
exclusively in the Trustees, and the Holders shall have no right or title
therein other than the beneficial interest conferred by their Interests
and they shall have no power or right to call for any partition or
division of any Trust Property.
9.2. Meetings of Holders. Meetings of Holders may be called
at any time by a majority of the Trustees and shall be called by any
Trustee upon written request of Holders holding, in the aggregate, not
less than 10% of the Interests, such request specifying the purpose or
purposes for which such meeting is to be called. Any such meeting shall
be held within or without the State of New York and within or without the
United States of America on such day and at such time as the Trustees
shall designate. Holders of one-third of the Interests, present in person
or by proxy, shall constitute a quorum for the transaction of any
business, except as may otherwise be required by the 1940 Act, other
applicable law, this Declaration or the By-Laws of the Trust. If a quorum
is present at a meeting, an affirmative vote of the Holders present, in
person or by proxy, holding more than 50% of the total Interests of the
Holders present, either in person or by proxy, at such meeting constitutes
the action of the Holders, unless a greater number of affirmative votes is
required by the 1940 Act, other applicable law, this Declaration or the
By-Laws of the Trust. All or any one of more Holders may participate in a
meeting of Holders by means of a conference telephone or similar
communications equipment by means of which all persons participating in
the meeting can hear each other and participation in a meeting by means of
such communications equipment shall constitute presence in person at such
meeting.
9.3. Notice of Meetings. Notice of each meeting of Holders,
stating the time, place and purposes of the meeting, shall be given by the
Trustees by mail to each Holder, at its registered address, mailed at
least 10 days and not more than 60 days before the meeting. Notice of any
meeting may be waived in writing by any Holder either before or after such
meeting. The attendance of a Holder at a meeting shall constitute a
waiver of notice of such meeting except in the situation in which a Holder
attends a meeting for the express purpose of objecting to the transaction
of any business on the ground that the meeting was not lawfully called or
convened. At any meeting, any business properly before the meeting may be
considered whether or not stated in the notice of the meeting. Any
adjourned meeting may be held as adjourned without further notice.
9.4. Record Date for Meetings, Distributions, etc. For the
purpose of determining the Holders who are entitled to notice of and to
vote or act at any meeting, including any adjournment thereof, or to
participate in any distribution, or for the purpose of any other action,
the Trustees may from time to time fix a date, not more than 90 days prior
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to the date of any meeting of Holders or the payment of any distribution
or the taking of any other action, as the case may be, as a record date
for the determination of the Persons to be treated as Holders for such
purpose. If the Trustees do not, prior to any meeting of the Holders, so
fix a record date, then the date of mailing notice of the meeting shall be
the record date.
9.5. Proxies, etc. At any meeting of Holders, any Holder
entitled to vote thereat may vote by proxy, provided that no proxy shall
be voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the
Secretary may direct, for verification prior to the time at which such
vote is to be taken. A proxy may be revoked by a Holder at any time
before it has been exercised by placing on file with the Secretary, or
with such other officer or agent of the Trust as the Secretary may direct,
a later dated proxy or written revocation. Pursuant to a resolution of a
majority of the Trustees, proxies may be solicited in the name of the
Trust or of one or more Trustees or of one or more officers of the Trust.
Only Holders on the record date shall be entitled to vote. Each such
Holder shall be entitled to a vote proportionate to its Interest. When an
Interest is held jointly by several Persons, any one of them may vote at
any meeting in person or by proxy in respect of such Interest, but if more
than one of them is present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to
be cast, such vote shall not be received in respect of such Interest. A
proxy purporting to be executed by or on behalf of a Holder shall be
deemed valid unless challenged at or prior to its exercise, and the burden
of proving invalidity shall rest on the challenger. No proxy shall be
valid after one year from the date of execution, unless a longer period is
expressly stated in such proxy. The Trust may also permit a Holder to
authorize and empower individuals named as proxies on any form of proxy
solicited by the Trustees to vote that Holder's Interest on any matter by
recording his voting instructions on any recording device maintained for
that purpose by the Trust or its agent, provided the Holder complies with
such procedures as the Trustees may designate to be necessary or
appropriate to determine the authenticity of the voting instructions so
recorded; such instructions shall be deemed to constitute a written proxy
signed by the Holder and delivered to the Trust and shall be deemed to be
dated as of the date such instructions were transmitted, and the Holder
shall be deemed to have approved and ratified all actions taken by such
proxies in accordance with the voting instructions so recorded.
9.6. Reports. The Trustees shall cause to be prepared and
furnished to each Holder, at least annually as of the end of each Fiscal
Year, a report of operations containing a balance sheet and a statement of
income of the Trust prepared in conformity with generally accepted
accounting principles and an opinion of an independent public accountant
on such financial statements. The Trustees shall, in addition, furnish to
each Holder at least semi-annually interim reports of operations
containing an unaudited balance sheet as of the end of such period and an
unaudited statement of income for the period from the beginning of the
then-current Fiscal Year to the end of such period.
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9.7. Inspection of Records. The books and records of the
Trust shall be open to inspection by Holders during normal business hours
for any purpose not harmful to the Trust.
9.8. Holder Action by Written Consent. 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 this Declaration)
consent to the action in writing and the written consents are filed with
the records of the meetings of Holders. Such consents shall be treated
for all purposes as a vote taken at a meeting of Holders. Each such
written consent shall be executed by or on behalf of the Holder delivering
such consent and shall bear the date of such execution. No such written
consent shall be effective to take the action referred to therein unless,
within one year of the earliest dated consent, written consents executed
by a sufficient number of Holders to take such action are filed with the
records of the meetings of Holders.
9.9. Notices. Any and all communications, including any and
all notices to which any Holder may be entitled, shall be deemed duly
served or given if mailed, postage prepaid, addressed to a Holder at its
last known address as recorded on the register of the Trust.
ARTICLE X
Duration; Termination;
Amendment; Mergers; Etc.
10.1. Duration. Subject to possible termination or dissolution
in accordance with the provisions of Section 10.2 and Section 10.3 hereof,
respectively, the Trust created hereby shall continue until the expiration
of 20 years after the death of the last survivor of the initial Trustees
named herein and the following named persons:
Date of
Name Address Birth
---- ------- -------
Cassius Marcellus Cornelius 742 Old Dublin Road November 9, 1990
Clay Hancock, NH 03449
Sara Briggs Sullivan 1308 Rhodes Street September 17, 1990
Dubois, WY 82513
Myles Bailey Rawson Winhall Hollow Road May 13, 1990
R.R. #1, Box 178B
Bondville, VT 05340
Zeben Curtis Kopchak Box 1126 October 31, 1989
Cordova, AK 99574
17
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Landon Harris Clay 742 Old Dublin Road February 15, 1989
Hancock, NH 03449
Kelsey Ann Sullivan 1308 Rhodes Street May 1, 1988
Dubois, WY 82513
Carter Allen Rawson Winhall Hollow Road January 28, 1988
R.R. #1, Box 178B
Bondville, VT 05340
Obadiah Barclay Kopchak Box 1126 August 29, 1987
Cordova, AK 99574
Richard Tubman Clay 742 Old Dublin Road April 12, 1987
Hancock, NH 03449
Thomas Moragne Clay 742 Old Dublin Road April 11, 1985
Hancock, NH 03449
Zachariah Bishop Kopchak Box 1126 January 11, 1985
Cordova, AK 99574
Sager Anna Kopchak Box 1126 May 22, 1983
Cordova, AK 99574
10.2. Termination.
(a) The Trust 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. Upon any such termination,
(i) the Trust shall carry on no business except for the
purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of
the Trust and all of the powers of the Trustees under this
Declaration shall continue until the affairs of the Trust have been
wound up, including the power to fulfill or discharge the contracts
of the Trust, collect the assets of the Trust, sell, convey,
assign, exchange or otherwise dispose of all or any part of the
Trust Property to one or more Persons at public or private sale for
consideration which may consist in whole or in part of cash,
securities or other property of any kind, discharge or pay the
liabilities of the Trust, and do all other acts appropriate to
liquidate the business of the Trust; provided that any sale,
conveyance, assignment, exchange or other disposition of all or
substantially all the Trust Property shall require approval of the
principal terms of the transaction and the nature and amount of the
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<PAGE>
consideration by the vote of Holders holding more than 50% of all
Interests; and
(iii) after paying or adequately providing for the payment
of all liabilities, and upon receipt of such releases, indemnities
and refunding agreements as they deem necessary for their
protection, the Trustees shall distribute the remaining Trust
Property, in cash or in kind or partly each, among the Holders
according to their respective rights as set forth in the procedures
established pursuant to Section 8.2 hereof.
(b) Upon termination of the Trust and distribution to the
Holders as herein provided, a majority of the Trustees shall execute and
file with the records of the Trust an instrument in writing setting forth
the fact of such termination and distribution. Upon termination of the
Trust, the Trustees shall thereupon be discharged from all further
liabilities and duties hereunder, and the rights and interests of all
Holders shall thereupon cease.
10.3. Dissolution. Upon the bankruptcy of any Holder, or upon the
Redemption of any Interest, the Trust shall be dissolved effective 120
days after the event. However, the Holders (other than such bankrupt or
redeeming Holder) may, by a unanimous affirmative vote at any meeting of
such Holders or by an instrument in writing without a meeting executed by
a majority of the Trustees and consented to by all such Holders, agree to
continue the business of the Trust even if there has been such a
dissolution.
10.4. Amendment Procedure.
(a) This Declaration may be amended by the vote of Holders
of more than 50% 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 the Holders of more than 50% of all
Interests. Notwithstanding any other provision hereof, this Declaration
may be amended by an instrument in writing executed by a majority of the
Trustees, and without the vote or consent of Holders, for any one or more
of the following purposes: (i) to change the name of the Trust, (ii) to
supply any omission, or to cure, correct or supplement any ambiguous,
defective or inconsistent provision hereof, (iii) to conform this
Declaration to the requirements of applicable federal law or regulations
or the requirements of the applicable provisions of the Code, (iv) to
change the state or other jurisdiction designated herein as the state or
other jurisdiction whose law shall be the governing law hereof, (v) to
effect such changes herein as the Trustees find to be necessary or
appropriate (A) to permit the filing of this Declaration under the law of
such state or other jurisdiction applicable to trusts or voluntary
associations, (B) to permit the Trust to elect to be treated as a
"regulated investment company" under the applicable provisions of the
Code, or (C) to permit the transfer of Interests (or to permit the
transfer of any other beneficial interest in or share of the Trust,
however denominated), (vi) in conjunction with any amendment contemplated
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by the foregoing clause (iv) or the foregoing clause (v) to make any and
all such further changes or modifications to this Declaration as the
Trustees find to be necessary or appropriate, any finding of the Trustees
referred to in the foregoing clause (v) or the foregoing clause (vi) to be
conclusively evidenced by the execution of any such amendment by a
majority of the Trustees, and (vii) change, modify or rescind any
provision of this Declaration provided such change, modification or
rescission is found by the Trustees to be necessary or appropriate and to
not have a materially adverse effect on the financial interests of the
Holders, any such finding to be conclusively evidenced by the execution of
any such amendment by a majority of the Trustees; provided, however, that
unless effected in compliance with the provisions of Section 10.4(b)
hereof, no amendment otherwise authorized by this sentence may be made
which would reduce the amount payable with respect to any Interest upon
liquidation of the Trust and; provided, further, that the Trustees shall
not be liable for failing to make any amendment permitted by this Section
10.4(a).
(b) No amendment may be made under Section 10.4(a) hereof
which would change any rights with respect to any Interest by reducing the
amount payable thereon upon liquidation of the Trust, except with the vote
or consent of Holders of two-thirds of all Interests.
(c) A certification in recordable form executed by a
majority of the Trustees setting forth an amendment and reciting that it
was duly adopted by the Holders or by the Trustees as aforesaid or a copy
of the Declaration, as amended, in recordable form, and executed by a
majority of the Trustees, shall be conclusive evidence of such amendment
when filed with the records of the Trust.
Notwithstanding any other provision hereof, until such time as
Interests are first sold, this Declaration may be terminated or amended in
any respect by the affirmative vote of a majority of the Trustees at any
meeting of Trustees or by an instrument executed by a majority of the
Trustees.
10.5. Merger, Consolidation and Sale of Assets. The Trust may merge
or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of
the Trust Property, including good will, upon such terms and conditions
and for such consideration when and as authorized at any meeting of
Holders called for such purpose by a Majority Interests Vote, and any such
merger, consolidation, sale, lease or exchange shall be deemed for all
purposes to have been accomplished under and pursuant to the statutes of
the State of New York.
10.6. Incorporation. Upon a Majority Interests Vote, the Trustees
may cause to be organized or assist in organizing a corporation or
corporations under the law of any jurisdiction or a trust, partnership,
association or other organization to take over the Trust Property or to
carry on any business in which the Trust directly or indirectly has any
interest, and to sell, convey and transfer the Trust Property to any such
20
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corporation, trust, partnership, association or other organization in
exchange for the equity interests thereof or otherwise, and to lend money
to, subscribe for the equity interests of, and enter into any contract
with any such corporation, trust, partnership, association or other
organization, or any corporation, trust, partnership, association or other
organization in which the Trust holds or is about to acquire equity
interests. The Trustees may also cause a merger or consolidation between
the Trust or any successor thereto and any such corporation, trust,
partnership, association or other organization if and to the extent
permitted by law. Nothing contained herein shall be construed as
requiring approval of the Holders for the Trustees to organize or assist
in organizing one or more corporations, trusts, partnerships, associations
or other organizations and selling, conveying or transferring a portion of
the Trust Property to one or more of such organizations or entities.
ARTICLE XI
Miscellaneous
11.1. Governing Law. This Declaration is executed by the Trustees
and delivered in the State of New York and with reference to the law
thereof, and the rights of all parties and the validity and construction
of every provision hereof shall be subject to and construed in accordance
with the law of the State of New York and reference shall be specifically
made to the trust law of the State of New York as to the construction of
matters not specifically covered herein or as to which an ambiguity
exists.
11.2. Counterparts. This Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original,
and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any one such original
counterpart.
11.3. Reliance by Third Parties. Any certificate executed by an
individual who, according to the records of the Trust or of any recording
office in which this Declaration may be recorded, appears to be a Trustee
hereunder, certifying to: (a) the number or identity of Trustees or
Holders, (b) the due authorization of the execution of any instrument or
writing, (c) the form of any vote passed at a meeting of Trustees or
Holders, (d) the fact that the number of Trustees or Holders present at
any meeting or executing any written instrument satisfies the requirements
of this Declaration, (e) the form of any By-Laws adopted by or the
identity of any officer elected by the Trustees, or (f) the existence of
any fact or facts which in any manner relate to the affairs of the Trust,
shall be conclusive evidence as to the matters so certified in favor of
any Person dealing with the Trustees.
11.4. Provisions in Conflict With Law or Regulations.
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(a) The provisions of this Declaration are severable, and
if the Trustees shall determine, with the advice of counsel, that any of
such provisions is in conflict with the 1940 Act, or with other applicable
law and regulations, the conflicting provision shall be deemed never to
have constituted a part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted
prior to such determination.
(b) If any provision of this Declaration shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction
and shall not in any manner affect such provision in any other
jurisdiction or any other provision of this Declaration in any
jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this instrument as
of the day and year first above written.
/s/ James B. Hawkes /s/ James L. O'Connor
-------------------------------- ---------------------------------
James B. Hawkes, as Trustee and James L. O'Connor, as Trustee and
not individually not individually
Signed in Tijuana, Mexico Signed in Tijuana, Mexico
22
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WORLDWIDE HEALTH SCIENCES PORTFOLIO
(formerly called Global Health Sciences Portfolio)
AMENDMENT TO DECLARATION OF TRUST
June 24, 1996
AMENDMENT, made June 24, 1996 to the Declaration of Trust made
March 26, 1996 (hereinafter called the "Declaration") of Global Health
Sciences Portfolio, a New York trust (hereinafter called the "Trust") by
the undersigned, being at least a majority of the Trustees of the Trust in
office on June 24, 1996.
WHEREAS, Section 10.4 of Article X of the Declaration empowers a
majority of the Trustees of the Trust to amend the Declaration without the
vote or consent of Holders to change the name of the Trust;
NOW, THEREFORE, the undersigned Trustees, do hereby amend the
Declaration in the following manner:
1. The caption at the head of the Declaration is hereby
amended to read as follows:
WORLDWIDE HEALTH SCIENCES PORTFOLIO
2. Section 1.1 of Article I of the Declaration is hereby amended to
read as follows:
ARTICLE I
1.1. Name. The name of the trust created hereby (the "Trust")
shall be Worldwide Health Sciences Portfolio and so far as may be
practicable the Trustees shall conduct the Trust's activities, execute all
documents and sue or be sued under that name, which name (and the word
"Trust" wherever hereinafter used) shall refer to the Trustees as
Trustees, and not individually, and shall not refer to the officers,
employees, agents or independent contractors of the Trust or holders of
interests in the Trust.
<PAGE>
IN WITNESS WHEREOF, the undersigned Trustees have executed this
instrument this 24th day of June, 1996.
Donald R. Dwight Norton H. Reamer
By: /s/ Donald R. Dwight By: /s/ Norton H. Reamer
------------------------- ------------------------
James B. Hawkes John L. Thorndike
By: /s/ James B. Hawkes By: /s/ John L. Thorndike
------------------------- ------------------------
Samuel L. Hayes, III Jack L. Treynor
By: /s/ Samuel L. Hayes, III By: /s/ Jack L. Treynor
------------------------- -------------------------
Executed in Hamilton, Bermuda
-2-
<PAGE>
GLOBAL HEALTH SCIENCES PORTFOLIO
--------------------------------
BY-LAWS
As Adopted March 26, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I -- Meetings of Holders . . . . . . . . . . . . . . . . . . 1
Section 1.1 Records at Holder Meetings . . . . . . . . 1
Section 1.2 Inspectors of Election . . . . . . . . . . 1
ARTICLE II -- Officers . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.1 Officers of the Trust . . . . . . . . . . . 2
Section 2.2 Election and Tenure . . . . . . . . . . . . 2
Section 2.3 Removal of Officers . . . . . . . . . . . . 2
Section 2.4 Bonds and Surety . . . . . . . . . . . . . 2
Section 2.5 Chairman, President and Vice President . . 2
Section 2.6 Secretary . . . . . . . . . . . . . . . . . 3
Section 2.7 Treasurer . . . . . . . . . . . . . . . . . 3
Section 2.8 Other Officers and Duties . . . . . . . . . 3
ARTICLE III -- Miscellaneous . . . . . . . . . . . . . . . . . . . . 4
Section 3.1 Depositories . . . . . . . . . . . . . . . 4
Section 3.2 Signatures . . . . . . . . . . . . . . . . 4
Section 3.3 Seal . . . . . . . . . . . . . . . . . . . . 4
Section 3.4 Indemnification . . . . . . . . . . . . . . 4
Section 3.5 Distribution Disbursing Agents and the
Like . . . . . . . . . . . . . . . . . . 4
ARTICLE IV -- Regulations; Amendment of By-Laws . . . . . . . . . . . 4
Section 4.1 Regulations . . . . . . . . . . . . . . . . 4
Section 4.2 Amendment and Repeal of By-Laws . . . . . . 5
i
<PAGE>
BY-LAWS
OF
GLOBAL HEALTH SCIENCES PORTFOLIO
--------------------------------
These By-Laws are made and adopted pursuant to Section
2.7 of the Declaration of Trust establishing GLOBAL HEALTH SCIENCES
PORTFOLIO (the "Trust"), dated March 26, 1996, as from time to time
amended (the "Declaration"). All words and terms capitalized in these
By-Laws shall have the meaning or meanings set forth for such words or
terms in the Declaration.
ARTICLE I
Meetings of Holders
Section 1.1. Records at Holder Meetings. At each
meeting of the Holders there shall be open for inspection the minutes of
the last previous meeting of Holders of the Trust and a list of the
Holders of the Trust, certified to be true and correct by the Secretary or
other proper agent of the Trust, as of the record date of the meeting.
Such list of Holders shall contain the name of each Holder in alphabetical
order and the address and Interest owned by such Holder on such record
date.
Section 1.2. Inspectors of Election. In advance of any
meeting of the Holders, the Trustees may appoint Inspectors of Election to
act at the meeting or any adjournment thereof. If Inspectors of Election
are not so appointed, the chairman, if any, of any meeting of the Holders
may, and on the request of any Holder or his proxy shall, appoint
Inspectors of Election. The number of Inspectors of Election shall be
either one or three. If appointed at the meeting on the request of one or
more Holders or proxies, a Majority Interests Vote shall determine whether
one or three Inspectors of Election are to be appointed, but failure to
allow such determination by the Holders shall not affect the validity of
the appointment of Inspectors of Election. In case any individual
appointed as an Inspector of Election fails to appear or fails or refuses
to so act, the vacancy may be filled by appointment made by the Trustees
in advance of the convening of the meeting or at the meeting by the
individual acting as chairman of the meeting. The Inspectors of Election
shall determine the Interest owned by each Holder, the Interests
represented at the meeting, the existence of a quorum, the authenticity,
validity and effect of proxies, shall receive votes, ballots or consents,
shall hear and determine all challenges and questions in any way arising
in connection with the right to vote, shall count and tabulate all votes
or consents, shall determine the results, and shall do such other acts as
may be proper to conduct the election or vote with fairness to all
Holders. If there are three Inspectors of Election, the decision, act or
certificate of a majority is effective in all respects as the decision,
act or certificate of all. On request of the chairman, if any, of the
<PAGE>
meeting, or of any Holder or its proxy, the Inspectors of Election shall
make a report in writing of any challenge or question or matter determined
by them and shall execute a certificate of any facts found by them.
ARTICLE II
Officers
Section 2.1. Officers of the Trust. The officers of the
Trust shall consist of a Chairman, if any, a President, a Secretary, a
Treasurer and such other officers or assistant officers, including Vice
Presidents, as may be elected by the Trustees. Any two or more of the
offices may be held by the same individual. The Trustees may designate a
Vice President as an Executive Vice President and may designate the order
in which the other Vice Presidents may act. The Chairman shall be a
Trustee, but no other officer of the Trust, including the President, need
be a Trustee.
Section 2.2. Election and Tenure. At the initial
organization meeting and thereafter at each annual meeting of the
Trustees, the Trustees shall elect the Chairman, if any, the President,
the Secretary, the Treasurer and such other officers as the Trustees shall
deem necessary or appropriate in order to carry out the business of the
Trust. Such officers shall hold office until the next annual meeting of
the Trustees and until their successors have been duly elected and
qualified. The Trustees may fill any vacancy in office or add any
additional officer at any time.
Section 2.3. Removal of Officers. Any officer may be
removed at any time, with or without cause, by action of a majority of the
Trustees. This provision shall not prevent the making of a contract of
employment for a definite term with any officer and shall have no effect
upon any cause of action which any officer may have as a result of removal
in breach of a contract of employment. Any officer may resign at any time
by notice in writing signed by such officer and delivered or mailed to the
Chairman, if any, the President or the Secretary, and such resignation
shall take effect immediately, or at a later date according to the terms
of such notice in writing.
Section 2.4. Bonds and Surety. Any officer may be
required by the Trustees to be bonded for the faithful performance of his
duties in such amount and with such sureties as the Trustees may
determine.
Section 2.5. Chairman, President and Vice Presidents.
The Chairman, if any, shall, if present, preside at all meetings of the
Holders and of the Trustees and shall exercise and perform such other
powers and duties as may be from time to time assigned to him by the
Trustees. Subject to such supervisory powers, if any, as may be given by
the Trustees to the Chairman, if any, the President shall be the chief
executive officer of the Trust and, subject to the control of the
Trustees, shall have general supervision, direction and control of the
business of the Trust and of its employees and shall exercise such general
<PAGE>
powers of management as are usually vested in the office of President of a
corporation. In the absence of the Chairman, if any, the President shall
preside at all meetings of the Holders and, in the absence of the
Chairman, the President shall preside at all meetings of the Trustees.
The President shall be, ex officio, a member of all standing committees of
Trustees. Subject to the direction of the Trustees, the President shall
have the power, in the name and on behalf of the Trust, to execute any and
all loan documents, contracts, agreements, deeds, mortgages and other
instruments in writing, and to employ and discharge employees and agents
of the Trust. Unless otherwise directed by the Trustees, the President
shall have full authority and power to attend, to act and to vote, on
behalf of the Trust, at any meeting of any business organization in which
the Trust holds an interest, or to confer such powers upon any other
person, by executing any proxies duly authorizing such person. The
President shall have such further authorities and duties as the Trustees
shall from time to time determine. In the absence or disability of the
President, the Vice Presidents in order of their rank or the Vice
President designated by the Trustees, shall perform all of the duties of
the President, and when so acting shall have all the powers of and be
subject to all of the restrictions upon the President. Subject to the
direction of the President, each Vice President shall have the power in
the name and on behalf of the Trust to execute any and all loan documents,
contracts, agreements, deeds, mortgages and other instruments in writing,
and, in addition, shall have such other duties and powers as shall be
designated from time to time by the Trustees or by the President.
Section 2.6. Secretary. The Secretary shall keep the
minutes of all meetings of, and record all votes of, Holders, Trustees and
the Executive Committee, if any. The results of all actions taken at a
meeting of the Trustees, or by written consent of the Trustees, shall be
recorded by the Secretary. The Secretary shall be custodian of the seal
of the Trust, if any, and (and any other person so authorized by the
Trustees) shall affix the seal or, if permitted, a facsimile thereof, to
any instrument executed by the Trust which would be sealed by a New York
corporation executing the same or a similar instrument and shall attest
the seal and the signature or signatures of the officer or officers
executing such instrument on behalf of the Trust. The Secretary shall
also perform any other duties commonly incident to such office in a New
York corporation, and shall have such other authorities and duties as the
Trustees shall from time to time determine.
Section 2.7. Treasurer. Except as otherwise directed by
the Trustees, the Treasurer shall have the general supervision of the
monies, funds, securities, notes receivable and other valuable papers and
documents of the Trust, and shall have and exercise under the supervision
of the Trustees and of the President all powers and duties normally
incident to his office. The Treasurer may endorse for deposit or
collection all notes, checks and other instruments payable to the Trust or
to its order and shall deposit all funds of the Trust as may be ordered by
the Trustees or the President. The Treasurer shall keep accurate account
of the books of the Trust's transactions which shall be the property of
the Trust, and which together with all other property of the Trust in his
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<PAGE>
possession, shall be subject at all times to the inspection and control of
the Trustees. Unless the Trustees shall otherwise determine, the
Treasurer shall be the principal accounting officer of the Trust and shall
also be the principal financial officer of the Trust. The Treasurer shall
have such other duties and authorities as the Trustees shall from time to
time determine. Notwithstanding anything to the contrary herein
contained, the Trustees may authorize the Investment Adviser or the
Administrator to maintain bank accounts and deposit and disburse funds on
behalf of the Trust.
Section 2.8. Other Officers and Duties. The Trustees
may elect such other officers and assistant officers as they shall from
time to time determine to be necessary or desirable in order to conduct
the business of the Trust. Assistant officers shall act generally in the
absence of the officer whom they assist and shall assist that officer in
the duties of his office. Each officer, employee and agent of the Trust
shall have such other duties and authorities as may be conferred upon him
by the Trustees or delegated to him by the President.
ARTICLE III
Miscellaneous
Section 3.1. Depositories. The funds of the Trust shall
be deposited in such depositories as the Trustees shall designate and
shall be drawn out on checks, drafts or other orders signed by such
officer, officers, agent or agents (including the Investment Adviser or
the Administrator) as the Trustees may from time to time authorize.
Section 3.2. Signatures. All contracts and other
instruments shall be executed on behalf of the Trust by such officer,
officers, agent or agents as provided in these By-Laws or as the Trustees
may from time to time by resolution provide.
Section 3.3. Seal. The seal of the Trust, if any, may
be affixed to any document, and the seal and its attestation may be
lithographed, engraved or otherwise printed on any document with the same
force and effect as if it had been imprinted and attested manually in the
same manner and with the same effect as if done by a New York corporation.
Section 3.4. Indemnification. Insofar as the
conditional advancing of indemnification monies under Section 5.4 of the
Declaration for actions based upon the 1940 Act may be concerned, such
payments will be made only on the following conditions: (i) the advances
must be limited to amounts used, or to be used, for the preparation or
presentation of a defense to the action, including costs connected with
the preparation of a settlement; (ii) advances may be made only upon
receipt of a written promise by, or on behalf of, the recipient to repay
the amount of the advance which exceeds the amount to which it is
ultimately determined that he is entitled to receive from the Trust by
reason of indemnification; and (iii) (a) such promise must be secured by a
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<PAGE>
surety bond, other suitable insurance or an equivalent form of security
which assures that any repayment may be obtained by the Trust without
delay or litigation, which bond, insurance or other form of security must
be provided by the recipient of the advance, or (b) a majority of a quorum
of the Trust's disinterested, non-party Trustees, or an independent legal
counsel in a written opinion, shall determine, based upon a review of
readily available facts, that the recipient of the advance ultimately will
be found entitled to indemnification.
Section 3.5. Distribution Disbursing Agents and the
Like. The Trustees shall have the power to employ and compensate such
distribution disbursing agents, warrant agents and agents for the
reinvestment of distributions as they shall deem necessary or desirable.
Any of such agents shall have such power and authority as is delegated to
any of them by the Trustees.
ARTICLE IV
Regulations; Amendment of By-Laws
Section 4.1. Regulations. The Trustees may make such
additional rules and regulations, not inconsistent with these By-Laws, as
they may deem expedient concerning the sale and purchase of Interests of
the Trust.
Section 4.2. Amendment and Repeal of By-Laws. In
accordance with Section 2.7 of the Declaration, the Trustees shall have
the power to alter, amend or repeal the By-Laws or adopt new By-Laws at
any time. Action by the Trustees with respect to the By-Laws shall be
taken by an affirmative vote of a majority of the Trustees. The Trustees
shall in no event adopt By-Laws which are in conflict with the
Declaration.
The Declaration refers to the Trustees as Trustees, but
not as individuals or personally; and no Trustee, officer, employee or
agent of the Trust shall be held to any personal liability, nor shall
resort be had to their private property for the satisfaction of any
obligation or claim or otherwise in connection with the affairs of the
Trust.
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<PAGE>
WORLDWIDE HEALTH SCIENCES PORTFOLIO
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 24th day of June, 1996, between Worldwide
Health Sciences Portfolio, a New York trust (the "Trust") and G/A Capital
Management, Inc., a Delaware 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 independent contractors 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. As investment adviser
to the Trust, the Adviser shall furnish continuously an investment program
and shall determine from time to time what securities and other
investments shall be acquired, disposed of 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 they deem 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 either directly with the
issuer or with brokers or dealers 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 payments
of cash for the account of the Trust. In connection with the selection of
such brokers or dealers and the placing of such orders, the Adviser shall
use its best efforts to seek to execute security transactions at prices
<PAGE>
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, Eaton
Vance Management or their affiliates or shares of any other investment
company investing 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 fee computed daily and payable
monthly at an annual rate of 1.00% of the Trust's average daily net assets
up to $30 million of such assets, 0.90% of the next $20 million of such
assets, and 0.75% on such assets in excess of $50 million. For assets of
$500 million or more, the advisory fee is as follows:
Annual
Average Daily Net Assets Asset Rate
------------------------ ----------
$500 million but less than $1 billion 0.70%
$1 billion but less than $1.5 billion 0.65%
$1.5 billion but less than $2 billion 0.60%
$2 billion but less than $3 billion 0.55%
$3 billion and over 0.50%
After 12 months, the basic advisory fee is subject to upward or
downward adjustment depending upon whether, and to what extent, the
investment performance of the Trust differs by at least one percentage
point from the record of the Standard & Poor's Index of 500 Common Stocks
over the same period. Each percentage point difference is multiplied by a
2
<PAGE>
performance adjustment rate of 0.025%. The maximum adjustment plus/minus
is 0.25%. One twelfth (1/12) of this adjustment is applied each month to
the average daily net assets of the Trust over the entire performance
period. This adjustment shall be based on a rolling period of up to and
including the most recent 36 months. Trust performance shall be total
return as computed under Rule 482 under the Securities Act of 1933.
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 to which it is entitled hereunder.
3. Allocation of Charges and Expenses. It is understood
that the Trust will pay all 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 statements 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 account 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 one of the Adviser's organization, and (xviii) 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.
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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 trustees, shareholders or otherwise
and that trustees, officers 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 Holder or otherwise. It is also
understood that trustees, 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 or Eaton Vance Management 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 of Interests in 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. Sub-Investment Adviser. The Adviser may employ one or
more sub-investment advisers from time to time to perform such of the acts
and services of the Adviser, including the selection of brokers or dealers
to execute the Trust's portfolio security transactions, and upon such
terms and conditions as may be agreed upon between the Adviser and such
investment adviser and approved by the Trustees of the Trust, all as
permitted by the Investment Company Act of 1940.
7. 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, 1997 and shall continue in full
force and effect indefinitely thereafter, but only so long as such
continuance after February 28, 1997 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.
Any party hereto may, at any time on sixty (60) days' prior
written notice to the others, terminate that party's obligations
hereunder, or, in the case of the Trust, terminate this Agreement in its
entirety, without the payment of any penalty, by action of Trustees of the
Trust or the trustees or directors of the Adviser, as the case may be, and
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<PAGE>
the Trust may, at any time upon such written notice to the Adviser,
terminate this Agreement with respect to the Adviser by vote of a majority
of the outstanding voting securities of the Trust. This Agreement shall
terminate automatically in the event of its assignment.
8. Amendments of the Agreement. This Agreement may be
amended by a writing signed by all 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 an 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.
9. Limitation of Liability. The Adviser expressly
acknowledge 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 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.
10. 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.
WORLDWIDE HEALTH SCIENCES PORTFOLIO
By:/s/ James B. Hawkes
----------------------------------
President
G/A CAPITAL MANAGEMENT, INC.
By:/s/ Samuel D. Isaly
----------------------------------
President
5
<PAGE>
PLACEMENT AGENT AGREEMENT
June 24, 1996
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, Massachusetts 02110
Gentlemen:
This is to confirm that, in consideration of the agreements
hereinafter contained, the undersigned, Worldwide Health Sciences
Portfolio (the "Trust"), an open-end diversified management investment
company registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), organized as a New York trust, has agreed that Eaton
Vance Distributors, Inc. ("EVD") shall be the placement agent (the
"Placement Agent") of Interests in the Trust ("Trust Interests").
1. Services as Placement Agent.
1.1 EVD will act as Placement Agent of the Trust Interests
covered by the Trust's registration statement then in effect under the
1940 Act. In acting as Placement Agent under this Placement Agent
Agreement, neither EVD nor its employees or any agents thereof shall make
any offer or sale of Trust Interests in a manner which would require the
Trust Interests to be registered under the Securities Act of 1933, as
amended (the "1933 Act").
1.2 All activities by EVD and its agents and employees as
Placement Agent of Trust Interests shall comply with all applicable laws,
rules and regulations, including, without limitation, all rules and
regulations adopted pursuant to the 1940 Act by the Securities and
Exchange Commission (the "Commission").
1.3 Nothing herein shall be construed to require the Trust to
accept any offer to purchase any Trust Interests, all of which shall be
subject to approval by the Board of Trustees.
1.4 The Portfolio shall furnish from time to time for use in
connection with the sale of Trust Interests such information with respect
to the Trust and Trust Interests as EVD may reasonably request. The Trust
shall also furnish EVD upon request with: (a) unaudited semiannual
statements of the Trust's books and accounts prepared by the Trust, and
(b) from time to time such additional information regarding the Trust's
financial or regulatory condition as EVD may reasonably request.
1.5 The Trust represents to EVD that all registration statements
filed by the Trust with the Commission under the 1940 Act with respect to
Trust Interests have been prepared in conformity with the requirements of
such statute and the rules and regulations of the Commission thereunder.
As used in this Agreement the term "registration statement" shall mean any
registration statement filed with the Commission as modified by any
amendments thereto that at any time shall have been filed with the
Commission by or on behalf of the Trust. The Trust represents and
<PAGE>
warrants to EVD that any registration statement will contain all
statements required to be stated therein in conformity with both such
statute and the rules and regulations of the Commission; that all
statements of fact contained in any registration statement will be true
and correct in all material respects at the time of filing of such
registration statement or amendment thereto; and that no registration
statement will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading to a purchaser of Trust Interests.
The Trust may but shall not be obligated to propose from time to time such
amendment to any registration statement as in the light of future
developments may, in the opinion of the Trust's counsel, be necessary or
advisable. If the Trust shall not propose such amendment and/or
supplement within fifteen days after receipt by the Trust of a written
request from EVD to do so, EVD may, at its option, terminate this
Agreement. The Trust shall not file any amendment to any registration
statement without giving EVD reasonable notice thereof in advance;
provided, however, that nothing contained in this Agreement shall in any
way limit the Trust's right to file at any time such amendment to any
registration statement as the Trust may deem advisable, such right being
in all respects absolute and unconditional.
1.6 The Trust agrees to indemnify, defend and hold EVD, its
several officers and directors, and any person who controls EVD within the
meaning of Section 15 of the 1933 Act or Section 20 of the Securities and
Exchange Act of 1934 (the "1934 Act") (for purposes of this paragraph 1.6,
collectively, "Covered Persons") free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which any Covered Person
may incur under the 1933 Act, the 1934 Act, common law or otherwise,
arising out of or based on any untrue statement of a material fact
contained in any registration statement, private placement memorandum or
other offering material ("Offering Material") or arising out of or based
on any omission to state a material fact required to be stated in any
Offering Material or necessary to make the statements in any Offering
Material not misleading; provided, however, that the Trust's agreement to
indemnify Covered Persons shall not be deemed to cover any claims,
demands, liabilities or expenses arising out of any financial and other
statements as are furnished in writing to the Trust by EVD in its capacity
as Placement Agent for use in the answers to any items of any registration
statement or in any statements made in any Offering Material, or arising
out of or based on any omission or alleged omission to state a material
fact in connection with the giving of such information required to be
stated in such answers or necessary to make the answers not misleading;
and further provided that the Trust's agreement to indemnify EVD and the
Trust's representations and warranties hereinbefore set forth in this
paragraph 1.6 shall not be deemed to cover any liability to the Trust or
its investors to which a Covered Person would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of a Covered Person's reckless
disregard of its obligations and duties under this Agreement. The Trust
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<PAGE>
should be notified of any action brought against a Covered Person, such
notification to be given by a writing addressed to the Trust, 24 Federal
Street Boston, Massachusetts 02110, with a copy to Eaton Vance
Management, the Administrator of the Trust, at the same address, promptly
after the summons or other first legal process shall have been duly and
completely served upon such Covered Person. The failure to so notify the
Trust of any such action shall not relieve the Trust from any liability
except to the extent the Trust shall have been prejudiced by such failure,
or from any liability that the Trust may have to the Covered Person
against whom such action is brought by reason of any such untrue statement
or omission, otherwise than on account of the Trust's indemnity agreement
contained in this paragraph. The Trust will be entitled to assume the
defense of any suit brought to enforce any such claim, demand or
liability, but in such case such defense shall be conducted by counsel of
good standing chosen by the Trust and approved by EVD, which approval
shall not be unreasonably withheld. In the event the Trust elects to
assume the defense of any such suit and retain counsel of good standing
approved by EVD, the defendant or defendants in such suit shall bear the
fees and expenses of any additional counsel retained by any of them; but
in case the Trust does not elect to assume the defense of any such suit or
in case EVD reasonably does not approve of counsel chosen by the Trust,
the Trust will reimburse the Covered Person named as defendant in such
suit, for the fees and expenses of any counsel retained by EVD or it. The
Trust's indemnification agreement contained in this paragraph and the
Trust's representations and warranties in this Agreement shall remain
operative and in full force and effect regardless of any investigation
made by or on behalf of Covered Persons, and shall survive the delivery of
any Trust Interests. This agreement of indemnity will inure exclusively
to Covered Persons and their successors. The Trust agrees to notify EVD
promptly of the commencement of any litigation or proceedings against the
Trust or any of its officers or Trustees in connection with the issue and
sale of any Trust Interests.
1.7 EVD agrees to indemnify, defend and hold the Trust, its
several officers and trustees, and any person who controls the Trust
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934
Act (for purposes of this paragraph 1.7, collectively, "Covered Persons")
free and harmless from and against any and all claims, demands,
liabilities and expenses (including the costs of investigating or
defending such claims, demands, liabilities and any counsel fees incurred
in connection therewith) that Covered Persons may incur under the 1933
Act, the 1934 Act or common law or otherwise, but only to the extent that
such liability or expense incurred by a Covered Person resulting from such
claims or demands shall arise out of or be based on any untrue statement
of a material fact contained in information furnished in writing by EVD in
its capacity as Placement Agent to the Trust for use in the answers to any
of the items of any registration statement or in any statements in any
other Offering Material or shall arise out of or be based on any omission
to state a material fact in connection with such information furnished in
writing by EVD to the Trust required to be stated in such answers or
necessary to make such information not misleading. EVD shall be notified
of any action brought against a Covered Person, such notification to be
3
<PAGE>
given by a writing addressed to EVD at 24 Federal Street, Boston,
Massachusetts 02110, promptly after the summons or other first legal
process shall have been duly and completely served upon such Covered
Person. EVD shall have the right of first control of the defense of the
action with counsel of its own choosing satisfactory to the Trust if such
action is based solely on such alleged misstatement or omission on EVD's
part, and in any other event each Covered Person shall have the right to
participate in the defense or preparation of the defense of any such
action. The failure to so notify EVD of any such action shall not relieve
EVD from any liability except to the extent the Trust shall have been
prejudiced by such failure, or from any liability that EVD may have to
Covered Persons by reason of any such untrue or alleged untrue statement,
or omission or alleged omission, otherwise than on account of EVD's
indemnity agreement contained in this paragraph.
1.8 No Trust Interests shall be offered by either EVD or the
Trust under any of the provisions of this Agreement and no orders for the
purchase or sale of Trust Interests hereunder shall be accepted by the
Trust if and so long as the effectiveness of the registration statement or
any necessary amendments thereto shall be suspended under any of the
provisions of the 1933 Act or the 1940 Act; provided, however, that
nothing contained in this paragraph shall in any way restrict or have an
application to or bearing on the Trust's obligation to redeem Trust
Interests from any investor in accordance with the provisions of the
Trust's registration statement or Declaration of Trust, as amended from
time to time.
1.9 The Trust agrees to advise EVD as soon as reasonably
practical by a notice in writing delivered to EVD or its counsel:
(a) of any request by the Commission for amendments to the
registration statement then in effect or for additional information;
(b) in the event of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement then in
effect or the initiation by service of process on the Trust of any
proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration statement then in
effect or that requires the making of a change in such registration
statement in order to make the statements therein not misleading; and
(d) of all action of the Commission with respect to any
amendment to any registration statement that may from time to time be
filed with the Commission.
For purposes of this paragraph 1.9, informal requests by or acts
of the Staff of the Commission shall not be deemed actions of or requests
by the Commission.
1.10 EVD agrees on behalf of itself and its employees to treat
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<PAGE>
confidentially and as proprietary information of the Trust all records and
other information not otherwise publicly available relative to the Trust
and its prior, present or potential investors and not to use such records
and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld where EVD may be exposed to
civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities, or
when so requested by the Trust.
2. 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 EVD 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 Trustees of the Trust or the Directors of
EVD, as the case may be, and the Trust may, at any time upon such written
notice to EVD, 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.
3. Representations and Warranties.
EVD and the Trust each hereby represents and warrants to the
other that it has all requisite authority to enter into, execute, deliver
and perform its obligations under this Agreement and that, with respect to
it, this Agreement is legal, valid and binding, and enforceable in
accordance with its terms.
4. Limitation of Liability.
EVD 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 EVD hereby agrees that it
shall have recourse to the Trust for payment of claims or obligations as
between the Trust and EVD arising out of this Agreement and shall not seek
satisfaction from any Trustee or officer of the Trust.
5. Certain Definitions.
The terms "assignment" and "interested persons" when used herein
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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.
6. Concerning Applicable Provisions of Law, etc.
This Agreement shall be subject to all applicable provisions of
law, including the applicable provisions of the 1940 Act and to the extent
that any provisions herein contained conflict with any such applicable
provisions of law, the latter shall control.
The laws of the Commonwealth of Massachusetts shall, except to
the extent that any applicable provisions of federal law shall be
controlling, govern the construction, validity and effect of this
Agreement, without reference to principles of conflicts of law.
If the contract set forth herein is acceptable to you, please so
indicate by executing the enclosed copy of this Agreement and returning
the same to the undersigned, whereupon this Agreement shall constitute a
binding contract between the parties hereto effective at the closing of
business on the date hereof.
Yours very truly,
WORLDWIDE HEALTH SCIENCES PORTFOLIO
By: /s/ James B. Hawkes
-------------------------------
President
Accepted:
EATON VANCE DISTRIBUTORS, INC.
By: /s/ Wharton P. Whitaker
-----------------------------
President
6
<PAGE>
CUSTODIAN AGREEMENT
between
WORLDWIDE HEALTH SCIENCES PORTFOLIO
and
INVESTORS BANK & TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1-2
2. Employment of Custodian and Property to be Held by it . . . . 2
3. Duties of the Custodian with Respect to Property of the Trust 3
A. Safekeeping and Holding of Property . . . . . . . . . . . 3
B. Delivery of Securities . . . . . . . . . . . . . . . . . 3-6
C. Registration of Securities . . . . . . . . . . . . . . . . 6
D. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . 6
E. Payments for Interests, or Increases in Interests, in
the Trust . . . . . . . . . . . . . . . . . . . . . . 6
F. Investment and Availability of U.S. Federal Funds . . . . 7
G. Collections . . . . . . . . . . . . . . . . . . . . . . . 7
H. Payment of Trust Monies . . . . . . . . . . . . . . . . 8-9
I. Liability for Payment in Advance of Receipt of Securities
Purchased . . . . . . . . . . . . . . . . . . . . . . 9
J. Payments for Reductions or Redemptions of Interests of
the Trust . . . . . . . . . . . . . . . . . . . . . . 9
K. Appointment of Agents by the Custodian . . . . . . . . . . 10
L. Deposit of Trust Portfolio Securities in Securities
Systems . . . . . . . . . . . . . . . . . . . . . 10-12
M. Deposit of Trust Commercial Paper in an Approved
Book-Entry System for Commercial Paper . . . . . . 12-13
N. Segregated Account . . . . . . . . . . . . . . . . . . . . 14
O. Ownership Certificates for Tax Purposes . . . . . . . . . 14
P. Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 14
Q. Communications Relating to Trust Portfolio Securities . . 14
R. Exercise of Rights; Tender Offers . . . . . . . . . . . . 15
S. Depository Receipts . . . . . . . . . . . . . . . . . . . 15
T. Interest Bearing Call or Time Deposits . . . . . . . . 15-16
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U. Options, Futures Contracts and Foreign Currency
Transactions . . . . . . . . . . . . . . . . . . . 16-17
V. Actions Permitted Without Express Authority . . . . . 17-18
4. Records and Miscellaneous Duties . . . . . . . . . . . . . . . 18
5. Opinion of Trust's Independent Public Accountants . . . . . . 18
6. Compensation and Expenses of Bank . . . . . . . . . . . . . . 18
7. Responsibility of Bank . . . . . . . . . . . . . . . . . . . . 19
8. Persons Having Access to Assets of the Trust . . . . . . . 19-20
9. Effective Period, Termination and Amendment; Successor
Custodian . . . . . . . . . . . . . . . . . . . . . . 20
10. Interpretive and Additional Provisions . . . . . . . . . . 20-21
11. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
12. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . 21
ii
<PAGE>
CUSTODIAN AGREEMENT
This Agreement is made between the Worldwide Health Sciences
Portfolio (hereinafter called the "Trust"), a New York trust having its
principal place of business in George Town, Grand Cayman, Cayman Islands,
BWI, 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, the Trust 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 the Trust'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, the Trust 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) "Board" shall mean the board of trustees of the Trust.
(b) "The Depository Trust Company", a clearing agency registered
with the U.S. 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.
(c) "Participants Trust Company", a clearing agency registered
with the U.S. 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) "Approved Clearing Agency" shall mean any other domestic
clearing agency registered with the U.S. Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 which
acts as a securities depository.
(e) "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
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<PAGE>
in the form of Subpart O).
(f) "Approved Foreign Securities Depository" shall mean a non-
U.S. securities depository or clearing agency referred to in Rule 17f-4
under the Investment Company Act of 1940 for non-U.S. securities.
(g) "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.
(h) 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
2
<PAGE>
interests in the Trust or the Board.
(i) "Trust" shall mean the Trust, as the context may require.
(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 non-U.S. 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
non-U.S. 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,
3
<PAGE>
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 U.S. 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
4
<PAGE>
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
5
<PAGE>
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
6
<PAGE>
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
7
<PAGE>
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 U.S. 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.
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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.
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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
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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; and
5) For distributions or payments to Holders of
Interest of the Trust.
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
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<PAGE>
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 Reductions 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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
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<PAGE>
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
17
<PAGE>
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
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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
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<PAGE>
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
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<PAGE>
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
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"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
currency exchange contracts or options to
purchase and sell non-U.S. 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. Currency 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
22
<PAGE>
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 other currency before receiving
confirmation of a currency exchange contract or
confirmation that the countervalue currency
completing the currency 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 currency 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 and shall be
subject to subsequent approval by an
officer 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. 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
23
<PAGE>
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 U.S. 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. At the
request of the Trustees or duly authorized agent of the Trust located
outside the United States, 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.
5. 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.
6. 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
24
<PAGE>
expenses.
7. 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 non-
U.S. 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 non-U.S. banking
institution, a non-U.S. 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 other than the U.S. and Canada 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.
8. Persons Having Access to Assets of the Trust
(i) No trustee, officer, employee or agent of the Trust shall
25
<PAGE>
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 8 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 8.
9. 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 the Trust determines that the performance of the Custodian has
been unsatisfactory or adverse to the interests of Trust holders or that
the terms of the Agreement are no longer consistent with publicly
available industry standards, then the Trust 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. If the conditions of the preceding sentence are not
met then the Trust may terminate this Agreement on sixty (60) days written
26
<PAGE>
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 Fund 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.
10. 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 U.S. 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.
11. Notices
Notices and other writings delivered or mailed postage prepaid to
the Trust addressed to The Bank of Nova Scotia Trust Company (Cayman)
Limited, The Bank of Nova Scotia Building, George Town, Grand Cayman,
Cayman Islands, WMI, 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, 24 Federal Street, Boston, Massachusetts 02110 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.
12. Massachusetts Law to Apply
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<PAGE>
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.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement on June 24, 1996.
WORLDWIDE HEALTH SCIENCES PORTFOLIO
By: /s/ James B. Hawkes
-----------------------------
James B. Hawkes, President
INVESTORS BANK & TRUST COMPANY
By: /s/ Michael F. Rogers
-----------------------------
Michael F. Rogers,
Executive Managing Director
28
<PAGE>
GLOBAL HEALTH SCIENCES PORTFOLIO
-------------------------------
PROCEDURES FOR ALLOCATIONS
AND DISTRIBUTIONS
March 26, 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 . . . . . . . . 3
Section 3.2 Book Capital Accounts . . . . . . . . . . . 4
Section 3.3 Tax Capital Accounts . . . . . . . . . . . . 4
Section 3.4 Compliance with Treasury Regulations . . . . 4
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 5
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 . . . . . 7
ARTICLE VI--Withdrawals
Section 6.1 Partial Withdrawals . . . . . . . . . . . . 7
Section 6.2 Redemptions . . . . . . . . . . . . . . . . 7
Section 6.3 Distribution in Kind . . . . . . . . . . . . 8
ARTICLE VII--Liquidation
Section 7.1 Liquidation Procedure . . . . . . . . . . . 8
Section 7.2 Alternative Liquidation Procedure . . . . . 8
Section 7.3 Cash Distributions Upon Liquidation . . . . 8
Section 7.4 Treatment of Negative Book Capital
Account Balance . . . . . . . . . . . . . 8
i
<PAGE>
PROCEDURES FOR
ALLOCATIONS AND DISTRIBUTIONS
OF
GLOBAL HEALTH SCIENCES 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
March 26, 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
<PAGE>
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
2
<PAGE>
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 Global Health Sciences 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
3
<PAGE>
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.
4
<PAGE>
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.
5
<PAGE>
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
6
<PAGE>
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
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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
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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.
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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.
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FORM OF
ACCOUNTING AND INTERESTHOLDER SERVICES AGREEMENT
AGREEMENT made as of this 24th day of June, 1996, between
Worldwide Health Sciences Portfolio, a New York trust (the "Trust"), and
IBT Fund Services (Canada) Inc., an Ontario corporation ("IBT").
WHEREAS, the Trust is registered under the Investment Company Act
of 1940 as an open-end management investment company and desires to engage
IBT to provide certain trust accounting and interestholder recordkeeping
services with respect to the Trust and IBT has indicated its willingness
to so act, subject to the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. IBT Appointed. The Trust hereby appoints IBT to provide
the services as hereinafter described and IBT agrees to act as such upon
the terms and conditions hereinafter set forth.
2. Definitions. Whenever used herein, the terms listed
below will have the following meaning:
2.1 Authorized Person. Authorized Person will mean
any of the persons duly authorized to give Proper Instructions or
otherwise act on behalf of the Trust by appropriate resolution of its
Board, and set forth in a certificate as required by Section 3 hereof.
2.2 Board. Board will mean the Board of Trustees of
the Trust.
2.3 Portfolio Security. Portfolio Security will mean
any security owned by the Trust.
2.4 Interests. Interests will mean participation
interests of the Trust.
3. Certification as to Authorized Persons. The Secretary or
Assistant Secretary of the Trust will at all times maintain on file with
IBT his or her certification to IBT, in such form as may be acceptable to
IBT, of (i) the names and signatures of the Authorized Persons and (ii)
the names of the Board members, it being understood that upon the
occurrence of any change in the information set forth in the most recent
certification on file (including without limitation any person named in
the most recent certification who is no longer an Authorized Person as
designated therein), the Secretary or Assistant Secretary of the Trust,
will sign a new or amended certification setting forth the change and the
new, additional or omitted names or signatures. IBT will be entitled to
rely and act upon the most recent Officers' Certificate given to it by the
Trust.
4. Maintenance of Records. IBT will maintain records with
respect to the services provided by IBT hereunder and will furnish the
<PAGE>
Trust daily with a statement of condition of the Trust. The books and
records of IBT pertaining to its actions under this Agreement and reports
by IBT or its independent accountants concerning its accounting systems
and internal accounting controls will be open to inspection and audit at
reasonable times by officers of or auditors employed by the Trust, and the
staff of The U.S. Securities and Exchange Commission, and will be
preserved by IBT in accordance with procedures established by the Trust.
IBT shall keep the books of account and render statements or
copies from time to time as reasonably requested by the Treasurer or any
executive officer of the Trust.
IBT, as fund accounting agent, shall assist generally in the
preparation of reports of a financial nature to Holders and others, audits
of accounts, and other ministerial matters of like nature.
5. 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 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 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 IBT 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,
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repurchase agreement, subscription right, security, participation
interests or other asset or property for which market quotations are not
readily available. IBT 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 U.S. 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.
6. Interestholder Services. IBT shall keep appropriate
records of the holdings of each interestholder on a daily basis. IBT
shall also keep each interestholder's subscription agreement with the
Portfolio.
7. Compensation of IBT. For the services to be rendered and
the facilities provided by IBT hereunder, the Trust shall pay to IBT a fee
from the assets of the Trust computed and paid monthly, in accordance with
a fee schedule agreed upon and attached hereto, as the same may be changed
by mutual agreement of the parties from time to time.
8. Concerning IBT.
8.1 Performance of Duties and Standard of Care. IBT
shall not be liable for any error of judgment or mistake of law or for any
act or omission in the performance of its duties hereunder, except for
willful misfeasance, bad faith or gross negligence in the performance of
its duties, or by reason of its reckless disregard of its obligations and
duties hereunder.
IBT will be entitled to receive and act upon the advice of
independent counsel of its own selection, which may be counsel for the
Trust, and will be without liability for any action taken or thing done or
omitted to be done in accordance with this Agreement in good faith in
conformity with such advice. In the performance of its duties hereunder,
IBT will be protected and not be liable, and will be indemnified and held
harmless by the Trust for any reasonable action taken or omitted to be
taken by it in good faith reliance upon the terms of this Agreement, any
Officers' Certificate, and or written instructions received from an
Authorized Person, resolution of the Board, telegram, notice, request,
certificate or other instrument reasonably believed by IBT to be genuine
and for any other loss to the Trust except in the case of IBT's gross
negligence, willful misfeasance or bad faith in the performance of its
duties or reckless disregard of its obligations and duties hereunder.
Notwithstanding anything in this Agreement to the contrary, in no
event shall IBT be liable hereunder or to any third party:
(a) for any losses or damages of any kind
resulting from acts of God, earthquakes, fires, floods, storms or other
disturbances of restrictions, acts of war, civil war or terrorism,
insurrection, nuclear fusion, fission or radiation, the interruption, loss
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or malfunction or utilities, transportation, or computers (hardware or
software) and computer facilities, the unavailability of energy sources
and other similar happenings or events except as results from IBT's own
gross negligence, willful misfeasance or bad faith in the performance of
its duties; or
(b) for special, punitive or consequential
damages arising from the provision of services hereunder, even if IBT has
been advised of the possibility of such damages.
8.2 Subcontractors. IBT, subject to approval of the
Trust, may subcontract for the performance of IBT's obligations hereunder
with any one or more persons, provided, however, that unless the Trust
otherwise expressly agrees in writing, IBT shall be as fully responsible
to the Trust for the acts and omissions of any subcontractor as it would
be for its own acts or omissions. In the event IBT obtains a judgment,
settlement or other monetary recovery for the wrongful conduct of the
subcontractor, the Trust shall be entitled to such recovery if such
conduct resulted in a loss to the Trust and IBT agrees to pursue such
claims vigorously. To the extent possible, such sub-contractors shall
provide services outside the United States.
8.3 Activities of IBT. The services provided by IBT
to the Trust are not to be deemed to be exclusive, IBT being free to
render administrative, fund accounting and/or other services to other
parties. It is understood that members of the Board, officers, and
shareholders of the Trust are or may become similarly interested in the
Trust and that IBT and/or any of its affiliates may become interested in
the Trust as a shareholder of the Trust or otherwise.
8.4 Insurance. IBT need not maintain any special
insurance for the benefit of the Trust, but will maintain customary
insurance for its obligations hereunder.
9. Termination. This Agreement may be terminated at any
time without penalty upon sixty days written notice delivered by either
party to the other by means of registered mail, and upon the expiration of
such sixty days, this Agreement will terminate. At any time after the
termination of this Agreement, the Trust will have access to the records
of IBT relating to the performance of its duties hereunder and IBT shall
cooperate in the transfer of such records to its successor.
10. Confidentiality. Both parties hereto agree that any non-
public information obtained hereunder concerning the other party is
confidential and may not be disclosed to any other person without the
consent of the other party, except as may be required by applicable law or
at the request of a governmental agency. The parties further agree that a
breach of this provision would irreparably damage the other party and
accordingly agree that each of them is entitled, without bond or other
security, to an injunction or injunctions to prevent breaches of this
provision.
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11. Notices. Any notice or other instrument in writing
authorized or required by this Agreement to be given to either party
hereto will be sufficiently given if addressed to such party and mailed or
delivered to it at its office at the address set forth below; namely:
(a) In the case of notices sent to the Trust to:
C/O The Bank of Nova Scotia Trust Company (Cayman) Ltd.
The Bank of Nova Scotia Building
P. O. Box 501
George Town
Grand Cayman, Cayman Island
British West Indies
(b) In the case of notices sent to IBT to:
IBT Fund Services (Canada), Inc.
Suite 5850, One First Canadian Place
P. O. Box 231
Toronto, Ontario M5X 1A4
Attention: Evelyn Foo
or at such other place as such party may from time to time designate in
writing.
12. Amendments. This Agreement may not be altered or
amended, except by an instrument in writing, executed by both parties, and
in the case of the Trust, duly authorized and approved by its respective
Board.
13. Governing Law. This Agreement will be governed by the
laws of Ontario.
14. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original,
but such counterparts shall, together, constitute only one instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their respective officers thereunto duly authorized as
of the day and year first written above.
Worldwide Health Sciences Portfolio
By:
-----------------------------
Name:
Title:
ATTEST:
__________________________
IBT Fund Services (Canada), Inc.
By:
-----------------------------
Name:
Title:
ATTEST:
___________________________
DATE: June 24, 1996
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WORLDWIDE HEALTH SCIENCES PORTFOLIO
ADMINISTRATION AGREEMENT
AGREEMENT made this 24th day of June, 1996 between Worldwide
Health Sciences 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.
To the extent necessary or desirable, the Administrator may
employ one or more sub-administrators within or outside the United States
to render the foregoing. The Administrator shall be responsible for the
compensation of any sub-administrator.
The Administrator shall not be responsible for providing
investment management or advisory services to the Trust under this
Agreement. G/A Capital Management, Inc. in its capacity as 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 them.
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%
<PAGE>
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
2
<PAGE>
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
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<PAGE>
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.
WORLDWIDE HEALTH SCIENCES PORTFOLIO EATON VANCE MANAGEMENT
By /s/ James B. Hawkes By /s/ H. Day Brigham Jr.
------------------------- ------------------------
President Vice President,
and not individually
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May 31, 1996
Global Health Sciences Portfolio
24 Federal Street
Boston, MA 02110
Ladies and Gentlemen:
With respect to our purchase from you, at the purchase price of
$100,000, of an interest (an "Initial Interest") in Global Health Sciences
Portfolio (the "Portfolio"), we hereby advise you that we are purchasing
such Initial Interest for investment purposes without any present
intention of redeeming or reselling.
The amount paid by the Portfolio on any withdrawal by us of any
portion of such Initial Interest will be reduced by a portion of any
unamortized organization expenses, determined by the proportion of the
amount of such Initial Interest withdrawn to the aggregate Initial
Interests of all holders of similar Initial Interests then outstanding
after taking into account any prior withdrawals of any such Initial
Interest.
Very truly yours,
BOSTON MANAGEMENT & RESEARCH
By /s/ William M. Steul
----------------------------
Vice President
<PAGE>
