As filed with the Securities and Exchange Commission on December __, 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]
AMENDMENT NO. 1
WORLDWIDE HEALTH SCIENCES PORTFOLIO
(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
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code: (809) 949-2001
Thomas Otis
24 Federal Street, Boston, Massachusetts 02110
(Name and Address of Agent for Service)
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EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant
to Section 8(b) of the Investment Company Act of 1940, as amended. However,
interests in the Registrant are not being registered under the Securities Act of
1933, as amended (the "1933 Act"), because such interests will be issued solely
in private placement transactions that do not involve any "public offering"
within the meaning of Section 4(2) of the 1933 Act. Investments in the
Registrant may be made only by U.S. and foreign investment companies, common or
commingled trust funds, organizations or trusts described in 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 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, Mehta and Isaly Asset
Management, Inc. ("M&I" 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.
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. 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.
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 may offer limited
products or services or which are at the research and development stage with no
marketable or approved products or technologies. 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 that the Portfolio's Trustees and the
Adviser determine are liquid. Holding Rule 144A securities may increase
illiquidity if qualified institutional buyers become uninterested in buying
them.
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 investments 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. Foreign currency exchange
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, 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 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.
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 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 and, in general, 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. Under normal
market conditions, the Portfolio will hold securities of issues in at least
three countries.
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 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 Mehta and Isaly Asset Management, Inc.
("M&I"), located at 41 Madison Avenue, 40th Floor, New York, New York
10010-2202, as its investment adviser. M&I was incorporated in Delaware on
February 24, 1989 and is principally owned by Samuel D. Isaly, who serves as the
President of M&I. The Portfolio is the only investment company registered under
the Investment Company Act of 1940 (the "1940 Act") advised by M&I, which
formerly was named G/A Capital Management, Inc.
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 Mehta and
Isaly Asset Management, Inc., which is an investment advisory firm registered
with the Securities and Exchange Commission (the "Commission").
For its services, M&I 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. Beginning September 1, 1997, M&I may receive a
performance based adjustment of up to 0.25% of the net assets of the Portfolio.
M&I has agreed to pay Eaton Vance Distributors, Inc. ("EVD") the equivalent of
one-third of its advisory fee receipts out of M&I'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 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. The
Portfolio and M&I have adopted Codes of Ethics relating to personal securities
transactions. The Codes permit M&I personnel to invest in securities (including
securities that may be purchased or held by the Portfolio) for their own
accounts, subject to certain restrictions and reporting procedures.
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. The Portfolio's placement agent is
Eaton Vance Distributors, Inc.("EVD"), which is a wholly-owned subsidiary of
Eaton Vance.
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 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 any litigation in which the
Portfolio is a party and any legal obligation to indemnify its officers and
Trustees with respect thereto, to the extent not covered by insurance.
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.
An interest in the Portfolio has no preemptive or conversion rights and
is 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 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.
As of November 29, 1996, EV Traditional Worldwide Health Sciences Fund,
Inc., controlled the Portfolio by virtue of owning approximately 88.0% 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 investment in
the Portfolio on each Portfolio Business Day as of the Portfolio Valuation Time.
The value of each investor's interest in the Portfolio will be determined by
multiplying the net asset value of the Portfolio by the percentage, determined
on the prior Portfolio Business Day, which 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 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 that seeks to qualify as a
regulated investment company under the Code will be able to satisfy the
requirements for such qualification.
Item 7. Purchase of Interests in the Portfolio
Interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. See "General Description of Registrant" above.
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 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.
<PAGE>
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-9
Control Persons and Principal Holder of Securities....... B-12
Investment Advisory and Other Services................... B-12
Brokerage Allocation and Other Practices................ B-15
Capital Stock and Other Securities...................... B-17
Purchase, Redemption and Pricing of Securities.......... B-19
Tax Status.............................................. B-20
Underwriters............................................ B-22
Calculation of Performance Data......................... B-22
Financial Statements..................................... B-22
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. 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 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 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.
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.
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 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."
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.
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 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.
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. The financial condition of the
borrower will be monitored by the Adviser on an ongoing basis. The Portfolio
would 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.
Asset Coverage Requirements. Transactions involving reverse repurchase
agreements, the lending of Portfolio securities or 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, or liquid securities in a segregated
account with its custodian in the prescribed amount. The securities in the
segregated account will be market to market daily.
Assets used as cover or held in a segregated account cannot be sold
while the position requiring coverage or segregation is outstanding, 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.
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% 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 (i) invest more than 15% of its net assets in
investments which are not readily marketable, including repurchase agreements
with remaining maturities in excess of seven days and restricted securities
(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);
(ii) invest in warrants if as a result more than 2% of the value of the
Portfolio's total assets would be invested in warrants which are not listed on a
recognized stock exchange, or more than 5% of the Portfolio's total assets would
be invested in warrants regardless of whether listed on such exchanges; (iii)
purchase or retain the securities of any issuer if to the knowledge of the
Portfolio any officer, director or trustee of the Portfolio or of its investment
adviser own beneficially more than 1/2 of 1% of the outstanding securities of
such issuer and together they own beneficially more than 5% of the securities of
such issuer; (iv) invest in companies for the purpose of exercising control or
management; or (v) invest in or sell put options, call options, straddles,
spreads or any combination thereof, except that the Portfolio may write covered
call options or enter into closing purchase transactions and except that the
Portfolio may enter into futures contracts and related options.
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.
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 (55), President and Trustee*
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 President of Dwight Partners, Inc. (a
corporate relations and communications company) founded in 1988. 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 (61), 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 (70), 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 Mehta and Isaly Asset
Management, Inc. since 1989; Senior Vice President of S.G. Warburg & Co., Inc.
from 1986 through 1989; and President of Gramercy Associates, a health care
industry consulting firm, from 1983 through 1986. Address: Mehta and Isaly Asset
Management, Inc., 41 Madison Avenue, 40th Floor, New York, New York 10010.
JAMES L. O'CONNOR (51), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
THOMAS OTIS (65), 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 (61), Assistant Secretary and Assistant Treasurer Vice
President of Eaton Vance, BMR and EV. Officer of various investment companies
managed by Eaton Vance or BMR.
A. JOHN MURPHY (34), 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. Hayes (Chairman), Reamer and Thorndike 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. 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 September 30, 1996, 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):
Estimated
Aggregate
Compensation Total Compensation
Name from Portfolio From Fund Complex
- ---- -------------- --------------------
Donald R.
Dwight $ 256 $142,500(2)
Samuel L.
Hayes, III 325 153,750(3)
Norton H.
Reamer 308 142,500
John L.
Thorndike 338 147,500
Jack L.
Treynor 318 147,500
(1) The Eaton Vance fund complex consists of 228 registered investment
companies or series thereof.
(2) Includes $42,500 of deferred compensation.
(3) Includes $37,500 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 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 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 November 29, 1996, EV Traditional Worldwide Health Sciences Fund,
Inc. (the "Traditional Fund") and EV Marathon Worldwide Health Sciences Fund,
Inc. (the "Marathon Fund") owned approximately 88.0% and 11.8%, respectively, of
the value of the outstanding interests in the Portfolio. Because the Traditional
Fund controls the Portfolio, the Traditional Fund may take actions without the
approval of any other investor. Each of the Traditional Fund and the Marathon
Fund has informed the Portfolio that whenever it is requested to vote on matters
pertaining to the fundamental policies of the Portfolio, it will hold a meeting
of shareholders and will cast its vote as instructed by its interestholders. It
is anticipated that any other investor in the Portfolio which is an investment
company registered under the 1940 Act would follow the same or a similar
practice. The Traditional Fund is an open-end management investment company
organized as a corporation under the laws of Maryland. The Marathon Fund is a
series of Eaton Vance Growth Trust, an open-end management investment company
organized as a business trust under the laws of the Commonwealth of
Massachusetts.
Item 16. Investment Advisory and Other Services
The Adviser. The Portfolio engages Mehta and Isaly Asset Management, Inc.
("M&I" 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 M&I 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 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, 1997. 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 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, 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, Mr. Gardner is Vice
Chairman and Mr. Hawkes 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, 1997, the Voting
Trustees of which are Messrs. Clay, Gardner, Hawkes and Rowland and Thomas E.
Faust, Jr. 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 or officers and Directors of EVC and EV. As of January 1,
1997, Messrs. Clay, Gardner and Hawkes each owned 24% and Messrs. Rowland and
Faust owned 15% and 13%, respectively, of such voting trust receipts. Mr. Otis
is an officer or Trustee of the Portfolio and is a member 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., 1 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 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.
IBT also provides services in connection with the preparation of
interestholder reports and electronic filing of such reports with the Commission
for which it receives a separate fee.
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, 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
determine 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") 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 accounts 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. ("NASD"), which rule provides that no firm which is
a member of the NASD 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 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 writing and the consents are filed with the records of meetings of
Holders.
The Portfolio's Declaration of Trust may be amended by vote of Holders
of more than 50% of all interests in the Portfolio at any meeting of Holders or
by an instrument in writing without a meeting, executed by a majority of the
Trustees and consented to by the Holders of more than 50% of all interests. The
Trustees may also amend the Declaration of Trust (without the vote or consent of
Holders) to change the Portfolio's name or the state or other jurisdiction whose
law shall be the governing law, to supply any omission or to cure, correct or
supplement any ambiguous, defective or inconsistent provision, to conform the
Declaration of Trust to applicable federal law or regulations or to the
requirements of the Code, or to change, modify or rescind any provision,
provided that such change, modification or rescission is determined by the
Trustees to be necessary or appropriate and not to have a materially adverse
effect on the financial interests of the Holders. No amendment of the
Declaration of Trust which would change any rights with respect to any Holder's
interest in the Portfolio by reducing the amount payable thereon upon
liquidation of the Portfolio may be made, except with the vote or consent of the
Holders of two-thirds of all interests. References in the Declaration of Trust
and in Part A or this Part B to a specified percentage of, or fraction of,
interests in the Portfolio, means Holders whose combined Book Capital Account
balances represent such specified percentage or fraction of the combined Book
Capital Account balance of all, or a specified group of, Holders.
The Portfolio may merge or consolidate with any other corporation,
association, trust or other organization or may sell or exchange all or
substantially all of its assets upon such terms and conditions and for such
consideration when and as authorized by the Holders of (a) 67% or more of the
interests in the Portfolio present or represented at the meeting of Holders, if
Holders of more than 50% of all interests are present or represented by proxy,
or (b) more than 50% of all interests, whichever is less. The Portfolio may be
terminated (i) by the affirmative vote of Holders of not less than two-thirds of
all interests at any meeting of Holders or by an instrument in writing without a
meeting, executed by a majority of the Trustees and consented to by Holders of
not less than two-thirds of all interests, or (ii) by the Trustees by written
notice to the Holders.
In accordance with the Declaration of Trust, there normally will be no
meetings of the investors for the purpose of electing Trustees unless and until
such time as less than a majority of the Trustees holding office have been
elected by investors. In such an event, the Trustees of the Portfolio then in
office will call an investors' meeting for the election of Trustees. Except for
the foregoing circumstances, and unless removed by action of the investors in
accordance with the Portfolio's Declaration of Trust, the Trustees shall
continue to hold office and may appoint successor Trustees.
The Declaration of Trust provides that no person shall serve as a
Trustee if investors holding two-thirds of the outstanding interests have
removed him from that office either by a written declaration 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 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 regulated investment company
(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 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 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 is a wholly-owned subsidiary of Eaton Vance and 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.
Statement of Assets and Liabilities as of August 31, 1996
Report of Independent Accountants
<PAGE>
Financial Statements
WORLDWIDE HEALTH SCIENCES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
August 31, 1996
Assets:
Cash.................................................. $100,020
Deferred organization expenses........................ 12,000
------
Total assets................................ $112,020
Liabilities:
Accrued organization expenses......................... 12,000
------
Net assets.................................................... $100,020
========
NOTES:
(1) Worldwide 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, $10 to Eaton
Vance Management and $10 EV Marathon Worldwide Health Sciences Fund (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.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Investors of
Worldwide Health Sciences Portfolio:
We have audited the accompanying statement of assets and liabilities of
Worldwide Health Sciences Portfolio (a New York Trust) as of August 31, 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 Worldwide Health
Sciences Portfolio as of August 31, 1996, in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand Chartered Accountants
Toronto, Ontario
September 2, 1996
<PAGE>
PART C
Item 24. Financial Statements and Exhibits
(a) Financial Statements The financial statements called for by this Item
are included in Part B and listed in Item 23 hereof.
(b) Exhibits
1. (a) Declaration of Trust dated March 26, 1996 filed
electronically as Exhibit No. 1(a) to the Registrant's original Registration
Statement filed with the Commission on July 22, 1996 (Accession No.
0001003291-96-000048) and incorporated herein by reference (the "Original
Registration Statement").
(b) Amendment to Declaration of Trust dated June 24, 1996 filed
electronically as Exhibit No. 1(b) to the Original Registration Statement and
incorporated herein by reference.
2. By-Laws of the Registrant adopted March 26, 1996 filed electronically as
Exhibit No. 2 to the Original Registration Statement and incorporated herein by
reference.
5. Investment Advisory Agreement between the Registrant and M&I dated June
24, 1996 filed electronically as Exhibit No. 5 to the Original Registration
Statement and incorporated herein by reference.
6. Placement Agent Agreement with Eaton Vance Distributors, Inc. dated
November 1, 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 electronically as Exhibit No. 8 to the Original Registration
Statement and incorporated herein by reference.
9. (a) Accounting and Interestholder Services Agreement with IBT Fund
Services (Canada) Inc. dated June 25, 1996 filed herewith.
(b) Administration Agreement between the Registrant and Eaton Vance
Management dated June 24, 1996 filed electronically as Exhibit No. 9(b) to the
Original Registration Statement and incorporated herein by reference.
(c) Sub-Administration Agreement among the Registrant, Eaton Vance
Management and IBT Trust Company (Cayman) Ltd. dated June 24, 1996 filed
herewith.
13. Investment representation letter of Boston Management and Research
dated May 31, 1996 filed electronically as Exhibit No. 13 to the Original
Registration Statement and incorporated herein by reference.
Item 25. Persons Controlled by or under Common Control with Registrant
Not applicable.
Item 26. Number of Holders of Securities
(1) (2)
Number of
Title of Class Record Holders as of
----------------- November 29, 1996
-----------------------
Interests 4
Item 27. Indemnification
Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed electronically as Exhibit 1(a) to the Original Registration
Statement and incorporated herein by reference.
The Trustees and officers of the Registrant and the personnel of the
Registrant's 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 custody
and possession of the Registrant's investment adviser.
Item 31. Management Services
Not applicable.
Item 32. Undertakings
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement on Form N-1A to be signed
on its behalf by the undersigned, thereunto duly authorized in Hamilton, Bermuda
on the 16th day of December, 1996.
WORLDWIDE HEALTH SCIENCES PORTFOLIO
By: /s/ James B. Hawkes
James B. Hawkes, President
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
- ----------- -----------------------
6 Placement Agent Agreement with Eaton Vance Distributors
dated November 1, 1996.
9 (a) Accounting and Interestholder Services Agreement with IBT
Fund Services (Canada)Inc. dated June 24, 1996.
9 (c) Sub-Administration Agreement among the Registrant, Eaton
Vance Management and IBT Trust Company (Cayman) Ltd.
dated June 24, 1996.
PLACEMENT AGENT AGREEMENT
November 1, 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"), formerly
named EV Distributors, Inc., 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 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 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 the Adviser of the Portfolio, Boston Management and Research, 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 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
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 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
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 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, 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 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.
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: Robert Donahoe
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.
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:/s/ James B. Hawkes
Name: James B. Hawkes
Title: President
ATTEST:
/s/ H. Day Brigham, Jr.
IBT Fund Services (Canada), Inc.
By:/s/ Robert V. Donahoe II
Name: Robert V. Donahoe II
Title: Director
signed in Toronto, Ontario, Canada
ATTEST:
/s/ Neal Nenadovic
DATE: June 24, 1996
SUB-ADMINISTRATION AGREEMENT
THIS AGREEMENT is made as of the 24th day of June, 1996.
AMONG:
(1) Eaton Vance Management, a Massachusetts business trust (the
"Administrator),
(2) Worldwide Health Sciences Portfolio, a New York trust the principal
office of which is at IBT Trust Company (Cayman), Ltd, The Bank of Nova Scotia
Building, George Town, Grand Cayman, Cayman Island, British West Indies (the
"Trust"),
AND
(3) IBT Trust Company (Cayman), Ltd., a company duly incorporated in the
Cayman Islands the Registered Office of which is at The Bank of Nova Scotia
Building, George Town, Grand Cayman, Cayman Islands, British West Indies
aforesaid (the "Sub-Administrator").
WHEREAS:
(A) The Trust is registered under the United States Investment
Company Act of 1940 as a management investment company.
(B) The Administrator pursuant to an Administration Agreement
dated June 24, 1996 has agreed to provide general
administration services to the Trust, and the Administrator
and the Trust wish to appoint the Sub-Administrator as general
administrator of the Trust outside the United States upon the
terms and conditions hereinafter appearing.
AGREEMENT:
1. (a) In this Agreement the words standing in the first column of the
table next hereinafter contained shall bear the meanings set opposite to them in
the second column thereof, if not inconsistent with the subject or context:
Words Meanings
"Declaration of Trust" The Declaration of Trust of the Trust for the
time being in force.
"Trustees" The Trustees of the Trust for the time being,
or as the case may be, the Trustees assembled as
a board.
"Registration Statement" The Registration Statement of the Trust as amended
and filed with the Securities and Exchange
Commission.
(b) Unless the context otherwise requires and except as varied or
otherwise specified in this agreement, words and expressions
contained in this agreement shall bear the same meaning as in
the Registration Statement PROVIDED THAT any alteration or
amendment of the Registration Statement shall not be effective
for the purposes of this Agreement unless the administrator
shall by endorsement hereon or otherwise have assented in
writing thereto.
(c) The headings are intended for convenience only and shall not affect the
construction of this Agreement.
APPOINTMENT OF ADMINISTRATOR
2. The Administrator and the Trust hereby appoint the Sub-Administrator
and the Sub-Administrator hereby agrees to act as general administrator
of the Trust, acting solely outside the United States, in accordance
with the terms and conditions hereof with effect from the date hereof.
DUTIES AS SUB-ADMINISTRATOR
3. The Sub-Administrator shall from time to time deliver such information,
explanations and reports to the Trust as the Trust may reasonably
require regarding the conduct of the business of the Trust.
4. The Sub-Administrator shall provide the principal office of the Trust;
and
(a) conduct on behalf of the Trust all the day to day business of
the Trust outside the United States, other than investment
activities, and provide or procure such office accommodation,
secretarial staff and other facilities as may be required for
the purposes of fulfilling its duties under this Agreement;
(b) receive and approve notices of subscriptions and redemptions
of Trust interests;
(c) review and arrange execution and filing with the U.S.
Securities and Exchange Commission (the "SEC") of amendments
to the Trust's Registration Statement, and of any other
regulatory filings required to be made by the Trust which have
been prepared by the Administrator or the Trust;
(d) deal with and reply to all correspondence and other
communications addressed to the Trust at its principal office,
whether in relation to the subscription, purchase or
redemption of interests in the Trust or otherwise PROVIDE THAT
in the event of any dispute in connection with the issue,
ownership, redemption or otherwise of any interests the matter
shall be referred to the Trustees acting outside the United
States, and the Sub-Administrator shall take such action as
may reasonably be required by the Trust;
(e) at any time during business hours to permit any duly appointed
agent or representative of the Administrator or the Trust, at
the expense of the Administrator or the Trust, to inspect the
Register of Holders or any other documents or records in the
possession of the Sub-Administrator and give such agent or
representative during business hours all information,
explanations and assistance as such agent or representative
may reasonably require, and permit representatives of the U.S.
Securities and Exchange Commission to examine books and
records of the Trust;
(f) maintain and safeguard the Register of Holders of Interests
and other documents in connection therewith and enter on such
Register all original issues and allotments of and all
increases, decreases and redemptions of such interests, all in
accordance with the provisions of the Declaration of Trust and
Trustee instructions and to prepare all such lists of Holders
of Interests of the Trust and account numbers of Holders as
may be required by the Trust.
DEALINGS OF THE SUB-ADMINISTRATOR
5. Nothing herein contained shall prevent the Sub-Administrator or any
firm, person or company associated in any way with the
Sub-Administrator from contracting with or entering into any financial,
banking or other transaction with the Trust, any shareholder or any
company or body of persons any of whose securities are held by or for
the account of the Trust or from being interested in such transaction.
6. Nothing herein contained shall prevent the Sub-Administrator or any
associate of the Sub-Administrator from acting as administrator or
general corporate manager or in any other capacity whatsoever for any
other company or body of persons on such terms as the Sub-Administrator
or such associate may arrange, and the Sub-Administrator or such
associate shall not be deemed to be affected with notice of or to be
under any duty to disclose to the Trust any fact or thing which may
come to its knowledge or that of any of its servants or agents in the
course of so doing or in any manner whatever otherwise than in the
course of carrying out its duties hereunder.
AGENTS AND ADVICE
7. The Sub-Administrator shall be at liberty in the performance of
its duties and in the exercise of any of the powers vested in it
hereunder to act by responsible officers or a responsible officer
for the time being and to employ and pay an agent who may (but
need not) be an associate of the Sub-Administrator to perform or
concur in performing any of the services required to be performed
hereunder and may act or rely upon the opinion or advice or any
information obtained from any broker, lawyer, valuer, surveyor,
auctioneer or other expert, whether reporting to the Trust, to
the Administrator to the Sub-Administrator, or not, and the
Sub-Administrator shall not be responsible for any loss
occasioned by its so acting. Any officer or agent acting for the
Sub-Administrator on behalf of the Trust shall act only outside
the United States, to the extent required by U.S. tax law. It is
understood and agreed that until IBT Trust Company (Cayman), Ltd.
has received its administrator's license in the Cayman Islands,
The Bank of Nova Scotia Trust Company (Cayman) Ltd. shall perform
the functions of the Sub-Administrator set forth in this
Agreement.
8. The Sub-Administrator may at the expense of the Adminstrator refer any
legal question to the legal advisers of the Administrator or the Trust
for the time being (whose name shall from time to time be notified by
or on behalf of the Administrator or the Trust to the
Sub-Administrator) or legal advisers that it may select with the prior
approval of the Administrator or the Trust and may authorize any such
legal adviser to take the opinion of counsel on any matter of
difficulty and may act on any opinion given by such legal advisers or
counsel without being responsible for the correctness thereof or for
any result which may follow from so doing.
REMUNERATION
9. In consideration of the services performed by the Sub-Administrator
hereunder the Sub-Administrator shall be entitled to receive from the
Administrator fees as are agreed upon by the Administrator and
Sub-Administrator and set forth in Schedule A of this Agreement.
REIMBURSEMENT BY THE ADMINISTRATOR TO THE SUB-ADMINISTRATOR
10. In addition to the fees set out in clause 9 above the Administrator
shall reimburse to the Sub-Administrator all reasonable costs and
expenses incurred by the Sub-Administrator in the performance of its
duties hereunder.
<PAGE>
LIABILITY AND INDEMNITY
11. (a) The Sub-Administrator, its subsidiaries, agents, advisors,
shareholders, directors, officers, servants and employees
shall not be liable to the Administrator or the Trust or a
Holder of Interests in the Trust, or any of its or their
successors or assigns, except for loss arising to the
Administrator or the Trust by reason of act of, or omissions
due to negligence or willful default on the part of any such
persons as aforesaid.
(b) The Administrator and the Trust shall indemnify, defend and hold
harmless the Sub-Administrator and each of its subsidiaries, agents, advisors,
shareholders, directors, officers, servants and employees from and against any
loss, liability, damage, cost or expense (including legal fees and expenses and
any amounts paid in settlement), resulting from its or their actions or
capacities hereunder or otherwise concerning the business or activities
undertaken on behalf of the Administrator or the Trust under this Agreement or
sustained by any of them including (without restricting the generality of the
foregoing) loss sustained as a result of delay, mis-delivery or error in
transmission of any cable, telefax, telex or telegraphic communication. Subject
as aforesaid all actions taken by the Sub-Administrator shall be taken in good
faith and in the reasonable belief that such actions are taken in the best
interests of the Trust PROVIDED THAT termination of any action, proceeding,
demand, claim or lawsuit by judgment, order or settlement shall not, or itself,
create a presumption that the conduct in question was not undertaken in good
faith with due care and in a manner reasonably believed to be in or not opposed
to the best interest of the Trust. The right of indemnification hereunder shall
remain in full force and effect regardless of the expiration or termination of
this Agreement.
RIGHT TO ADVISE AND MANAGE THE FUNDS OR OTHERS
12. The Administrator or the Trust acknowledge that an important part of
the Sub-Administrator's business is, and that it derives profits from,
managing the affairs of its affiliates and other entities and that the
Sub-Administrator will be managing such affiliates and entities during
the same period that it is managing the affairs of the Trust. The
Sub-Administrator and its officers and employees shall be free to
manage such other affiliates and entities and to retain for its own or
their benefit all profits and revenues derived therefrom PROVIDED THAT
the Sub-Administrator shall not knowingly prefer affiliates of the
Sub-Administrator or other entities to the detriment of the affairs of
the Trust.
RESTRICTIONS
13. None of the parties hereto shall do or commit any act, matter or thing
which would or might prejudice or bring into disrepute in any manner
the business or reputation of the other or any director, officer or
employee of the other.
14. Except as required by the law and save as contemplated by the
Declaration of Trust, none of the parties hereto shall either before or
after the termination of this Agreement disclose to any person not
authorized by the other party to receive the same information relating
to such party or to the affairs of such party of which the party
disclosing the same shall have become possessed during the period of
this agreement, and both parties shall use all reasonable endeavors to
prevent any such disclosure as aforesaid.
<PAGE>
TERMINATION
15. The Sub-Administrator shall be entitled to resign its appointment
hereunder:
(a) by giving not less than two (2) months' notice in writing to the
Administrator and the Trust;
(b) if the Administrator or the Trust shall commit any breach of
its obligations under this Agreement and shall fail within ten
days of receipt of notice served by the Sub-Administrator
requiring it so to do, to make good such breach; and
(c) at any time without such notice as is referred to in
sub-paragraphs (a) and (b) of this clause if the Administrator
or the Trust shall go into liquidation (other than for the
purpose of reconstruction or amalgamation upon terms
previously approved in writing by the Sub-Administrator) or if
a receiver of any of the assets of the Administrator or the
Trust is appointed.
16. The Administator or the Trust may terminate the appointment of the
Sub-Administrator:
(a) by giving no less than two (2) months' notice in writing to the
Sub-Administrator;
(b) if the Sub-Administrator shall commit any breach of its
obligations under this Agreement and shall fail within ten
days of receipt of notice served by the Administrator or the
Trust requiring it so to do, to make good such breach; and
(c) at any time without such notice as is referred to in
sub-paragraphs (a) and (b) or this clause if the
Sub-Administrator goes into liquidation (except a voluntary
liquidation for the purpose of reconstruction or amalgamation
upon terms previously approved in writing by the Administrator
and the Trust) or if a receiver is appointed of any of the
assets of the Sub-Administrator.
17. On termination of the appointment of the Sub-Administrator under the
provisions of the preceding clauses, such termination shall be without
prejudice to any antecedent liability of the Sub-Administrator, the
Administrator or the Trust. The Sub-Administrator shall be entitled to
receive all fees and other moneys accrued up to the date of such
termination but shall not be entitled to compensation in respect of
such termination.
18. The Sub-Administrator shall, on the termination of its appointment:
(a) Forthwith hand over to the Administrator or the Trust or as it shall
direct all books of account, registers, correspondence and records of all and
every description relating to the affairs of the Trust which are in the
Sub-Administrator's possession but not including any promotional material
bearing the style or any trade mark or symbol of the Sub-Administrator. The
Sub-Administrator shall also in such circumstance deliver or cause to be
delivered to the succeeding Sub-Administrator or as the Administrator or the
Trust shall direct all funds or other properties of the Trust deposited with or
otherwise held by the Sub-Administrator or to its order hereunder and do all
such further acts as the Administrator or the Trust may reasonably require of
it.
<PAGE>
(b) have the right by written request to require the Trust in its
Registration Statement and any other material made available to investors and
prospective investors to (as may reasonably be approved by the
Sub-Administrator) indicate that the Sub-Administrator and its delegate(s) (if
any) have ceased to be its Sub-Administrator.
REPRESENTATIONS AND WARRANTIES
19. (a) The Sub-Administrator represents and warrants to the Administrator
and the Trust as follows:
(i) The Sub-Administrator has full power and authority to
enter into and perform this Agreement and this
Agreement has been duly authorized by all requisite
corporate action, executed and delivered by or on
behalf of the Sub-Administrator and constitutes a
valid and binding agreement of the Sub-Administrator.
(ii) Neither the execution, delivery nor performance of
this Agreement by the Sub-Administrator will result
in a breach of violation of any statute, law, rule or
of the material provisions of any debenture or other
material agreement binding upon the Sub-Administrator
and no consent, approval, authorization or license by
any court or governmental agency is required for the
execution, delivery or performance of this Agreement
by the Sub-Administrator, except such as have been
obtained by the Sub-Administrator.
(b) the Administrator and the Trust represent and warrant to the
Sub-Administrator as follows:
(i) The Administrator and the Trust have full power and
authority to enter into and perform this Agreement
and this Agreement has been duly authorized by all
requisite corporate action, executed and delivered by
or on behalf of the Administrator and the Trust and
constitutes a valid and binding agreement of the
Administrator and the Trust.
(ii) Neither the execution, delivery nor performance of
this Agreement by the Administrator and the Trust
will result in a breach of violation of any statute,
law, rule or of the material provisions of any
debentures or other material agreement binding upon
the Administrator and the Trust and no consent,
approval, authorization or license by any court or
governmental agency is required for the execution,
delivery or performance of this Agreement by the
trust except such as have been obtained by the
Administrator and the Trust.
INDEPENDENT CONTRACTOR
20. For all purposes of this Agreement, the Sub-Administrator shall be an
independent contractor and not an employee or dependent agent of the
Administrator or the Trust, nor shall anything herein be construed as
making the Administrator or the Trust a partner or co-venturer with the
Sub-Administrator or any of its affiliates or other clients. Except as
provided in this Agreement, the Sub-Administrator shall have no
authority to bind, obligate or represent the Administrator or the
Trust.
<PAGE>
COMPLETE AGREEMENT
21. This Agreement constitutes the entire agreement among the parties
relating to the subject matter hereof.
ASSIGNMENT
22. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns but may not be assigned by any party
without the express written consent of the other party which shall not
be reasonably withheld or delayed.
23. This Agreement may not be amended except by the written consent of each
of the parties hereto.
NOTICES
24. Any notice delivered under this agreement shall be in writing and
signed by a duly authorized officer of the party giving such notice and
shall be delivered personally or sent by registered or certified mail,
postage prepaid, to the registered office of the party for whom it is
intended. A notice so posted shall be deemed to be served at the
expiration of seventy-two (72) hours after posting and in proving
service by post it shall be sufficient to prove that an envelope
containing the notice was duly addressed, stamped and posted.
GOVERNING LAW
25. This Agreement shall be governed by and construed in accordance with
the laws of the Cayman Islands and the parties hereto agree to submit
to the non-exclusive jurisdiction of the Courts of the Cayman Islands.
IN WITNESS WHEREOF this Agreement has been duly executed for an on behalf of the
parties hereto in manner binding upon them the day and year first above written:
written.
Signed by
for and on behalf of the said
Eaton Vance Management /s/ H. Day Brigham, Jr.
Vice President
in the presence of:
Signed by
for and on behalf of the said
Worldwide Health Sciences Portfolio: /s/ James B. Hawkes
President
signed in Hamilton, Bermuda
SIGNED by
for and on behalf of the said
IBT Trust Company (Cayman), Ltd.: /s/ Robert V. Donahoe, II
Director
signed in Toronto, Ontario
<PAGE>
IBT Trust Company (Cayman), Ltd.
Fee Schedule for Sub-Administration Services
Eaton Vance
Annual Offshore Sub-Administration Fee $ 1,500
This fee will be charged annually for the following Principal Office
and Sub-Administrative services.
Principal Office
The following services will be provided for the Portfolio (Hub):
o Register Portfolio/Fund with Inspector of Financial Services
o Safekeeping of original contracts, agreements, and board
minutes o Provide officers to Fund o Ensure compliance with
Cayman Islands Law
Administrative Services
The following services will be provided for the Portfolio (Hub):
o Authorize expense budget and amendments o Authorize expense
payments o Mail Board materials o Maintain shareholder
register o Authorize Subscriptions and redemptions o Authorize
Fund distributions (if Applicable)
o Distribute annual, semi-annual, quarterly reports to
shareholders
