As filed with the Securities and Exchange Commission on February 27, 1997
File No. 811-7302
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
----
Amendment No. 6 / X /
----
GLOBAL HIGH INCOME PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
50 California Street, 27th Floor
San Francisco, California 94111
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 415-392-6181
David J. Thelander, Esq.
Vice President & Assistant General Counsel
Chancellor LGT Asset Management, Inc.
50 California Street, 27th Floor
San Francisco, California 94111
(Name and Address of Agent for Service)
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<PAGE>
EXPLANATORY NOTE
This Amendment to the Registration Statement of Global High Income
Portfolio has been filed by the Registrant pursuant to Section 8(b) of the
Investment Company Act of 1940, as amended (the "1940 Act"). However, beneficial
interests in the Registrant have not been registered under the Securities Act of
1933, as amended (the "1933 Act"), since such interests are offered 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
only be made by investment companies, insurance company separate accounts,
common or commingled trust funds or similar organizations or entities which are
"accredited investors" as defined in Regulation D under the 1933 Act. This
Amendment to the Registration Statement does not constitute an offer to sell, or
the solicitation of an offer to buy, any beneficial interests in the Registrant.
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
CONTENTS OF REGISTRATION STATEMENT
This registration statement of Global High Income Portfolio contains the
following documents:
Facing Sheet
Contents of Registration Statement
Part A
Part B
Part C
Signature Page
Exhibits
<PAGE>
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.
Responses to certain Items required to be included in Part A of this
Registration Statement are incorporated herein by reference from Post-Effective
Amendment No. 47 to the Registration Statement of G.T. Investment Funds, Inc.
(1940 Act File No. 811-5426), as filed with the Securities and Exchange
Commission ("SEC") on February 26, 1997 ("Feeder Registration Statement"). Part
A of the Feeder Registration Statement includes the joint prospectus of the GT
Global Income Funds ("Feeder's Part A").
Item 4. General Description of Registrant.
- - ------- ----------------------------------
Global High Income Portfolio (the "Portfolio") is a non-diversified,
open-end management investment company which was organized, under its former
name, Global Utilities Portfolio, as a trust under the laws of the State of New
York on April 27, 1992.
Beneficial interests in the Portfolio are offered solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. Investments in the Portfolio may only
be made by investment companies, insurance company separate accounts, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" as defined in Regulation D under the 1933 Act. This
Amendment to the 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 manager is Chancellor LGT Asset Management,
Inc. ("Chancellor LGT Asset Management"). Chancellor LGT Asset Management and
its worldwide affiliates are part of Liechtenstein Global, a provider of global
asset management and private banking products and services to individual and
institutional investors.
Information on the Portfolio's investment objectives, the kinds of
securities in which the Portfolio principally invests, other investment
practices of the Portfolio and the risk factors associated with investments in
the Portfolio is incorporated herein by reference from the sections entitled
"Investment Objectives and Policies" and "Risk Factors" in the Feeder's Part A.
Additional investment techniques, features and limitations concerning the
Portfolio's investment program are described in Part B of this Registration
Statement.
Item 5. Management of the Portfolio.
- - ------- ----------------------------
A description of how the business of the Portfolio is managed is
incorporated herein by reference from the section entitled "Management" in the
Feeder's Part A. The following list identifies the specific sections of the
Feeder's Part A under which the information required by Item 5 of Form N-1A may
be found; each listed section is incorporated herein by reference.
<PAGE>
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Item 5(a) Management
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Item 5(b) Management--Investment Management and Administration
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Item 5(c) Management
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Item 5(d) Management
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Item 5(e) Other Information--Transfer Agent
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Item 5(f) Management; Prospectus Summary
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Item 5(g) Management
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Item 6. Capital Stock and Other Securities.
- - ------- -----------------------------------
The Portfolio is organized as a trust under the laws of the State of
New York. Under the Declaration of Trust, the Trustees are authorized to issue
beneficial 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 (e.g., investment companies, insurance company separate accounts and
common and commingled trust funds) will each be liable for all obligations of
the Portfolio. However, the Trustees of the Portfolio believe that the risk of
an investor in the Portfolio incurring financial loss on account of such
liability is limited to circumstances in which both inadequate insurance existed
and the Portfolio itself was unable to meet its obligations.
As of the date of this Registration Statement, GT Global High Income
Fund ("High Income Fund") owns a majority interest in the Portfolio. However,
the High Income Fund has undertaken that, with respect to matters on which the
Portfolio seeks a vote of its interestholders, the High Income Fund will seek a
vote of its shareholders and will vote its interest in the Portfolio in
accordance with their instructions.
Investments in the Portfolio have no preemptive or conversion rights
and are fully paid and nonassessable, except as set forth below. The Portfolio
is not required to hold annual meetings of investors but the Portfolio will hold
special meetings of investors when in the judgment of the Trustees it is
necessary or desirable to submit matters for an investor vote. Investors have
the right to communicate with other investors to the extent provided in Section
16(c) of the 1940 Act in connection with requesting a meeting of investors for
the purpose of removing one or more Trustees, which removal requires a
two-thirds vote of the Portfolio's beneficial interests. Investors also have
under certain circumstances the right to remove one or more Trustees without a
meeting. 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.
The Portfolio intends to distribute to its investors the Portfolio's
net investment income monthly and its net realized capital gains, if any,
annually after the end of the Portfolio's fiscal year on October 31.
Under the current method of the Portfolio's operation, it is not
subject to any income tax. However, each investor in the Portfolio is taxable on
its share (as determined in accordance with the governing instruments of the
Portfolio) of the Portfolio's taxable income, gain, loss, deductions and credits
in determining its income tax liability. The determination of such share will be
made in accordance with the Internal Revenue Code of 1986, as amended ("Code")
A-2
<PAGE>
and regulations promulgated thereunder. It is intended that the Portfolio's
assets, income and distributions will be managed in such a way that an investor
in the Portfolio will be able to satisfy the requirements of Subchapter M of the
Code, assuming that the investor invested all of its assets in the Portfolio.
Investor inquiries may be directed to Chancellor LGT Asset Management
at the following address: 50 California Stret, 27th Floor, San Francisco, CA
94111.
Item 7. Purchase of Securities.
- - ------- -----------------------
Beneficial interests in the Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the 1933 Act. See "General Description of
Registrant."
An investment in the Portfolio may be made without a sales load at the
net asset value next determined after an order is received in "good order" by
the Portfolio. There is no minimum initial or subsequent investment in the
Portfolio. However, investments must be made in federal funds (i.e., monies
credited to the account of the Portfolio's custodian bank by a Federal Reserve
Bank). Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each day the New York Stock Exchange ("NYSE") is open for trading.
Information on the time and method of valuation of the Portfolio's
assets is incorporated by reference from the section entitled "Calculation of
Net Asset Value" in the Feeder's Part A.
The Portfolio reserves the right to cease accepting investments at any
time or to reject any investment order.
Item 8. Redemption or Repurchase.
- - ------- -------------------------
An investor in the Portfolio may reduce any portion or all of its
investment at any time at the net asset value next determined after a request in
"good order" is furnished by the investor to the Portfolio. The proceeds of a
reduction will be paid by the Portfolio in federal funds normally on the next
business day after the reduction is effected, but in any event within seven
days. Investments in the Portfolio may not be transferred.
The right of any investor to receive payment with respect to any
reduction may be suspended or the payment of the proceeds therefrom postponed
during any period (1) when the NYSE is closed (other than customary weekend or
holiday closings) or trading on the NYSE is restricted as determined by the SEC,
(2) when an emergency exists, as defined by the SEC, which would prohibit the
Portfolio in disposing of its portfolio securities or in fairly determining the
value of its assets, or (3) as the SEC may otherwise permit.
Item 9. Pending Legal Proceedings.
- - ------- --------------------------
Not applicable.
A-3
<PAGE>
APPENDIX A
RATINGS OF SECURITIES
A description of corporate bond and commercial paper ratings is
incorporated herein by reference from "Appendix A--Description of Debt Ratings"
in the Feeder's Part A.
A-4
<PAGE>
PART B
Part B of this Registration Statement should be read only in
conjunction with Part A. Capitalized terms used in Part B and not otherwise
defined have the meanings given them in Part A of this Registration Statement.
Responses to certain Items required to be included in Part B of this
Registration Statement are incorporated herein by reference from the Feeder
Registration Statement. Part B of the Feeder Registration Statement includes the
joint statement of additional information of the GT Global Income Funds
("Feeder's Part B").
Item 10. Cover Page.
- - -------- -----------
Not applicable.
Item 11. Table of Contents.
- - -------- ------------------
Page
General Information and History.....................................B-1
Investment Objectives and Policies..................................B-1
Management of the Portfolio.........................................B-1
Control Persons and Principal Holders of Securities.................B-2
Investment Advisory and Other Services..............................B-2
Brokerage Allocation and Other Practices............................B-3
Capital Stock and Other Securities..................................B-3
Purchase, Redemption and Pricing of Securities......................B-4
Tax Status..........................................................B-5
Underwriters........................................................B-5
Calculation of Performance Data.....................................B-5
Financial Statements................................................B-5
Item 12. General Information and History.
- - -------- --------------------------------
Prior to October 20, 1992, the name of Global High Income Portfolio was
"Global Utilities Portfolio."
Item 13. Investment Objectives and Policies.
- - -------- -----------------------------------
Part A contains basic information about the investment objectives,
policies and limitations of Global High Income Portfolio (the "Portfolio"). This
Part B supplements the discussion in Part A of the investment objectives,
policies and limitations of the Portfolio.
Information on the fundamental investment limitations and the non-
fundamental investment policies and limitations of the Portfolio, the types of
securities bought and investment techniques used by the Portfolio, and certain
risks attendant thereto, as well as other information on the Portfolio's
investment programs, is incorporated by reference from the sections entitled
"Investment Objectives and Policies," "Options, Futures and Currency
Strategies," "Risk Factors," "Investment Limitations" and "Execution of
Portfolio Transactions" in the Feeder's Part B.
Item 14. Management of the Portfolio.
- - -------- ----------------------------
Information about the Trustees and officers of the Portfolio, and their
roles in management of the Portfolio and other GT Global Funds, is incorporated
B-5
<PAGE>
herein by reference from the section entitled "Directors, Trustees and Executive
Officers" in the Feeder's Part B.
The Board of Trustees has a Nominating and Audit Committee, composed of
Ms. Quigley and Messrs. Anderson, Bayley and Patterson, which is responsible for
nominating persons to serve as Trustees, reviewing audits of the Portfolio and
recommending firms to serve as independent auditors of the Portfolio. Each of
the Trustees and officers of the Portfolio is also a Director and officer of
G.T. Investment Funds, Inc., G.T. Global Developing Markets Fund, Inc., G.T.
Global Floating Rate Fund. Inc. and G.T. Investment Portfolios, Inc., and a
Trustee and officer of G.T. Global Growth Series, G.T. Global Eastern Europe
Fund, G.T. Global Variable Investment Trust, G.T. Global Variable Investment
Series, Growth Portfolio and Global Investment Portfolio which also are
registered investment companies managed by Chancellor LGT Asset Management. Each
Trustee and Officer serves in total as a Director and or Trustee and Officer,
respectively, of 11 registered investment companies with 41 series managed or
administered by Chancellor LGT Asset Management.
Each Trustee who is not a director, officer or employee of Chancellor
LGT Asset Management or any affiliated company is paid an annual fee of $5,000 a
year, plus $300 for each meeting of the Board attended, and reimbursed travel
and other expenses incurred in connection with attending Board meetings. Other
Trustees and officers receive no compensation or expense reimbursement from the
Portfolio. For the fiscal year ended October 31, 1996, the Portfolio paid Mr.
Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley $1,734 each. For the year
ended October 31, 1996, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms. Quigley,
who are not directors, officers or employees of Chancellor LGT Asset Management
or any affiliated company, received total compensation of $80,100, $80,100,
$72,600, and $80,100, respectively, from the investment companies managed or
administered by Chancellor LGT Asset Management for which he or she serves as a
Director or Trustee. Fees and expenses disbursed to the Trustees contained no
accrued or payable pension or retirement benefits.
As of the fiscal year ended October 31, 1996, the officers and Trustees
and their families as a group owned in the aggregate beneficially or of record
less than 1% of the outstanding shares of the Portfolio.
Item 15. Control Persons and Principal Holders of Securities.
- - -------- ----------------------------------------------------
As of the date of this filing, GT Global High Income Fund owned 99.9%
of the value of the outstanding interests in the Portfolio. Because GT Global
High Income Fund controls the Portfolio, GT Global High Income Fund may take
actions affecting its Portfolio without the approval of any other investor.
GT Global High Income Fund has informed the Portfolio that whenever it
is requested to vote on any proposal of the Portfolio, it will hold a meeting of
shareholders and will cast its vote as instructed by its shareholders. It is
anticipated that other investors in the Portfolio will follow the same or a
similar practice.
The address of GT Global High Income Fund is 50 California Street, 27th
Floor, San Francisco, CA 94111.
Item 16. Investment Advisory and Other Services.
- - -------- ---------------------------------------
Information on the investment management and other services provided
for or on behalf of the Portfolio is incorporated herein by reference from the
sections entitled "Management," "Directors, Trustees and Executive Officers" and
"Additional Information" in the Feeder's Part B. The following list identifies
the specific sections in the Feeder's Part B under which the information
required by Item 16 of Form N-1A may be found; each section is incorporated
herein by reference.
B-6
<PAGE>
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Item 16(a) Management; Additional Information
- - --------------------------------------------------------------------------------
Item 16(b) Management
- - --------------------------------------------------------------------------------
Item 16(c) Not Applicable
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Item 16(d) Management
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Item 16(e) Not Applicable
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Item 16(f) Not Applicable
- - --------------------------------------------------------------------------------
Item 16(g) Not Applicable
- - --------------------------------------------------------------------------------
Item 16(h) Additional Information
- - --------------------------------------------------------------------------------
Item 16(i) Not Applicable
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For the fiscal years ended October 31, 1994, 1995 and 1996, the
Portfolio paid investment management and administration fees of $2,266,420,
$2,411,786 and $3,014,924, respectively, to Chancellor LGT Asset Management.
Item 17. Brokerage Allocation and Other Practices.
- - -------- -----------------------------------------
A description of the Portfolio's brokerage allocation and other
practices is incorporated herein by reference from the section entitled
"Execution of Portfolio Transactions" in the Feeder's Part B.
Item 18. Capital Stock and Other Securities.
- - -------- -----------------------------------
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Portfolio. Investors are entitled to participate pro
rata in distributions of taxable income, loss, gain and credit of the Portfolio.
Upon liquidation or dissolution of the Portfolio, investors are entitled to
share pro rata in the Portfolio's net assets available for distribution to its
investors. Investments in the Portfolio have no preference, preemptive,
conversion or similar rights and are fully paid and nonassessable, except as set
forth below. Investments in the Portfolio may not be transferred. Certificates
representing an investor's beneficial interest in the Portfolio are issued only
upon the written request of an investor.
Each investor is entitled to a vote in proportion to the amount of its
investment in the Portfolio. Investors in the Portfolio do not have cumulative
voting rights, and investors holding more than 50% of the aggregate beneficial
interest in the Portfolio may elect all of the Trustees of the Portfolio if they
choose to do so and in such event the other investors in the Portfolio would not
be able to elect any Trustee. The Portfolio is not required to hold annual
meetings of investors but the Portfolio will hold special meetings of investors
when in the judgment of the Portfolio's Trustees it is necessary or desirable to
submit matters for an investor vote. No material amendment may be made to the
Portfolio's Declaration of Trust without the affirmative majority vote of
investors (with the vote of each being in proportion to the amount of their
investment).
The Portfolio may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by the vote of two-thirds of its
investors (with the vote of each being in proportion to the amount of their
investment), except that if the Trustees of the Portfolio recommend such sale of
assets, the approval by vote of a majority of the investors (with the vote of
each being in proportion to the amount of their investment) will be sufficient.
B-7
<PAGE>
The Portfolio may also be terminated (i) upon liquidation and distribution of
its assets, if approved by the vote of two-thirds of its investors (with the
vote of each being in proportion to the amount of their investment), or (ii) by
the Trustees of the Portfolio by written notice to its investors.
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
beneficial interest in the Portfolio. The Declaration of Trust also provides
that the Portfolio shall maintain appropriate insurance (for example, fidelity
bonding and errors and omissions insurance) for the protection of the Portfolio,
its investors, Trustees, officers, employees and agents covering possible tort
and other liabilities. Thus, the risk of an investor incurring financial loss on
account of investor liability is limited to circumstances in which both
inadequate insurance existed and the Portfolio itself was 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. The Declaration of Trust provides
that the trustees and officers will be indemnified by the Portfolio 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
or other disposition, or by a reasonable determination, based upon a review of
readily available facts, by vote of a majority of disinterested 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 19. Purchase, Redemption and Pricing of Securities.
- - -------- -----------------------------------------------
Beneficial interests in the Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within the
meaning of Section 4(2) of the Securities Act of 1933, as amended.
Information on the method followed by the Portfolio in determining its
net asset value and the timing of such determination is incorporated by
reference from the section entitled "Valuation of Fund Shares" in the Feeder's
Part B. See also Items 7 and 8 in Part A.
The Portfolio reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption or repurchase order by
making payment in whole or in part in readily marketable securities chosen by
the Portfolio and valued as they are for purposes of computing the Portfolio's
net asset value (a redemption in kind). If payment is made in securities, an
investor may incur transaction expenses in converting these securities into
cash. The Portfolio has elected, however, to be governed by Rule 18f-1 under the
1940 Act as a result of which the Portfolio is obligated to redeem beneficial
interests with respect to any one investor during any 90 day period, solely in
B-8
<PAGE>
cash up to the lesser of $250,000 or 1% of the net asset value of the Portfolio
at the beginning of the period.
Each investor in the Portfolio may add to or reduce its investment in
the Portfolio on each day that the NYSE is open for trading. At the close of
trading, on each such day, 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 representing that investor's share of the aggregate beneficial
interests in the Portfolio. Any additions or reductions which are to be effected
on that day will then be effected. The investor's percentage of the aggregate
beneficial interests in the Portfolio will then be recomputed as the percentage
equal to the fraction (i) the numerator of which is the value of such investor's
investment in the Portfolio as of the close of trading on such day plus or
minus, as the case may be, the amount of net additions to or reductions in 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 trading on such day plus or minus, as the case may be, the amount of
the net additions to or reductions in the aggregate investments 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 as of
the close of trading on the following day the NYSE is open for trading.
Item 20. Tax Status.
- - -------- -----------
Information on the taxation of the Portfolio is incorporated by
reference herein from the section entitled "Taxes" in the Feeder's Part B.
Item 21. Underwriters.
- - -------- -------------
Not applicable.
Item 22. Calculation of Performance Data.
- - -------- --------------------------------
Not applicable.
Item 23. Financial Statements.
- - -------- ---------------------
Audited financial statements for the Portfolio for the fiscal year
ended October 31, 1996 are included herein, in reliance on the report of Coopers
& Lybrand L.L.P., independent auditors, given on the authority of said firm as
experts in auditing and accounting.
B-9
<PAGE>
COOPERS
&LYBRAND Coopers & Lybrand L.L.P.
a professional services firm
Report of Independent Accountants
ANNUAL REPORT
To the Shareholders and Board of Trustees of Global
High Income Portfolio:
We have audited the accompanying statement of assets and liabilities of Global
High Income Portfolio, including the portfolio of investments as of October 31,
1996, the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the supplementary data for each of the four years in the period then
ended and for the period from October 22, 1992 (commencement of operations) to
October 31, 1992. These financial statements and the supplementary data are the
responsibility of the Portfolio's management. Our responsibility is to express
an opinion on these financial statements and the supplementary data based on our
audits.
We conducted our audits 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 statements and the
supplementary data are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of October 31, 1996 by correspondence with the custodian and brokers.
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 audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and the supplementary data referred to
above present fairly, in all material respects, the financial position of Global
High Income Portfolio as of October 31, 1996, the results of its operations for
the year then ended the changes in its net assets for each of the two year in
the period then ended, and the supplementary data for each of the period from
October 22, 1992 (commencement of operations) to October 31, 1996, in conformity
with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
December 13, 1996
Coopers & Lybrand L.L.P. is a member of Coopers & Lybrand International, a
limited liability association incorporated in Switzerland.
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
Portfolio of Investments
October 31, 1996
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------------------------------------
Principal Value % of Net
Fixed Income Investments Currency Amount (Note 1) Assets
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<S> <C> <C> <C> <C> <C>
Government & Government Agency Obligations (62.1%)
--------------------------------------------------
Argentina (10.8%)
-----------------
Republic of Argentina:
Discount Bond, 6.4375% due 3/31/23 + USD 26,305,000 19,087,566 4.3
BOCON Pre 4, 5.4435% due 9/1/02 % + USD 15,293,000 15,346,526 3.4
Par Bond, 5.25% due 3/31/23 ( USD 20,381,000 12,152,171 2.7
Floating Rate Bond, 6.625% due 3/31/05 + USD 2,203,040 1,816,131 0.4
Brazil (9.6%)
-------------
Federal Republic of Brazil:
C Bond, 4.5% due 4/15/14 (Effective rate at period end %( USD 55,360,363 38,404,647 8.6
is 6.92813%, including "payment-in-kind" bonds.)
MYDFA Floating Rate Note, 6.6875% due 9/15/07 - 144A )+ USD 5,191,000 4,350,707 1.0
Bulgaria (2.9%)
--------------
Bulgaria, Discount Bond Series A, 6.6875% due 7/28/24 + USD 25,780,000 13,067,238 2.9
- EURO
---------------------
Costa Rica (1.6%)
-----------------
Banco Central de Costa Rica:
Interest Bond Series A, 6.34375% due 5/21/05 (effective
maturity date 8/23/03) + USD 6,036,880 5,825,589 1.3
Principal Bond Series A, 6.25% due 5/21/10 USD 1,900,000 1,539,000 0.3
Ecuador (4.9%)
--------------
Ecuador:
Past Due Interest Bond, 3% due 2/27/15 - Euro (Effective
rate at period end is 4.96%, including "payment-in-kind"
bonds.) % + USD 28,818,107 16,138,140 3.6
Past Due Interest Bond, 3% due 2/27/15 - Registered
(Effective rate at period end is 4.96%, including "payment-in-
kind" bonds.) % + USD 6,079,992 3,404,796 0.8
Discount Bond, 6.5% due 2/28/25 - EURO + USD 3,210,000 2,104,556 0.5
Mexico (8.2%)
-------------
United Mexican States:
Global Bond, 11.5% due 5/15/26 USD 12,700,000 12,684,125 2.8
11.375% due 9/15/16 - 144A ) USD 5,640,000 5,625,900 1.3
<PAGE>
7.6875% due 8/6/01 - 144A + ) L USD 4,619,000 4,620,386 1.0
Discount Bond Series C, 6.35156% due 12/31/19 + : USD 4,956,000 4,082,505 0.9
Banco Nacional de Comercio Exterior, S.N.C. Trust ) USD 9,440,000 9,746,800 2.2
Division, 11.25% due 5/30/06 - 144A
Nigeria (4.8%)
--------------
Central Bank of Nigeria, Par Bond, 6.25% due 11/15/20 ( USD 34,500,000 21,390,000 4.8
---------------------
Panama (3.1%)
-------------
Panama, Interest Reduction Bond, 3.5% due ( ) USD 21,105,000 13,955,681 3.1
7/17/14 - 144A
---------------------
Philippines (2.7%)
------------------
Republic of Philippines, 8.75% due 10/7/16 - 144A ) USD 7,000,000 6,855,625 1.5
Central Bank of the Philippines, Debt Conversion Bond + USD 5,663,000 5,422,323 1.2
Series B, 6.4375% due 12/1/09
United States (2.7%)
--------------------
United States Treasury Note, 7.00% due 7/15/06 L USD 11,660,000 12,194,037 2.7
---------------------
Uruguay (1.5%)
--------------
Banco Central del Uruguay:
New Money Bond, 6.875% due 2/18/06 + USD 3,750,000 3,628,125 0.8
Par Bond Series A, 6.75% due 2/19/21 : USD 2,290,000 1,889,250 0.4
Par Bond Series B, 6.75% due 2/19/21 : USD 1,500,000 1,237,500 0.3
Venezuela (9.3%)
----------------
Republic of Venezuela:
Debt Conversion Bond, 6.625% due 12/18/07 + USD 20,750,000 17,066,875 3.8
Front Loaded Interest Reduction Bond Series A, 6.625% due + USD 13,000,000 10,814,375 2.4
3/31/07
Par Bond Series A, 6.75% due 3/31/20 : USD 13,500,000 9,610,313 2.2
Front Loaded Interest Reduction Bond Series B, 6.5% due
3/31/07 + USD 5,000,000 4,159,375 0.9
-----------
Total Government & Government Agency Obligations (cost 278,220,262
$259,273,931) -----------
Sovereign Debt (17.2%)
----------------------
Morocco (4.4%)
--------------
Kingdom of Morocco, Tranche A Loan Agreement, 6.375%
due 1/1/09 + USD 25,000,000 19,843,750 4.4
---------------------
<PAGE>
Peru (1.5%)
Peru Loan Agreement - ! USD 4,600,000 5,384,875 1.2
Peru Loan Agreement (Citibank Issued) - ! USD 1,000,000 1,170,625 0.3
Russia (11.3%)
--------------
Bank for Foreign Economic Affairs (Vnesheconombank)
Loan Agreement:
Assignment - ! USD 46,757,000 34,337,172 7.7
Participation - ! DEM 12,466,000 6,321,960 1.4
Assignment - ! DEM 9,819,000 4,979,571 1.1
Participation - ! USD 6,600,000 4,846,875 1.1
------------
Total Sovereign Debt (cost $54,521,525) 76,884,828
------------
Corporate Bonds (10.7%)
-----------------------
Argentina (0.4%)
----------------
Industrias Metallurgicas Pescarmona S.A. (IMPSA), 11.75% ) USD 1,950,000 1,989,000 0.4
due 3/27/98 - 144A
---------------------
Brazil (0.3%)
-------------
Net Sat Servicos LTDA, 12.75% due 8/5/04 - 144A ) USD 1,134,000 1,190,700 0.3
---------------------
Indonesia (5.1%)
----------------
Asia Pulp & Paper International Finance Co., Ltd., 11.75% USD 6,077,000 6,335,273 1.4
due 10/1/05
Dharmala Sakti Sejahtera Promissory Note, effective yield IDR 9,000,000,000 3,449,610 0.8
20.00%, due 6/9/97
PT Polysindo EKA Perkasa:
effective yield 20.05%, due 7/27/97 IDR 6,000,000,000 2,246,285 0.5
13% due 6/15/01 - DTC USD 613,000 680,430 0.2
13% due 6/15/01 - EURO USD 395,000 438,450 0.1
PT Tjiwi Kimia, 13.25% due 8/1/01 USD 2,500,000 2,812,500 0.6
Rapp International Finance, 13.25% due 12/15/05 - Euro USD 2,430,000 2,642,625 0.6
FSW International Finance Co., 12.5% due 11/1/06 - 144A ) USD 2,007,000 2,025,816 0.5
PT Indah Kiat International Finance Series B, 11.875% due USD 1,510,000 1,615,700 0.4
6/15/02
Luxembourg (0.5%)
-----------------
<PAGE>
Millicom International Cellular, effective ) USD 3,800,000 2,170,750 0.5
yield 13.5%, due 6/1/06 - 144A
--------------------
Malaysia (0.1%)
---------------
Aokam Perdana Bhd., Convertible Bond, 3.5% due 6/13/04 USD 650,000 453,375 0.1
--------------------
Mexico (2.8%)
------------
Grupo Industrial Durango, S.A., 12.625% due 8/1/03 USD 4,758,000 4,960,215 1.1
Grupo Irsa, S.A. de C.V., 8.375% due 7/15/98 USD 3,300,000 3,295,875 0.7
Cemex, S.A. de C.V. "B", 12.75% due 7/15/06 - 144A ) USD 2,420,000 2,622,675 0.6
Grupo Elektra, S.A. de C.V., 12.75% due 5/15/01 - 144A ) USD 1,500,000 1,573,125 0.4
People's Republic of China (0.7%)
---------------------------------
Zhuhai Highway Co., Ltd., 11.5% due 7/1/08 - 144A ) USD 2,900,000 3,124,750 0.7
--------------------
Philippines (0.8%)
------------------
Filinvest Capital, Convertible Bond, 3.75% due 2/1/02 ( USD 1,892,000 1,863,620 0.4
- Reg. S
CE Casecnan Water & Energy, 11.45% due 11/15/05 USD 1,030,000 1,138,150 0.3
- Reg. S
Subic Power Corp., 9.5% due 12/28/08 - 144A ) USD 448,276 463,966 0.1
----------
Total Corporate Bonds (cost $46,398,969) 47,092,890
----------
TOTAL FIXED INCOME INVESTMENTS
(cost $360,194,425) --------------------
402,197,980 90.0
--------------------
Underlying Value % of Net
Options Currency Amount (Note 1) Assets
---------------------------------------------------------------------------------------------------------------------
Republic of Argentina: USD - - 0.3
Government & Government Agency Obligations
Floating Rate Bond 3/31/05, Call Option, strike 77.875, - 19,800,000 890,050 -
expires 11/29/96
Floating Rate Bond 3/31/05, Call Option, strike - 19,800,000 512,365 -
80.625, expires 12/9/96
Republic of Brazil C Bond 4/15/14, Call Option, strike USD 99,670,154 1,108,531 0.3
71.8125, expires 12/26/96
Government & Government Agency Obligations
Republic of Venezuela: USD - - 0.0
Government & Government Agency Obligations
<PAGE>
Debt Conversion Bond 12/18/07, Call Option, strike 84.15, - 9,857,000 94,637 -
expires 1/2/97
Debt Conversion Bond 12/18/07, Call Option, strike 84.44, - 9,857,000 85,894 -
expires 1/2/97
TOTAL OPTIONS
---------------------
(cost $3,779,230) 2,691,477 0.6
---------------------
Principal Value % of Net
Short-Term Investments Currency Amount (Note 1) Assets
---------------------------------------------------------------------------------------------------------------------
Commercial Paper - Discounted (3.8%)
------------------------------------
Thailand (0.2%)
---------------
TPI Polene Public Co., Ltd., current yield THB 25,000,000 962,735 0.2
10.36% due 1/6/97
--------------------
United States (3.6%)
--------------------
Merrill Lynch & Co., current yield 5.38% due 11/5/96 USD 16,000,000 15,990,436 3.6
---------------------
------------
Total Commercial Paper - Discounted (cost $16,958,338) 16,953,171
------------
Treasury Bills (2.0%)
---------------------
Mexico (2.0%)
-------------
Mexican Cetes, current yield 29.66% due 1/23/97 MXN 4,567,238 5,351,413 1.2
Mexican Cetes, current yield 29.61% due 1/16/97 MXN 1,340,951 1,578,527 0.4
Mexican Cetes, current yield 26.88% due 1/30/97 MXN 1,225,706 1,436,292 0.3
Mexican Cetes, current yield 29.66% due 2/20/97 MXN 325,125 372,690 0.1
Mexican Cetes, current yield 29.66% due 2/6/97 MXN 135,468 156,927 0.0
------------
Total Treasury Bills (cost $8,891,671) 8,895,849
------------
Commercial Paper - Indexed (1.4%)
---------------------------------
Philippines (1.4%)
------------------
National Westminster Bank PLC, Currency-Linked CD, USD 6,500,000 6,418,711 1.4
12.3798% due 2/28/97
--------------------
(cost $6,500,000)
TOTAL SHORT-TERM INVESTMENTS
(cost $32,350,009) --------------------
32,267,731 7.2
--------------------
Value % of Net
Repurchase Agreement (Note 1) Assets
---------------------------------------------------------------------------------------------------------------------
Dated October 31, 1996, with State Street Bank & Trust Co.,
due November 1, 1996, for an effective yield of 5.55%
collateralized by $3,010,000 U.S. Treasury Bonds, 7.125%
due 2/15/23 (market value of collateral is $3,179,150,
including accrued interest). 3,112,480 0.7
(cost $3,112,480)
TOTAL INVESTMENTS
(cost $399,436,144) * 440,269,668 98.5
Other Assets and Liabilities 6,801,612 1.5
=====================================================================================================================
NET ASSETS $447,071,280 100.0
=====================================================================================================================
</TABLE>
<PAGE>
+ The coupon rate shown on floating rate note represents the rate at
period end.
! Non-income producing security.
- Underlying loan agreement currently in default.
) Security exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt
from registration, normally to qualified institutional buyers.
L Security is segregated as collateral for when-issued securities held
by the Fund. See Note 1 of Notes to Financial Statements.
( The coupon rate shown on step-up coupon bond represents the rate at
period end.
% Bond pays stated or additional interest with "payment-in-kind" (PIK)
bonds.
: Issued with detachable warrants or value recovery rights. The current
market value of each warrant or right is zero.
* For Federal income tax purposes, cost is $401,018,014 and
appreciation (depreciation) is as follows:
Unrealized appreciation: $42,322,854
Unrealized depreciation: (3,071,200)
-----------
Net unrealized appreciation: $39,251,654
===========
Forward Foreign Currency Contracts Outstanding
October 31, 1996
<TABLE>
<CAPTION>
Unrealized
Market Value Contract Delivery Appreciation
Contracts to Sell: (U.S. Dollars) Price Date (Depreciation)
- - ------------------ -------------- ----- ---- --------------
<S> <C> <C> <C> <C>
Deutsche Marks.......................................................... 6,587,811 1,47060 11/13/96 $ 191,735
-------------- -------- -------------
Total Contracts to Sell (Receivable amount $6,779,546) ............... 6,587,811 191,735
-------------- -------------
The value of Contracts to Sell as Percentage of Net Assets is 1.48%
Total Open Forward Foreign Currency Contracts ........................ $ 191,735
=============
</TABLE>
- - --------------
See Note 1 to the financial statements.
The accompanying notes are an integral part of the financial statements.
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
October 31, 1996
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Assets:
Investments in securities, at value (cost $399,436,144) (Note 1) $440,269,668
U.S. currency $ 747
Foreign currencies (cost $375,538) 363,584 364,331
Receivable for securities sold 19,276,936
Interest receivable 8,384,949
Receivable for open forward foreign currency contracts, net (Note 1) 191,735
Unamortized organizational costs (Note 1) 4,877
Other assets 100
-------------
Total assets 468,492,596
-------------
Liabilities:
Payable for securities purchased 21,061,541
Payable for investment management and administration fees (Note 2) 280,820
Payable for custodian fees 23,927
Payable for printing and postage expenses 22,733
Payable for professional fees 16,802
Payable for Trustees' fees and expenses (Note 2) 3,225
Other accrued expenses 12,268
------------
Total liabilities 21,421,316
------------
Net assets $447,071,280
============
Net assets consist of:
Paid in capital (Note 2) $275,464,046
Accumulated net investment income 120,732,596
Accumulated net realized gain on investments and foreign currency
transactions 9,860,797
Net unrealized appreciation on translation of assets and liabilities
in foreign currencies 180,317
Net unrealized appreciation of investments 40,833,524
============
Total - representing net assets applicable to shares of beneficial interest
outstanding $447,071,280
=============
The accompanying notes are an integral part of the financial statements.
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
GLOBAL HIGH INCOME PORTFOLIO
STATEMENT OF OPERATIONS
Year ended October 31, 1996
- - ------------------------------------------------------------------------------------------------------------------------------------
Investment income:
Interest income (Note 1) $ 45,539,611
-----------------
Total investment income 45,539,611
-----------------
Expenses:
Investment management and administration fees (Note 2) 3,014,924
Custodian fees 181,559
Interest expense (Note 1) 163,819
Legal fees 14,436
Trustees' fees and expenses (Note 2) 6,955
Amortization of organization costs (Note 1) 5,010
Audit fees 3,078
-----------------
Total expenses 3,389,781
<PAGE>
-----------------
Net investment income 42,149,830
-----------------
Net realized and unrealized gain on investments and foreign currencies: (Note 1)
Net realized gain on investments $ 62,643,262
Net realized loss on foreign currency transactions (125,790)
-----------------
Net realized gain during the year 62,517,472
Net change in unrealized appreciation on translation of assets and 174,082
liabilities in foreign currencies
Net change in unrealized appreciation of investments 31,730,913
-----------------
Net unrealized appreciation during the year 31,904,995
-----------------
Net realized and unrealized gain on investments and foreign currencies 94,422,467
-----------------
Net increase in net assets resulting from operations $136,572,297
=================
The accompanying notes are an integral part of the financial statements.
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
GLOBAL HIGH INCOME PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- - ------------------------------------------------------------------------------------------------------------------------------------
Year ended Year ended
October 31, 1996 October 31, 1995
----------------- -----------------
Increase (Decrease) in net assets
Operations:
Net investment income $42,149,830 $44,137,109
Net realized gain (loss) on investments and foreign currency transactions 62,517,472 (62,112,954)
Net change in unrealized appreciation (depreciation) on translation of 174,082 (302)
assets and liabilities in foreign currencies
Net change in unrealized appreciation of investments 31,730,913 24,969,840
----------------- -----------------
Net increase in net assets resulting from operations 136,572,297 6,993,693
----------------- -----------------
Beneficial interest transactions: (Note 2)
Contributions 302,410,133 322,934,028
Withdrawals (350,591,916) (372,158,223)
----------------- -----------------
Net decrease from beneficial interest transactions (48,181,783) (49,224,195)
----------------- -----------------
Total increase (decrease) in net assets 88,390,514 (42,230,502)
Net assets:
Beginning of year 358,680,766 400,911,268
================= =================
End of year $447,071,280 $358,680,766
================= =================
The accompanying notes are an integral part of the financial statements.
- - ------------------------------------------------------------------------------------------------------------------------------------
- - ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
SUPPLEMENTARY DATA
Contained below are ratios and supplemental data that have been derived from
information provided in the financial statements.
<TABLE>
<CAPTION>
October 22, 1992
Year ended October 31, (commencement of
-------------------------------------------------- operations) to
1996 1995 1994 1993 October 31, 1992
---- ---- ---- ---- ----------------
Ratios and supplemental data:
<S> <C> <C> <C> <C> <C>
Net assets, end of period (in 000's).................. $447,071 $358,681 $400,911 $256,740 $200
Ratio of net investment income to average net assets.. 10.31% 12.8% 7.93% 8.0% N/A(a)
Ratio of expenses to average net assets............... 0.83% 0.78% 0.72% 0.9% N/A(a)
Ratio of interest expense to average net assets....... N/A N/A 0.22% N/A N/A
Portfolio turnover rate............................... 290% 213% 178% 195% none
</TABLE>
- - ---------------------
(a) Ratios are not meaningful due to short period of operation
The accompanying notes are an integral part of the financial statements.
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
NOTES TO
FINANCIAL STATEMENTS
October 31, 1996
- - --------------------------------------------------------------------------------
1. Significant Accounting Policies
Global High Income Portfolio ("Portfolio") is organized as a New York Trust and
is registered under the Investment Company Act of 1940, as amended ("1940 Act"),
as a non-diversified, open-end management investment company. The following is a
summary of significant accounting policies consistently followed by the
Portfolio in the preparation of the financial statements. The policies are in
conformity with generally accepted accounting principles, and therefore the
financial statements may include certain estimates made by management.
(A) Portfolio Valuation
The Portfolio calculates the net asset value of and completes orders to purchase
or repurchase Portfolio shares of beneficial interest on each business day, with
the exception of those days on which the New York Stock Exchange is closed.
Equity securities are valued at the last sale price on the exchange on which
such securities are traded, or on the principal over-the-counter market on which
such securities are traded, as of the close of business on the day the
securities are being valued, or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange determined by Chancellor LGT Asset
Management, Inc. (the "Manager") to be the primary market.
Fixed income investments are valued at the mean of representative quoted bid and
ask prices for such investments or, if such prices are not available, at prices
for investments of comparative maturity, quality and type; however, when the
Manager deems it appropriate, prices obtained for the day of valuation from a
bond pricing service will be used. Short-term investments with a maturity of 60
days or less are valued at amortized cost adjusted for foreign exchange
translation and market fluctuation, if any.
Investments for which market quotations are not readily available (including
restricted securities which are subject to limitations on their sale) are valued
at fair value as determined in good faith by or under the direction of the
Portfolio's Board of Trustees.
Portfolio securities which are primarily traded on foreign exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, and those values are then translated into U.S. dollars at
the current exchange rates, except that when an occurrence subsequent to the
time a value was so established is likely to have materially changed such value,
then the fair value of those securities will be determined by consideration of
other factors by or under the direction of the Portfolio's Board of Trustees.
(B) Foreign Currency Translation
The accounting records of the Portfolio are maintained in U.S. dollars. The
market values of foreign securities, currency holdings, and other assets and
liabilities are recorded in the books and records of the Portfolio after
translation to U.S. dollars based on the exchange rates on that day. The cost of
each security is determined using historical exchange rates. Income and
withholding taxes are translated at prevailing exchange rates when earned or
incurred.
The Portfolio does not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of forward foreign currency
contracts, sales of foreign currencies, currency gains or losses realized
between the trade and settlement dates on securities transactions, and the
<PAGE>
difference between the amounts of dividends, interest, and foreign withholding
taxes recorded on the Portfolio's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized foreign exchange gains or
losses arise from changes in the value of assets and liabilities other than
investments in securities at year end, resulting from changes in exchange rates.
(C) Repurchase Agreements
With respect to repurchase agreements entered into by the Portfolio, it is the
Portfolio's policy to always receive, as collateral, United States government
securities or other high quality debt securities of which the value, including
accrued interest, is at least equal to the amount to be repaid to the Portfolio
under each agreement at its maturity.
(D) Forward Foreign Currency Contracts
A forward foreign currency contract ("Forward Contract") is an agreement between
two parties to buy and sell a currency at a set price on a future date. The
market value of the Forward Contract fluctuates with changes in currency
exchange rates. The Forward Contract is marked-to-market daily and the change in
market value is recorded by the Portfolio as an unrealized gain or loss. When
the Forward Contract is closed, the Portfolio records a realized gain or loss
equal to the difference between the value at the time it was opened and the
value at the time it was closed. Forward Contracts involve market risk in excess
of the amounts shown in the Portfolio's "Statement of Assets and Liabilities."
The Portfolio could be exposed to risk if a counterparty is unable to meet the
terms of the contract or if the value of the currency changes unfavorably. The
Portfolio may enter into Forward Contracts in connection with planned purchases
or sales of securities, or to hedge against adverse fluctuations in exchange
rates between currencies.
(E) Option Accounting Principles
When the Portfolio writes a call or put option, an amount equal to the premium
received is included in the Portfolio's "Statement of Assets and Liabilities" as
an asset and an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option.
The current market value of an option listed on a traded exchange is valued at
its last bid price, or, in the case of an over-the-counter option, is valued at
the average of the last bid prices obtained from brokers. If an option expires
on its stipulated expiration date or if the Portfolio enters into a closing
purchase transaction, a gain or loss is realized without regard to any
unrealized gain or loss on the underlying security, and the liability related to
such option is extinguished. If a written call option is exercised, a gain or
loss is realized from the sale of the underlying security and the proceeds of
the sale are increased by the premium originally received. If a written put
option is exercised, the cost of the underlying security purchased would be
decreased by the premium originally received. The Portfolio can write options
only on a covered basis, which, for a call, requires that the portfolio hold the
underlying security and, for a put, requires the Portfolio to set aside cash,
U.S. government securities, or other liquid, high-grade debt securities in an
amount not less than the exercise price or otherwise provide adequate cover at
all times while the put option is outstanding. The Portfolio may use options to
manage its exposure to the bond market and to fluctuations in currency values or
interest rates.
The premium paid by the Portfolio for the purchase of a call or put option is
included in the Portfolio's "Statement of Assets and Liabilities" as an
investment and subsequently "marked-to-market" to reflect the current market
value of the option. If an option which the Portfolio has purchased expires on
the stipulated expiration date, the Portfolio realizes a loss in the amount of
the cost of the option. If the Portfolio enters into a closing sale transaction,
the Portfolio realizes a gain or loss, depending on whether proceeds from the
closing sale transaction are greater or less than the cost of the option. If the
Portfolio exercises a call option, the cost of the securities acquired by
exercising the call is increased by the premium paid to buy the call. If the
Portfolio exercises a put option, it realizes a gain or loss from the sale of
the underlying security, and the proceeds from such sale are decreased by the
premium originally paid.
The risk associated with purchasing options is limited to the premium originally
paid. The risk in writing a call option is that the Portfolio may forego the
opportunity of profit if the market value of the underlying security or index
increases and the option is exercised. The risk in writing a put option is that
the Portfolio may incur a loss if the market value of the underlying security or
index decreases and the option is exercised. In addition, there is the risk the
Portfolio may not be able to enter into a closing transaction because of an
illiquid secondary market.
<PAGE>
(F) Futures Contracts
A futures contract is an agreement between two parties to buy and sell a
security at a set price on a future date. Upon entering into such a contract the
Portfolio is required to pledge to the broker an amount of cash or securities
equal to the minimum "initial margin" requirements of the exchange on which the
contract is traded. Pursuant to the contract, the Portfolio agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as "variation margin"
and are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed. The potential risk to the Portfolio is that the
change in value of the underlying securities may not correlate to the change in
value of the contracts. The Portfolio may use futures contracts to manage its
exposure to the bond market and to fluctuations in currency values or interest
rates.
(G) Security Transactions and Related Investment Income
Security transactions are accounted for on the trade date (date the order to buy
or sell is executed). The cost of securities sold is determined on a first-in,
first-out-basis, unless otherwise specified. Dividends are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Where a high
level of uncertainty exists as to its collection, income is recorded net of all
withholding tax with any rebate recorded when received. The Portfolio may trade
securities on other than normal settlement terms. This may increase the risk if
the other party to the transaction fails to deliver and causes the Portfolio to
subsequently invest at less advantageous prices.
(H) Portfolio Securities Loaned
For international securities, cash collateral is received by the Portfolio
against loaned securities in an amount at least equal to 105% of the market
value of the loaned securities at the inception of each loan. This collateral
must be maintained at not less than 103% of the market value of the loaned
securities during the period of the loan. For domestic securities, cash
collateral is received by the Portfolio against loaned securities in the amount
at least equal to 102% of the market value of the loaned securities at the
inception of each loan, and is maintained at this level during the period of the
loan. At October 31, 1996, there were no securities on loan to brokers.
(I) Taxes
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code of 1986, as amended ("Code"). Therefore, no provision has been made
for Federal taxes on income, capital gains, or unrealized appreciation of
securities held.
(J) Deferred Organizational Expenses
Expenses incurred by the Portfolio in connection with its organization, its
registration with the Securities and Exchange Commission and with various states
and the initial public offering of its shares aggregated $25,000. These expenses
are being amortized on a straightline basis over a five-year period.
(K) Foreign Securities
There are certain additional considerations and risks associated with investing
in foreign securities and currency transactions that are not inherent with
investments of domestic origin. The Portfolio's investment in emerging market
countries may involve greater risks than investments in more developed markets
and the price of such investments may be volatile. These risks of investing in
foreign and emerging markets may include foreign currency exchange rate
fluctuations, perceived credit risk, adverse political and economic developments
and possible adverse foreign government intervention.
<PAGE>
(L) Indexed Securities
The Portfolio may invest in indexed securities whose value is linked either
directly or indirectly to changes in foreign currencies, interest rates,
equities, indices, or other reference instruments. Indexed securities may be
more volatile than the reference instrument itself, but any loss is limited to
the amount of the original investment.
(M) Restricted Securities
The Portfolio is permitted to invest in privately placed restricted securities.
These securities may be resold in transactions exempt from registration or to
the public if the securities are registered. Disposal of these securities may
involve time-consuming negotiations and expense, and prompt sale at an
acceptable price may be difficult.
(N) Line of Credit
For the year ended October 31, 1996, the Global High Income Portfolio
periodically borrowed amounts from a bank at a base or Eurodollar rate. The
arrangement with the bank allows the Portfolio to borrow a maximum amount of
$25,000,000. On February 28 & 29, 1996, the Portfolio borrowed $24,000,000, all
of which was repaid on April 18, 1996.
For the year ended October 31, 1996, the weighted average outstanding daily
balance of bank loans (based on the number of days the loans were outstanding)
was $17,800,000 with a weighted average interest rate of 6.63%.
Interest expense for the year ended October 31, 1996, was $163,819.
(O) Securities Purchased on a When-Issued or Forward Commitment Basis
The Portfolio may trade securities on a when-issued or forward commitment basis,
with payment and delivery scheduled for a future date. These transactions are
subject to market fluctuations and are subject to the risk that the value at
delivery may be more or less than the trade date purchase price. Although the
Portfolio will generally purchaes these securities with the intention of
acquiring such securities, they may sell such securities before the settlement
date. These securities are identified on the accompanying Portfolio of
Invesetments. The Portfolio has set aside sufficient cash or liquid high grade
debt securities as collateral for these purchase commitments.
2. Related Parties
Chancellor LGT Asset Management, Inc. is the Portfolio's investment manager and
administrator. On October 31, 1996, Chancellor Capital Management, Inc. merged
with LGT Asset Management, Inc. and the surviving entity was renamed Chancellor
LGT Asset Management, Inc. The Portfolio pays investment management and
administration fees to the Manager at the annualized rate of 0.475% on the first
$500 million of average daily net assets of the Portfolio; 0.45% on the next $1
billion; 0.425% on the next $1 billion; and 0.40% on amounts thereafter, plus 2%
of the Portfolio's total investment income calculated in accordance with
generally accepted accounting principles, adjusted daily for currency
revaluations, on a mark to market basis, of the Portfolio's assets; provided,
however, that during any fiscal year this amount shall not exceed 2% of the
Portfolio's total investment income calculated in accordance with generally
accepted accounting principles. These fees are computed daily and paid monthly.
The Portfolio pays each of its Trustees who is not an employee, officer or
director of the Manager, G.T. Global Financial Services, Inc., or G.T. Global
Investor Services, Inc. $500 per year plus $150 for each meeting of the board or
any committee thereof attended by the Trustees.
At October 31, 1996, all of the shares of beneficial interest of the Portfolio
were owned either by GT Global High Income Fund or the Manager.
<PAGE>
3. Purchases and Sales of Securities
For the year ended October 31, 1996, purchases and sales of investment
securities by the Portfolio, other than U.S. government obligations and
short-term investments, aggregated $983,932,679 and $1,020,907,620,
respectively. Purchases and sales of U.S. government obligations by the
Portfolio aggregated $96,288,547 and $84,315,986, respectively.
4. Written Options:
The Portfolio's written options contract activity for the year ended October 31,
1996 was as follows:
Covered Call and Put Options Written
Underlying
Nominal
Amount Premiums
---------- --------
Options outstanding at October 31, 1995 0 $ 0
Options written 7,000,000 101,500
Options cancelled in closing purchase transactions 0 0
Options expired prior to exercise (7,000,000) (101,500)
Options exercised 0 0
---------- ---------
Options outstanding at October 31, 1996 0 $ 0
---------- ----------
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
- - -------- ----------------------------------
(a) Financial Statements: Audited financial statements for the
Portfolio for the fiscal year ended October 31, 1996 and the report of Coopers &
Lybrand L.L.P., independent auditors, with respect to such audited financial
statements are included in Part B to this Registration Statement.
(b) Exhibits
1. Declaration of Trust of the Registrant - Filed
herewith.
2. By-Laws of the Registrant - Filed herewith.
5. Investment Management and Administration Contract
between the Registrant and Chancellor LGT Asset
Management, Inc. - Filed herewith.
8. Form of Custodian Agreement between the Registrant and
State Street Bank and Trust Company - Filed herewith.
11. Consent of Coopers & Lybrand L.L.P., Independent
Accountants - Filed herewith.
13. Investment representation letters of initial investors
- Filed herewith.
27. Financial Data Schedule - Filed herewith.
Item 25. Persons Controlled by or under Common Control with Registrant.
- - -------- --------------------------------------------------------------
Not applicable.
Item 26. Number of Holders of Securities.
- - -------- --------------------------------
(1) (2)
Title of Class Number of Record Holders
Beneficial Interests 2 (as of February 27, 1997)
Item 27. Indemnification.
- - -------- ----------------
Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed as Exhibit 1 to this Registration Statement.
The Trustees and officers of the Registrant are insured under an errors
and omissions liability insurance policy and the Registrant is insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser.
- - -------- -----------------------------------------------------
Information as to any other business, profession, vocation or
employment of a substantial nature in which each director or officer of
Chancellor LGT Asset Management is, or at any time during the past two years has
been, engaged for his or her own account or in the capacity of director,
officer, employee, partner or trustee is incorporated herein by reference from
the section entitled
C-10
<PAGE>
"Management" in the Feeder's Part A and the sections entitled "Directors,
Trustees and Executive Officers" and "Management" in the Feeder's Part B.
Information as to the directors and officers of Chancellor LGT Asset
Management, Inc., Registrant's investment manager, is included in such manager's
Form ADV (File No. 801-10254), filed with the Commission, which is incorporated
herein by reference thereto.
Item 29. Principal Underwriters.
- - -------- -----------------------
Not applicable.
Item 30. Location of Accounts and Records.
- - -------- ---------------------------------
Accounts, books and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, are maintained and held in
the offices of the Registrant and its investment manager, Chancellor LGT Asset
Management, Inc., 50 California Street, 27th Floor, San Francisco, California
94111.
Records covering shareholder accounts and portfolio transactions are
also maintained and kept by the Registrant's Custodian, State Street Bank and
Trust Company, 225 Franklin Street, Boston, Massachusetts 02110.
Item 31. Management Services.
- - -------- --------------------
Other than as set forth in Parts A and B of this Registration
Statement, the Registrant is not a party to any management-related service
contract.
Item 32. Undertakings.
- - -------- -------------
None.
C-11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Global High Income Portfolio has duly caused this Amendment to its Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of San Francisco, and the State of California, on
the 26th day of February, 1997.
GLOBAL HIGH INCOME PORTFOLIO
By: /s/ David J. Thelander
----------------------
David J. Thelander
Assistant Secretary
<PAGE>
INDEX OF EXHIBITS
Exhibit No. Description of Exhibit
1. Declaration of Trust of the Registrant - Filed herewith.
2. By-Laws of the Registrant - Filed herewith.
5. Investment Management and Administration Contract between the
Registrant and Chancellor LGT Asset Management, Inc. - Filed
herewith.
8. Form of Custodian Agreement between the Registrant and State Street
Bank and Trust Company - Filed herewith.
11. Consent of Coopers & Lybrand, Independent Accountants - Filed
herewith.
13. Investment representation letters of initial investors - Filed
herewith.
27. Financial Data Schedule - Filed herewith.
C-13
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FUND'S ANNUAL FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000893580
<NAME> GLOBAL HIGH INCOME PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 399436
<INVESTMENTS-AT-VALUE> 440270
<RECEIVABLES> 27854
<ASSETS-OTHER> 368
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 468492
<PAYABLE-FOR-SECURITIES> 21062
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 359
<TOTAL-LIABILITIES> 21421
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 275464
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 120732
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 9861
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 41014
<NET-ASSETS> 447071
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 45540
<OTHER-INCOME> 0
<EXPENSES-NET> (3390)
<NET-INVESTMENT-INCOME> 42150
<REALIZED-GAINS-CURRENT> 62517
<APPREC-INCREASE-CURRENT> 31905
<NET-CHANGE-FROM-OPS> 136572
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 302410
<NUMBER-OF-SHARES-REDEEMED> (350592)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 88391
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 3015
<INTEREST-EXPENSE> 164
<GROSS-EXPENSE> 3390
<AVERAGE-NET-ASSETS> 425692
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> .83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
GLOBAL HIGH INCOME PORTFOLIO
DECLARATION OF TRUST
Dated as of April 27, 1992
and
As amended October 20, 1992
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I The Trust 1
Section 1.1 Name 1
Section 1.2 Definitions 1
ARTICLE II Trustees 3
Section 2.1 Number and Qualification
Section 2.2 Term and Election 3
Section 2.3 Resignation, Removal and Retirement 4
Section 2.4 Vacancies 4
Section 2.5 Meetings 4
Section 2.6 Officers; Chairman of the Board 5
Section 2.7 By-Laws 5
ARTICLE III Powers of Trustees 5
Section 3.1 General 5
Section 3.2 Investments 6
Section 3.3 Legal Title 6
Section 3.4 Sale and Increases of Interests 7
Section 3.5 Decreases and Redemptions of Interests 7
Section 3.6 Borrow Money 7
Section 3.7 Delegation; Committees 7
Section 3.8 Collection and Payment 7
Section 3.9 Expenses 7
Section 3.10 Miscellaneous Powers 8
Section 3.11 Further Powers 8
ARTICLE IV Investment Management and Administration
and Placement Agent Arrangements 8
Section 4.1 Investment Management and Other Arrangements 8
Section 4.2 Parties to Contract 9
i
<PAGE>
Page
----
ARTICLE V Liability of Holders; Limitations of Liability
of Trustees, Officers, etc. 9
Section 5.1 Liability of Holders; Indemnification 9
Section 5.2 Limitations of Liability of Trustees, Officers,
Employees, Agents, Independent contractors to
Third Parties 9
Section 5.3 Limitations of Liability of Trustees, Officers,
Employees Agents, Independent Contractors to
Trust, Holder, etc. 9
Section 5.4 Mandatory Indemnification 9
Section 5.5 No Bond Required of Trustees 11
Section 5.6 No Duty of Investigation; Notice in Trust
Instruments, etc.
Section 5.7 Reliance on Experts, etc. 11
ARTICLE VI Interests 11
Section 6.1 Interests 11
Section 6.2 Non-Transferability 12
Section 6.3 Register of Interests 12
ARTICLE VII Increases, Decreases and Redemptions of Interests 12
ARTICLE VIII Determination of Book Capital Account Balances,
and Distributions 12
Section 8.1 Book Capital Account Balances 12
Section 8.2 Allocations and Distributions to Holders 13
Section 8.3 Power ti Modify Foregoing Procedure 13
ARTICLE IX Holders 13
Section 9.1 Rights of Holder 13
Section 9.2 Meeting of Holders 13
Section 9.3 Notice of Meetings 14
Section 9.4 Record Date for Meetings, Distributions, etc. 14
Section 9.5 Proxies, etc. 14
Section 9.6 Reports 14
Section 9.7 Inspection of Records 15
Section 9.8 Holder Action by Written Consent 15
Section 9.9 Notices 15
ii
<PAGE>
Page
----
ARTICLE X Duration; Termination; Amendment; Mergers; etc. 15
Section 10.1 Duration i 15
Section 10.2 Termination 16
Section 10.3 Dissolution
Section 10.4 Amendment Procedure 17
Section 10.5 Merger, Consolidation and Sale of Assets 18
Section 10.6 Incorporation 18
ARTICLE XI Miscellaneous 18
Section 11.1 Certificate of Designation; Agent for Service of
Process 18
Section 11.2 Governing Law 19
Section 11.3 Counterparts
Section 11.4 Reliance by Third Parties 19
Section 11.5 Provisions in Conflict With Law or Regulations 19
iii
<PAGE>
DECLARATION OF TRUST
OF
GLOBAL HIGH INCOME PORTFOLIO
This DECLARATION OF TRUST of the Global High Income Portfolio hereby is
made as of the 27th day of April, 1992, by the parties signatory hereto, as
Trustees (as defined in Section 1.2 hereof), hereby is amended solely to change
the name of the trust created hereby as of the ____ day of October, 1992.
WITNESSETH:
-----------
WHEREAS, the Trustees desire to form a trust fund under the law of the
State of New York for the investment and reinvestment of its assets; and
WHEREAS, it is proposed that the trust assets be composed of money and
property contributed thereto by the holders of interests in the trust entitled
to ownership rights in the trust;
NOW, THEREFORE, the Trustees hereby declare that they will hold in
trust all money and property contributed to the trust fund and will manage and
dispose of the same for the benefit of the holders of interests in the Trust and
subject to the provisions hereof, to wit:
ARTICLE I
The Trust
---------
1.1. NAME. The name of the trust fund established hereby (the"Trust")
shall be the Global High Income Portfolio and so far as may be practicable the
Trustees shall conduct the Trust's activities, execute all documents and sue or
be sued under that name, which name (and the word "Trust" wherever hereinafter
used) shall refer to the Trustees as Trustees, and not individually, and shall
not refer to the officers, employees, agents or independent contractors of the
Trust or holders of interests in the Trust/.
1.2. DEFINITIONS. As used in this Declaration, the following terms shall
have the following meanings:
The term "Interested Person" shall have the meaning given it in the
1940 Act.
1
<PAGE>
"BOOK CAPITAL ACCOUNT" shall mean, for any Holder at any time, the Book
Capital Account of the Holder for such day, determined in accordance with
Section 8.1 hereof.
"CODE" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time, as well as any non-superseded provisions of the
Internal Revenue Code of 1954, as amended (or any corresponding provision or
provisions of succeeding law).
"COMMISSION" shall mean the United States Securities and Exchange
Commission.
"DECLARATION" shall mean this Declaration of Trust as amended from time
to time. References in this Declaration to "DECLARATION," "HEREOF," "HEREIN" and
"HEREUNDER" shall be deemed to refer to this Declaration rather than the article
or section in which any such word appears.
"FISCAL YEAR" shall mean an annual period determined by the Trustees
which ends on December 31 of each year or on such other day as is permitted or
required by the Code.
"HOLDER" shall mean as of any particular time all holders of record of
Interests in the Trust.
"INSTITUTIONAL LNVESTOR(S)" shall mean any regulated investment company,
segregated asset account, foreign investment company, common trust fund, group
trust or other investment arrangement, whether organized within or without the
United States of America, other than an individual, S corporation, partnership
or grantor trust beneficially owned by any individual, S corporation or
partnership.
"INTEREST(S)" shall mean the beneficial interest of a Holder in the
Trust, including all rights, powers and privileges accorded to Holders by this
Declaration, which interest may be expressed as a percentage, determined by
calculating, at such times and on such basis as the Trustees shall from time to
time determine, the ratio of each Holder's Book Capital Account balance to the
total of all Holders' Book Capital Account balances. Reference herein to a
specified percentage of, or fraction of, Interests, means Holders whose combined
Book Capital Account balances represent such specified percentage or fraction of
the combined Book Capital Account balances of all, or a specified group of,
Holders.
"INVESTMENT MANAGER AND ADMINISTRATOR" shall mean any party furnishing
services to the Trust pursuant to any investment management or administration
contract described in Section 4.1 hereof.
"MAJORITY INTERESTS VOTE" shall mean the vote, at a meeting of Holders,
of (A) 67% or more of the Interests present or represented at such meeting, if
Holders of more than 50% of all Interests are present or represented by proxy,
or (B) more than 50% of all Interests, whichever is less.
2
<PAGE>
"PERSON" shall mean and include individuals, corporations, partnerships,
trusts, associations, joint ventures and other entities, whether or not legal
entities, and governments and agencies and political subdivisions thereof.
"REDEMPTION" shall mean the complete withdrawal of an Interest of a
Holder the result of which is to reduce the Book Capital Account balance of that
Holder to zero, and the term "REDEEM" shall mean to effect a Redemption.
"TRUSTEES" shall mean each signatory to this Declaration, so long as such
signatory shall continue in office in accordance with the terms hereof, and all
other individuals who at the time in question have been duly elected or
appointed and have qualified as Trustees in accordance with the provisions
hereof and are then in office, and reference in this Declaration to a Trustee or
Trustees shall refer to such individual or individuals in their capacity as
Trustees hereunder.
"TRUST PROPERTY" shall mean as of any particular time any and all
property, real or personal, tangible or intangible, which at such time is owned
or held by or for the account of the Trust or the Trustees.
The "1940 ACT" shall mean the United States Investment Company Act of
1940, as amended from time to time, and the rules and regulations thereunder.
ARTICLE II
Trustees
--------
2.1. NUMBER AND QUALIFICATION. The number of Trustees shall be fixed from
time to time by action of the Trustees taken as provided in Section 2.5 hereof;
provided, however, that the number of Trustees so fixed shall in no event be
less than three or more than 15. Any vacancy created by an increase in the
number of Trustees may be filled by the appointment of an individual having the
qualifications described in this Section 2.1 made by action of the Trustees
taken as provided in Section 2.5 hereof. Any such appointment shall not become
effective, however, until the individual named in the written instrument of
appointment shall have accepted in writing such appointment and agreed in
writing to be bound by the terms of this Declaration. No reduction in the number
of Trustees shall have the effect of removing any Trustee from office. Whenever
a vacancy occurs, until such vacancy is filled as provided in Section 2.4
hereof, the Trustees continuing in office, regardless of their number, shall
have all the powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Declaration. A Trustee shall be an individual
at least 21 years of age who is not under legal disability.
2.2. TERM AND ELECTION. Each Trustee named herein, or elected or
appointed prior to the first meeting of Holders, shall (except in the event of
resignations, retirements, removals or vacancies pursuant to Section 2.3 or
Section 2.4 hereof) hold office until a successor to such Trustee has been
elected at such meeting and has qualified to serve as Trustee, as required under
3
<PAGE>
the 1940 Act. Subject to the provisions of Section 16(a) of the 1940 Act and
except as provided in Section 2.3 hereof, each Trustee shall hold office during
the lifetime of the Trust and until its termination as hereinafter provided.
2.3. RESIGNATION, REMOVAL AND RETIREMENT. Any Trustee may resign his or
her trust (without need for prior or subsequent accounting) by an instrument in
writing executed by such Trustee and delivered or mailed to the Chairman, if
any, the President or the Secretary of the Trust and such resignation shall be
effective upon such delivery, or at a later date according to the terms of the
instrument. Any Trustee may be removed by the affirmative vote of Holders of
two-thirds of the Interests or (provided the aggregate number of Trustees, after
such removal and after giving effect to any appointment made to fill the vacancy
created by such removal, shall not be less than the number required by Section
2.1 hereof), with cause, by the action of two-thirds of the remaining Trustees.
Removal with cause includes, but is not limited to, the removal of a Trustee due
to physical or mental incapacity or failure to comply with such written policies
as from time to time may be adopted by at least two-thirds of the Trustees with
respect to the conduct of the Trustees and attendance at meetings. Any Trustee
who has attained a mandatory retirement age, if any, established pursuant to any
written policy adopted from time to time by at least two-thirds of the Trustees
shall, automatically and without action by such Trustee or the remaining
Trustees, be deemed to have retired in accordance with the terms of such policy,
effective as of the date determined in accordance with such policy. Any Trustee
who has become incapacitated by illness or injury as determined by a majority of
the other Trustees, may be retired by written instrument executed by a majority
of the other Trustees, specifying the date of such Trustee's retirement. Upon
the resignation, retirement or removal of a Trustee, or a Trustee otherwise
ceasing to be a Trustee, such resigning, retired, removed or former Trustee
shall execute and deliver such documents as the remaining Trustees shall require
for the purpose of conveying to the Trust or the remaining Trustees any Trust
Property held in the name of such resigning, retired, removed or former Trustee.
Upon the death of any Trustee or upon removal, retirement or resignation due to
any Trustee's incapacity to serve as Trustee, the legal representative of such
deceased, removed, retired or resigning Trustee shall execute and deliver on
behalf of such deceased, removed, retired or resigning Trustee such documents as
the remaining Trustees shall require for the purpose set forth in the preceding
sentence.
2.4. VACANCIES. The term of office of a Trustee shall terminate and a
vacancy shall occur in the event of the death, resignation, retirement,
adjudicated incompetence or other incapacity to perform the duties of the
office, or removal of a Trustee. No such vacancy shall operate to annul this
Declaration or to revoke any existing agency created pursuant to the terms of
this Declaration. In the case of a vacancy, Holders of at least a majority of
the Interests entitled to vote, acting at any meeting of Holders held in
accordance with Section 9.2 hereof, or, to the extent permitted by the 1940 Act,
a majority vote of the Trustees continuing in office acting by written
instrument or instruments, may fill such vacancy, and any Trustee so elected by
the Trustees or the Holders shall hold office as provided in this Declaration.
2.5. MEETINGS. Meetings of the Trustees shall be held from time to time
upon the call of the Chairman, if any, the President, the Secretary, an
4
<PAGE>
Assistant Secretary or any two Trustees. Regular meetings of the Trustees may be
held without call or notice at a time and place fixed by the By-Laws or by
resolution of the Trustees. Notice of any other meeting shall be mailed or
otherwise given not less than 24 hours before the meeting but may be waived in
writing by any Trustee either before or after such meeting. The attendance of a
Trustee at a meeting shall constitute a waiver of notice of such meeting except
in the situation in which a Trustee attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting was
not lawfully called or convened. The Trustees may act with or without a meeting.
A quorum for all meetings of the Trustees shall be a majority of the Trustees.
Unless provided otherwise in this Declaration, any action of the Trustees may be
taken at a meeting by vote of a majority of the Trustees present (a quorum being
present) or without a meeting by written consent of a majority of the Trustees.
Any committee of the Trustees, including an executive committee, if any,
may act with or without a meeting. A quorum for all meetings of any such
committee shall be a majority of the members thereof. Unless provided otherwise
in this Declaration, any action of any such committee may be taken at a meeting
by vote of a majority of the members present (a quorum being present) or without
a meeting by written consent of a majority of the members.
With respect to actions of the Trustees and any committee of the
Trustees, Trustees who are Interested Persons of the Trust or otherwise
interested in any action to be taken may be counted for quorum purposes under
this Section 2.5 and shall be entitled to vote to the extent permitted by the
1940 Act.
All or any one or more Trustees may participate in a meeting of the
Trustees or any committee thereof by means of a conference telephone or similar
communications equipment by means of which all individuals participating in the
meeting can hear each other and participation in a meeting by means of such
communications equipment shall constitute presence in person at such meeting.
2.6. OFFICERS: CHAIRMAN OF THE BOARD. The Trustees shall, from time to
time, elect a President, a Secretary and a Treasurer. The Trustees may elect or
appoint, from time to time, a Chairman of the Board who shall preside at all
meetings of the Trustees and carry out such other duties as the Trustees may
designate. The Trustees may elect or appoint or authorize the President to
appoint such other officers, agents or independent contractors with such powers
as the Trustees may deem to be advisable. The Chairman, if any, shall be and
each other officer may, but need not, be a Trustee.
2.7. BY-LAWS. The Trustees may adopt and, from time to time, amend or
repeal By-Laws for the conduct of the business of the Trust.
ARTICLE III
Powers Of Trustees
------------------
5
<PAGE>
3.1. GENERAL. The Trustees shall have exclusive and absolute control over
the Trust Property and over the business of the Trust to the same extent as if
the Trustees were the sole owners of the Trust Property and such business in
their own right, but with such powers of delegation as may be permitted by this
Declaration. The Trustees may perform such acts as in their sole discretion they
deem proper for conducting the business of the Trust. The enumeration of or
failure to mention any specific power herein shall not be construed as limiting
such exclusive and absolute control. The powers of the Trustees may be exercised
without order of or resort to any court.
3.2. INVESTMENTS. The Trustees shall have power to
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, assign, transfer, exchange, distribute or otherwise
deal in or dispose of United States and foreign currencies and related
instruments, including forward contracts, and securities, including common and
preferred stock, warrants, bonds, debentures, time notes and all other evidences
of indebtedness, negotiable or non-negotiable instruments, obligations,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, convertible securities, forward
contracts, options, futures contracts, and other securities, including, without
limitation, those issued, guaranteed or sponsored by any state, territory or
possession of the United States and the District of Columbia and their political
subdivisions, agencies and instrumentalities, or by the U.S. Government, any
foreign government, or any agency, instrumentality or political subdivision of
the United States Government or any foreign government, or any international
instrumentality, or by any bank, savings institution, corporation or other
business entity organized under the laws of the United States or under any
foreign laws; and to exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such investments of any kind and
description, including, without limitation, the right to consent and otherwise
act with respect thereto, with power to designate one or more Persons to
exercise any of such rights, powers and privileges with respect to any of such
investments; and the Trustees shall be deemed to have the foregoing powers with
respect to any additional instruments in which the Trustees may determine to
invest.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
3.3. TITLE. Legal title to all Trust Property shall be vested in the
Trustees as joint tenants except that the Trustees shall have the power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust, or in the name or nominee name of any
other Person on behalf of the Trust, on such terms as the Trustees may
determine.
6
<PAGE>
The right, title and interest of the Trustees in the Trust Property shall
vest automatically in each individual who may hereafter become a Trustee upon
his due election and qualification. Upon the resignation, removal or death of a
Trustee, such resigning, removed or deceased Trustee shall automatically cease
to have any right, title or interest in any Trust Property, and the right, title
and interest of such resigning, removed or deceased Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
3.4. SALE AND INCREASES OF INTERESTS. The Trustees, in their discretion,
may, from time to time, without a vote of the Holders, permit any Institutional
Investor to purchase an Interest, or increase its Interest, for such type of
consideration, including cash or property, at such time or times (including,
without limitation, each business day), and on such terms as the Trustees may
deem best, and may in such manner acquire other assets (including the
acquisition of assets subject to, and in connection with the assumption of,
liabilities) and businesses. Individuals, S corporations, partnerships and
grantor trusts that are beneficially owned by any individual, S corporation or
partnership may not purchase Interests. A Holder which has redeemed its Interest
may not be permitted to purchase an Interest until the later of 60 calendar days
after the date of such Redemption or the first day of the Fiscal Year next
succeeding the Fiscal Year during which such Redemption occurred.
3.5. DECREASES AND REDEMPTIONS OF INTEREST. Subject to Article VII
hereof, the Trustees, in their discretion, may, from time to time, without a
vote of the Holders, permit a Holder to redeem its Interest, or decrease its
Interest, for either cash or property, at such time or times (including, without
limitation, each business day), and on such terms as the Trustees may deem best.
3.6. BORROW MONEY. The Trustees shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Trust, including the lending
of portfolio securities, and to endorse, guarantee, or undertake the performance
of any obligation, contract or engagement of any other Person.
3.7. DELEGATION; COMMITTEES. The Trustees shall have power, consistent
with their continuing exclusive and absolute control over the Trust Property and
over the business of the Trust, to delegate from time to time to such of their
number or to officers, employees, agents or independent contractors of the Trust
the doing of such things and the execution of such instruments in either the
name of the Trust or the names of the Trustees or otherwise as the Trustees may
deem expedient.
3.8. COLLECTION AND PAYMENT. The Trustees shall have power to collect all
property due to the Trust; and to pay all claims, including taxes, against the
Trust Property; to prosecute, defend, compromise or abandon any claims relating
to the Trust or the Trust Property; to foreclose any security interest securing
any obligation, by virtue of which any property is owed to the Trust; and to
enter into releases, agreements and other instruments.
3.9. EXPENSES. The Trustees shall have power to incur and pay any
expenses, which in the opinion of the Trustees are necessary or incidental to
carry out any of the purposes of this Declaration, and to pay reasonable
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compensation from the Trust Property to themselves as Trustees. The Trustees
shall fix the compensation of all officers, employees and Trustees The Trustees
may pay themselves such compensation for special services, including legal and
brokerage services, as they in good faith may deem reasonable, and reimbursement
for expenses reasonably incurred by themselves on behalf of the Trust.
3.10. MISCELLANEOUS POWERS. The Trustees shall have power to (a) employ
or contract with such Persons as the Trustees may deem appropriate for the
transaction of the business of the Trust and terminate such employees or
contractual relationships as they consider appropriate; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) purchase,
and pay for out of Trust Property, insurance policies insuring the Investment
Manager and Administrator, placement agent, Holders, Trustees, officers,
employees, agents or independent contractors of the Trust against all claims
arising by reason of holding any such position or by reason of any action taken
or omitted by any such Person in such capacity, whether or not the Trust would
have the power to indemnify such Person against such liability; (d) establish
pension, profit-sharing and other retirement, incentive and benefit plans for
the Trustees, officers, employees or agents of the Trust; (e) make donations,
irrespective of benefit to the Trust, for charitable, religious, educational,
scientific, civic or similar purposes; (f) to the extent permitted by law,
indemnify any Person with whom the Trust has dealings, including the Investment
Manager and Administrator, placement agent, Holders, Trustees, officers,
employees, agents or independent contractors of the Trust, to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual obligations
of others; (h) determine and change the Fiscal Year of the Trust and the method
by which its accounts shall be kept; and (i) adopt a seal for the Trust, but the
absence of such a seal shall not impair the validity of any instrument executed
on behalf of the Trust.
3.11. FURTHER POWERS. The Trustees shall have power to conduct the
business of the Trust and carry on its operations in any and all of its branches
and maintain offices, whether within or without the State of New York, in any
and all states of the United States of America, in the District of Columbia, and
in any and all commonwealths, territories, dependencies, colonies, possessions,
agencies or instrumentalities of the United States of America and of foreign
governments, and to do all such other things and execute all such instruments as
they deem necessary, proper, appropriate or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust which
is made by the Trustees in good faith shall be conclusive. In construing the
provisions of this Declaration, the presumption shall be in favor of a grant of
power to the Trustees. The Trustees shall not be required to obtain any court
order in order to deal with Trust Property.
ARTICLE IV
Investment Advisory and Administration
and Placement Agent Arrangements
--------------------------------
4.1. INVESTMENT ADVISORY AND OTHER ARRANGEMENTS. The Trustees may in
their discretion, from time to time, enter into investment management and
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administration contracts or placement agent agreements whereby the other party
to such contract or agreement shall undertake to furnish the Trustees such
investment management and administration, placement agent and/or other services
as the Trustees shall, from time to time, consider appropriate or desirable and
all upon such terms and conditions as the Trustees may in their sole discretion
determine. Notwithstanding any provision of this Declaration, the Trustees may
authorize any Investment Manager and Administrator (subject to such general or
specific instructions as the Trustees may, from time to time adopt) to effect
purchases, sales, loans or exchanges of Trust Property on behalf the Trustees or
may authorize any officer, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of any such Investment Manager
and Administrator (all without any further action by the Trustees). Any such
purchase, sale, loan or exchange shall be deemed to have been authorized by the
Trustees.
4.2. PARTIES TO CONTRACT. Any contract of the character described in
Section 4.1 hereof or in the By-Laws of the Trust may be entered into with any
corporation, firm, trust or association, although one or more of the Trustees or
officers of the Trust may be an officer, director, Trustee, shareholder or
member of such other party to the contract, and no such contract shall be
invalidated or rendered voidable by reason of the existence of any such
relationship, nor shall any individual holding such relationship be liable
merely by reason of such relationship for any loss or expense to the Trust under
or by reason of any such contract or accountable for any profit realized
directly or indirectly therefrom, provided that the contract when entered into
was reasonable and fair and not inconsistent with the provisions of this Article
IV or the By-Laws of the Trust. The same Person may be the other party to one or
more contracts entered into pursuant to Section 4.1 hereof or the By-Laws of the
Trust, and any individual may be financially interested or otherwise affiliated
with Persons who are parties to any or all of the contracts mentioned in this
Section 4.2 or in the By-Laws of the Trust.
ARTICLE V
Liability of Holders; Limitations of
Liability of Trustees, Officers, etc.
-------------------------------------
5.1. LIABILITY OF HOLDERS, INDEMNIFICATION. Each Holder shall be jointly
and severally liable (with rights of contribution inter se in proportion to
their respective Interests in the Trust) for the liabilities and obligations of
the Trust in the event that the Trust fails to satisfy such liabilities and
obligations; provided, however, that, to the extent assets are available in the
Trust, the Trust shall indemnity and hold each Holder harmless from and against
any claim or liability to which such Holder may become subject by reason of
being or having been a Holder to the extent that such claim or liability imposes
on the Holder obligation or liability which, when compared to the obligations
and liabilities imposed on other Holders, is greater than such Holder's Interest
(proportionate share), and shall reimburse such Holder for all legal and other
expenses reasonably incurred by such Holder in connection with any such claim or
liability. The rights accruing to a Holder under this Section 5.1 shall not
exclude any other right to which such Holder may be lawfully entitled, nor shall
anything contained herein restrict the right of the Trust to indemnify or
reimburse a Holder in any appropriate situation even though not specifically
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provided herein. Notwithstanding the indemnification procedure described above,
it is intended that each Holder shall remain jointly and severally liable to the
Trust's creditors as a legal matter.
5.2. LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES, AGENTS.,
INDEPENDENT CONTRACTORS TO THIRD PARTIES. No Trustee, officer, employee, agent
or independent contractor (except in the case of an agent or independent
contractor to the extent expressly provided by written contract) of the Trust
shall be subject to any personal liability whatsoever to any Person, other than
the Trust or the Holders, in connection with Trust Property or the affairs of
the Trust; and all such Persons shall look solely to the Trust Property for
satisfaction of claims of any nature against a Trustee, officer, employee, agent
or independent contractor (except in the case of an agent or independent
contractor to the extent expressly provided by written contract) of the Trust
arising in connection with the affairs of the Trust.
5.3. LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS, AGENTS, INDEPENDENT
CONTRACTORS TO TRUST HOLDERS, ETC. No Trustee, officer, employee, agent or
independent contractor (except in the case of an agent or independent contractor
to the extent expressly provided by written contract) of the Trust shall be
liable to the Trust or the Holders for any action or failure to act (including,
without limitation, the failure to compel in any way any former or acting
Trustee to redress any breach of trust) except for such Person's own bad faith,
willful misfeasance, gross negligence or reckless disregard of such Person's
duties.
5.4. MANDATORY INDEMNIFICATION. The Trust shall indemnify, to the fullest
extent permitted by law (including the 1940 Act), each Trustee, officer,
employee, agent or independent contractor (except in the case of an agent or
independent contractor to the extent expressly provided by written contract) of
the Trust (including any Person who serves at the Trust's request as a director,
officer or trustee of another organization in which the Trust has any interest
as a shareholder, creditor or otherwise) against all liabilities and expenses
(including amounts paid in satisfaction of judgments, in compromise, as fines
and penalties, and as counsel fees) reasonably incurred by such Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which such Person may be involved or
with which such Person may be threatened, while in office or thereafter, by
reason of such Person being or having been such a Trustee, officer, employee,
agent or independent contractor, except with respect to any matter as to which
such Person shall have been adjudicated to have acted in bad faith, willful
misfeasance, gross negligence or reckless disregard of such Person's duties;
provided, however, that as to any matter disposed of by a compromise payment by
such Person, pursuant to a consent decree or otherwise, no indemnification
either for such payment or for any other expenses shall be provided unless there
has been a determination that such Person did not engage in willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Person's office by the court or other body approving the
settlement or other disposition or by a reasonable determination, based upon a
review of readily available facts (as opposed to a full trial-type inquiry),
that such Person did not engage in such conduct by written opinion from
independent legal counsel approved by the Trustees. The rights accruing to any
Person under these provisions shall not exclude any other right to which such
Person may be lawfully entitled; provided that no Person may satisfy any right
of indemnity or reimbursement granted in this Section 5.4 or In Section 5.2
hereof or to which such Person may be otherwise entitled except out of the Trust
Property. The Trustees may make advance payments in connection with
indemnification under this Section 5.4, provided that the indemnified Person
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shall have given a written undertaking to reimburse the Trust in the event it is
subsequently determined that such Person is not entitled to such
indemnification.
5.5. NO BOND REQUIRED OF TRUSTEES No Trustee shall, as such, be obligated
to give any bond or surety or other security for the performance of any of such
Trustee's duties hereunder.
5.6. NO DUTY OF LNVESTIGATION; NOTICE IN TRUST INSTRUMENTS., ETC., No
purchaser, lender or other Person dealing with any Trustee, officer, employee,
agent or independent contractor of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by such
Trustee, officer, employee, agent or independent contractor or be liable for the
application of money or property paid, loaned or delivered to or on the order of
such Trustee, officer, employee, agent or independent contractor. Every
obligation, contract, instrument, certificate or other interest or undertaking
of the Trust, and every other act or thing whatsoever executed in connection
with the Trust shall be conclusively taken to have been executed or done by the
executors thereof only in their capacity as Trustees, officers, employees,
agents or independent contractors of the Trust. Every written obligation,
contract, instrument, certificate or other interest or undertaking of the Trust
made or sold by any Trustee, officer, employee, agent or independent contractor
of the Trust, in such capacity, shall contain an appropriate recital to the
effect that the Trustee, officer, employee, agent or independent contractor of
the Trust shall not personally be bound by or liable thereunder, nor shall
resort be had to their private property for the satisfaction of any obligation
or claim thereunder, and appropriate references shall be made therein to the
Declaration, and may contain any further recital which they may deem
appropriate, but the omission of such recital shall not operate to impose
personal liability on any Trustee, officer, employee, agent or independent
contractor of the Trust. Subject to the provisions of the 1940 Act, the Trust
may maintain insurance for the protection of the Trust Property, the Holders,
and the Trustees, officers, employees, agents and independent contractors of the
Trust in such amount as the Trustees shall deem adequate to cover possible tort
liability, and such other insurance as the Trustees in their sole judgment shall
deem advisable.
5.7. RELIANCE ON EXPERTS. Each Trustee, officer, employee, agent or
independent contractor of 'the Trust shall, in the performance of such Person's
duties, be fully and completely justified and protected with regard to any act
or any failure to act resulting from reliance in good faith upon the books of
account or other records of the Trust (whether or not the Trust would have the
power to indemnify such Persons against such liability), upon an opinion of
counsel, or upon reports made to the Trust by any of its officers or employees
or by any Investment Manager and Administrator, accountant, appraiser or other
experts or consultants selected with reasonable care by the Trustees, officers
or employees of the Trust, regardless of whether such counsel or expert may also
be a Trustee.
ARTICLE VI
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Interests
---------
6.1. INTERESTS. The beneficial interest in the Trust Property shall
consist of non-transferable Interests. The Interests shall be personal property
giving only the rights in this Declaration specifically set forth. The value of
an Interest shall be equal to the Book Capital Account balance of the Holder of
the lnterest.
6.2. NON-TRANSFERABILITY. A Holder may not transfer, sell or exchange its
Interest.
6.3. REGISTER OF INTERESTS. A register shall be kept at the Trust under
the direction of the Trustees which shall contain the name, address and Book
Capital Account balance of each Holder. Such register shall be conclusive as to
the identity of the Holders. No Holder shall be entitled to receive payment of
any distribution, nor to have notice given to it as herein provided, until it
has given its address to such officer or agent of the Trust as is keeping such
register for entry thereon.
ARTICLE VII
Inceases, Decreases and Redemptions Of Interests
------------------------------------------------
Subject to applicable law, to the provisions of this Declaration and to
such restrictions as may from time to time be adopted by the Trustees, each
Holder shall have the right to vary its investment in the Trust at any time
without limitation by increasing (through a capital contribution) or decreasing
(through a capital withdrawal) or by a Redemption of its Interest. An increase
in the Investment of a Holder in the Trust shall be reflected as an increase in
the Book Capital Account balance of that Holder and a decrease in the investment
of a Holder in the Trust or the Redemption of the Interest of a Holder shall be
reflected as a decrease in the Book Capital Account balance of that Holder. The
Trust shall, upon appropriate and adequate notice from any Holder increase,
decrease or redeem such Holder's Interest for an amount determined by the
application of a formula adopted for such purpose by resolution of the Trustees;
provided that (a) the amount received by the Holder upon any such decrease or
Redemption shall not exceed the decrease in the Holder's Book Capital Account
balance effected by such decrease or Redemption of its Interest, and (b) if so
authorized by the Trustees, the Trust may, at any time and from time to time,
charge fees for effecting any such decrease or Redemption, at such rates as the
Trustees may establish, and may, at any time and from time to time, suspend such
right of decrease or Redemption. The procedures for effecting decreases or
Redemptions shall be as determined by the Trustees from time to time.
ARTICLE VIII
Determination of Book Capital Account
Balances and Distributions
--------------------------
8.1. BOOK CAPITAL ACCOUNT BALANCES. The Book Capital Account balance of
each Holder shall be determined on such days and at such time or times as the
Trustees may determine. The Trustees shall adopt resolutions setting forth the
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method of determining the Book Capital Account balance of each Holder. The power
and duty to make calculations pursuant to such resolutions may be delegated by
the Trustees to the Investment Manager and Administrator, custodian, or such
other Person as the Trustees may determine. Upon the Redemption of an Interest,
the Holder of that Interest shall be entitled to receive the balance of its Book
Capital Account. A Holder may not transfer, sell or exchange its Book Capital
Account balance.
8.2. ALLOCATIONS AND DISTRIBUTIONS TO HOLDERS. The Trustees shall, in
compliance with the Code, the 1940 Act and generally accepted accounting
principles, establish the procedures by which the Trust shall make (i) the
allocation of unrealized gains and losses, taxable income and tax loss, and
profit and loss, or any item or items thereof, to each Holder, (ii) the payment
of distributions, if any, to Holders, and (iii) upon liquidation, the final
distribution of items of taxable income and expense. Such procedures shall be
set forth in writing and be furnished to the Trust's accountants. The Trustees
may amend the procedures adopted pursuant to this Section 8.2 from time to time.
The Trustees may retain from the net profits such amount as they may deem
necessary to pay the liabilities and expenses of the Trust to meet obligations
of the Trust, and as they may deem desirable to use in the conduct of the
affairs of the Trust or to retain for future requirements or extensions of the
business.
8.3. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any of the
foregoing provisions of this Article VIII, the Trustees may prescribe, in their
absolute discretion, such other bases and times for determining the net income
of the Trust, the allocation of income of the Trust, the Book Capital Account
balance of each Holder, or the payment of distributions to the Holders as they
may deem necessary or desirable to enable the Trust to comply with any provision
of the 1940 Act or any order of exemption issued by the Commission or with the
Code.
ARTICLE IX
Holders
-------
9.1. RIGHTS OF HOLDERS. The ownership of the Trust Property and the right
to conduct any business described herein are vested exclusively in the Trustees,
and the Holders shall have no right or title therein other than the beneficial
interest conferred by their Interests and they shall have no power or right to
call for any partition or division of any Trust Property.
9.2. MEETINGS OF HOLDERS. Meetings of Holders may be called at any time
by a majority of the Trustees and shall be called by any Trustee upon written
request of Holders holding, in the aggregate, not less than 10% of the
Interests, such request specifying the purpose or purposes for which such
meeting is to be called. Any such meeting shall be held within or without the
State of New York and within or without the United States of America on such day
and at such time as the Trustees shall designate. Holders of one-third of the
Interests, present in person or by proxy, shall constitute a quorum for the
transaction of any business, except as may otherwise be required by the 1940
Act, other applicable law, this Declaration or the By-Laws of the Trust. If a
quorum is present at a meeting, an affirmative vote of the Holders present, in
person or by proxy, holding more than 50% of the total Interests of the Holders
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present, either in person or by proxy, at such meeting constitutes the action of
the Holders, unless a greater number of affirmative votes is required by the
1940 Act, other applicable law, this Declaration or the By-Laws of the Trust.
All or any one of more Holders may participate in a meeting of Holders by means
of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in a meeting by means of such communications equipment shall constitute presence
in person at such meeting.
9.3. NOTICE OF MEETINGS. Notice of each meeting of Holders, stating the
time, place and purposes of the meeting, shall be given by the Trustees by mail
to each Holder, at its registered address, mailed at least 10 days and not more
than 60 days before the meeting. Notice of any meeting may be waived in writing
by any Holder either before or after such meeting. The attendance of a Holder at
a meeting shall constitute a waiver of notice of such meeting except in the
situation in which a Holder attends a meeting for the express purpose of
objecting to the transaction of any business on the ground that the meeting was
not lawfully called or convened. At any meeting, any business properly before
the meeting may be considered whether or not stated in the notice of the
meeting. Any adjourned meeting may be held as adjourned without further notice.
9.4. RECORD DATE FOR MEETINGS, DISTRIBUTIONS, ETC. For the purpose of
determining the Holders who are entitled to notice of and to vote at any
meeting, or to participate in any distribution, or for the purpose of any other
action, the Trustees may from time to time fix a date, not more than 90 days
prior to the date of any meeting of Holders or the payment of any distribution
or the taking of any other action, as the case may be, as a record date for the
determination of the Persons to be treated as Holders for such purpose.
9.5. PROXIES. ETC. At any meeting of Holders, any Holder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Secretary, or with such other
officer or agent of the Trust as the Secretary may direct, for verification
prior to the time at which such vote is to be taken. A proxy may be revoked by a
Holder at any time before it has been exercised by placing on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, a later dated proxy or written revocation. Pursuant to a resolution of a
majority of the Trustees, proxies may be solicited in the name of the Trust or
of one or more Trustees or of one or more officers of the Trust. Only Holders on
the record date shall be entitled to vote. Each such Holder shall be entitled to
a vote proportionate to its Interest. When an Interest is held jointly by
several Persons, any one of them may vote at any meeting in person or by proxy
with respect to such Interest, but if more than one of them is present at such
meeting in person or by proxy, and such joint owners or their proxies so present
disagree as to any vote to be cast, such vote shall not be received with respect
of such Interest. A proxy purporting to be executed by or on behalf of a Holder
shall be deemed valid unless challenged at or prior to its exercise, and the
burden of proving invalidity shall rest on the challenger.
9.6. REPORTS. The Trustees shall cause to be prepared and furnished to
each Holder, at least annually as of the end of each Fiscal Year, a report of
operations containing a balance sheet and a statement of income of the Trust
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prepared in conformity with generally accepted accounting principles and an
opinion of an independent public accountant on such financial statements. The
Trustees shall, in addition, furnish to each Holder at least semi-annually
interim reports of operations containing an unaudited balance sheet as of the
end of such period and an unaudited statement of income for the period from the
beginning of the then-current Fiscal Year to the end of such period.
9.7. INSPECTION OF RECORDS. The records of the Trust shall be open to
inspection by Holders during normal business hours for any purpose not harmful
to the Trust.
9.8. HOLDER ACTION BY WRITTEN CONSENT. Any action which may be taken by
Holders may be taken without a meeting if Holders holding more than 50% of all
Interests entitled to vote (or such larger proportion thereof as shall be
required by any express provision of this Declaration) consent to the action in
writing and the written consents are filed with the records of the meetings of
Holders. Such consents shall be treated for all purposes as a vote taken at a
meeting of Holders. Each such written consent shall be executed by or on behalf
of the Holder delivering such consent and shall bear the date of such execution.
No such written consent shall be effective to take the action referred to
therein unless, within one year of the earliest dated consent, written consents
executed by a sufficient number of Holders to take such action are filed with
the records of the meetings of Holders.
9.9. NOTICES. Any and all communications, including any and all notices
to which any Holder may be entitled, shall be deemed duly served or given if
mailed, postage prepaid, addressed to a Holder at its last known address as
recorded an the register of the Trust.
ARTICLE X
Duration; Termination;
Amendment; Mergers; Etc.
------------------------
10.1. DURATION. Subject to possible termination or dissolution in
accordance with the provisions of Section 10.2 and Section 10.3 hereof,
respectively, the Trust created hereby shall continue until the expiration of 20
years after the death of the last survivor of the initial Trustees named herein
and the following named persons:
Name Address Date of Birth
Nelson Stewart Ruble 65 Duck Pond Road 04/10/91
Glen Cove, NY 11542
Shelby Sara Wyetzner 8 Oak Brook Lane 10/18/90
Merrick, NY 11566
Amanda Jehan Sher Coolidge 400 South Pointe Drive, #803 08/16/89
Miami Beach, FL 33139
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David Cornelius Johnson 752 West End Avenue, Apt. 10J 05/02/89
New York, NY 10025
Conner Leahy McCabe 100 Parkway Road, Apt. 3C 02/22/89
Bronxville, NY 10708
Andrea Hellegers 530 East 84th Street, Apt. 5H 12/22/88
New York, NY 10028
Emilie Blair Ruble 65 Duck Pond Road 02/24/89
Glen Cove, NY 11542
Brian Patrick Lyons 152-48 Jewel Avenue 01/20/89
Flushing, NY 11367
Carolina Bolger Cima 11 Beachwood Lane 12/23/88
Scarsdale, NY 10583
10.2. TERMINATION.
(a) The Trust may be terminated (i) by the affirmative vote of
Holders of not less than two thirds of all Interests at any meeting of Holders
or by an instrument in writing without a meeting, executed by a majority of the
Trustees and consented to by Holders of not less than two-thirds of all
Interests, or (ii) by the Trustees by written notice to the Holders. Upon such
termination,
(i) the Trust shall carry on no business except for the
purpose of winding up its affairs;
(ii) the Trustees shall proceed to wind up the affairs of the
Trust and all of the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust have been wound up,
including the power to fulfill or discharge the contracts of the
Trust, collect the assets of the Trust, sell, convey, assign, exchange
or otherwise dispose of all or any part of the Trust Property to one
or more Persons at public or private sale for consideration which may
consist in whole or in part of cash, securities or other property of
any kind, discharge or pay the liabilities of the Trust, and do all
other acts appropriate to liquidate the business of the Trust;
provided that any sale, conveyance, assignment, exchange or other
disposition of all or substantially all the Trust Property shall
require approval of the principal terms of the transaction and the
nature and amount of the consideration by the vote of Holders holding
more than 50% of all Interests; and
(iii) after paying or adequately providing for the payment of
all liabilities , and upon receipt of such releases, indemnities and
refunding agreements as they deem necessary for their protection, the
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Trustees shall distribute the remaining Trust Property, in cash or in
kind or partly each, among the Holders according to their respective
rights as set forth in the procedures established pursuant to Section
8.2 hereof.
(b) Upon termination of the Trust and distribution to the Holders as
herein provided, a majority of the Trustees shall execute and file with the
records of the Trust an instrument in writing setting forth the fact of such
termination and distribution. Upon termination of the Trust, the Trustees shall
thereupon be discharged from all further liabilities and duties hereunder, and
the rights and interests of all Holders shall thereupon cease.
10.3. DISSOLUTION. Upon the bankruptcy of any Holder, or upon the
Redemption of any Interest, the Trust shall be dissolved effective 120 days
after the event. However, the Holders (other than such bankrupt or redeeming
Holder) may, by unanimous affirmative vote of any meeting of such Holders or by
an instrument in writing without a meeting executed by a majority of the
Trustees and consented to by all such Holders, agree to continue the business of
the Trust even if there has been such a dissolution.
10.4. AMENDMENT PROCEDURE.
-------------------
(a) This Declaration may be amended by the vote of Holders of more
than 50% of all Interests at any meeting of Holders or my an instrument in
writing without a meeting, executed by a majority of the Trustees and consented
to by the Holder of more than 50% of all Interests. Notwithstanding any other
provision hereof, this Declaration may be amended by an instrument in writing
executed by a majority of the Trustees, and without the vote or consent of
Holders, for any one or more of the following purposes: (i) to change the name
of the Trust, (ii) to supply any omission, or to cure, correct or supplement any
ambiguous, defective or inconsistent provision hereof, (iii) to conform this
Declaration to the requirements of applicable federal law or regulations of the
requirements of the applicable provisions of the Code, (iv) to change the state
of other jurisdiction designated herein as the state or other jurisdiction whose
law shall be the governing law hereof, (v) to effect such changes herein as the
Trustees find to be necessary or appropriate (A) to permit the filing of this
Declaration under the law of such state or other jurisdiction applicable to
trusts or voluntary associations, (B) to permit the Trust to elect to be treated
as a "regulated investment company" under the applicable provisions of the Code,
or (C) to permit the transfer of Interests (or to permit the transfer of any
other beneficial interests in or share of the Trust, however denominated, and
(vi) in conjunction with any amendment contemplated by the foregoing clause (iv)
or the foregoing clause (v) to make any and all such further changes or
modifications to this Declaration as the Trustees find to be necessary or
appropriate, any finding of the Trustees referred to in the foregoing clause (v)
or the foregoing clause (vi) to be conclusively evidenced by the execution of
any such amendment by a majority of the Trustees; provided, however, that unless
affected in compliance with the provisions of Section 10.4(b) hereof, no
amendment otherwise authorized by this sentence may be made which would reduce
the amount payable with respect to any Interest upon liquidation of the Trust
and; provided, further, that the Trustees shall not be liable for failing to
make any amendment permitted by this Section 10.4(a)
17
<PAGE>
(b) No amendment may be made under Section 10.4 (a) hereof which
would change any rights with respect to any Interest by reducing the amount
payable thereon upon liquidation of the Trust or by diminishing or eliminating
any voting rights pertaining thereto, except with the vote or consent of Holders
of two-thirds of all Interests.
(c) A certification in recordable form executed by a majority of
the Trustees setting forth an amendment and reciting that it was duly adopted by
the Holders or by the Trustees as aforesaid or a copy of the Declaration, as
amended, in recordable form, and executed by a majority of the Trustees, shall
be conclusive evidence of such amendment when filed with the records of the
Trust.
Notwithstanding any other provision hereof, until such time as Interests
are first sold, this Declaration may be terminated or amended in any respect by
the affirmative vote of a majority of the Trustees at any meeting of Trustees or
by an instrument executed by a majority of the Trustees.
10.5. MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust may merge or
consolidate with any other corporation, association, trust or other organization
or may sell, lease or exchange all or substantially all of the Trust Property,
including good will, upon such terms and conditions and for such consideration
when and as authorized at any meeting of Holders called for such purpose by the
affirmative vote of Holders of not less than two-thirds of all Interests, or by
an instrument in writing without a meeting, consented to by Holders of not less
than two-thirds of all Interests, and any such merger, consolidation, sale,
lease or exchange shall be deemed for all purposes to have been accomplished
under and pursuant to the statutes of the State of New York.
10.6 INCORPORATION. Upon a Majority Interests Vote, the Trustees may
cause to be organized or assists in organizing a corporation or corporations
under the law of any jurisdiction or a trust, partnership, association or other
organization to take over the Trust Property or to carry on any business in
which the Trust directly or indirectly has any interest, and to sell, convey and
transfer the Trust Property to any such corporation, trust, partnership,
association or other organization in exchange for the equity interests thereof
or otherwise, and to lend money to, subscribe for the equity interests of, and
enter into any contract with any such corporation, trust, partnership,
association or other organization, or any corporation, trust, partnership,
association or other organization in which the Trust holds or is about to
acquire equity interests. The Trustees may also cause a merger or consolidation
between the Trust or any successor thereto and any such corporation, trust,
partnership, association or other organization if and to the extent permitted by
law. Nothing contained herein shall be construed as requiring approval of the
Holders of the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to one or
more or such organizations or entities.
ARTICLE XI
Miscellaneous
-------------
18
<PAGE>
11.1. CERTIFICATE OF DESIGNATION; AGENT FOR SERVICE OF PROCESS. The Trust
shall file, with the Department of State of the State of New York, a
certificate, in the name of the Trust and executed by an officer of the Trust,
designating the Secretary of State of the State of New York as an agent upon
whom process in any action or proceeding against the Trust may be served.
11.2. GOVERNING LAW. This Declaration is executed by the Trustees and
delivered in the State of New York and with reference to the law thereof, and
the rights of all parties and the validity and construction of every provision
hereof shall be subject to and construed in accordance with the law of the State
of New York and reference shall be specifically made to the trust law of the
State of New York as to the construction of matters not specifically covered
herein or as to which an ambiguity exists.
11.3. COUNTERPARTS. This Declaration may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and such
counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any one such original counterpart.
11.4. RELIANCE BY THIRD PARTIES. Any certificate executed by an
individual who, according to the records of the Trust or of any recording office
in which this Declaration may be recorded, appears to be a Trustee hereunder,
certifying to: (a) the number or identity of Trustees or Holders, (b) the due
authorization of the execution of any instrument or writing, (c) the form of any
vote passed at a meeting of Trustees or Holders, (d) the fact that the number of
Trustees or Holders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (e) the form of any By-Laws
adopted by or the identity of any officer elected by the Trustees, or (f) the
existence of any fact or facts which in any manner relate to the affairs of the
Trust shall be conclusive evidence as to the matters so certified in favor of
any Person dealing with the Trustees.
11.5. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
----------------------------------------------
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, or with other applicable law and
regulations, the conflicting provision shall be deemed never to have constituted
regulations, the conflicting provision shall be deemed never to have constituted
a part of this Declaration; provided, however, that such determination shall not
affect any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
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IN WITNESS WHEREOF, the undersigned have executed this instrument as of the 20th
day of October, 1992.
/s/ David A, Minella
----------------------------
David A. Minella
As Trustee and not individually
/s/ C. Derek Anderson
----------------------------
C. Derek Anderson
As Trustee and not individually
/s/ Frank S. Bayley
----------------------------
Frank S. Bayley
As Trustee and not individually
/s/ Arthur C. Patteson
----------------------------
Arthur C. Patterson
As Trustee and not individually
/s/ Ruth H. Quigley
----------------------------
Ruth H. Quigley
As Trustee and not individually
20
GLOBAL HIGH INCOME PORTFOLIO
BY-LAWS
As Adopted April 27, 1992
and
As Amended October 20, 1992
<PAGE>
BY-LAWS
TABLE OF CONTENTS
PAGE
ARTICLE I Meeting of Holders 1
Section 1.1 Fixing Record Dates 1
Section 1.2 Records of Holder Meetings 1
Section 1.3 Inspectors of Election 1
Section 1.4 Proxies; Voting 2
ARTICLE II Meetings of Trustees 2
Section 2.1 Annual and Regular Meetings 2
Section 2.2 Notice 2
ARTICLE III Officers 2
Section 3.1 Officers of the Trust 2
Section 3.2 Election and Tenure 2
Section 3.3 Removal of Officers 2
Section 3.4 Bond and Surety 3
Section 3.5 Chairman, President and Vice President 3
Section 3.6 Secretary 3
Section 3.7 Treasurer 4
Section 3.8 Other Officers and Duties 4
ARTICLE IV Miscellaneous 4
Section 4.1 Depositories 4
Section 4.2 Signatures 4
Section 4.3 Seal 4
Section 4.4 Indemnification 5
Section 4.5 Distribution Disbursing Agents and
the Like 5
ARTICLE V Regulations; Amendment of By-Laws 5
Section 5.1 Regulations 5
Section 5.2 Amendment and Repeal of By-Laws 5
<PAGE>
BY-LAWS
OF
GLOBAL HIGH INCOME PORTFOLIO
These By-Laws are made and adopted pursuant to Section 2.7 of the
Declaration of Trust establishing GLOBAL HIGH INCOME PORTFOLIO (the "Trust"),
dated as of April 27, 1992, as from time to time amended (the "Declaration").
All words and terms capitalized in these By-Laws shall have the meaning or
meanings set forth for such words or terms in the Declaration.
ARTICLE I
Meetings of Holders
Section 1.1. Fixing Record Dates. If the Trustees do not, prior to any
meeting of the Holders, fix a record date, then the date of mailing notice of
the meeting shall be the record date.
Section 1.2. Records of Holder Meetings. At each meeting of the Holders
there shall be open for inspection the minutes of the last previous meeting of
Holders of the Trust and a list of the Holders of the Trust, certified to be
true and correct by the Secretary or other proper agent of the Trust, as of the
record date of the meeting. Such list of Holders shall contain the name of each
Holder in alphabetical order and the address and Interest owned by such Holder
on such record date.
Section 1.3. Inspectors of Election. In advance of any meeting of the
Holders, the Trustees may appoint Inspectors of Election to act at the meeting
or any adjournment thereof. If Inspectors of Election are not so appointed, the
chairman, if any, of any meeting of the Holders may, and on the request of any
Holder of his proxy shall, appoint Inspectors of Election. The number of
Inspectors of Election shall be either one or three. If appointed at the meeting
on the request of one or more Holders or proxies, a Majority Interests Vote
shall determine whether one or three Inspectors of Election are to be appointed,
but failure to allow such determination by the Holders shall not affect the
validity of the appointment of Inspectors of Election. In case any individual
appointed as an Inspector or Election fails to appear or fails or refuses to
act, the vacancy may be filled by appointment made by the Trustees in advance of
convening of the meeting or at the meeting by the individual acting as chairman
of the meeting. The Inspectors of Election shall determine the Interest owned by
each Holder, the Interests represented at the meeting, the existence of a
quorum, the authenticity, validity and effect of proxies, shall receive votes,
ballots or consents, shall hear and determine all challenges and questions in
any way arising in connection with the right to vote, shall count and tabulate
all votes or consents, shall determine the results, and shall do such other acts
as may be proper to conduct the election or vote with fairness to all Holders.
If there are three Inspectors of Election, the decision, act or certificate of a
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majority is effective in all respects as the decision, act or certificate of
all. On request of the chairman, if any, of the meeting, or of any Holder or his
proxy, the Inspectors of Election shall make a report in writing of any
challenge, or question or matter determined by them and shall execute a
certificate of any facts found by them.
Section 1.4. Proxies; Voting. No proxy shall be valid after one year
from the date of its execution, unless a longer period is expressly stated in
such proxy.
ARTICLE II
Meeting of Trustees
Section 2.1. Annual and Regular Meetings. The Trustees shall hold an
annual meeting for the election of officers and the transaction of other
business which may come before such meeting.
Section 2.2. Notice. Notice of a meeting shall be given by mail, by
telegram (which term shall include a cablegram), by telecopier or delivered
personally (which term shall include by telephone). Neither the business to be
transacted at, nor the purpose of, any meeting of the Trustees need be stated in
the notice or waiver of notice of such meeting, and no notice need be given of
action proposed to be taken by written consent.
ARTICLE III
Officers
Section 3.1. Officers of the Trust. The Officers of the Trust shall
consists of a Chairman, if any, a President, a Secretary, a Treasurer and such
other officers or assistant officers, including Vice Presidents, as may be
elected by the Trustees. Any two or more of the offices may be held by the same
person. The Trustees may designate a Vice President as an Executive Vice
President and may designate the order in which the other Vice Presidents may
act. The Chairman shall be a Trustee, but no other officer of the Trust,
including the President, need be a Trustees.
Section 3.2. Election and Tenure. At the initial organization meeting
and thereafter at each annual meeting of the trustees, the trustees shall elect
the Chairman, if any, the President, the Secretary, the Treasurer and such other
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officers as the Trustees shall deem necessary or appropriate in order to carry
out the business of the Trust. Such officers shall hold office until the next
annual meeting of the Trustees and until their successors have been duly elected
and qualified. The Trustees may fill any vacancy in office or add any additional
officer at any time.
Section 3.3. Removal of Officers. Any officer may be removed at any
time, with or without cause, by action of a majority of the Trustees. This
provision shall not prevent the making of a contract of employment for a
definite term with any officer and shall have no effect upon any cause of action
which any officer may have as a result of removal in breach of a contract of
employment. Any officer may resign at any time by notice in writing signed by
such officer and delivered or mailed to the Chairman, if any, the President or
the Secretary, and such resignation shall take effect immediately, or at a later
date according to the terms of such notice in writing.
Section 3.4. Bonds and Surety. Any officer may be required by the
Trustees to be bonded for the faithful performance of his duties in such amount
and with such sureties as the Trustees may determine.
Section 3.5. Chairman, President and Vice Presidents. The Chairman, if
any, shall, if present, preside at all meetings of the Holders and of the
Trustees and shall exercise and perform such other powers and duties as may be
from time to time assigned to him by the Trustees. Subject to such supervisory
powers, if any, as may be given by the Trustees to the Chairman, if any, the
President shall be the chief executive officer of the Trust and, subject to the
control of the Trustees, shall have general supervision, direction and control
of the business of the Trust and of its employees and shall exercise such
general powers of management as are usually vested in the office of President of
a corporation. In the absence of the Chairman, if any, the President shall
preside at all meetings of the Holders and, in the absence of the Chairman, the
President shall preside at all meetings of the Trustees. The President shall be,
ex officio, a member of all standing committees of Trustees. Subject to the
direction of the Trustees, the President shall have the power, in the name and
on behalf of the Trust, to execute any and all loan documents, contracts,
agreements, deeds, mortgages and other instruments in writing, and to employ and
discharge employees and agents of the Trust. Unless otherwise directed by the
Trustees, the President shall have full authority and power to attend, to act
and to vote, on behalf of the Trust, at any meeting of any business organization
in which the Trust holds an interest, or to confer such powers upon any other
person, by executing any proxies duly authorizing such person. The President
shall have such further authorities and duties as the Trustees shall from time
to time determine, In the absence or disability of the President, the Vice
Presidents in order of their rank or the Vice President designated by the
Trustees, shall perform all of the duties of the President, and when so acting
shall have all the powers of and be subject to all of the restrictions upon the
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President. Subject to the direction of the President, each Vice President shall
have the power in the name and on behalf of the Trust to execute any and all
loan documents, contracts, agreements, deeds, mortgages and other instruments in
writing, and, in addition, shall have such other duties and powers as shall be
designated from time to time by the Trustees or by the President.
Section 3.6. Secretary. The Secretary shall keep minutes of all
meetings of, and record all votes of, Holders, Trustees and the Executive
Committee, if any. The results of all actions taken at a meting of the Trustees,
or by written consent of the Trustees, shall be recorded by the Secretary. The
Secretary shall be custodian of the seal of the Trust, if any, and (and any
other person so authorized by the Trustees) shall affix the seal or, if
permitted, a facsimile thereof, to any instrument executed by the Trust which
would be sealed by a New York corporation executing the same or a similar
instrument and shall attest the seal and the signature or signatures of the
officer of officers executing such instrument on behalf of the Trust. The
Secretary shall also perform any other duties commonly incident to such office
in a New York corporation, and shall have such other authorities and duties as
the Trustees shall from time to time determine.
Section 3.7. Treasurer. Except as otherwise directed by the Trustees,
the Treasurer shall have the general supervision of the monies, funds,
securities, notes receivable and other valuable papers and documents of the
trust, and shall have and exercise under the supervision of the Trustees and of
the President all powers and duties normally incident to his office. The
Treasurer may endorse for deposit or collection all notes, checks and other
instruments payable to the Trust of to its order and shall deposit all funds of
the trust as may be ordered by the Trustees or the President. The Treasurer
shall keep accurate account of the books of the Trust's transactions which shall
be the property of the Trust, and which together with all other property of the
Trust in his possession, shall be subject at all times to the inspection and
control of the Trustees. Unless the Trustees shall otherwise determine, the
Treasurer shall be the principal accounting officer of the Trust and shall also
be the principal financial officer of the Trust. The Treasurer shall have such
other duties and authorities as the Trustees shall from time to time determine.
Notwithstanding anything to the contrary herein contained, the Trustees may
authorize the Investment Manager and Administrator to maintain bank accounts and
deposit and disburse funds on behalf of the Trust.
Section 3.8. Other Officers and Duties. The Trustees may elect such
other officers and assistant officers as they shall from time to time determine
to be necessary or desirable in order to conduct the business of the Trust.
Assistant officers shall act generally in the absence of the officer which they
assist and shall assist that officer in the duties of his office. Each officer,
employee and agent of the Trust shall have such other duties and authorities as
may be conferred upon him by the Trustees or delegated to him by the President.
4
<PAGE>
ARTICLE IV
Miscellaneous
Section 4.1. Depositories. The funds of the Trust shall be deposited in
such depositories as the Trustees shall designate and shall be drawn out on
checks, drafts or other orders signed by such officer, officers, agent or agent
(including the Investment Manager and Administrator) as the Trustees may from
time to time authorize.
Section 4.2. Signatures. All contract and other instruments shall be
executed on behalf of the Trust by such officer, officers, agent or agents as
provided in these By-Laws or as the Trustees may from time to time by resolution
provide.
Section 4.3. Seal. The Seal of the Trust, if any, may be affixed to any
document, and the seal and its attestation may be lithographed, engraved or
otherwise printed on any document with the same force and effect as if it had
been imprinted and attested manually in the same manner and with the same effect
as if done by a New York corporation.
Section 4.4. Indemnification. Insofar as the conditional advancing of
indemnification monies under Section 5.4 of the Declaration for actions based
upon the 1940 Act may be concerned, such payments will be made only on the
following conditions: (i) the advances must be limited to amounts used, or to be
used, for the preparation or presentation of a defense to the action, including
costs connected with the preparation of a settlement; (ii) advances may be made
only upon receipt of a written promise by, or on behalf of, the recipient to
repay the amount of the advance which exceeds the amount to which it is
ultimately determined that he is entitled to receive from the Trust by reason of
indemnification; and (iii) (a) such promise must be secured by a surety bond,
other suitable insurance or an equivalent form of security which assures that
any repayment may be obtained by the Trust without delay or litigation, which
bond, insurance or other form of security must be provided by the recipient of
the Advance, or (b) a majority of a quorum of the Trust's disinterested,
non-party Trustees, or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts, that the recipient of
the advance ultimately will be found entitled to indemnification.
5
<PAGE>
Section 4.5. Distribution Disbursing Agents and the Like. The Trustees
shall have the power to employ and compensate such distribution disbursing
agents, warrant agents and agents for the reinvestment of distributions as they
shall deem necessary or desirable. Any such agents shall have such power and
authority as is delegated to any of them by the Trustees.
ARTICLE V
Regulations; Amendment of By-Laws
Section 5.1. Regulations. The Trustees may make such additional rules
and regulations, not inconsistent with these By-Laws, as they may deem expedient
concerning the sale and purchase of Interest of the Trust.
Section 5.2. Amendment and Repeal of By-Laws. In accordance with
Section 2.7 of the Declaration, the Trustees shall have the power to alter,
amend or repeal the By-Laws or adopt new By-Laws at any time. Action by the
Trustees with respect to the By-Laws shall be taken by an affirmative vote of a
majority of the Trustees. The Trustees shall in no event adopt By-Laws which are
in conflict with the Declaration.
The Declaration refers to the Trustees as Trustees, but not as
individuals or personally; and no Trustee, officer, employee or agent of the
Trust shall be held to any personal liability, nor shall resort be had to their
private property for the satisfaction of any obligation or claim or otherwise in
connection with the affairs of the Trust.
6
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN GLOBAL HIGH INCOME PORTFOLIO AND
G.T. MANAGEMENT, INC.
Contract made as of October 22, 1992, between Global High Income
Portfolio ("Portfolio"), a New York Trust, and G.T. Capital Management, Inc.
("G.T. Capital"), a California corporation.
WHEREAS the Portfolio is registered under the Investment Company Act of
1940, as amended ("1940 Act") as an open-end management investment company, and
WHEREAS the Portfolio desires to retain G.T. Capital as investment
manager and administrator to furnish certain administrative, investment advisory
and portfolio management services to the Portfolio and G. T. Capital is willing
to furnish such services.
NOW, THEREFORE in consideration of the premises and the mutual
covenants herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Portfolio hereby appoints G.T. Capital as
investment manager and administrator of the Portfolio for the period and on the
terms set forth in this Contract. G.T. Capital accepts such appointment and
agrees to render the services herein set forth , for the compensation herein
provided.
2. DUTIES AS INVESTMENT MANAGER.
(a) Subject to the supervision of the Portfolio's Board of Trustees
("Trustees"), G.T. Capital will provide a continuous investment program for the
Portfolio, including investment research and management with respect to all
securities and investments and cash equivalents of the Portfolio. G.T. Capital
will determine from time to time what securities and other investments will be
purchased, retained or sold by the Portfolio, and the brokers and dealers
through whom trades will be executed.
(b) G.T. Capital agrees that in placing orders with brokers and dealers
it will attempt to obtain the best net results in terms of price and execution.
Consistent with this obligation G.T. Capital may, in its discretion, purchase
and sell portfolio securities to and from brokers and dealers who sell shares of
investment companies which invest all of their investable assets in the
Portfolio or provide the Portfolio or G.T. Capital's other clients with
research, analysis, advice and similar services. G.T. Capital may pay to brokers
and dealers, in return for research and analysis, a higher commission or spread
than may be charged by other brokers and dealers, subject to G.T. Capital's
determining in good faith that such commission or spread is reasonable in terms
either of the particular transaction or of the overall responsibility of G.T.
Capital to the Portfolio and its other clients and that the total commissions or
spreads paid by the Portfolio will be reasonable in relation to the benefits to
the Portfolio over the long term. In no instance will portfolio securities be
<PAGE>
purchased from or sold to G.T. Capital or any affiliated person thereof except
in accordance with the federal securities laws and the rules and regulations
thereunder. Wherever G.T. Capital simultaneously places orders to purchase or
sell the same security on behalf of the Portfolio and one or more other accounts
advised by G.T. Capital, such orders will be allocated as to price and amount
among all such accounts in a manner believed to be equitable to each account.
The Portfolio recognizes that in some cases this procedure may adversely affect
the results obtained for each Portfolio.
(c) G.T. Capital will oversee the maintenance of all books and records
with respect to the securities transactions of the Portfolio, and will furnish
the Board with such periodic and special reports as the Board reasonably may
request. In compliance with the requirements of Rule 31a-3 under the 1940 Act,
G.T. Capital hereby agrees that all records which it maintains for the Portfolio
are the property of the Portfolio, agrees to preserve for the periods prescribed
by Rule 31a-2 under the 1940 Act any records which it maintains for the
Portfolio and which are required to be maintained by Rule 31a-1 under the 1940
Act, and further agrees to surrender promptly to the Portfolio any records which
it maintains for the Portfolio upon request by the Portfolio.
(d) G.T. Capital will oversee the computation of the net asset value
and the net income of the Portfolio as described in the currently effective
registration statement of the Portfolio under the 1940 Act ("Registration
Statement") or as more frequently requested by the Board.
3. DUTIES AS ADMINISTRATOR. G.T. Capital will administer the affairs of
the Portfolio subject to the supervision of the Board and the following
understandings:
(a) G.T. Capital will supervise all aspects of the operations of the
Portfolio, including the oversight of custodial, pricing and accounting
services, excepts as hereinafter set forth; provided, however, that nothing
herein contained shall be deemed to relieve or deprive the Board of its
responsibility for control of the conduct of the affairs of the Portfolio.
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(b) At G.T. Capital's expense, G.T. Capital will provide the Portfolio
with such corporate, administrative and clerical personnel (including officers
of the Portfolio) and services as are reasonably deemed necessary or advisable
by the Board.
(c) G.T. Capital will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the
Portfolio's proxy material, tax returns and required reports with or to the
Portfolio's investors, the Securities and Exchange Commission and other
appropriate federal or state regulatory authorities.
(d) G.T. Capital will provide the Portfolio with, or obtain for it,
adequate office space and all necessary office equipment and services, including
telephone service, heat, utilities, stationery supplies and similar items.
4. FURTHER DUTIES. In all matters relating to the performance of this
Contract, G.T. Capital will act in conformity with the Declaration of Trust,
By-Laws and Registration Statement of the Portfolio and with the instructions
and directions of the Board and will comply with the requirements of the 1940
Act, the rules thereunder and all other applicable federal and state laws and
regulations.
5. DELEGATION OF G.T. CAPITAL'S DUTIES AS INVESTMENT MANAGER AND
ADMINISTRATOR. G.T. Capital may enter into one or more agreements ("Sub-Advisory
or Sub-Administration Contract") with a sub-adviser or sub-administrator in
which G.T. Capital delegates to such sub-advisor or sub-administrator the
performance of any or all of the services specified in Paragraph 2 and 3 of this
Contract, provided that: (i) each Sub-Advisory and Sub-Administration Contract
imposes on the sub-adviser or sub-administrator bound thereby all the duties and
conditions to which G. T. Capital is subject with respect to the delegated
services under Paragraphs 2, 3, and 4 of this Contract; (ii) each Sub-Advisory
or Sub-Administration Contract meets all requirements of the 1940 Act and rules
thereunder; and (iii) G.T. Capital shall not enter into a Sub-Advisory or
Sub-Administration Contract unless it is approved by the Board prior to
implementation.
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6. SERVICES NOT EXCLUSIVE. The services furnished by G.T. Capital
hereunder are not to be deemed exclusive and G. T. Capital shall be free to
furnish similar services to others so long as its services under this Contract
are not impaired thereby. Nothing in this Contract shall limit or restrict the
right of any director, officer or employee of G.T. Capital, who may also be a
Trustee, officer or employee of the Portfolio, to engage in any other business
or to devote his or her time and attention in part to the management or other
aspects of any other business, whether of a similar nature or a dissimilar
nature.
7. EXPENSES.
(a) During the term of this Contract, the Portfolio will bear all
expenses, not specifically assumed by G.T. Capital, incurred in its operations.
(b) Expenses borne by the Portfolio will include but not be limited to
the following: (i) the cost (including brokerage commissions, if any) of
securities purchased or sold by the Portfolio and any losses incurred in
connection therewith; (ii) fees payable to and expenses incurred on behalf of
the Portfolio by G.T. Capital under this Contract; (iii) expenses of organizing
the Portfolio; (iv) filing fees and expenses relating to the registration and
qualification of the Portfolio under federal and/or state securities laws and
maintaining such registrations and qualifications; (v) fees and salaries payable
to the Portfolio's Trustees who are not parties to this Contract or interested
persons of any such party ("Independent Trustees"); (vi) all expenses incurred
in connection with the Independent Trustees' services, including travel
expenses; (vii) taxes (including any income or franchise taxes) and governmental
fees; (viii) costs of any liability, uncollectible items of deposit and other
insurance and fidelity bonds; (ix) any costs, expenses or losses arising out of
a liability or claim for damages or other relief asserted against the Portfolio
or the Portfolio for violation of any law; (x) legal, accounting and auditing
expenses, including legal fees of special counsel for the Independent Trustees;
(xi) charges of custodians, pricing agents and other agents; (xii) expenses of
setting in type, printing and mailing reports and proxy materials for existing
investors; (xiii) any extraordinary expenses (including fees and disbursements
of counsel, costs of actions, suits or proceedings to which the Portfolio is a
party and the expenses the Portfolio may incur as a result of its legal
obligations to provide indemnification to its officers, Trustees, employees and
agents) incurred by the Portfolio; (xiv) fees, voluntary assessments and other
expenses incurred in connection with membership in investment company
organizations; (xv) costs of mailing and tabulating proxies and costs of
meetings of investors, the Board and any committees thereof; (xvi) the cost of
investment company literature and other publications provided by the Portfolio
to its Trustees and officers; and (xvii) costs of mailing, stationery and
communications equipment.
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(c) G.T. Capital will assume the cost of any compensation for services
provided to the Portfolio received by the officers of the Portfolio and by the
Trustees of the Portfolio who are not Independent Trustees.
(d) The payment or assumption by G.T. Capital of any expense of the
Portfolio that G.T. Capital is not required by this Contact to pay or assume
shall not obligate G.T. Capital to pay or assume the same or any similar expense
of the Portfolio on any subsequent occasion.
8. COMPENSATION.
(a) For the services provided under this Agreement, the Portfolio will
pay G.T. Capital a fee, computed daily and paid monthly, at the annualized rate
of .50% of the Portfolio's average daily net assets plus 2% of the Portfolio's
total investment income calculated in accordance with generally accepted
accounting principles, adjusted daily for currency revaluations, on a marked to
market basis, of the Portfolio's assets; provided, however, that during any
fiscal year this amount shall not exceed 2% of the Portfolio's total investment
income calculated in accordance with generally accepted accounting principles.
(b) The fee shall be computed daily and paid monthly to G.T. Capital on
or before the last business day of the next succeeding calendar month.
(c) G.T. Capital agrees to reduce the fee payable to it under this
Contract by the amount by which the ordinary operating expenses (exclusive of
organization expenses, interest, taxes, distribution-related expenses and
extraordinary expenses) of the Portfolio for any fiscal year borne by an
investor in the Portfolio together with the direct ordinary operating expenses
(exclusive of brokerage commissions, organization expenses, taxes, interest,
distribution-related expenses and extraordinary expenses) of the investor shall
exceed the most stringent limits prescribed by any state in which shares of any
investor in the Portfolio are offered for sale. Costs incurred in connection
with the purchase or sale of portfolio securities, including brokerage fees and
commissions, which are capitalized in accordance with generally accepted
accounting principles applicable to investment companies, shall be accounted for
as items and not expenses. Property accruals shall be made for the Portfolio for
any projected reduction hereunder and corresponding amounts shall be withheld
from the fees paid by that Portfolio to G.T. Capital. Any additional reduction
computed as being necessary at the end of the fiscal year shall be deducted from
the fee for the last month of such fiscal year. If the amount of the fee payable
by the Portfolio to G.T. Capital is less than the amount by which the
Portfolio's expenses exceed an applicable expense limitation, G.T. Capital shall
reimburse the Portfolio's expenses in an amount sufficient to enable the
Portfolio to meet such limitation.
(d) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
5
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9. LIMITATION OF LIABILITY OF G. T. CAPITAL AND INDEMNIFICATION. G.T.
Capital shall not be liable, and the Portfolio shall indemnify G.T. Capital and
its directors, officers and employees, for any costs or liabilities arising from
any error of judgment or mistake of law or any loss suffered by the Portfolio in
connection with the matters to which this Contract relates except a loss
resulting from willful misfeasance, bad faith or gross negligence or the part of
G.T. Capital in the performance by G.T. Capital of its duties or from reckless
disregard by G.T. Capital of its obligations and duties under this Contract. Any
person, even though also an officer, partner, employee or agent of G.T. Capital,
who may be or become an officer, Trustee, employee or agent of the Portfolio
shall be deemed, when rendering services to the Portfolio or acting with respect
to any business of the Portfolio to be rendering such service to or acting
solely for the Portfolio and not as an officer, partner, employee, or agent or
one under the control or direction of G.T. Capital even though paid by it.
10. DURATION AND TERMINATION.
(a) This Contract shall become effective on the date hereabove written,
provided that this Contract shall not take effect unless it has first been
approved (i) by a vote of a majority of the Independent Trustees, cast in person
at a meeting called for the purpose of voting on such approval, and (ii) by vote
of a majority of that Portfolio's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from the above written date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods
not to exceed twelve months each, provided that such continuance is specifically
approved at least annually (i) by a vote of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on such
approval and (ii) by the Board or by vote of a majority of the outstanding
voting securities of the Portfolio.
(c) Notwithstanding the foregoing, this Contract may be terminated at
any time, without the payment of any penalty, by vote of the Board or by a vote
of a majority of the outstanding voting securities of the Portfolio on sixty
days' written notice to G.T. Capital or by G.T. Capital at any time, without the
payment of any penalty, on sixty days' written notice to the Portfolio. This
Contract will automatically terminate in the event of its assignment.
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11. AMENDMENT OF THIS CONTRACT. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Contract shall be
effective until approved by vote of a majority of the Portfolio's outstanding
voting securities.
12. GOVERNING LAW. This Contract shall be construed in accordance with
the laws of the state of California and the 1940 Act. To the extent that the
applicable laws of the state of California conflict with the applicable
provisions of the 1940 Act, the latter shall control.
13. MISCELLANEOUS. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "interested person,"
"assignment," "broker," "dealer," "investment adviser," "national securities
exchange," "net assets," "prospectus," "sale," "sell," and "security" shall have
the same meaning as such terms have in the 1940 Act subject to such exemption as
may be granted by the Securities and Exchange Commission by any rule, regulation
or order. Where the effect of a requirement of the 1940 Act reflected in any
provision of this Contract is made less restrictive by a rule, regulation or
order of the Securities and Exchange Commission, whether of special or general
application such provision shall be deemed to incorporate the effect of such
rule, regulation or order.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
executed by their officers designated as of the day and year first above
written.
Attest: GLOBAL HIGH INCOME PORTFOLIO
/s/ Peter R. Guarino By: /s/ James W. Churm
- - ---- ---------------- -----------------------
Peter R. Guarino James W. Churm
Attest: G.T. CAPITAL MANAGEMENT, INC.
/s/ Peter R. Guarino By: /s/ James R. Tufts
- - --------------------- -----------------------
Peter R. Guarino James R. Tufts
7
CUSTODIAN CONTRACT
Between
GLOBAL HIGH INCOME PORTFOLIO
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
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1. Employment of Custodian and Property to be Held By It 1
2. Duties of the Custodian with Respect to Property of the Fund Held by the
Custodian in the United States 2
2.1 Holding Securities 2
2.2 Delivery of Securities 3
2.3 Registration of Securities 7
2.4 Bank Accounts 7
2.5 Availability of Federal Funds 8
2.6 Collection of Income 8
2.7 Payment of Fund Monies 9
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased 11
2.9 Appointment of Agents 12
2.10 Deposit of Fund Assets in Securities System 12
2.11 Fund Assets Held in the Custodian's Direct Paper System 15
2.12 Segregated Account 16
2.13 Ownership Certificates for Tax Purposes 17
2.14 Proxies 17
2.15 Communications Relating to Portfolio Securities 17
3. Duties of Custodian With Respect to Property of the Fund Held
Outside of the United States 18
3.1 Appointment of Foreign Sub-Custodians 18
3.2 Assets to be Held 19
3.3 Foreign Securities Depositories 19
3.4 Agreements with Foreign Banking Institutions 19
3.5 Access of Independent Accountants of the Fund 20
3.6 Reports by Custodian 20
3.7 Transactions in Foreign Custody Account 20
3.8 Liability of Foreign Sub-Custodians 21
3.9 Liability of Custodian 22
3.10 Reimbursement for Advances 22
3.11 Monitoring Responsibilities 23
3.12 Branches of U.S. Banks 23
3.13 Tax Law 24
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Page
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4. Payments for Repurchases or Redemptions and Sales of Shares
of the Fund 25
5. Proper Instructions 26
6. Actions Permitted Without Express Authority 26
7. Evidence of Authority 27
8. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income 27
9. Mitigation by Custodian 28
10. Notice of Litigation; Right to Proceed 28
11. Records 29
12. Opinion of Fund's Independent Accountants 30
13. Reports to Fund by Independent Public Accountants 30
14. Compensation by Custodian 31
15. Responsibility of Custodian 31
16. Effective Period, Termination and Amendment 33
17. Successor Custodian 34
18. Interpretive and Additional Provisions 35
19. Massachusetts Law to Apply 36
20. Prior Contracts 36
21. Limitation of Shareholder Liability 36
22. Shareholder Communications Election 36
23. Assignment 37
24 Severability 37
ii
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CUSTODIAN CONTRACT
This Contract between Global High Income Portfolio, a New York trust,
having its principal place of business at 50 California Street, San Francisco,
California 94111 hereinafter called the "Fund", and State Street Bank and Trust
Company, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian".
WITNESSETH: That in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of its assets,
including securities which it desires to be held in places within the United
States ("domestic securities") and securities it desires to be held outside the
United States ("foreign securities") pursuant to the provisions of the
Declaration of Trust. The Fund agrees to deliver to the Custodian all securities
and cash owned by it, and all payments of income, payments of principal or
capital distributions received by it with respect to all securities owned by the
Fund, from time to time, and the cash consideration received by it for such new
or treasury shares of beneficial interest, ("Shares") of the Fund as may be
issued or sold from time to time. The Custodian shall not be responsible for any
property of the Fund held or received by the Fund and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall from time to time employ one or more sub-custodians,
located in the United States but only in accordance with an applicable vote by
the Board of Trustees of the Fund, and provided that the Custodian shall have no
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more or less responsibility or liability to the Fund on account of any actions
or omissions of any sub-custodian so employed than any such sub-custodian has to
the Custodian. The Custodian may employ as sub-custodian for the Fund's foreign
securities and other assets the foreign banking institutions and foreign
securities depositories designated in Schedule A hereto but only in accordance
with the provisions of Article 3.
2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY
THE CUSTODIAN IN THE UNITED STATES
2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate
for the account of the Fund all non-cash property, to be held by it in
the United States including all domestic securities owned by the Fund,
other than (a) securities which are maintained pursuant to Section 2.10
in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U. S. Department of the Treasury,
collectively referred to herein as "Securities System" and (b)
commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in the Direct Paper System of the Custodian
pursuant to Section 2.11.
2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
domestic securities owned by the Fund held by the Custodian or in a
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only
upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and only in the
following cases:
1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;
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2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 thereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Fund;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to be
delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the name
of the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange
for a different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
PROVIDED that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of the Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, the Custodian shall have no responsibility
or liability for any loss arising from the delivery of such
securities prior to receiving payment for such securities except
3
<PAGE>
as may arise from the Custodian's own negligence or willful
misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that, in
any such case, the new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of securities made by
the Fund, but only against receipt of adequate collateral as
agreed upon from time to time by the Custodian and the Fund,
which may be in the form of cash or obligations issued by the
United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is
to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the delivery
of securities owned by the Fund prior to the receipt of such
collateral;
4
<PAGE>
11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, BUT ONLY against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934 (the "Exchange Act")
and a member of The National Association of Securities Dealers,
Inc. ("NASD"), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange, or of any similar organization or
organizations regarding escrow or other arrangements in
connection with transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any similar
organization or organizations, regarding account deposits in
connection with transactions by the Fund;
14) Upon receipt of instructions from the transfer agent, ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind,
as may be described from time to time in the Fund's currently
effective prospectus and statement of additional information
("Prospectus"), in satisfaction of requests by holders of Shares
for repurchase or redemption; and
5
<PAGE>
15) For any other proper corporate purpose, but only upon receipt of,
in addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive Committee
signed by an officer and certified by the Secretary or an
Assistant Secretary, specifying the securities of the Fund to be
delivered, setting forth the purpose for which such delivery is
to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Domestic Securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Fund or in the name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund,
UNLESS the Fund has authorized in writing the appointment of a nominee
to be used in common with other registered investment companies having
the same investment adviser as the Fund, or in the name or nominee name
of any agent appointed pursuant to Section 2.9 or in the name or
nominee name of any sub-custodian appointed pursuant to Article 1. All
securities accepted by the Custodian on behalf of the Fund under the
terms of this Contract shall be in "street name" or other good delivery
form. If, however, the Fund directs the Custodian to maintain
securities in "street name", the Custodian shall utilize its best
efforts only to timely collect income due the Fund on such securities
and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
6
<PAGE>
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Fund which
shall contain only property held by the Custodian as Custodian for the
Funds, subject only to draft or order by the Custodian acting pursuant
to the terms of this Contract, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Fund, other than cash maintained by the
Fund in a bank account established and used in accordance with Rule
17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for a Fund may be deposited by it to its credit as Custodian
in the Banking Department of the Custodian or in such other banks or
trust companies as it may in its discretion deem necessary or
desirable; PROVIDED, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company
Act of 1940 and that each such bank or trust company and the funds to
be deposited with each such bank or trust company shall be approved by
vote of a majority of the Board of Trustees of the Fund. Such funds
shall be deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that capacity.
2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund
and the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to such Fund as of specified
times agreed upon from time to time by the Fund and the Custodian in
the amount of checks received in payment for Shares of the Fund which
are deposited into the Fund's account.
2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
7
<PAGE>
each Fund shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and
other payments with respect to United States bearer domestic securities
if, on the date of payment by the issuer, such securities are held by
the Custodian or its agent thereof and shall credit such income, as
collected, to such Fund's custodian account. Without limiting the
generality of the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring presentation as
and when they become due and shall collect interest when due on
securities held hereunder. Income due the Fund on United States
securities loaned pursuant to the provisions of Section 2.2 (10) shall
be the responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the Fund
with such information or data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of the income to
which the Fund is properly entitled.
2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the
Fund but only (a) against the delivery of such securities or
evidence of title to such options, futures contracts or options
on futures contracts to the Custodian (or any bank, banking firm
or trust company doing business in the United States or abroad
which is qualified under the Investment Company Act of 1940, as
amended, to act as a custodian and has been designated by the
Custodian as its agent for this purpose) registered in the name
8
<PAGE>
of the Fund or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth
in Section 2.10 hereof; (c) in the case of a purchase involving
the Direct Paper System, in accordance with the conditions set
forth in Section 2.11; (d) in the case of repurchase agreements
entered into between the Fund and the Custodian, or another
bank, or a broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificate form or though
an entry crediting the Custodian's account at the Federal
Reserve Bank with such securities or (ii) against delivery of
the receipt evidencing purchase by the Fund of securities owned
by the Custodian along with written evidence of the agreement by
the Custodian to repurchase such securities from the Fund or (e)
for transfer to a time deposit account of the Fund in any bank,
whether domestic or foreign; such transfer may be effected prior
to receipt of a confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Fund as
set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Fund, including but not limited to the following payments for
the account of the Fund: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
9
<PAGE>
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to the
governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive
Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary, specifying
the amount of such payment, setting forth the purpose for which
such payment is to be made, declaring such purpose to be a
proper purpose, and naming the person or persons to whom such
payment is to be made.
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Fund is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions
from the Fund to so pay in advance, the Custodian shall be absolutely
liable to the Fund for such securities to the same extent as if the
securities had been received by the Custodian.
2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
10
<PAGE>
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; PROVIDED, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder. In the event of any loss, damage or expense suffered or
incurred by the Fund caused by or resulting from the negligence or
willful misconduct of any agent appointed by the custodian pursuant to
this Section 2.9, the Custodian shall promptly reimburse the Fund in
the amount of such loss, damage or expense.
2.10 DEPOSIT OF FUND ASSETS IN SECURITIES SYSTEMS. The Custodian may deposit
and/or maintain domestic securities owned by the Fund in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the U.
S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the following
provisions:
1) The Custodian may keep domestic securities of the Fund in a
Securities System provided that such securities are represented
in an account ("Account") of the Custodian in the Securities
System which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
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<PAGE>
2) The records of the Custodian with respect to securities of the
Fund which are maintained in a Securities System shall identify
by book-entry those securities belonging to the Fund;
3) The Custodian shall pay for domestic securities purchased for
the account of the Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred to
the Account, and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon (i) receipt of advice from
the Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advises from
the Securities System of transfers of domestic securities for
the account of the Fund shall identify the Fund, be maintained
for the Fund by the Custodian and be provided to the Fund at its
request. The Custodian shall furnish the Fund on behalf of the
Fund confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall furnish
to the Fund on behalf of the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities
System for the account of the Fund on the next business day;
4) The Custodian shall provide the Fund for the Fund with any
report obtained by the Custodian (or by any agent appointed by
the Custodian pursuant to Section 2.9 and furnished to the
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<PAGE>
Custodian) on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss, damage or
expense to the Fund resulting from use of the Securities System
by reason of any negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its or their
employees or from failure of the Custodian or any such agent to
enforce effectively such rights as it may have against the
Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the Securities System or any other
person which the Custodian may have as a consequence of any such
loss, damage or expense, if and to the extent that the Fund has
not been made whole for any such loss, damage or expense. The
Custodian agrees to cooperate with the Fund on connection with
the enforcements of the Fund's subrogation rights.
2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM
The Custodian may deposit and/or maintain securities owned by the Fund
in the Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions;
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2) The Custodian may keep securities of the Fund in the Direct
Paper System only if such securities are represented in an
account ("Account") of the Custodian in the Direct Paper System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to securities of the
Fund which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the account
of the Fund upon the making of an entry on the records of the
Custodian to reflect such payment and transfer of securities to
the account of the Fund. The Custodian shall transfer securities
sold for the account of the Fund upon the making of an entry on
the records of the Custodian to reflect such transfer and
receipt of payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund, in the form of a
written advice or notice, of Direct Paper on the next business
day following such transfer and shall furnish to the Fund copies
of daily transaction sheets reflecting each day's transaction in
the Securities System for the account of the Fund;
6) The Custodian and any agent appointed pursuant to Section 2.9
shall provide the Fund with any report on its system of internal
accounting control as the Fund may reasonably request from time
to time.
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2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of each such Fund, into which account or accounts may
be transferred cash and/or securities, including securities maintained
in an account by the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Fund, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or
written by the Fund or commodity futures contract or options thereon
purchased or sold by the Fund, (iii) for the purposes of compliance by
the Fund with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts
by registered investment companies and (iv) as mutually agreed upon
from time to time in writing by the Custodian and the Fund.
2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of the Fund held by it and
in connection with transfers of securities.
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2.14 PROXIES. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 COMMUNICATIONS RELATING TO FUND SECURITIES. Subject to the provisions
of Section 2.3, the Custodian shall transmit promptly to the Fund for
each Fund all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations
of rights in connection therewith and notices of exercise of call and
put options written by the Fund and the maturity of futures contracts
purchased or sold by the Fund) received by the Custodian from issuers
of the domestic securities being held for the Fund. With respect to
tender or exchange offers, the Custodian shall transmit promptly to the
Fund all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund
desires to take action with respect to any tender offer, exchange offer
or any other similar transaction, the Fund shall notify the Custodian
at least three business days prior to the date on which the Custodian
is to take such action.
3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD
OUTSIDE OF THE UNITED STATES
3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Fund's
securities and other assets maintained outside the United States the
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foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon
receipt of "Proper Instructions", as defined in Article 5 of this
Contract, together with a certified resolution of the Fund's Board of
Trustees, the Custodian and the Fund may agree to amend Schedule A
hereto from time to time to designate additional foreign banking
institutions and foreign securities depositories to act as
sub-custodian. Upon receipt of Property Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Fund's assets.
3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund may determine
to be reasonably necessary to effect the Fund's foreign securities
transactions. The Custodian shall identify on its books as belonging to
the Fund, the foreign securities of the Fund held by each foreign
sub-custodian.
3.3 FOREIGN SECURITIES DEPOSITORIES. Except as may otherwise be agreed upon
in writing by the Custodian and the Fund, assets of the Funds shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.5 hereof.
3.4 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall be substantially in the form set
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forth in Exhibit 1 hereto and shall provide that: (a) the Fund's assets
will not be subject to any right, charge, security interest, lien or
claims of any kind in favor of the foreign banking institution or is
creditors or agent, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the Fund's assets will be
freely transferable without the payment of money or value other than
for custody or administration; (c) adequate records will be maintained
identifying the assets as belonging to the Fund; (d) officers of or
auditors employed by, or other representatives of the Custodian,
including to the extent permitted under applicable law the independent
public accountants for the Fund, will be given access to the books and
records of the foreign banking institution relating to its actions
under its agreement with the Custodian; and (e) assets of the Funds
held by the foreign sub-custodian will be subject only to the
instructions of the Custodian of its agents.
3.5 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.6 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Fund held by foreign sub-custodians,
including but not limited to an identification of entities having
possession of the Fund's securities and other assets and advises or
notifications of any transfers of securities to or from each custodial
account maintained by a foreign banking institution for the Custodian
on behalf of the Fund indicating, as to securities acquired for the
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Fund, the identity of the entity having physical possession of such
securities.
3.7
TRANSACTIONS IN FOREIGN CUSTODY ACCOUNTS. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to
the foreign securities of the Funds of the Fund held outside the United
States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of each
applicable Fund and delivery of securities maintained for the account
of the Fund may be effected in accordance with the customary
established securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction
occurs, including, without limitation, delivering securities to the
purchaser thereof or to a dealer therefor (or an agent for such
purchaser or dealer) against a receipt with the expectation of
receiving later payment for such securities from such purchaser or
dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may
be maintained in the name of such entity's nominee to the same extent
as set forth in Section 2.3 of this Contract, and the Fund agrees to
hold any such nominee harmless from any liability as a holder of record
of such securities.
3.8 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless,
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the Custodian and the Fund from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund has not been made
whole for any such loss, damage, cost, expense, liability or claim.
3.9 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.12 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.9, in delegating custody duties to State
Street London Ltd., the Custodian shall not be relived of any
responsibility to the Fund for any loss due to such delegation, except
such loss as may result from (a) political risk (including, but not
limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or
(b) other losses (excluding a bankruptcy or insolvency of State Street
London, Ltd. not caused by political risk) due to acts of God, nuclear
incident or other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
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3.10 REIMBURSEMENT FOR ADVANCES. If the Fund requires the Custodian to
advance cash or securities for any purpose including the purchase or
sale of foreign exchange or of contracts for foreign exchange, or in
the event that the Custodian or its nominee shall incur or be assessed
any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may
arise from its or its nominee's own negligent action, negligent failure
to act or willful misconduct, any property at any time held for the
account of the Fund shall be security therefor and should the Fund fail
to repay the Custodian promptly, the Custodian shall be entitled to
utilize available cash and to dispose of such Funds assets to the
extent necessary to obtain reimbursement.
3.11 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Custodian
will promptly inform the Fund in the event that the Custodian learns of
a material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million (U.S. dollars
or the equivalent thereof) or that its shareholders' equity has
declined below $200 million (in each case computed in accordance with
generally accepted U.S. accounting principles).
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3.12 BRANCHES OF U.S. BANKING. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Fund's assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract.
(b) Cash held for each Fund in the United Kingdom shall be maintained
in an interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.13 TAX LAW. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Custodian
as custodian of the Fund by the tax law of the United States of America
or any state or political subdivision thereof. It shall be the
responsibility of the Custodian to use reasonable efforts and due care
(a) to perform such ministerial steps as are required to collect any
tax refund, (b) to ascertain the appropriate rate of tax withholding
and (c) to provide such documents as may be required to enable the Fund
to received appropriate tax treatment under applicable tax laws and any
applicable treaty provisions. Unless otherwise informed by the Fund,
the Custodian, in performance of its duties under this Section, shall
be entitled to apply categorical treatment of the Fund according to the
nationality of the Fund, the particulars of its organization and other
relevant details that shall be supplied by the Fund. The Custodian
shall be entitled to rely on any information supplied by the Fund. The
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<PAGE>
Custodian may engage reasonable professional advisors disclosed to the
Fund by the Custodian, which may include attorneys, accountants or
financial institutions in the regular business of investment
administration and may rely upon advise received therefrom. It shall be
the duty of the Fund to inform the Custodian of any change in the
organization, domicile or other relevant fact concerning tax treatment
of the Fund and further to inform the Custodian if the Fund is or
becomes the beneficiary of any special ruling or treatment not
applicable to the general nationality and category or entity of which
the Fund is a part under general laws and treaty provisions.
4. PAYMENTS FOR SALES OR REPURCHASE OR REDEMPTIONS OF SHARES OF THE FUND. From
such funds as may be available for the purpose but subject to the limitations of
the Declaration of Trust and any applicable votes of the Board of Trustees of
the Fund pursuant thereto, the Custodian shall, upon receipt of instructions
from the Transfer Agent, make funds available for payment to holders of Shares
who have delivered to the Transfer Agent a request for redemption or repurchase
of their Shares. In connection with the redemption or repurchase of shares of
the Fund, the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank designated by the
redeeming shareholders. In connection with the redemption or repurchase of
Shares of the Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the Fund to the holder of
Shares, when presented to the Custodian in accordance with such procedures and
controls as are mutually agreed upon from time to time between the Fund and the
Custodian.
The Custodian shall receive from the distributor for Fund's Shares or
from the Transfer Agent of the Fund and deposit into the Fund's account such
23
<PAGE>
payments as are received for Shares of that Fund issued or sold from time to
time by the Fund. The Custodian will provide timely notification to the Fund and
the Transfer Agent of any receipt by it of payments for Shares of the Fund.
5. PROPER INSTRUCTIONS. "Proper Instructions" as used throughout this Contract
means a writing signed in the name of the Fund by any TWO of the President, any
Vice President, the Secretary, the Assistant Secretary, the Treasurer or the
Assistant Treasurer of the Fund or any other persons duly authorized to sign
such writing by the Board of Trustees of the Fund. Each such writing shall set
forth the specific transaction or type of transaction involved, including a
specific statement of the purpose for which such action is requested. The
Custodian may act and rely upon oral instructions if the Custodian reasonable
believes them to have been given by a person authorized to give instructions
with respect to the transactions involved. Oral instructions shall be promptly
confirmed in writing by Proper Instructions. Upon receipt of a certificate of
the Secretary or an Assistant Secretary as to the authorization by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Custodian are satisfied that such procedures afford adequate
safeguards for the Funds' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.12.
6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The Custodian may in its
discretion, without express authority from the Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Contract,
provided that all such payments shall be accounted for to the Fund;
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<PAGE>
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other dealings with the
securities and property of the Fund except as otherwise directed by the Board of
Trustees of the Fund.
7. EVIDENCE OF AUTHORITY. The Custodian shall be protected in acting upon any
instructions, notice, request, consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly executed by or on behalf
of the Fund. The Custodian may receive and accept a certified copy of a vote of
the Board of Trustees of the Fund as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any determination or of
any action by the Board of Trustees pursuant to the Declaration of Trust as
described in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the contrary.
8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF
NET ASSET VALUE AND NET INCOME.
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective prospectus related to
the Fund and shall advise the Fund and the Transfer Agent daily of the total
amounts of such net income and, if instructed in writing by an officer of the
Fund to do so, shall advise the Transfer Agent periodically of the division of
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such net income among its various components. The calculations of the net asset
value per share and the daily income of each Fund shall be made at the time or
times described from time to time in the Fund's currently effective prospectus.
9. MITIGATION BY CUSTODIAN. Upon the occurrence of any event connected with the
duties of the Custodian under this Contract which causes or may cause any loss,
damage or expense to the fund, (i) the Custodian shall, and (ii) shall exercise
reasonable efforts to cause any sub-custodian to, use reasonable efforts and
take all reasonable steps under the circumstances to mitigate the effects of
such event and to avoid continuing harm to the Fund.
10. NOTIFICATION OF LITIGATION; RIGHT TO PROCEED. The Fund shall not be liable
for indemnification under this Contract to the extent that the Fund's ability to
defend against any litigation or proceeding brought against the Custodian in
respect of which indemnity may be sough under this Contract is prejudiced by the
Custodian's failure to give prompt notice of the commencement of any such
litigation or proceeding, With respect to claims in such litigation or
proceedings for which indemnity by the Fund may be sough and subject to
applicable law and the ruling of any court of competent jurisdiction, the Fund
shall be entitled to participate in any such litigation or proceeding and, after
written notice from the Fund to the Custodian, the Fund may assume the defense
of such litigation or proceeding with counsel of its choice at its own expense
in respect of that portion of the litigation for which the Fund may be subject
to an indemnification obligation; provided, however, that the Custodian shall be
entitled to participate in the defense of any such litigation or proceeding. If
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the Funds has acknowledged in writing its obligation to indemnify the Custodian
with respect to such litigation or proceeding, the Custodian's participation
shall be at its own expense and the Fund shall control the defense of the
litigation or proceeding. If the Fund is not permitted to participate in or
control such litigation or proceeding under applicable law or by a ruling of a
court of competent jurisdiction, the Custodian shall reasonably prosecute such
litigation or proceeding. The Custodian shall not consent to the entry of any
judgment or enter into any settlement in any such litigation or proceeding
without providing the Fund with adequate notice of any such settlement or
judgment, and without the Fund's prior written consent. The Custodian shall
submit written evidence to the Fund with respect to any cost or expense for
which it is seeking indemnification in such form and detail as the Fund may
reasonable request.
11. RECORDS. The Custodian shall create and maintain and retain all records
relating to its activities and obligations under this Contract in such manner as
will meet the obligations of the Fund under the Investment Company Act of 1940
and the rules and regulations thereunder, with particular attention to Section
31 thereof and Rules 31a-1 and 31a-2 thereunder. All such records shall be the
property of the Fund and in the event of termination of this Contract shall be
delivered to the Fund or a successor custodian as instructed by the Fund. All
such records shall at all times during the regular business hours of the
Custodian be open for inspection and audit by duly authorized officers,
employees or agents of, attorneys for and auditors employed by the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
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owned by the Fund and held by the Custodian and shall, when requested to do so
by the Fund and for such compensation as shall be agreed upon between the Fund
and the Custodian, include certificate numbers in such tabulations.
12. OPINION OF FUND'S INDEPENDENT ACCOUNTANT. The Custodian shall take all
reasonable action, as the Fund may from time to time request, to obtain from
year to year favorable opinions from the Fund's independent accountants with
respect to its activities hereunder in connection with the preparation of the
Fund's Form N-1A, and Form N-SAR or other annual reports to the Securities and
Exchange Commission and with respect to any other requirements of such
Commission.
13. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. The Custodian shall
provide the Fund, such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including domestic securities deposited and/or
maintained in a Securities System, relating to the services provided by the
Custodian under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so state.
14. COMPENSATION OF CUSTODIAN. The Custodian shall be entitled to reasonable
compensation for its services and expenses as Custodian, as agreed upon from
time to time between the Fund and the Custodian.
15. RESPONSIBILITY OF CUSTODIAN. So long as and to the extent that it is in the
exercise of reasonable care, the Custodian shall not be responsible for the
title, validity or genuineness of any property or evidence of title thereto
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received by it or delivered by it pursuant to this Contract and shall be held
harmless in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options agreement. The
Custodian shall be held to the exercise of reasonable care and diligence in
carrying out the provisions of this Contract, but shall be kept indemnified by
and shall be without liability to the Fund for any action taken or omitted by it
in good faith without negligence. It shall be entitled to rely on and may act
upon advice of counsel (who may be counsel for the Fund) on all matters, and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Section 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by Section 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability of claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody or any
securities or cash of the Fund in a foreign country including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund or the Fund being liable for the payment of money or incurring
liability of some other form, the Fund, as a prerequisite to requiring the
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Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of such
Fund's assets to the extent necessary to obtain reimbursement.
16. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. This Contract shall become
effective as of its execution, shall continue in full force and effect until
terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than thirty (30) days after the date
of such delivery or mailing; PROVIDED, however that the Custodian shall not act
under Section 2.10 hereof in the absence of receipt of an initial certificate of
the Secretary or an Assistant Secretary that the Board of Trustees of the Fund
has approved the initial use of a particular Securities System and the of
receipt of an annual certificate of the Secretary or an Assistant Secretary that
the Board of Trustees has reviewed the use of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company Act of 1940, as
amended and that the Custodian shall not act under Section 2.11 hereof in the
absence of receipt of an initial certificate of the
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Secretary or an Assistant Secretary that the Board of Trustees has approved the
initial use of the Direct Paper System and the receipt of an annual certificate
of the Secretary or an Assistant Secretary that the Board of Trustees has
reviewed the use by the Fund of the Direct Paper System; PROVIDED FURTHER,
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Declaration of Trust, and further provided, that the Fund may at any time
by action of its Board of Trustees (i) substitute another bank or trust company
for the Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction. Upon termination of the Contract, the
Fund shall pay to the Custodian such compensation as may be due as of the date
of such termination and shall likewise reimburse the Custodian for its costs,
expenses and disbursements.
17. SUCCESSOR CUSTODIAN. If a successor custodian shall be appointed by the
Board of Trustees of the Fund, the Custodian shall, upon termination, deliver to
such successor custodian at the office of the Custodian, duly endorsed and in
the form for transfer, all securities then held by it hereunder and shall
transfer to an account of the successor custodian all of the securities of each
such Fund held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
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of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank' as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect. The Custodian agrees to
cooperate with the successor custodian and the Fund in execution of documents
and performance of other action necessary or desirable in order to substitute
the successor custodian for the Custodian.
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18. INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with the operation of
this Contract, the Custodian and the Fund, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, PROVIDED that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Declaration of Trust of the Fund. No
interpretive or additional provisions made as provided in the preceding sentence
shall be deemed to be an amendment of this Contract.
19. MASSACHUSETTS LAW TO APPLY. This Contract shall be construed and the
provisions thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.
20. PRIOR CONTRACTS. This Contract supersedes and terminates, as of the date
hereof, all prior contracts between the Fund and the Custodian relating to the
custody of the Fund's assets.
21. LIMITATION OF SHAREHOLDER LIABILITY. It is expressly agreed that the
obligations of the Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Fund personally,
but shall only bind the assets and property of the Fund, as provided in the
Fund's Declaration of Trust. The execution and delivery of this Agreement have
been authorized by the Trustees of the fund, and this Agreement has been
executed and delivered by an authorized officer of the Fund acting as such;
neither such authorization by such Trustees nor such execution and delivery by
such officer shall be deemed to have been made by any of them individually or to
33
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impose any liability on any of them personally, but shall bind only the assets
and property of the Funds, as provided in the Fund's Declaration of Trust.
22. SHAREHOLDER COMMUNICATIONS ELECTION. Securities and Exchange Commission Rule
14b-2 requires banks which hold securities for the account of customers to
respond to requests by issuers of securities for the names, addresses and
holdings of beneficial owners of securities of that issuer held by the bank
unless the beneficial owner has expressly objected to disclosure of this
information. In order to comply with the rule, the Custodian needs the Fund to
indicate whether it authorizes the Custodian to provide the Fund's name,
address, and share position to requesting companies whose securities the Fund
owns. If the Fund tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the fund tells the Custodian "yes" or
does not check either "yes" or "no" below, the Custodian is required by the rule
to treat the Fund as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by the Fund.
For the Fund's protection, the Rule prohibits the requesting company from using
the Fund's name and address for any purpose other than corporate communications.
Please indicate below whether the Fund consents or objects by checking one of
the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [ x ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
23. ASSIGNMENT. Neither the Fund nor the Custodian shall have the right to
assign any of its rights or obligations under this Contract without the prior
written consent of the other party.
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24. SEVERABILITY. If any provision of this Contract is held to be unenforceable
as a matter of law, the other terms and provisions hereof shall not be affected
thereby and shall remain in full force and effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 21ST day of OCTOBER, 1992.
ATTEST: GLOBAL HIGH INCOME PORTFOLIO
/s/ Peter R. Guarino By: /s/ James R. Tufts
- - ---------------------------- ------------------------------
ATTEST: STATE STREET BANK AND TRUST
COMPANY
/s/ Janine McDuffy By: /s/
- - ------------------ ------------------------------
Executive Vice President
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SCHEDULE A
GLOBAL HIGH INCOME PORTFOLIO:
The following foreign banking institutions and foreign securities
depositories have been approved by the board of trustees of the above-mentioned
trust for use by the indicated trust as sub-custodians for the securities and
other assets:
Citibank, N.A.-Argentina (Caja de Valores) (Argentina)
Australia and New Zealand Banking Group, Limited (Austraclear) (Australia)
Girozentrale and Bank de Osterreichischen Sparkassen (OEKB) (Austria)
Banque Bruxelles Lambert (C.I.K.) (Belgium)
Citibank, N.A. Brazil (BOVESPA) (Brazil)
Canada, Trust Company (CDS) (Canada)
Citibank, N.A.-Chile (Chile)
Den Danske Bank (VP-Centralen) (Denmark)
Kansallis-Osake-Pankki (Finland)
Credit Commercial de France (SICOVAM) (France)
Berliner Handels-Und Frankfurter Bank (Kassenverein) (Germany)
National Bank of Greece (The Central Depository) (Greece)
Standard Chartered Bank Hong Kong (Hong Kong)
Standard Chartered Bank Jakarta (Indonesia)
Bank of Ireland (GSO) (Ireland)
Credito Italiano (Monte Titoli) (Italy)
Sumitomo Trust & Banking Co. (Japan)
Standard Chartered Bank, Kuala Lumpur (Malaysia)
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Citibank, N.A.-Mexico (INDEVAL) (Mexico)
Bank Mees and Hope N.V. (NECIGEF) (The Netherlands)
Westpac Banking Corporation (New Zealand)
Christiania Bank Og Kreditkasse (VPS) (Norway)
Standard Chartered Bank (the Philippines)
Banco Comercial Portugues (Portugal)
Development Bank of Singapore (CDP) (Singapore)
Banco Hispano Americano, S.A. (Spain)
Skandinaviska Enskilda Banken (VPC) (Sweden)
Union Bank of Switzerland (SEGA) (Switzerland)
Central Trust of China (TSCD) (Taiwan)
Standard Chartered Bank, Bangkok (SDC) (Thailand)
Citibank, N.A. Turkey (Turkey)
State Street London Limited (CGO) (United Kingdom)
Citibank, N.A. -Venezuela (Venezuela)
Cedel
Euro-Clear
GLOBAL HIGH INCOME PORTFOLIO
/s/ Peter R. Guarino
- - --------------------
Peter R. Guarino
Assistant Secretary
Dated as of October 21, 1992
2
<PAGE>
EXHIBIT I
SUBCUSTODIAN AGREEMENT
AGREEMENT made this _____ day of ______________ 19 __, between State Street
Bank and Trust Company, A Massachusetts Trust Company (hereinafter referred to
as the "Custodian") , having its principal place of business at 225 Franklin
Street, Boston, MA, and _______________________________________(hereinafter
referred to as the "Subcustodian") , a ___________________________organized
under the laws of ______________________and having an office at
________________________________________________________________________________
WHEREAS, Custodian has been appointed to act as Trustee, Custodian or
Subcustodian of securities and monies on behalf of certain of its customers
including, without limitation, collective investment undertakings, investment
companies subject to the U.S. Investment Company Act of 1940, as amended, and
employee benefit plans subject to the U.S. Employee Retirement Income Security
Act of 1974, as amended;
WHEREAS, Custodian wishes to establish Account (the "Account") with the
Subcustodian to hold and maintain certain property for which Custodian is
responsible as custodian; and
WHEREAS, Subcustodian agrees to establish the Account and to hold and
maintain all Property in the Account in accordance with the terms and conditions
herein set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the Custodian and the Subcustodian agree as follows:
I. The Account
-----------
A. Establishment of the Account. Custodian hereby requests that
Subcustodian establish for each client of the Custodian an Account which shall
be composed of:
1. A Custody Account for any and all Securities (as hereinafter
defined) from time to time received by Subcustodian therefor, and
2. A Deposit Account for any and all Cash (as hereinafter defined)
from time to time received by Subcustodian therefor.
B. Use of the Account. The Account shall be used exclusively to hold,
acquire, transfer or otherwise care for, on behalf of Custodian as custodian and
the customers of Custodian and not for Custodian's own interest, Securities and
such Cash or cash equivalents as are transferred to Subcustodian or as are
received in payment of any transfer of, or as payment on, or interest on, or
dividend from, any such Securities (herein collectively called "Cash").
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C. Transfer of Property in the Account. Beneficial ownership of the
Securities and Cash in the Account shall be freely transferable without payment
of money or value other than for safe custody and administration.
D. Ownership and Segregation of Property in the Account. The ownership of
the property in the Account, whether Securities, Cash or both, and whether any
such property is held by Subcustodian in an Eligible Depository, shall be
clearly recorded on Subcustodian's books as belonging to Custodian on behalf of
Custodian's customers, and not for Custodian's own interest and, to the extent
that Securities are physically held in the Account, such Securities shall also
be physically segregated from the general assets of Subcustodian, the assets of
Custodian in its individual capacity and the assets of Subcustodian's other
customers. In addition, Subcustodian shall maintain such other records as may be
necessary to identify the property hereunder as belonging to each Account.
E. Registration of Securities in the Account. Securities which are eligible
for deposit in a depository as provided for in Paragraph III may be maintained
with the depository in an account for Subcustodian's customers. Securities which
are not held in a depository and that are ordinarily held in registered form
will be registered in the name of Subcustodian or in the name of Subcustodian's
nominee, unless alternate Instructions are furnished by Custodian.
II. Services to Be Provided By the Subcustodian
The services Subcustodian will provide to Custodian and the manner in which
such services will be performed will be as set forth below in this Agreement.
A. Services Performed Pursuant to Instructions. All transactions involving
the Securities and Cash in the Account shall be executed solely in accordance
with Custodian's Instructions as that term is defined in Paragraph IV hereof,
except those described in paragraph B below.
B. Services to Be Performed Without Instructions. Subcustodian will, unless
it receives Instructions from Custodian to the contrary:
1. Collect Cash. Promptly collect and receive all dividends, income,
principal, proceeds from transfer and other payments with respect to property
held in the Account, and present for payment all Securities held in the Account
which are called, redeemed or retired or otherwise become payable and all
coupons and other income items which call for payment upon presentation, and
credit Cash receipts therefrom to the Deposit Account.
2. Exchange Securities. Promptly exchange Securities where the
exchange is purely ministerial including, without limitation, the exchange of
temporary Securities for those in definitive form and the exchange of warrants,
or other documents of entitlement to Securities, for the Securities themselves.
2
<PAGE>
3. Sale of Rights and Fractional Interests. Whenever notification of a
rights entitlement or a fractional interest resulting from a rights issue, stock
dividend or stock split is received for the Account and such rights entitlement
or fractional interest bears an expiration date, Subcustodian will promptly
endeavor to obtain Custodian's Instructions, but should these not be received in
time for Subcustodian to take timely action, Subcustodian is authorized to sell
such rights entitlement or fractional interest and to credit the Account.
4. Execute Certificates. Execute in Custodian's name for the Account,
whenever Subcustodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of income from the
Securities held in the account.
5. Pay Taxes and Receive Refunds. To pay or cause to be paid from the
Account any and all taxes and levies in the nature of taxes imposed on the
property in the Account by any governmental authority, and to take all steps
necessary to obtain all tax exemptions, privileges or other benefits, including
reclaiming and recovering any foreign withholding tax, relating to the Account
and to execute any declaration, affidavits, or certificates of ownership which
may be necessary in connection therewith.
6. Prevent Losses. Take such steps as may be reasonably necessary to
secure or otherwise prevent the loss of, entitlements attached to or otherwise
relating to property held in the Account.
C. Additional Services.
1. Transmission of Notices of Corporate Action. By such means as will
permit custodian to take timely action with respect thereto, Subcustodian will
promptly notify Custodian upon receiving notices or reports, or otherwise
becoming aware, of corporate action affecting Securities held in the Account
(including, but not limited to, calls for redemption, mergers, consolidations,
reorganizations, recapitalizations, tender offers, rights offerings, exchanges,
subscriptions and other offerings) and dividend, interest and other income
payments relating to such Securities.
2. Communications Regarding the Exercise of Entitlements. Upon request
by Custodian, Subcustodian will promptly deliver, or cause any Eligible
Depository authorized and acting hereunder to deliver, to Custodian all notices
proxies, proxy soliciting materials and other communications that call for
voting or the exercise of rights or other specific action (including material
relative to legal proceedings intended to be transmitted to security holders)
relating to Securities held in the Account to the extent received by
Subcustodian or said Eligible Depository, such proxies or any voting instruments
to be executed by the registered holder of the Securities, but without
indicating the manner in which such Securities are to be voted.
3. Monitor Financial Service. In furtherance of its obligations under
this Agreement, Subcustodian will monitor a leading financial service with
respect to announcements and other information respecting property held in the
3
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Account, including announcements and other information with respect to corporate
actions and dividend, interest and other income payments.
III. Use of Securities Depository
Subcustodian may, with the prior written approval of Custodian, maintain all or
any part of the Securities in the Account with a securities depository or
clearing agency which is incorporated or organized under the laws of a country
other than the United States of America and is supervised or regulated by a
government agency or regulatory authority in the foreign jurisdiction having
authority over such depositories or agencies, and which operates (a) the central
system for handling of designated securities, or equivalent book entries in
_______________________, or (b) a transnational system for the central handling
of securities or equivalent book entries (herein called "Eligible Depository") ,
provided however, that, while so maintained, such securities shall be subject
only to the directions of Subcustodian, and that Subcustodian duties,
obligations and responsibilities with regard to such Securities shall be the
same as if such Securities were held by Subcustodian on its premises.
IV. Claims Against Property in the Account
The property in the account shall not be subject to any right, charge, security
interest, lien or claim of any kind (collectively "Charges") in favor of
Subcustodian or any Eligible Depository or any creditor of Subcustodian or of
any Eligible Depository except a claim for payment for such property's safe
custody or administration in accordance with the terms of this Agreement.
Subcustodian will immediately notify Custodian of any attempt by any party to
assert any Charge against the property held in the Account and shall take all
lawful actions to protect such property from such Charges until Custodian has
had a reasonable time to respond to such notice.
V. Subcustodian's Warranty
Subcustodian represents and warrants that:
(A) It is a branch of a "qualified U.S. bank" or an "eligible foreign
custodian" as those terms are defined in Rule 17f-5 of the Investment Company
Act of 1940, a copy of which is attached hereto as Attachment A (the "Rule"),
and subcustodian shall immediately notify Custodian, in writing or. by other
authorized means, in the event that there appears to be a substantial likelihood
that Subcustodian will cease to qualify under the Rule as currently in effect or
as hereafter amended, or
(B) It is the subject of an exemptive order issued by the United States
Securities and Exchange Commission which order permits Custodian to employ
Subcustodian notwithstanding the fact that Subcustodian fails to qualify under
the terms of the Rule, and Subcustodian shall immediately notify Custodian, in
writing or by other authorized means, if for any reason it is no longer covered
by such exemptive order.
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Upon receipt of any such notification required under (A) or (B) of this section,
Custodian may terminate this Agreement immediately without prior notice to
Subcustodian.
VI. Definitions
A. Instructions. The term "Instructions" means:
1. instructions in writing signed by authorized individuals
designated as such by Custodian;
2. telex or tested telex instructions of Custodian;
3. other forms of instructions in computer readable form as shall
customarily be used for the transmission of like information, and
4. such other forms of communication as from time to time may be
agreed upon by Custodian and Subcustodian, which subcustodian believes in good
faith to have been given by Custodian or which are transmitted with proper
testing or authentication pursuant to terms and conditions which Custodian may
specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded. Subcustodian shall act in
accordance with Instructions and shall not be liable for any act or omission in
respect of any Instruction except in the case of willful default, negligence,
fraud, bad faith, willful misconduct, or reckless disregard of duties on the
part of Subcustodian. Subcustodian in executing all Instructions will take
relevant action in accordance with accepted industry practice and local
settlement practice.
B. Account. The term "Account" means collectively the Custody Account, and
the Deposit Account.
C. Securities. The term "Securities" includes, without limitation, stocks,
shares, bonds, debentures, debt securities (convertible or non-convertible) ,
notes, or other obligations or securities and any certificates, receipts,
futures contracts, foreign exchange contracts, options, warrants, scrip or other
instruments representing rights to receive, purchase or subscribe for the same,
or evidencing or representing any other rights or interests therein, or in any
property or assets.
VII. Miscellaneous Provision
A. Statements Regarding the Account. Subcustodian will supply Custodian
with such statements regarding the Account as Custodian may request, including
the identity and location of any Eligible Depository authorized and acting
hereunder. In addition, Subcustodian will supply Custodian an advice or
notification of any transfers of Securities to or from the Account indicating as
to Securities acquired for the Account, if applicable, the Eligible Depository
having physical possession Securities.
5
<PAGE>
B. Examination of Books and Records. Subcustodian agrees that its books and
records relating to the Account and Subcustodian's actions under this Agreement
shall be open to the physical, on-premises inspection and audit at reasonable
times by officers of, auditors employed by or other representatives of Custodian
including (to the extent permitted under the law of ___________) the independent
public accountants for any customer of Custodian whose property is being held
hereunder and such books and records shall be retained for such period as shall
be agreed upon by Custodian and Subcustodian.
As Custodian may reasonably request from time to time, Subcustodian will furnish
its auditor's reports on its system of internal controls, and Subcustodian will
use its best efforts to obtain and furnish similar reports of any Eligible
Depository authorized and acting hereunder.
C. Standard of Care. In holding, maintaining, servicing and disposing of
Property under this Agreement, and in fulfilling any other obligations
hereunder, Subcustodian shall exercise the same standard of care that it
exercises over its own assets, PROVIDED that Subcustodian shall exercise at
least the degree of care and maintain adequate insurance as expected of a
prudent professional Subcustodian for hire and shall assume the burden of
proving that it has exercised such care in its maintenance of Property held by
Subcustodian in its Account. The maintenance of the Property in an Eligible
Depository shall not affect Subcustodian's standard of care, and Subcustodian
will remain as fully responsible for any loss or damage to such securities as if
it had itself retained physical possession of them. Subcustodian shall also
indemnify and hold harmless Custodian and each of Custodian's customers from and
against any loss, damage, cost, expense, liability or claim (including
reasonable attorney's fees) arising out of or in connection with the improper or
negligent performance or the nonperformance of the duties of Subcustodian.
Subcustodian shall be responsible for complying with all provisions of the law
of ______________ or any other law, applicable to Subcustodian in connection
with its duties hereunder, including (but not limited to) the payment of all
transfer taxes or other taxes and compliance with any currency restrictions and
securities laws in connection with its duties as Subcustodian.
D. Loss of Cash or Securities. Subcustodian agrees that, in the even of any
loss of Securities or Cash in the Account, Subcustodian will use its best
efforts to ascertain the circumstances relating to such loss and will promptly
report the same to Custodian and shall use every legal means available to it to
effect the quickest possible recovery.
E. Compensation of Subcustodian. Custodian agrees to pay to Subcustodian
from time to time such compensation for its services and such out-of-pocket or
incidental expenses of Subcustodian pursuant to this Agreement as may be
mutually agreed upon in writing from time to time.
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<PAGE>
F. Operating Requirements. The Subcustodian agrees to follow such Operating
Requirements as the Custodian may establish from time to time. A copy of the
current Operating Requirements is attached as Attachment B to this Agreement.
G. Termination. This Agreement may be terminated by Subcustodian or
Custodian on 60 days' written notice to the other party, sent by registered
mail, provided that any such notice, whether given by Subcustodian or Custodian,
shall be followed within 60 days by Instructions specifying the names of the
persons to whom Subcustodian shall deliver the Securities in the Account and to
whom the Cash in the account shall be paid. If within 60 days following the
giving of such notice of termination, Subcustodian does not receive such
Instructions, Subcustodian shall continue to hold such Securities and Cash
subject to this Agreement until such Instructions are given. The obligations of
the parties under this Agreement shall survive the termination of this
Agreement.
G. Notices. Unless otherwise specified in this Agreement, all notices and
communications with respect to matters contemplated by this Agreement shall be
in writing, and delivered by mail, postage prepaid, telex, SWIFT, or other
mutually agreed telecommunication methods to the following addresses (or to such
other address as either party hereto may from time to time designate by notice
duly given in accordance with this paragraph):
To Subcustodian:
To Custodian State Street Bank and Trust Company
Securities Operations/
Network Administration
P.O. Box 1631
Boston, MA 02105
H. Confidentiality. Subcustodian and Custodian shall each use its best
efforts to maintain the confidentiality of the property in the Account and the
beneficial owners thereof, subject, however, to the provisions of any laws,
requiring disclosure. In addition, Subcustodian shall safeguard any test keys,
identification codes or other security devices which Custodian shall make
available to it. The Subcustodian further agrees it will not disclose the
existence of this Agreement or any current business relationship unless
compelled by applicable law or regulation or unless it has secured the
Custodian's written consent.
I. Assignment. This Agreement shall not be assignable by either party but
shall bind any successor in interest of Custodian and Subcustodian respectively.
J. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of _____________________. To the extent inconsistent
with this Agreement or Custodian's Operating Requirements as attached hereto,
Subcustodian's rules and conditions regarding accounts generally or custody
accounts specifically shall not apply.
7
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CUSTODIAN: STATE STREET BANK AND TRUST COMPANY
By: ________________________________
Date: _______________________________
AGREED TO BY SUBCUSTODIAN
- - ------------------------------------
By: ________________________________
Date: _______________________________
8
<PAGE>
COOPERS
&LYBRAND Coopers & Lybrand L.L.P.
a professional services firm
Consent of Independent Accountants
To the Board of Trustees of Global High Income Portfolio
We consent to the inclusion in Post Effective Amendment No. 6 to the
Registration Statement of Global High Income Portfolio on Form N-1A (File No.
811-7302) of our report dated December 13, 1996 on our audit of the financial
statements and financial highlights of the above referenced funds which report
is included in the Annual Report to Shareholders for the year ended October 31,
1996 which is included in the Post Effective Amendment to the Registration
Statement.
We also consent to the reference to our Firm under the caption, "Financial
Statements."
/s/ Coopers & Lybrand L.L.P.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
February 24, 1997
GLOBAL HIGH INCOME PORTFOLIO
LETTER OF INVESTMENT INTENT
To the Board of Trustees of Global High Income Portfolio:
The undersigned (the "Purchaser") hereby subscribes to purchase a
beneficial interest ("Interest") of Global High Income Portfolio in
consideration for which the Purchaser agrees to transfer to you upon demand cash
in the amount of One Hundred Thousand Dollars ($100,000.00).
The Purchaser agrees that the beneficial interest is being purchased
for investment with no present intention of reselling or redeeming said
Interest.
Dated and effective this 16th day of October, 1992.
G.T. GLOBAL HIGH INCOME FUND
/s/ James W. Churm
------------------------------
By: James W. Churm
Vice President
<PAGE>
GLOBAL HIGH INCOME PORTFOLIO
LETTER OF INVESTMENT INTENT
To the Board of Trustees of Global High Income Portfolio:
The undersigned (the "Purchaser") hereby subscribes to purchase a
beneficial interest ("Interest") of Global High Income Portfolio in
consideration for which the Purchaser agrees to transfer to you upon demand cash
in the amount of One Hundred Thousand Dollars ($100,000.00).
The Purchaser agrees that the beneficial interest is being purchased
for investment with no present intention of reselling or redeeming said
Interest.
Dated and effective this 16th day of October, 1992.
G.T. CAPITAL MANAGEMENT, INC.
/s/ James W. Churm
-------------------------------
By: James W. Churm
Vice President
