As filed with the Securities and Exchange Commission on April 30, 1998
File No. 811-07291
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 3
THE PREMIUM PORTFOLIOS*
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
ELIZABETHAN SQUARE, GEORGE TOWN, GRAND CAYMAN, CAYMAN ISLANDS, BWI
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(345) 945-1824
SUSAN JAKUBOSKI, ELIZABETHAN SQUARE, GEORGE TOWN,
GRAND CAYMAN, CAYMAN ISLANDS, BWI
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROGER P. JOSEPH, BINGHAM DANA LLP,
150 FEDERAL STREET, BOSTON, MA 02110
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* Relates only to Emerging Asian Markets Equity Portfolio.
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EXPLANATORY NOTE
Beneficial interests in the Registrant are not registered under the
Securities Act of 1933, as amended (the "1933 Act"), because such interests 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.
Investments in the Registrant may be made only by investment companies, common
or commingled trust funds or similar organizations or entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any beneficial interests in the Registrant.
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PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant.
Emerging Asian Markets Equity Portfolio (the "Portfolio") is a separate
series of The Premium Portfolios (the "Trust"). Citibank, N.A. ("Citibank" or
the "Adviser") is the investment adviser for the Portfolio. The Trust is an
open-end management investment company which was organized as a trust under the
laws of the State of New York on September 13, 1993. 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 U.S.
Securities Act of 1933, as amended (the "1933 Act"). Investments in the
Portfolio may be made only by investment companies, common or commingled trust
funds or similar organizations or entities which are "accredited investors"
within the meaning of Regulation D under the 1933 Act. This Registration
Statement does not constitute an offer to sell, or the solicitation of an offer
to buy, any "security" within the meaning of the 1933 Act.
BENEFICIAL INTERESTS IN THE PORTFOLIO ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, CITIBANK, N.A. OR ANY OF ITS AFFILIATES, ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER AGENCY AND
INVOLVE INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT
INVESTED.
INVESTMENT OBJECTIVE AND POLICIES:
The investment objective of the Portfolio is long-term capital growth.
Dividend income, if any, is incidental to this investment objective.
The Portfolio seeks its objective by investing mainly in equity
securities of issuers located in Asian countries with emerging markets and
developing economies. These countries include the Philippines, Malaysia,
Indonesia, Thailand, South Korea, Taiwan, the People's Republic of China,
India, Pakistan, Sri Lanka and Vietnam. These countries are called,
collectively, "Emerging Asia Countries." Under normal circumstances, at least
sixty-five percent of the Portfolio's total assets is invested in equity
securities of issuers in at least three Emerging Asia Countries. For purposes
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of this policy, equity securities are defined as common stock, securities
convertible into common stock, and trust or limited partnership interests, and
include securities purchased directly or in the form of sponsored American
Depositary Receipts, European Depositary Receipts or other similar securities
representing common stock of non-U.S. issuers.
An issuer is deemed to be "located in" or "in" a particular country if it
meets at least one of the following tests: (i) the issuer's securities are
principally traded in the country's markets; (ii) the issuer's principal
offices or operations are located in the country; or (iii) the issuer derives
at least 50% of its revenues from goods or services sold or manufactured in the
country.
In selecting common stocks for the Portfolio the Adviser emphasizes
equity securities of companies that, in the opinion of the Adviser, offer the
potential for sustainable long-term growth in earnings. The Portfolio may
invest in companies with small, medium and large market capitalizations. The
Adviser may also select other securities which it believes provide an
opportunity for appreciation, such as fixed income securities, convertible and
non-convertible bonds, preferred stock and warrants. The Portfolio's assets
usually consist of issues listed on securities exchanges.
"Certain Information about Emerging Asia Countries" below in this Part A
includes additional information concerning Emerging Asia Countries. All of
these countries are considered developing and, in general, have new and limited
or restricted securities markets.
The Adviser believes that the economies of the Emerging Asia Countries,
although currently experiencing many challenges, could return to above average
rates of economic growth within a few years. The Adviser also believes that
investing in the Portfolio may provide effective diversification for a
portfolio invested in United States and developed international markets,
because emerging markets generally have not moved in sync with more developed
international markets over the long-term.
Investors should keep in mind, however, that Emerging Asia Countries
recently have been and may continue to be subject to severe political, social
and economic setbacks. The setbacks in these markets may result from, among
other things, the following: (i) authoritarian governments or military
involvement in political and economic decision-making, including changes in
government through extra-constitutional means; (ii) popular unrest associated
with demands for improved political, economic and social conditions; (iii)
internal insurgencies; (iv) hostile relations with neighboring countries; and
(v) ethnic, religious and racial disaffection. Such social, political and
economic setbacks could continue to disrupt financial markets in which the
Portfolio invests and adversely affect the value of the Portfolio's assets.
In recent months, there has been extraordinary economic turmoil in
Emerging Asia Countries. In late 1997, a number of the Emerging Asia Countries
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suffered currency devaluations, equity market downturns, and other detrimental
economic events, leading several countries to request and receive assistance
from the International Monetary Fund. The International Monetary Fund has
provided assistance in exchange for assurances of financial reform. There can
be no assurance that these reforms will occur. Economic turmoil may continue in
the region and may negatively impact the Portfolio's return and the value of
the Portfolio's beneficial interests. See "Certain Information about Emerging
Asia Countries" below.
CERTAIN ADDITIONAL INVESTMENT POLICIES:
TEMPORARY INVESTMENTS. For temporary defensive purposes, the Portfolio
may invest without limit in cash and in U.S. dollar-denominated high quality
money market and short-term instruments. These investments may result in a
lower yield than would be available from investments with a lower quality or
longer term.
OTHER PERMITTED INVESTMENTS. For more information regarding the
Portfolio's permitted investments and investment practices, see "Permitted
Investments and Investment Practices." The Portfolio will not necessarily
invest or engage in each of the investments and investment practices described
in "Permitted Investments and Investment Practices" but reserves the right to
do so.
INVESTMENT RESTRICTIONS. Part B of this Registration Statement contains a
list of specific investment restrictions which govern the investment policies
of the Portfolio, including a limitation that the Portfolio may borrow money
from banks in an amount not to exceed 1/3 of the Portfolio's net assets for
extraordinary or emergency purposes (e.g., to meet redemption requests);
securities will not be purchased for the Portfolio at any time at which
borrowings exceed 5% of the Portfolio's total assets (taken at market value).
Except as otherwise indicated, the Portfolio's investment objectives and
policies may be changed without approval by the holders of the outstanding
securities of the Portfolio. If a percentage or rating restriction (other than
a restriction as to borrowing) is adhered to at the time an investment is made,
a later change in percentage or rating resulting from changes in the
Portfolio's securities will not be a violation of policy.
PORTFOLIO TURNOVER. Securities of the Portfolio will be sold whenever the
Adviser believes it is appropriate to do so given the Portfolio's investment
objectives, without regard to the length of time a particular security may have
been held. For the fiscal years ended December 31, 1996 and 1997 the turnover
rates for the Portfolio were 73% and 72%, respectively. The amount of brokerage
commissions and realization of taxable capital gains will tend to increase as
the level of portfolio activity increases.
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BROKERAGE TRANSACTIONS. The primary consideration in placing the
Portfolio's security transactions with broker-dealers for execution is to
obtain and maintain the availability of execution at the most favorable prices
and in the most effective manner possible.
RISK CONSIDERATIONS:
The risks of investing in the Portfolio vary depending upon the nature of
the securities held, and the investment practices employed, on its behalf.
Certain of these risks are described below.
CHANGES IN NET ASSET VALUE. The Portfolio's net asset value will
fluctuate based on changes in the values of the underlying portfolio
securities. This means that an investment in the Portfolio may be worth more or
less at redemption than at the time of purchase. Equity securities fluctuate in
response to general market and economic conditions and other factors, including
actual and anticipated earnings, changes in management, political developments
and the potential for takeovers and acquisitions. During periods of rising
interest rates the value of debt securities generally declines, and during
periods of falling rates the value of these securities generally increases.
Changes by recognized rating agencies in the rating of any debt security, and
actual or perceived changes in an issuer's ability to make principal or
interest payments, also affect the value of these investments.
CREDIT RISK OF DEBT SECURITIES. Investors should be aware that securities
offering above average yields may at times involve above average risks. Adverse
economic or changing circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case for higher
grade obligations.
NON-U.S. SECURITIES. Investments in non-U.S. securities involve risks
relating to political, social and economic developments abroad, as well as
risks resulting from the differences between the regulations to which U.S. and
non-U.S issuers and markets are subject. These risks may include expropriation,
confiscatory taxation, withholding taxes on dividends and interest, limitations
on the use or transfer of portfolio assets and political or social instability.
Enforcing legal rights may be difficult, costly and slow in non-U.S. countries,
and there may be special problems enforcing claims against non-U.S.
governments. In addition, non-U.S. companies may not be subject to accounting
standards or governmental supervision comparable to U.S. companies, and there
may be less public information about their operations. Non-U.S. markets may be
less liquid and more volatile than U.S. markets, and may offer less protection
to investors such as the Portfolio. Prices at which the Portfolio may acquire
securities may be affected by trading by persons with material non-public
information and by securities transactions by brokers in anticipation of
transactions by the Portfolio.
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Because non-U.S. securities often are denominated in currencies other
than the U.S. dollar, changes in currency exchange rates will affect the
Portfolio's net asset value, the value of dividends and interest earned and
gains and losses realized on the sale of securities. Currencies of the Emerging
Asia Countries can be more volatile than those of developed countries. Certain
of these currencies recently have experienced a significant devaluation
relative to the U.S. dollar, causing the value of investments in such countries
to drop significantly in U.S. dollar terms. In particular, Thailand, Indonesia,
the Philippines and South Korea have experienced currency crises and have
sought assistance from the International Monetary Fund. In addition, some
Emerging Asia Countries have fixed or managed currencies which are not
free-floating against the U.S. dollar. A government's failure to maintain such
a fixed currency may lead to volatility in currency values.
The Portfolio will invest its assets in issuers located in developing
countries. Developing countries are generally defined as countries in the
initial stages of their industrialization cycles with low per capita income.
All of the risks of investing in non-U.S. securities are heightened by
investing in issuers in developing countries. Investors should be aware that
investing in the equity and fixed income markets of developing countries
involves exposure to economic structures that are generally less diverse and
mature, and to political systems which can be expected to have less stability,
than those of developed countries. Historical experience indicates that the
markets of developing countries have been more volatile than the markets of
developed countries with more mature economies; such markets often have
provided higher rates of return, and greater risks, to investors. These
heightened risks include (i) greater risks of expropriation, confiscatory
taxation and nationalization, and less social, political and economic
stability; (ii) the small current size of markets for securities of issuers
based in developing countries and the currently low or non-existent volume of
trading, resulting in a lack of liquidity and in price volatility; (iii)
certain national policies which may restrict the Portfolio's investment
opportunities including restrictions on investing in issuers or industries
deemed sensitive to relevant national interests; and (iv) the absence of
developed legal structures. Such characteristics can be expected to continue in
the future.
Equity securities traded in certain foreign countries, including Emerging
Asia Countries, may trade at price-earnings multiples higher than those of
comparable companies trading on securities markets in the United States, which
may not be sustainable. Rapid increases in money supply in certain countries
may result in speculative investment in equity securities which may contribute
to volatility of trading markets.
The costs attributable to non-U.S. investing, such as the costs of
maintaining custody of securities in non-U.S. countries, frequently are higher
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than those attributable to U.S. investing. As a result, the operating expense
ratio of the Portfolio is expected to be higher than those of investment
companies investing exclusively in U.S. securities.
SMALLER COMPANIES. Investors in the Portfolio should be aware that the
securities of companies with small market capitalizations and securities of
certain growth companies may have more risks than the securities of other
companies. Small capitalization companies and certain growth companies may be
more susceptible to market downturns or setbacks because such companies may
have limited product lines, markets, distribution channels, and financial and
management resources. Further, there is often less publicly available
information about small capitalization companies and many growth companies than
about more established companies. As a result of these and other factors, the
prices of securities issued by small capitalization companies and some growth
companies may be volatile.
REGIONAL CONCENTRATION. The Portfolio invests primarily in issuers
located in Emerging Asia Countries. Investors in the Portfolio may therefore be
subject to greater risk and volatility than investors in funds with more
geographically diverse portfolios. In addition, the Portfolio will be
susceptible to political and economic factors affecting issuers in countries
within the Asia-Pacific region and in the specific countries in which it
invests. Because many of the Emerging Asia Countries are trading partners,
political and economic setbacks in a particular Emerging Asia Country in which
the Portfolio invests may lead to market instability and a lack of investor
confidence in other Emerging Asia Countries. During 1997, events in a number of
Emerging Asia Countries highlighted the financial interdependence of the region
and demonstrated that negative financial events in one country may have
far-reaching negative effects throughout the region. The devaluation of the
Thai currency caused a wave of currency devaluations and other detrimental
economic events in many Emerging Asia Countries. See below for additional
information about Emerging Asia Countries.
INVESTMENT PRACTICES. Certain of the investment practices employed for
the Portfolio may entail certain risks. See "Permitted Investments and
Investment Practices" below.
PERMITTED INVESTMENTS AND INVESTMENT PRACTICES:
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements
in order to earn a return on temporarily available cash. Repurchase agreements
are transactions in which an institution sells the Portfolio a security at one
price, subject to the Portfolio's obligation to resell and the selling
institution's obligation to repurchase that security at a higher price normally
within a seven day period. There may be delays and risks of loss if the seller
is unable to meet its obligation to repurchase.
REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse
repurchase agreements. Reverse repurchase agreements involve the sale of
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securities held by the Portfolio and the agreement by the Portfolio to
repurchase the securities at an agreed-upon price, date and interest payment.
When the Portfolio enters into reverse repurchase transactions, securities of a
dollar amount equal in value to the securities subject to the agreement will be
maintained in a segregated account with the Portfolio's custodian. The
segregation of assets could impair the Portfolio's ability to meet its current
obligations or impede investment management if a large portion of the
Portfolio's assets are involved. Reverse repurchase agreements are considered
to be a form of borrowing.
LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements and in order to generate additional income, the Portfolio may lend
its portfolio securities to broker-dealers and other institutional borrowers.
Such loans must be callable at any time and continuously secured by collateral
(cash or U.S. Government securities) in an amount not less than the market
value, determined daily, of the securities loaned. It is intended that the
value of securities loaned by the Portfolio would not exceed 33-1/3% of the
Portfolio's net assets.
In the event of the bankruptcy of the other party to a securities loan, a
repurchase agreement or reverse repurchase agreement, the Portfolio could
experience delays in recovering either the securities or cash. To the extent
that, in the meantime, the value of the securities loaned or sold has increased
or the value of the securities purchased has decreased, the Portfolio could
experience a loss.
RULE 144A SECURITIES. The Portfolio may purchase restricted securities
that are not registered for sale to the general public. If the Adviser
determines that there is a dealer or institutional market in the securities,
the securities will not be treated as illiquid for purposes of the Portfolio's
investment limitations. The Trustees will review these determinations. These
securities are known as "Rule 144A securities," because they are traded under
Rule 144A among qualified institutional buyers. Institutional trading in Rule
144A securities is relatively new, and the liquidity of these investments could
be impaired if trading in Rule 144A securities does not develop or if qualified
institutional buyers become, for a time, uninterested in purchasing Rule 144A
securities.
PRIVATE PLACEMENTS AND ILLIQUID INVESTMENTS. The Portfolio may invest up
to 15% of its net assets in securities for which there is no readily available
market. These illiquid securities may include privately placed restricted
securities for which no institutional market exists. The absence of a trading
market can make it difficult to ascertain a market value for illiquid
investments. Disposing of illiquid investments may involve time-consuming
negotiation and legal expenses, and it may be difficult or impossible for the
Portfolio to sell them promptly at an acceptable price.
"WHEN-ISSUED" SECURITIES. In order to ensure the availability of suitable
securities, the Portfolio may purchase securities on a "when-issued" or on a
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"forward delivery" basis, which means that the securities would be delivered to
the Portfolio at a future date beyond customary settlement time. Under normal
circumstances, the Portfolio takes delivery of the securities. In general, the
Portfolio does not pay for the securities until received and does not start
earning interest until the contractual settlement date. While awaiting delivery
of the securities, the Portfolio establishes a segregated account consisting of
cash, cash equivalents or high quality debt securities equal to the amount of
the Portfolio's commitments to purchase "when-issued" securities. An increase
in the percentage of the Portfolio's assets committed to the purchase of
securities on a "when-issued" basis may increase the volatility of its net
asset value.
CURRENCY EXCHANGE CONTRACTS. Forward currency exchange contracts may be
entered into for the Portfolio for the purchase or sale of non-U.S. currency
for hedging purposes against adverse rate changes or otherwise to achieve the
Portfolio's investment objective. A currency exchange contract allows a
definite price in dollars to be fixed for securities of non-U.S. issuers that
have been purchased or sold (but not settled) for the Portfolio. Entering into
such exchange contracts may result in the loss of all or a portion of the
benefits which otherwise could have been obtained from favorable movements in
exchange rates. In addition, entering into such contracts means incurring
certain transaction costs and bearing the risk of incurring losses if rates do
not move in the direction anticipated.
SHORT SALES "AGAINST THE BOX." In a short sale, the Portfolio sells a
borrowed security and has a corresponding obligation to the lender to return
the identical security. The Portfolio may engage in short sales only if at the
time of the short sale it owns or has the right to obtain, at no additional
cost, an equal amount of the security being sold short. This investment
technique is known as a short sale "against the box". The Portfolio may make a
short sale as a hedge, when it believes that the value of a security owned by
the Portfolio (or a security convertible or exchangeable for such security) may
decline. Not more than 40% of the Portfolio's total assets would be involved in
short sales "against the box."
DEPOSITARY RECEIPTS FOR SECURITIES OF NON-U.S. ISSUERS. American
Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs") and other forms of depositary receipts for
securities of non-U.S. issuers provide an alternative method for the Portfolio
to make non-U.S. investments. These securities are not usually denominated in
the same currency as the securities into which they may be converted.
Generally, ADRs, in registered form, are designed for use in U.S. securities
markets and EDRs and GDRs, in bearer form, are designed for use in European and
global securities markets. ADRs are receipts typically issued by a U.S. bank or
trust company evidencing ownership of the underlying securities. EDRs and GDRs
are European and global receipts, respectively, evidencing a similar
arrangement.
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OTHER INVESTMENT COMPANIES. Subject to applicable statutory and
regulatory limitations, assets of the Portfolio may be invested in shares of
other registered investment companies. The Portfolio may invest up to 5% of its
assets in closed-end investment companies which primarily hold securities of
non-U.S. issuers.
CERTAIN INFORMATION ABOUT EMERGING ASIA COUNTRIES:
Under normal circumstances, at least 65% of the assets of the Portfolio
will be invested in securities of issuers located in Emerging Asia Countries.
"Emerging Asia Countries" include the Philippines, Malaysia, Indonesia,
Thailand, South Korea, Taiwan, the People's Republic of China, India, Pakistan,
Sri Lanka and Vietnam. Accordingly, investors in the Portfolio should be aware
of the special factors affecting investment in Emerging Asia Countries.
In recent months, there has been extraordinary economic turmoil in
Emerging Asia Countries. In July, 1997, Thailand ceased maintaining a fixed
exchange rate linked to the U.S. dollar. As a result, the Thai currency
drastically devalued as compared to the U.S. dollar. The Thai currency crisis
spread to other Emerging Asia Countries, resulting in devaluations of virtually
all of the currencies of the Emerging Asia Countries. Exchange rate volatility
in turn caused extreme volatility in the equity markets of Emerging Asia
Countries. Since July, 1997, investors in equity markets in Emerging Asia
Countries have experienced significant losses due to currency fluctuations,
depreciation in equity securities and other detrimental economic events.
Several Emerging Asia Countries have requested and received assistance
from the International Monetary Fund. The International Monetary Fund has
provided assistance in exchange for assurances of financial reform. There can
be no assurance that these reforms will occur. For example, Indonesia recently
breached its reform agreements with the International Monetary Fund.
In certain Emerging Asia Countries economic difficulties and the
intervention of the International Monetary Fund have threatened the political
power of current government leaders and sparked social unrest. For example, in
Indonesia there have been riots directed against the ethnic Chinese community.
Economic, social, and political turmoil may continue in the region and may
negatively impact the Portfolio's return and the value of the Portfolio's
beneficial interests.
Political, Social and Economic Factors. Few of the Emerging Asia
Countries have western-style or fully democratic governments. In many cases,
the governments are authoritarian in nature and influenced by security forces.
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However, in some countries, new governments have been democratically elected
and are functioning effectively. The issue of transition of power from one
generation of leader to the next has caused uncertainty in certain Emerging
Asia Countries. For example, sovereignty over Hong Kong was transferred from
Great Britain to China on July 1, 1997, at which time Hong Kong became a
Special Administrative Region of China. Although China has committed by treaty
to preserve the economic and social freedoms enjoyed in Hong Kong for 50 years
following the reversion, it is not clear how future developments in Hong Kong
and China may affect this commitment. It is to be expected that the Hong Kong
stock market will remain volatile in response to prevailing perceptions of
political developments in China.
Disparities of wealth, among other factors, have led to social unrest in
some of the Emerging Asia Countries accompanied, in certain cases, by violence
and labor unrest. Ethnic, religious and racial disaffection, as evidenced in
India and Sri Lanka, have created social, economic and political problems.
Several of the Emerging Asia Countries have had or presently have hostile
relationships with neighboring nations or have experienced internal insurgency
resulting in instability. Thailand has experienced border battles with Laos and
Cambodia, and India has engaged in border disputes with several of its
neighbors, including China and Pakistan. An uneasy truce exists between North
Korea and South Korea. China continues to claim sovereignty over Taiwan and the
threat of armed conflict continues to exist with respect to the issue of
political reunification of the two countries. Finally, China possesses nuclear
weapons capability and North Korea, its neighbor, has been alleged to be in the
process of developing such a capability.
Economies of the Emerging Asia Countries differ unfavorably from the U.S.
economy in such respects as rate of growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payments position. The economies of certain of the Emerging Asia Countries may
suffer from extreme debt burdens or inflation rates. Hyperinflation and rapid
fluctuations in inflation rates have had, and may continue to have, negative
effects on the economies and securities markets of certain Emerging Asia
Countries.
The economies of most of the Emerging Asia Countries are heavily
dependent upon trade and require foreign investment for continued development.
They are accordingly affected by protective trade barriers and the economic
conditions of their trade and investment partners, principally the United
States, Japan, and the European Union. The enactment by the United States or
other principal trading partners of protectionist trade legislation, reduction
of foreign investment in the local economies and general declines in the
international securities markets could have a significant adverse effect upon
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the securities markets of the Emerging Asia Countries. For example, revocation
by the United States of China's "Most Favored Nation" status under United
States international trade laws would adversely affect the trade and economic
development of China and Hong Kong.
The economies of some of the Emerging Asia Countries, such as Indonesia
and Malaysia, are vulnerable to weakness in world prices for their commodity
exports, including crude oil. Others, such as Hong Kong and Taiwan, have
limited natural resources, resulting in dependence on foreign sources for
certain raw materials and economic vulnerability to global fluctuations of
price and supply.
The economies of certain of the Emerging Asia Countries may be subject to
risks related to the banking systems in those countries. Problems have arisen
in certain banking systems due to excessive lending for the development of real
property and a high proportion of nonperforming loans.
The stock markets in certain of the Emerging Asia Countries are
undergoing a period of growth and change which may result in trading volatility
and difficulties in the settlement and recording of transactions and in
interpreting and applying the relevant law and regulations. For example,
investments have been impeded in India because of that country's difficulties
in processing and settling securities transactions. In China, the securities
market is relatively new and the country has no securities laws of nationwide
applicability. The corporate form of organization has only recently been
permitted in China and fundamental corporate law tenets, such as limited
liability, remain open to question. In addition, in certain countries such as
Hong Kong and China, a small number of companies represent a large percentage
of the market. In Hong Kong, a substantial portion of the companies listed on
the Hong Kong Stock Exchange are involved in real estate related businesses.
Such concentrations, coupled with a low volume of trading relative to that in
the United States, may cause increased price volatility and illiquidity of
securities. Furthermore, some markets, such as the Chinese securities markets,
may be susceptible to being influenced by large investors trading significant
blocks of securities.
Governments in certain of the Emerging Asia Countries participate in the
local economy to a significant degree through ownership interests or
regulation. Actions by these governments could have a significant adverse
effect on market prices of securities and payment of dividends. Also, in the
Emerging Asia Countries, there may be the possibility of expropriations,
confiscatory taxation, corruption, political, economic or social instability or
diplomatic developments which could adversely affect assets of the Portfolio
held in those counties.
Investment and Repatriation Restrictions. Foreign investment in the
securities markets of several of the Emerging Asia Countries is restricted or
controlled in varying degrees. These restrictions may limit or preclude
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investment in certain of the Emerging Asia Countries and may increase expenses
of the Portfolio. In addition, the repatriation of both investment income and
capital from several of the Emerging Asia Countries is subject to restrictions
such as the need for certain government consents.
In India, Indonesia, South Korea, Malaysia, the Philippines, Singapore,
Taiwan and Thailand, the Portfolio may be limited by government regulation or a
company's charter to a maximum percentage of equity ownership in any one
company. Some Emerging Asia Countries limit the percentage foreign investors
may own of their domestic issuers by requiring that such issuers issue two
classes of shares, "local" and "foreign" shares. Foreign shares may be held
only by investors that are not considered nationals or residents of that
country and may be subject to restrictions on the right to receive dividends
and other distributions or limited voting and other rights. The market for
foreign shares is generally less liquid than the market for local shares, and
foreign shares often trade at a premium to local shares. Currently, in China,
the Portfolio may only invest in "B" shares of securities traded on The
Shanghai Securities Exchange and The Shenzhen Stock Exchange, the two
officially recognized securities exchanges in China.
The Portfolio may invest indirectly in the securities markets of certain
of the Emerging Asia Countries through other investment funds due to
restrictions on foreign investment. Investment in investment funds may involve
the payment of management expenses and payment of substantial premiums above
the value of such companies' portfolios and is subject to limitations under the
Investment Company Act of 1940 (the "1940 Act") and market availability. The
Portfolio does not intend to invest in such funds unless, in the judgment of
the Adviser, the potential benefits of such investment justify the payment of
any applicable premium and expenses.
The Portfolio closely monitors applicable restrictions imposed by
regulatory authorities in all of the Emerging Asia Countries and is authorized
to make any permissible investment to the extent that such restrictions are
lifted.
Other Factors. Investments in securities of issuers in the Emerging Asia
Countries are subject to other factors, including those described under "Risk
Considerations."
Item 5. Management of the Portfolio.
The Portfolio is supervised by a Board of Trustees. Citibank is the
investment adviser. A majority of the Trustees are not affiliated with the
Adviser. More information on the Trustees and officers of the Portfolio appears
under "Management" in Part B.
The Portfolio draws on the strength and experience of Citibank. Citibank
offers a wide range of banking and investment services to customers across the
<PAGE>
United States and throughout the world, and has been managing money since 1822.
Its portfolio managers are responsible for investing in money market, equity
and fixed income securities. Citibank and its affiliates manage more than $88
billion in assets worldwide. Citibank is a wholly-owned subsidiary of Citicorp.
Citibank's address is 153 East 53rd Street, New York, New York 10043. Citicorp
recently announced its intention to merge with The Travelers Group. Completion
of the merger is subject to the satisfaction of certain conditions.
Citibank manages the Portfolio's assets pursuant to an investment
advisory agreement (the "Advisory Agreement"). Subject to policies set by the
Trustees, Citibank makes investment decisions for the Portfolio.
Shern Liang Tan is based in Citibank's Singapore office and is the
manager of the Portfolio. Mr. Tan, who has been a manager of the Portfolio
since 1996, has responsibilities which include managing accounts invested in
industrialized and emerging Asia-Pacific equities. He joined Citibank in 1989.
For its services under the Advisory Agreement, the Adviser receives an
investment advisory fee, which is accrued daily and paid monthly, equal to
1.00% of the Portfolio's average daily net assets on an annualized basis for
the Portfolio's then current fiscal year. The investment advisory fee of the
Portfolio is higher than those paid by most investment companies in general.
The Trustees have determined that this advisory fee is reasonable given the
investment policy of investing primarily in non-U.S. securities.
For the fiscal year ended December 31, 1997, the investment advisory fee
paid to Citibank under the Advisory Agreement was 0.97% of the Portfolio's
average daily net assets for that fiscal year.
Citibank and its affiliates may have deposit, loan and other
relationships with the issuers of securities purchased on behalf of the
Portfolio, including outstanding loans to such issuers which may be repaid in
whole or in part with the proceeds of securities so purchased. Citibank has
informed the Trust that, in making its investment decisions, it does not obtain
or use material inside information in the possession of any division or
department of Citibank or in the possession of any affiliate of Citibank.
The Glass-Steagall Act prohibits certain financial institutions, such as
Citibank, from underwriting securities of open-end investment companies, such
as the Trust. Citibank believes that its services under the Advisory Agreement
and the activities performed by it as sub-administrator are not underwriting
and are consistent with the Glass-Steagall Act and other relevant federal and
state laws. However, there is no controlling precedent regarding the
performance of the combination of investment advisory and sub-administrative
activities by banks. State laws on this issue may differ from applicable
<PAGE>
federal law, and banks and financial institutions may be required to register
as dealers pursuant to state securities laws. Changes in either federal or
state statutes or regulations, or in their interpretations, could prevent
Citibank from continuing to perform these services. If Citibank were to be
prevented from acting as the Adviser or sub-administrator, the Trust would seek
alternative means for obtaining these services. The Trust does not expect that
shareholders would suffer any adverse financial consequences as a result of any
such occurrence.
The Portfolio has an administrative services plan (the "Administrative
Services Plan") which provides that the Portfolio may obtain the services of an
administrator, a transfer agent and a custodian, and may enter into agreements
providing for the payment of fees for such services. Under the Administrative
Services Plan, fees paid to the Portfolio's administrator may not exceed 0.05%
of the Portfolio's average daily net assets on an annualized basis for the
Portfolio's then-current fiscal year.
Signature Financial Group (Cayman) Ltd. ("SFG") provides certain
administrative services to the Portfolio under an administrative services
agreement. These administrative services include providing general office
facilities, supervising the overall administration of the Portfolio, and
providing persons satisfactory to the Board of Trustees to serve as Trustees
and officers of the Portfolio. These Trustees and officers may be directors,
officers or employees of SFG or its affiliates.
For these services, SFG receives fees accrued daily and paid monthly of
0.05% of the assets of the Portfolio, on an annualized basis for the
Portfolio's then-current fiscal year. However, SFG has voluntarily agreed to
waive a portion of the fees payable to it as necessary to maintain the
projected rate of total operating expenses.
SFG is a wholly-owned subsidiary of Signature Financial Group, Inc.
Pursuant to a sub-administrative services agreement, Citibank performs
such sub-administrative duties for the Portfolio as from time to time are
agreed upon by Citibank and SFG. Citibank's compensation as sub-administrator
is paid by SFG.
The Trust, on behalf of the Portfolio, has entered into a Custodian
Agreement with State Street Bank and Trust Company ("State Street") pursuant to
which State Street acts as custodian for the Portfolio. Securities may be held
by a sub-custodian bank approved by the Trustees. State Street Cayman Trust
Company, Ltd. ("State Street Cayman") provides fund accounting services for the
Portfolio. State Street Cayman also provides transfer agency services to the
Portfolio.
The principal business address of State Street is 225 Franklin Street,
Boston, Massachusetts 02110. The principal business address of State Street
Cayman is P.O. Box 2508 GT, Grand Cayman, British West Indies.
<PAGE>
In addition to amounts payable under the Advisory Agreement and the
Administrative Services Plan, the Portfolio is responsible for its own
expenses, including, among other things, the costs of securities transactions,
the compensation of Trustees that are not affiliated with the Adviser,
government fees, taxes, accounting and legal fees, expenses of communicating
with investors, interest expense, and insurance premiums. For the fiscal year
ended December 31, 1997, the Portfolio's total expenses were 1.12% of its
average daily net assets for that fiscal year.
The Portfolio could be adversely affected if the computer systems used by
the Portfolio or its service providers are not programmed to accurately process
information on or after January 1, 2000. The Portfolio, and its service
providers, are making efforts to resolve any potential Year 2000 issues. While
it is likely that these efforts will be successful, the failure to implement
any necessary modifications to computer systems used by the Portfolio or its
service providers could result in an adverse impact on the Portfolio.
Item 6. Capital Stock and Other Securities.
Investments in the Portfolio have no pre-emptive or conversion rights and
are fully paid and non-assessable, except as set forth below. The Trust is not
required to hold, and has no current intention of holding, annual meetings of
investors, but the Trust 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 under certain circumstances (e.g., upon
application and submission of certain specified documents to the Trustees by a
specified number of investors) the right to communicate with other investors in
connection with requesting a meeting of investors for the purpose of removing
one or more Trustees. Investors also have the right to remove one or more
Trustees without a meeting by a declaration in writing by a specified number of
investors. Upon liquidation or dissolution of the Portfolio, investors would be
entitled to share pro rata in the net assets of the Portfolio available for
distribution to its investors.
The Trust reserves the right to create and issue a number of series, in
which case investors in each series would participate equally in the earnings,
dividends and assets of the particular series. Currently, the Trust has seven
active series.
The Trust 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 in the Portfolio is
entitled to a vote in proportion to the amount of its beneficial interest 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. The
Declaration of Trust of the Trust provides that entities investing in the
Portfolio are each liable for all obligations of the Portfolio. It is not
expected that the liabilities of the Portfolio would ever exceed its assets.
The net asset value of the Portfolio (i.e., the value of its securities
and other assets less its liabilities) is determined each day on which the New
York Stock Exchange is open for trading ("Business Day") (and on such other
days as are deemed necessary in order to comply with Rule 22c-1 under the 1940
<PAGE>
Act"). This determination is made once during each day as of the close of
regular trading on such Exchange. Values of the Portfolio's assets are
determined on the basis of their market or other fair value, as described in
Item 19 of Part B.
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each Business Day. As of the close of regular trading on the New
York Stock Exchange, on each Business Day, the value of each investor's
beneficial interest in the Portfolio is determined by multiplying the net asset
value of the Portfolio by the percentage, effective for that day, which
represents that investor's share of the aggregate beneficial interests in the
Portfolio. Any additions or withdrawals, which are to be effected on that day,
are then effected. Thereafter, the investor's percentage of the aggregate
beneficial interests in the Portfolio is then re-computed 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 regular trading on
such day plus or minus, as the case may be, the amount of any additions to or
withdrawals from the investor's investment in the Portfolio effected on such
day, and (ii) the denominator of which is the aggregate net asset value of the
Portfolio as of the same time on such day plus or minus, as the case may be,
the amount of the net additions to or withdrawals from the aggregate
investments in the Portfolio by all investors in the Portfolio. The percentage
so determined is then applied to determine the value of the investor's interest
in the Portfolio as of the close of regular trading on the following Business
Day of the Portfolio.
The Trust has determined that the Portfolio is properly treated as a
partnership for U.S. federal and New York state income tax purposes.
Accordingly, the Portfolio is not subject to any U.S. federal or New York state
income taxes, but each investor in the Portfolio must take into account its
share of the Portfolio's ordinary income, expenses, capital gains and losses,
credits and other items in determining its income tax liability. The
determination of such share is made in accordance with the governing
instruments of the Trust and the U.S. Internal Revenue Code of 1986, as amended
(the "Code"), and regulations promulgated thereunder.
The Trust intends to conduct its activities and those of the Portfolio so
that they will not be deemed to be engaged in the conduct of a U.S. trade or
business for U.S. federal income tax purposes. Therefore, it is not anticipated
that an investor in the Portfolio, other than an investor which would be deemed
a "U.S. person" for U.S. federal income tax purposes, will be subject to U.S.
federal income taxation (other than a 30% withholding tax on dividends and
certain interest income) solely by reason of its investment in the Portfolio.
There can be no assurance that the U.S. Internal Revenue Service may not
challenge the above conclusions or take other positions that, if successful,
might result in the payment of U.S. federal income taxes by investors in the
Portfolio.
<PAGE>
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. Investments in the Portfolio may only
be made by investment companies, common or commingled trust funds or similar
organizations or entities which are "accredited investors" within the meaning
of Regulation D under the 1933 Act. This Registration Statement does not
constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.
An investment in the Portfolio is made without a sales load. All
investments are made at net asset value next determined after an order is
received by the Portfolio. There is no minimum initial or subsequent investment
in the Portfolio. However, since the Portfolio intends to be as fully invested
at all times as is reasonably practicable in order to enhance the yield on its
assets, investments must be made in federal funds (i.e., moneys credited to the
account of the Portfolio's custodian bank by a U.S. Federal Reserve Bank).
The Trust reserves the right to cease accepting investments for the
Portfolio at any time or to reject any investment order.
The exclusive placement agent for the Portfolio is CFBDS, Inc. ("CFBDS").
The address of CFBDS is c/o SFG, Elizabethan Square, George Town, Grand Cayman,
Cayman Islands, British West Indies. CFBDS receives no compensation for serving
as the exclusive placement agent for the Portfolio.
Item 8. Redemption or Repurchase.
An investor in the Portfolio may withdraw all or any portion of its
investment at any time after a withdrawal request in proper form is received by
the Portfolio from the investor. The proceeds of a withdrawal will be paid by
the Portfolio in federal funds normally on the Business Day the withdrawal is
effected, but in any event within seven days. See "Purchase, Redemption and
Pricing of Securities" in Part B of this Registration Statement regarding the
Trust's right to pay the redemption price in kind with readily marketable
securities (instead of cash). Investments in the Portfolio may not be
transferred.
The right of any investor to receive payment with respect to any
withdrawal may be suspended or the payment of the withdrawal proceeds postponed
during any period in which the New York Stock Exchange is closed (other than
weekends or holidays) or trading on the Exchange is restricted, or, to the
extent otherwise permitted by the 1940 Act, if an emergency exists.
<PAGE>
Item 9. Pending Legal Proceedings.
Not applicable.
<PAGE>
PART B
Item 10. Cover Page.
Not applicable.
Item 11. Table of Contents.
Page
General Information and History................................... B-1
Investment Objective and Policies................................. B-1
Management of the Trust........................................... B-12
Control Persons and Principal Holders of Securities............... B-16
Investment Advisory and Other Services............................ B-16
Brokerage Allocation and Other Practices.......................... B-19
Capital Stock and Other Securities................................ B-20
Purchase, Redemption and Pricing of Securities.................... B-22
Tax Status........................................................ B-24
Underwriters...................................................... B-27
Calculations of Performance Data.................................. B-27
Financial Statements.............................................. B-27
Item 12. General Information and History.
Not applicable.
Item 13. Investment Objective and Policies.
Part A contains additional information about the investment objective and
policies of the Emerging Asian Markets Equity Portfolio (the "Portfolio"), a
series of The Premium Portfolios (the "Trust"). This Part B should be read in
conjunction with Part A.
The investment objective of the Portfolio is long-term capital growth.
Dividend income, if any, is incidental to this investment objective. The
investment objective of the Portfolio may be changed without approval by the
Portfolio's investors. Of course, there can be no assurance that the Portfolio
will achieve its investment objective.
Part A contains a discussion of the various types of securities in which
the Portfolio may invest and the risks involved in such investments. The
following supplements the information contained in Part A concerning the
investment objective, policies and techniques of the Portfolio.
<PAGE>
The Portfolio seeks its objective by investing mainly in equity
securities of issuers located in Asian countries with emerging markets and
developing economies. These countries include the Philippines, Malaysia,
Indonesia, Thailand, South Korea, Taiwan, the People's Republic of China,
India, Pakistan, Sri Lanka and Vietnam. These countries are called,
collectively, "Emerging Asia Countries." Under normal circumstances, at least
sixty-five percent of the Portfolio's total assets is invested in equity
securities of issuers in at least three of the Emerging Asia Countries.
The policies described above and those described below are not
fundamental and may be changed without investor approval.
REPURCHASE AGREEMENTS
The Portfolio may invest in repurchase agreements collateralized by
securities in which the Portfolio may otherwise invest. Repurchase agreements
are agreements by which the Portfolio purchases a security and simultaneously
commits to resell that security to the seller (which is usually a member bank
of the U.S. Federal Reserve System or a member firm of the New York Stock
Exchange (or a subsidiary thereof)) at an agreed-upon date within a number of
days (usually not more than seven) from the date of purchase. The resale price
reflects the purchase price plus an agreed-upon market rate of interest which
is unrelated to the coupon rate or maturity of the purchased security. A
repurchase agreement involves the obligation of the seller to pay the agreed
upon price, which obligation is in effect secured by the value of the
underlying security, usually U.S. Government or Government agency issues. Under
the Investment Company Act of 1940, as amended (the "1940 Act), repurchase
agreements may be considered to be loans by the buyer. The Portfolio's risk is
limited to the ability of the seller to pay the agreed-upon amount on the
delivery date. If the seller defaults, the underlying security constitutes
collateral for the seller's obligation to pay although the Portfolio may incur
certain costs in liquidating this collateral and in certain cases may not be
<PAGE>
permitted to liquidate this collateral. All repurchase agreements entered into
by the Portfolio are fully collateralized, with such collateral being marked to
market daily.
RULE 144A SECURITIES
The Portfolio may purchase securities that are not registered ("Rule 144A
securities") under the Securities Act of 1933 (the "1933 Act"), but can be
offered and sold to "qualified institutional buyers" under Rule 144A under the
1933 Act. However, the Portfolio will not invest more than 15% of its net
assets in illiquid investments, which includes securities for which there is no
readily available market, securities subject to contractual restrictions on
resale and Rule 144A securities, unless the Trustees of the Trust determine,
based on the trading markets for the specific Rule 144A security, that it is
liquid. The Trustees have adopted guidelines and delegated to the Adviser the
daily function of determining and monitoring liquidity of Rule 144A securities.
The Trustees, however, retain oversight and are ultimately responsible for the
determinations.
Since it is not possible to predict with assurance exactly how the market
for Rule 144A securities will develop, the Trustees will carefully monitor the
Portfolio's investments in Rule 144A securities, focusing on such factors,
among others, as valuation, liquidity and availability of information. The
liquidity of investments in Rule 144A securities could be impaired if trading
in Rule 144A securities does not develop or if qualified institutional buyers
become for a time uninterested in purchasing Rule 144A securities.
SECURITIES OF NON-U.S. ISSUERS
The Portfolio will invest in securities of non-U.S. issuers. Investing in
securities issued by companies whose principal business activities are outside
the United States may involve significant risks not present in U.S.
investments. For example, the value of such securities fluctuates based on the
relative strength of the U.S. dollar. In addition, there is generally less
publicly available information about non-U.S. issuers, particularly those not
subject to the disclosure and reporting requirements of the U.S. securities
laws. Non-U.S. issuers are generally not bound by uniform accounting, auditing
and financial reporting requirements comparable to those applicable to U.S.
issuers. Investments in securities of non-U.S. issuers also involve the risk of
possible adverse changes in investment or exchange control regulations,
expropriation or confiscatory taxation, limitation on the removal of funds or
other assets of the Portfolio, political or financial instability or diplomatic
and other developments which would affect such investments. Further, economies
of other countries or areas of the world may differ favorably or unfavorably
from the economy of the U.S.
It is anticipated that in most cases the best available market for
securities of non-U.S. issuers would be on exchanges or in over-the-counter
<PAGE>
markets located outside the U.S. Non-U.S. securities markets, while growing in
volume and sophistication, are generally not as developed as those in the U.S.,
and securities of some non-U.S. issuers (particularly those located in
developing countries) may be less liquid and more volatile than securities of
comparable U.S. companies. Non-U.S. security trading practices, including those
involving securities settlement where the Portfolio's assets may be released
prior to receipt of payments, may expose the Portfolio to increased risk in the
event of a failed trade or the insolvency of a non-U.S. broker-dealer. In
addition, non-U.S. brokerage commissions are generally higher than commissions
on securities traded in the U.S. and may be non-negotiable. In general, there
is less overall governmental supervision and regulation of non-U.S. securities
exchanges, brokers and listed companies than in the U.S.
Investments in closed-end investment companies which primarily hold
securities of non-U.S. issuers may entail the risk that the market value of
such investments may be substantially less than their net asset value and that
there would be duplication of investment management and other fees and
expenses.
American Depositary Receipts ("ADRs"), European Depositary Receipts
("EDRs"), Global Depositary Receipts ("GDRs") and other forms of depositary
receipts for securities of non-U.S. issuers provide an alternative method for
the Portfolio to make non-U.S. investments. These securities are not usually
denominated in the same currency as the securities into which they may be
converted. Generally, ADRs, in registered form, are designed for use in U.S.
securities markets and EDRs and GDRs, in bearer form, are designed for use in
European and global securities markets. ADRs are receipts typically issued by a
U.S. bank or trust company evidencing ownership of the underlying securities.
EDRs and GDRs are European and global receipts, respectively, evidencing a
similar arrangement. ADRs, EDRs and GDRs are subject to many of the same risks
that apply to other investments in non-U.S. securities.
ADRs, EDRs, and GDRs may be issued pursuant to sponsored or unsponsored
programs. In sponsored programs, an issuer has made arrangements to have its
securities traded in the form of depositary receipts. In unsponsored programs,
the issuer may not be directly involved in the creation of the program.
Although regulatory requirements with respect to sponsored and unsponsored
programs are generally similar, in some cases it may be easier to obtain
financial information from an issuer that has participated in the creation of a
sponsored program. Accordingly, there may be less information available
regarding issuers of securities underlying unsponsored programs, and there may
not be a correlation between such information and the market value of the
depositary receipts.
The Portfolio may invest in securities of non-U.S. issuers that impose
restrictions on transfer within the United States or to United States persons.
<PAGE>
Although securities subject to such transfer restrictions may be marketable
abroad, they may be less liquid than securities of non-U.S. issuers of the same
class that are not subject to such restrictions.
The Portfolio will invest its assets in issuers located in developing
countries, which are generally defined as countries in the initial stages of
their industrialization cycles with low per capita income. All of the risks of
investing in non-U.S. securities are heightened by investing in issuers in
developing countries. Investors should be aware that investing in the equity
and fixed income markets of developing countries involves exposure to economic
structures that are generally less diverse and mature, and to political systems
which can be expected to have less stability, than those of developed
countries. Historical experience indicates that the markets of developing
countries have been more volatile than the markets of developed countries with
more mature economies; such markets often have provided higher rates of return
and greater risks. These heightened risks include (i) greater risks of
expropriation, confiscatory taxation and nationalization, and less social,
political and economic stability; (ii) the small current size of markets for
securities of issuers based in developing countries and the currently low or
non-existent volume of trading, resulting in a lack of liquidity and in price
volatility; (iii) certain national policies which may restrict the Portfolio's
investment opportunities including restrictions on investing in issuers or
industries deemed sensitive to relevant national interests; and (iv) the
absence of developed legal structures.
CURRENCY EXCHANGE TRANSACTIONS
Because the Portfolio may buy and sell securities denominated in
currencies other than the U.S. dollar, and receive interest, dividends and sale
proceeds in currencies other than the U.S. dollar, the Portfolio may enter into
currency exchange transactions to convert U.S. currency to non-U.S. currency
and non-U.S. currency to U.S. currency, as well as convert one non-U.S.
currency to another non-U.S. currency. The Portfolio either enters into these
transactions on a spot (i.e., cash) basis at the spot rate prevailing in the
currency exchange markets, or uses forward contracts to purchase or sell
non-U.S. currencies. The Portfolio may also enter into currency hedging
transactions in an attempt to protect the value of its assets as measured in
U.S. dollars from unfavorable changes in currency exchange rates and control
regulations. (Although the Portfolio's assets are valued daily in terms of U.S.
dollars, the Trust does not intend to convert the Portfolio's holdings of
non-U.S. currencies into U.S. dollars on a daily basis.) The Portfolio does not
currently intend to speculate in currency exchange rates or forward contracts.
The Portfolio may convert currency on a spot basis from time to time, and
investors should be aware of the costs of currency conversion. Although
currency exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference (the "spread") between the prices at which they
<PAGE>
are buying and selling various currencies. Thus, a dealer may offer to sell a
currency at one rate, while offering a lesser rate of exchange should the
Portfolio desire to resell that currency to the dealer.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers.
A forward contract generally has no deposit requirement, and no fees or
commissions are charged at any stage for trades.
When the Portfolio enters into a contract for the purchase or sale of a
security denominated in a non-U.S. currency, it may desire to "lock in" the
U.S. dollar price of the security. By entering into a forward contract for the
purchase or sale, for a fixed amount of U.S. dollars, of the amount of non-U.S.
currency involved in the underlying security transaction, the Portfolio may be
able to protect against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the non-U.S. currency during the
period between the date the security is purchased or sold and the date on which
payment is made or received.
When the Adviser believes that the currency of a particular country may
suffer a substantial decline against the U.S. dollar, the Portfolio may enter
into a forward contract to sell, for a fixed amount of U.S. dollars, the amount
of non-U.S. currency approximating the value of some or all of the Portfolio's
securities denominated in such non-U.S. currency. The precise matching of the
forward contract amounts and the value of the securities involved is not
generally possible since the future value of such securities in non-U.S.
currencies changes as a consequence of market movements in the value of those
securities between the date the forward contract is entered into and the date
it matures. The projection of a short-term hedging strategy is highly
uncertain. The Portfolio does not enter into such forward contracts or maintain
a net exposure to such contracts where the consummation of the contracts
obligates the Portfolio to deliver an amount of non-U.S. currency in excess of
the value of the Portfolio's securities or other assets denominated in that
currency. Under normal circumstances, consideration of the prospect for
currency parities will be incorporated in the investment decisions made with
regard to overall diversification strategies. However, the Adviser believes
that it is important to have the flexibility to enter into such forward
contracts when it determines that the best interests of the Portfolio will be
served.
The Portfolio generally would not enter into a forward contract with a
term greater than one year. At the maturity of a forward contract, the
Portfolio will either sell the security and make delivery of the non-U.S.
currency, or retain the security and terminate its contractual obligation to
deliver the non-U.S. currency by purchasing an "offsetting" contract with the
<PAGE>
same currency trader obligating it to purchase, on the same maturity date, the
same amount of the non-U.S. currency. If the Portfolio retains the security and
engages in an offsetting transaction, the Portfolio will incur a gain or a loss
(as described below) to the extent that there has been movement in forward
contract prices. If the Portfolio engages in an offsetting transaction, it may
subsequently enter into a new forward contract to sell the non-U.S. currency.
Should forward prices decline during the period between the date the Portfolio
enters into a forward contract for the sale of the non-U.S. currency and the
date it enters into an offsetting contract for the purchase of such currency,
the Portfolio will realize a gain to the extent the selling price of the
currency exceeds the purchase price of the currency. Should forward prices
increase, the Portfolio will suffer a loss to the extent that the purchase
price of the currency exceeds the selling price of the currency.
It is impossible to forecast with precision the market value of the
Portfolio's securities at the expiration of a forward contract. Accordingly, it
may be necessary for the Portfolio to purchase additional non-U.S. currency on
the spot market if the market value of the security is less than the amount of
non-U.S. currency the Portfolio is obligated to deliver and if a decision is
made to sell the security and make delivery of such currency. Conversely, it
may be necessary to sell on the spot market some of the non-U.S. currency
received upon the sale of the security if its market value exceeds the amount
of such currency the Portfolio is obligated to deliver.
The Portfolio may also purchase put options on a non-U.S. currency in
order to protect against currency rate fluctuations. If the Portfolio purchases
a put option on a non-U.S. currency and the value of the non-U.S. currency
declines, the Portfolio will have the right to sell the non-U.S. currency for a
fixed amount in U.S. dollars and will thereby offset, in whole or in part, the
adverse effect on the Portfolio which otherwise would have resulted.
Conversely, where a rise in the U.S. dollar value of another currency is
projected, and where the Portfolio anticipates investing in securities traded
in such currency, the Portfolio may purchase call options on the non-U.S.
currency.
The purchase of such options could offset, at least partially, the
effects of adverse movements in exchange rates. However, the benefit to the
Portfolio from purchases of non-U.S. currency options will be reduced by the
amount of the premium and related transaction costs. In addition, where
currency exchange rates do not move in the direction or to the extent
anticipated, the Portfolio could sustain losses on transactions in non-U.S.
currency options which would require it to forgo a portion or all of the
benefits of advantageous changes in such rates.
The Portfolio may write options on non-U.S. currencies for hedging
purposes or otherwise to achieve its investment objectives. For example, where
the Portfolio anticipates a decline in the value of the U.S. dollar value of a
non-U.S. security due to adverse fluctuations in exchange rates it could,
<PAGE>
instead of purchasing a put option, write a call option on the relevant
currency. If the expected decline occurs, the option will most likely not be
exercised, and the diminution in value of the security held by the Portfolio
will be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the cost of a non-U.S. security to be acquired because
of an increase in the U.S. dollar value of the currency in which the underlying
security is primarily traded, the Portfolio could write a put option on the
relevant currency which, if rates move in the manner projected, will expire
unexercised and allow the Portfolio to hedge such increased cost up to the
amount of the premium. However, the writing of a currency option will
constitute only a partial hedge up to the amount of the premium, and only if
rates move in the expected direction. If this does not occur, the option may be
exercised and the Portfolio would be required to purchase or sell the
underlying currency at a loss which may not be offset by the amount of the
premium. Through the writing of options on currencies, the Portfolio also may
be required to forgo all or a portion of the benefits which might otherwise
have been obtained from favorable movements in exchange rates.
Put and call options on non-U.S. currencies written by the Portfolio will
be covered by segregation of cash, short-term money market instruments or high
quality debt securities in an account with the custodian in an amount
sufficient to discharge the Portfolio's obligations with respect to the option,
by acquisition of the non-U.S. currency or of a right to acquire such currency
(in the case of a call option) or the acquisition of a right to dispose of the
currency (in the case of a put option), or in such other manner as may be in
accordance with the requirements of any exchange on which, or the counterparty
with which, the option is traded and applicable laws and regulations.
Investing in ADRs and other depositary receipts presents many of the same
risks regarding currency exchange rates as investing directly in securities
denominated in currencies other than the U.S. dollar. Because the securities
underlying these receipts are traded primarily in non-U.S. currencies, changes
in currency exchange rates will affect the value of these receipts. For
example, a decline in the U.S. dollar value of another currency in which
securities are primarily traded will reduce the U.S. dollar value of such
securities, even if their value in the other currency remains constant, and
thus will reduce the value of the receipts covering such securities. The
Portfolio may employ any of the above described non-U.S. currency hedging
techniques to protect the value of its assets invested in receipts.
The Portfolio's dealings in non-U.S. currency contracts are limited to
the transactions described above. Of course, the Portfolio is not required to
enter into such transactions and does not do so unless deemed appropriate by
the Adviser. It should also be realized that these methods of protecting the
value of the Portfolio's securities against a decline in the value of a
<PAGE>
currency do not eliminate fluctuations in the underlying prices of the
securities. Additionally, although such contracts tend to minimize the risk of
loss due to a decline in the value of the hedged currency, they also tend to
limit any potential gain which might result should the value of such currency
increase.
The Portfolio has established procedures consistent with policies of the
Securities and Exchange Commission (the "SEC") concerning forward contracts.
Since those policies currently recommend that an amount of the Portfolio's
assets equal to the amount of the purchase be held aside or segregated to be
used to pay for the commitment, the Portfolio expects always to have cash, cash
equivalents or high quality debt securities available sufficient to cover any
commitments under these contracts or to limit any potential risk.
SHORT SALES "AGAINST THE BOX"
In a short sale, the Portfolio sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. The
Portfolio, in accordance with applicable investment restrictions, may engage in
short sales only if at the time of the short sale it owns or has the right to
obtain, at no additional cost, an equal amount of the security being sold
short. This investment technique is known as a short sale "against the box."
In a short sale, the seller does not immediately deliver the securities
sold and is said to have a short position in those securities until delivery
occurs. If the Portfolio engages in a short sale, the collateral for the short
position is maintained for the Portfolio by the custodian or qualified
sub-custodian. While the short sale is open, an amount of securities equal in
kind and amount to the securities sold short or securities convertible into or
exchangeable for such equivalent securities are maintained in a segregated
account for the Portfolio. These securities constitute the Portfolio's long
position.
The Portfolio does not engage in short sales against the box for
investment purposes. The Portfolio may, however, make a short sale against the
box as a hedge, when it believes that the price of a security may decline,
causing a decline in the value of a security owned by the Portfolio (or a
security convertible or exchangeable for such security). In such case, any
future losses in the Portfolio's long position should be reduced by a gain in
the short position. Conversely, any gain in the long position should be reduced
by a loss in the short position. The extent to which such gains or losses are
reduced depends upon the amount of the security sold short relative to the
amount the Portfolio owns. There are certain additional transaction costs
associated with short sales against the box, but the Portfolio endeavors to
offset these costs with the income from the investment of the cash proceeds of
short sales.
The Adviser does not expect that more than 40% of the Portfolio's total
assets would be involved in short sales against the box. The Adviser does not
currently intend to engage in such sales.
<PAGE>
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to
generate income, the Portfolio may lend its securities to broker-dealers and
other institutional borrowers. Such loans will usually be made only to member
banks of the U.S. Federal Reserve System and to member firms of the New York
Stock Exchange (and subsidiaries thereof). Loans of securities would be secured
continuously by collateral in cash, cash equivalents, or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested in
high quality short-term instruments. Either party has the right to terminate a
loan at any time on customary industry settlement notice (which will not
usually exceed three business days). During the existence of a loan, the
Portfolio would continue to receive the equivalent of the interest or dividends
paid by the issuer on the securities loaned and with respect to cash collateral
would also receive compensation based on investment of the collateral (subject
to a rebate payable to the borrower). Where the borrower provides the Portfolio
with collateral consisting of U.S. Treasury obligations, the borrower is also
obligated to pay the Portfolio a fee for use of the borrowed securities. The
Portfolio would not, however, have the right to vote any securities having
voting rights during the existence of the loan, but would call the loan in
anticipation of an important vote to be taken among holders of the securities
or of the giving or withholding of their consent on a material matter affecting
the investment. As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the collateral should the borrower fail
financially. However, the loans would be made only to entities deemed by the
Adviser to be of good standing, and when, in the judgment of the Adviser, the
consideration which can be earned currently from loans of this type justifies
the attendant risk. In addition, the Portfolio could suffer loss if the
borrower terminates the loan and the Portfolio is forced to liquidate
investments in order to return the cash collateral to the buyer. If the Adviser
determines to make loans, it is not intended that the value of the securities
loaned by the Portfolio would exceed 33-1/3% of the value of its net assets.
WHEN-ISSUED SECURITIES
The Portfolio may purchase securities on a "when-issued" or on a "forward
delivery" basis. It is expected that, under normal circumstances, the Portfolio
would take delivery of such securities. When the Portfolio commits to purchase
a security on a "when-issued" or on a "forward delivery" basis, it sets up
procedures consistent with SEC policies. Since those policies currently require
that an amount of the Portfolio's assets equal to the amount of the purchase be
held aside or segregated to be used to pay for the commitment, the Portfolio
expects always to have cash, cash equivalents or high quality debt securities
sufficient to cover any commitments or to limit any potential risk. However,
<PAGE>
even though the Portfolio does not intend to make such purchases for
speculative purposes and intends to adhere to the provisions of SEC policies,
purchases of securities on such bases may involve more risk than other types of
purchases. For example, the Portfolio may have to sell assets which have been
set aside in order to meet redemptions. Also, if the Adviser determines it is
advisable as a matter of investment strategy to sell the "when-issued" or
"forward delivery" securities, the Portfolio would be required to meet its
obligations from the then available cash flow or the sale of securities, or,
although it would not normally expect to do so, from the sale of the
"when-issued" or "forward delivery" securities themselves (which may have a
value greater or less than the Portfolio's payment obligation).
INVESTMENT RESTRICTIONS
The Trust, on behalf of the Portfolio, has adopted the following policies
which may not be changed without approval by holders of a majority of the
outstanding voting securities of the Portfolio, which as used in this Part B
means the vote of the lesser of (i) 67% or more of the outstanding voting
securities of the Portfolio present at a meeting at which the holders of more
than 50% of the outstanding voting securities of the Portfolio are present or
represented by proxy, or (ii) more than 50% of the outstanding voting
securities of the Portfolio. The term "voting securities" as used in this
paragraph has the same meaning as in the 1940 Act.
The Portfolio may not:
(1) Borrow money, except that as a temporary measure for extraordinary or
emergency purposes it may borrow from banks in an amount not to exceed 1/3 of
the current value of its net assets, including the amount borrowed (the
Portfolio may not purchase any securities at any time at which borrowings
exceed 5% of the total assets of the Portfolio, taken at market value). It is
intended that the Portfolio would borrow money only from banks and only to
accommodate requests for the repurchase of beneficial interests in the
Portfolio while effecting an orderly liquidation of portfolio securities.
(2) Purchase any security or evidence of interest therein on margin,
except that such short-term credit may be obtained for the Portfolio as may be
necessary for the clearance of purchases and sales of securities.
(3) Underwrite securities issued by other persons, except insofar as the
Trust acting on behalf of the Portfolio may technically be deemed an
underwriter under the Securities Act of 1933 in selling a security.
(4) Make loans to other persons except (a) through the lending of its
portfolio securities and provided that any such loans not exceed 33-1/3% of the
Portfolio's net assets, (b) through the use of fixed time deposits or
<PAGE>
repurchase agreements or the purchase of short-term obligations or (c) by
purchasing a portion of an issue of debt securities of types commonly
distributed privately to financial institutions. The purchase of short-term
commercial paper or a portion of an issue of debt securities which is part of
an issue to the public shall not be considered the making of a loan.
(5) Purchase or sell real estate (including limited partnership interests
but excluding securities secured by real estate or interests therein),
interests in oil, gas or mineral leases, commodities or commodity contracts in
the ordinary course of business (the foregoing shall not be deemed to preclude
the Portfolio from investing in futures contracts, and the Portfolio reserves
the freedom of action to hold and to sell real estate acquired as a result of
the ownership of securities by the Portfolio).
(6) With respect to 75% of the Portfolio's total assets, purchase
securities of any issuer if such purchase at the time thereof would cause more
than 5% of the Portfolio's assets (taken at market value) to be invested in the
securities of such issuer (other than securities or obligations issued or
guaranteed by the United States or any agency or instrumentality of the United
States); provided that for purposes of this restriction the issuer of an option
or futures contract shall not be deemed to be the issuer of the security or
securities underlying such contract.
(7) With respect to 75% of the total assets of the Portfolio, purchase
securities of any issuer if such purchase at the time thereof would cause more
than 10% of the voting securities of such issuer to be held by the Portfolio.
(8) Concentrate its investments in any particular industry (including the
securities of foreign governments or multilateral lending institutions), except
that positions in futures or options contracts shall not be subject to this
restriction.
(9) Issue any senior security (as that term is defined in the 1940 Act)
if such issuance is specifically prohibited by the 1940 Act or the rules and
regulations promulgated thereunder, except as appropriate to evidence a debt
incurred without violating Investment Restriction (1) above.
As an operating policy, the Portfolio will not invest more than 15% of
its net assets in securities for which there is no readily available market.
This policy is not fundamental and may be changed by the Trust without the
approval of the holders of the beneficial interests in the Portfolio.
If a percentage or rating restriction on investment or utilization of
assets set forth above or referred to in Part A is adhered to at the time an
investment is made or assets are so utilized, a later change in percentage
<PAGE>
resulting from changes in the value of the securities or a later change in the
rating of the securities held for the Portfolio will not be considered a
violation of policy.
Item 14. Management of the Trust.
The Trustees and officers of the Trust and their principal occupations
during the past five years are set forth below. Their titles may have varied
during that period. Asterisks indicate that those Trustees and officers are
"interested persons" (as defined in the 1940 Act) of the Trust. Unless
otherwise indicated below, the address of each Trustee and officer is 21 Milk
Street, Boston, Massachusetts. The address of the Trust is Elizabethan Square,
George Town, Grand Cayman, Cayman Islands, British West Indies.
TRUSTEES
ELLIOTT J. BERV (aged 55) -- Chairman and Director, Catalyst, Inc. (Management
Consultants) (since June, 1992); President, Chief Operating Officer and
Director, Deven International, Inc. (International Consultants) (June, 1991 to
June, 1992); President and Director, Elliott J. Berv & Associates (Management
Consultants) (since May, 1984). His address is 15 Stornoway Drive, Cumberland
Foreside, Maine.
PHILIP W. COOLIDGE* (aged 46) -- President of the Trust; Chief Executive
Officer and President, Signature Financial Group, Inc. and CFBDS, Inc.
("CFBDS").
MARK T. FINN (aged 54) -- President and Director, Delta Financial, Inc. (since
June, 1983); Chairman of the Board and Chief Executive Officer, FX 500 Ltd.
(Commodity Trading Advisory Firm) (since April, 1990); Director, Vantage
Consulting Group, Inc. (since October, 1988). His address is 3500 Pacific
Avenue, P.O. Box 539, Virginia Beach, Virginia.
C. OSCAR MORONG, JR. (aged 63) -- Chairman of the Board of Trustees of the
Trust; Managing Director, Morong Capital Management (since February, 1993);
Senior Vice President and Investment Manager, CREF Investments, Teachers
Insurance & Annuity Association (retired, January, 1993); Director, Indonesia
Fund; Trustee, MAS Funds (since 1993). His address is 1385 Outlook Drive West,
Mountainside, New Jersey.
WALTER E. ROBB, III (aged 71) -- President, Benchmark Consulting Group, Inc.
(since 1991); Principal, Robb Associates (Corporate Financial Advisors) (since
1978); President, Benchmark Advisors, Inc. (Corporate Financial Advisors)
(since 1989); Trustee of certain registered investment companies in the MFS
Family of Funds. His address is 35 Farm Road, Sherborn, Massachusetts.
<PAGE>
OFFICERS
PHILIP W. COOLIDGE* (aged 46) -- President of the Trust; Chief Executive
Officer and President, Signature Financial Group, Inc. and CFBDS.
CHRISTINE A. DRAPEAU* (aged 27) -- Assistant Secretary and Assistant Treasurer
of the Trust; Assistant Vice President, Signature Financial Group, Inc. (since
January, 1996); Paralegal and Compliance Officer, various financial companies
(July, 1992 to January, 1996); Graduate Student, Bentley College (prior to
December, 1994).
TAMIE EBANKS-CUNNINGHAM* (aged 25)--Assistant Secretary of the Trust; Office
Manager, Signature Financial Group (Cayman) Ltd. (since April, 1995);
Administrator, Cayman Islands Primary School (prior to April, 1995). Her
address is P.O. Box 2494, Elizabethan Square, George Town, Grand Cayman, Cayman
Islands, British West Indies.
JOHN R. ELDER* (aged 49) -- Treasurer of the Trust; Vice President, Signature
Financial Group, Inc. (since April, 1995); Treasurer, CFBDS (since April,
1995); Treasurer of the Phoenix Family of Mutual Funds, Phoenix Home Life
Mutual Insurance Company (1983 to March, 1995).
LINDA T. GIBSON* (aged 32) -- Secretary of the Trust; Vice President, Signature
Financial Group, Inc. (since May, 1992); Assistant Secretary, CFBDS (since
October, 1992).
JOAN R. GULINELLO* (aged 42) -- Assistant Secretary and Assistant Treasurer of
the Trust; Vice President, Signature Financial Group, Inc. (since October,
1993); Secretary, CFBDS (since October, 1995); Vice President and Assistant
General Counsel, Massachusetts Financial Services Company (prior to October,
1993).
JAMES E. HOOLAHAN* (aged 51) -- Vice President, Assistant Secretary and
Assistant Treasurer of the Trust; Senior Vice President, Signature Financial
Group, Inc.
SUSAN JAKUBOSKI* (aged 34) -- Vice President, Assistant Secretary and Assistant
Treasurer of the Trust; Vice President, Signature Financial Group (Cayman) Ltd.
(since August, 1994); Fund Compliance Administrator, Concord Financial Group
(November, 1990 to August, 1994). Her address is Suite 193, 12 Church Street,
Hamilton HM11, Bermuda.
MOLLY S. MUGLER* (aged 46) -- Assistant Secretary and Assistant Treasurer of
the Trust; Vice President, Signature Financial Group, Inc.; Assistant
Secretary, CFBDS.
<PAGE>
CLAIR TOMALIN* (aged 29) -- Assistant Secretary of the Trust; Office Manager,
Signature Financial Group (Europe) Limited (since 1993). Her address is 117
Charterhouse Street, London ECIM 6AA.
SHARON M. WHITSON* (aged 49) -- Assistant Secretary and Assistant Treasurer of
the Trust; Assistant Vice President, Signature Financial Group, Inc.
JULIE J. WYETZNER* (aged 38) -- Vice President, Assistant Secretary and
Assistant Treasurer of the Trust; Vice President, Signature Financial Group,
Inc.
The Trustees and officers of the Trust also hold comparable positions
with certain other funds for which SFG or an affiliate serves as the
administrator.
The Declaration of Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust, unless, as to liability to the Trust 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 Trust. 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.
The Trustees of the Portfolio received the following remuneration from
the Portfolio during its fiscal year ended December 31, 1997.
Trustee Compensation Table
Aggregate Compensation Total Compensation from
Trustee(1) from the Trust (2) Trust and Complex (2)
---------- ------------------- ---------------------
Elliott J. Berv $1,364 $57,000
Philip W. Coolidge $0 $0
Mark T. Finn $1,356 $54,000
Walter E. Robb, III $698 $56,000
<PAGE>
(1) Mr. Morong became a Trustee of the Trust on November 14, 1998 and received
no compensation for serving as a Trustee of the Trust during the fiscal
year ended December 31, 1997.
(2) Information relates to the calendar year ended December 31, 1997. Messrs.
Berv, Coolidge, Finn and Robb served as Trustees of 31, 55, 26 and 24 funds
or portfolios, respectively, in the family of open-end registered
investment companies advised or managed by Citibank.
Item 15. Control Persons and Principal Holders of Securities.
As of April 21, 1998, CitiFundsSM Emerging Asian Markets Equity Portfolio
(the "Fund") owned 64.9% and Citi Emerging Asian Markets Equity Fund, Ltd.
owned approximately 35.1% of the outstanding beneficial interests in the
Portfolio. Because the Fund controls the Portfolio, the Fund could take actions
without the approval of any other investor. The Fund has informed the Portfolio
that whenever it is requested to vote on matters pertaining to the fundamental
policies of the Portfolio, it will hold a meeting of its shareholders and will
cast its vote as instructed by its shareholders. It is anticipated that any
other investor in the Portfolio which is an investment company registered under
the 1940 Act would follow the same or a similar practice. The Fund is a series
of CitiFunds International Trust, a Massachusetts business trust organized on
August 7, 1990 and registered under the 1940 Act as an investment company.
CitiFunds International Trust was called Landmark International Funds until its
name was changed effective January 7, 1998, and Landmark International Funds
was called Landmark International Equity Fund until its name was changed
effective May 5, 1995.
Item 16. Investment Advisory and Other Services.
Citibank, N.A. ("Citibank" or the "Adviser") manages the assets of the
Portfolio pursuant to an investment advisory agreement (the "Advisory
Agreement"). Subject to such policies as the Board of Trustees may determine,
the Adviser manages the Portfolio's securities and makes investment decisions
for the Portfolio. The Adviser furnishes at its own expense all services,
facilities and personnel necessary in connection with managing the Portfolio's
investments and effecting securities transactions for the Portfolio. The
Advisory Agreement continues in effect as long as such continuance is
specifically approved at least annually by the Board of Trustees or by a vote
of a majority of the outstanding voting securities of the Portfolio, and, in
either case, by a majority of the Trustees who are not parties to the Advisory
Agreement or interested persons of any such party, at a meeting called for the
purpose of voting on the Advisory Agreement.
<PAGE>
The Advisory Agreement provides that the Adviser may render services to
others. The Advisory Agreement is terminable without penalty on not more than
60 days' nor less than 30 days' written notice by the Trust when authorized
either by a vote of a majority of the outstanding voting securities of the
Portfolio or by a vote of a majority of the Board of Trustees, or by the
Adviser on not more than 60 days' nor less than 30 days' written notice, and
will automatically terminate in the event of its assignment. The Advisory
Agreement provides that neither the Adviser nor its personnel shall be liable
for any error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the execution of security transactions
for the Portfolio, except for willful misfeasance, bad faith or gross
negligence or reckless disregard of its or their obligations and duties under
the Advisory Agreement. For the period August 23, 1995 (commencement of
operations) to December 31, 1995 and for the fiscal years ended December 31,
1996 and 1997, the fees payable to Citibank under the Advisory Agreement with
respect to the Portfolio were $12,307 (all of which was voluntarily waived),
$109,575 (of which $49,394 was voluntarily waived), and $83,978 (of which
$2,500 was voluntarily waived), respectively.
Pursuant to an administrative services agreement (the "Administrative
Services Agreement"), SFG (in its capacity under the Administrative Services
Agreement, the "Administrator") provides the Trust with general office
facilities and supervises the overall administration of the Trust, including,
among other responsibilities, the negotiation of contracts and fees with, and
the monitoring of performance and billings of, the Trust's independent
contractors and agents; the preparation and filing of all documents required
for compliance by the Trust with applicable laws and regulations; and arranging
for the maintenance of books and records of the Trust. The Administrative
Services Agreement with SFG continues in effect if such continuance is
specifically approved at least annually by the Board of Trustees or by a vote
of a majority of the outstanding voting securities of the Trust and, in either
case, by a majority of the Trustees who are not parties to the Administrative
Services Agreement or interested persons of any such party. The Administrator
provides persons satisfactory to the Board of Trustees to serve as Trustees and
officers of the Trust. Such Trustees and officers, as well as certain other
employees and Trustees of the Trust, may be directors, officers or employees of
the Administrator or its affiliates. For the period August 23, 1995
(commencement of operations) to December 31, 1995 and for the fiscal years
ended December 31, 1996 and 1997, the fees payable by the Trust to the
Administrator under the Administrative Services Agreement with respect to the
Portfolio were $615 (all of which was voluntarily waived), $5,478 (of which
$4,953 was voluntarily waived), and $4,200 (all of which was voluntarily
waived), respectively.
The Administrative Services Agreement provides that SFG may render
administrative services to others. The Administrative Services Agreement
terminates automatically if it is assigned and may be terminated without
penalty by vote of a majority of the outstanding voting securities of the Trust
<PAGE>
or by either party on not more than 60 days' nor less than 30 days' written
notice. The Administrative Services Agreement also provides that neither SFG,
as the Administrator, nor its personnel shall be liable for any error of
judgment or mistake of law or for any act or omission in the administration or
management of the Trust, except for willful misfeasance, bad faith or gross
negligence in the performance of its or their duties or by reason of reckless
disregard of its or their obligations and duties under the Administrative
Services Agreement.
SFG is a wholly-owned subsidiary of Signature Financial Group, Inc. SFG
is a company organized under the laws of the Cayman Islands. Its principal
place of business is in George Town, Grand Cayman, British West Indies.
Pursuant to a sub-administrative services agreement, Citibank performs
such sub-administrative duties for the Trust as from time to time are agreed
upon by Citibank and SFG. Citibank performs such sub-administrative duties in a
manner consistent with the Operating Policies and Procedures of the Trust.
Citibank's sub-administrative duties may include providing equipment and
clerical personnel necessary for maintaining the Trust's organization,
participation in the preparation of documents required for compliance by the
Trust with applicable laws and regulations, the preparation of certain
documents in connection with meetings of Trustees and shareholders, and other
functions which would otherwise be performed by the Administrator. For
performing such sub-administrative services, Citibank receives compensation as
from time to time is agreed upon by SFG, not in excess of the amount paid to
SFG for its services under the Administrative Services Agreement with the
Trust. All such compensation is paid by SFG.
The Trust has adopted an administrative services plan (the
"Administrative Plan") which provides that the Trust may obtain the services of
an administrator, a transfer agent and a custodian, and may enter into
agreements providing for the payment of fees for such services. Under the
Administrative Plan, the administrative services fee payable to the
Administrator from the Portfolio may not exceed 0.05% of the Portfolio's
average daily net assets on an annualized basis for its then-current fiscal
year.
The Administrative Plan continues in effect if such continuance is
specifically approved at least annually by a vote of both a majority of the
Trustees and a majority of the Trustees who are not "interested persons" of the
Portfolio and who have no direct or indirect financial interest in the
operation of the Administrative Plan or in any agreement related to such Plan
("Qualified Trustees"). The Administrative Plan requires that the Trust provide
to the Board of Trustees and the Board of Trustees review, at least quarterly,
a written report of the amounts expended (and the purposes therefor) under the
Administrative Plan. The Administrative Plan may be terminated at any time by a
vote of a majority of the Qualified Trustees or, with respect to the Portfolio,
<PAGE>
by a vote of a majority of the outstanding voting securities of the Portfolio.
The Administrative Plan may not be amended to increase materially the amount of
permitted expenses thereunder without the approval of a majority of the
outstanding voting securities of the Trust and may not be materially amended in
any case without a vote of the majority of both the Trustees and the Qualified
Trustees.
The Trust, on behalf of the Portfolio, has entered into a Custodian
Agreement with State Street Bank and Trust Company ("State Street") pursuant to
which State Street acts as custodian for the Portfolio. Securities may be held
by a sub-custodian bank approved by the Trustees. State Street Cayman Trust
Company, Ltd. ("State Street Cayman") provides fund accounting services for the
Portfolio. State Street Cayman also provides transfer agency services to the
Portfolio.
The principal business address of State Street is 225 Franklin Street,
Boston, Massachusetts 02110. The principal business address of State Street
Cayman is P.O. Box 2508 GT, Grand Cayman, British West Indies.
Price Waterhouse are the chartered accountants for the Trust, providing
audit services, and assistance and consultation with respect to the preparation
of filings with the SEC. The address of Price Waterhouse is Suite 3000, Box 82,
Royal Trust Towers, Toronto Dominion Center, Toronto, Ontario, Canada M5K 1G8.
Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts 02110, acts
as counsel for the Portfolio.
Item 17. Brokerage Allocation and Other Practices.
The Trust trades securities for the Portfolio if it believes that a
transaction net of costs (including custodian charges) will help achieve the
Portfolio's investment objectives. Changes in the Portfolio's investments are
made without regard to the length of time a security has been held, or whether
a sale would result in the recognition of a profit or loss. Therefore, the rate
of turnover is not a limiting factor when changes are appropriate. Specific
decisions to purchase or sell securities for the Portfolio are made by a
portfolio manager who is an employee of the Adviser and who is appointed and
supervised by its senior officers. The portfolio manager may serve other
clients of the Adviser in a similar capacity.
The primary consideration in placing portfolio securities transactions
with broker-dealers for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible. The Adviser attempts to achieve this result by selecting
broker-dealers to execute transactions on behalf of the Portfolio and other
clients of the Adviser on the basis of their professional capability, the value
and quality of their brokerage services, and the level of their brokerage
<PAGE>
commissions. In the case of securities traded in the over-the-counter market
(where no stated commissions are paid but the prices include a dealer's markup
or markdown), the Adviser normally seeks to deal directly with the primary
market makers, unless in its opinion, best execution is available elsewhere. In
the case of securities purchased from underwriters, the cost of such securities
generally includes a fixed underwriting commission or concession. From time to
time, soliciting dealer fees are available to the Adviser on the tender of the
Portfolio's securities in so-called tender or exchange offers. Such soliciting
dealer fees are in effect recaptured for the Portfolio by the Adviser. At
present no other recapture arrangements are in effect.
Under the Advisory Agreement, in connection with the selection of such
brokers or dealers and the placing of such orders, the Adviser is directed to
seek for the Portfolio in its best judgment, prompt execution in an effective
manner at the most favorable price. Subject to this requirement of seeking the
most favorable price, securities may be bought from or sold to broker-dealers
who have furnished statistical, research and other information or services to
the Adviser or the Portfolio, subject to any applicable laws, rules and
regulations.
The investment advisory fee that the Portfolio pays to the Adviser will
not be reduced as a consequence of the Adviser's receipt of brokerage and
research services. While such services are not expected to reduce the expenses
of the Adviser, the Adviser would, through the use of the services, avoid the
additional expenses which would be incurred if it should attempt to develop
comparable information through its own staff or obtain such services
independently.
In certain instances there may be securities that are suitable as an
investment for the Portfolio as well as for one or more of the Adviser's other
clients. Investment decisions for the Portfolio and for the Adviser's other
clients are made with a view to achieving their respective investment
objectives. It may develop that a particular security is bought or sold for
only one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more clients are selling the same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable
for the investment objectives of more than one client. When two or more clients
are simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could adversely affect
the price of or the size of the position obtainable for the security for the
Portfolio. When purchases or sales of the same security for the Portfolio and
for other portfolios managed by the Adviser occur contemporaneously, the
purchase or sale orders may be aggregated in order to obtain any price
advantages available to large volume purchases or sales.
<PAGE>
For the period August 23, 1995 to December 31, 1995 and for the fiscal
years ended December 31, 1996 and 1997, the Portfolio paid brokerage
commissions of $44,000, $138,267, and $101,942 respectively.
Item 18. Capital Stock and Other Securities.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in the Trust and to establish series, each of which shall
be a subtrust, the beneficial interests in which shall be separate and distinct
from the beneficial interests in any other series. The Portfolio is one of the
series of the Trust. Investors in the Portfolio 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. Interests in the Portfolio have no preference,
pre-emptive, conversion or similar rights and are fully paid and
non-assessable, except as set forth below. Interests in the Portfolio may not
be transferred.
Each investor is entitled to a vote in proportion to its percentage of
the aggregate beneficial interests in the Portfolio. Investors in the Portfolio
do not have cumulative voting rights, and investors holding more than 50% of
the aggregate beneficial interests in the Trust may elect all of the Trustees
if they choose to do so and in such event the other investors in the Trust
would not be able to elect any Trustee. The Trust is not required to hold, and
has no current intention of holding, annual meetings of investors but the Trust
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.
The Trust may enter into a merger or consolidation, or sell all or
substantially all of its assets, if approved by a vote of a majority, as
defined in the 1940 Act, of the holders of the Trust's outstanding voting
securities voting as a single class, or of the affected series of the Trust, as
the case may be, or if authorized by an instrument in writing without a
meeting, consented to by holders of not less than a majority of the interests
of the affected series. However, if the Trust or the affected series is the
surviving entity of the merger, consolidation or sale of assets, no vote of
interest holders is required. Any series of the Trust may be dissolved (i) by
the affirmative vote of not less than two-thirds of the outstanding beneficial
interests in such series at any meeting of holders of beneficial interests or
by an instrument in writing signed by a majority of the Trustees and consented
to by not less than two-thirds of the outstanding beneficial interests, (ii) by
the Trustees by written notice to holders of the beneficial interests in the
series or (iii) upon the bankruptcy or expulsion of a holder of a beneficial
interest in the series, unless the remaining holders of beneficial interests,
by majority vote, agree to continue the series. The Trust may be dissolved by
action of the Trustees upon the dissolution of the last remaining series.
<PAGE>
The Portfolio is a series of the Trust, organized as a trust under the
laws of the State of New York. The Trust's Declaration of Trust provides that
investors in the Portfolio are each liable for all obligations of the
Portfolio. The Declaration of Trust also provides that the Trust may maintain
appropriate insurance (for example, fidelity bonding and errors and omissions
insurance) for the protection of the Trust, 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
Trust itself was unable to meet its obligations. It is not expected that the
liabilities of the Portfolio would ever exceed its assets.
The Declaration of Trust further provides that obligations of the Trust
are not binding upon the Trustees individually 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 or she 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
or her office.
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 1933 Act. Investments in the Portfolio may only
be made by investment companies, common or commingled trust funds or similar
organizations or entities which are "accredited investors" within the meaning
of Regulation D under the 1933 Act. This Registration Statement does not
constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.
The net asset value of the Portfolio (i.e., the value of its securities
and other assets less its liabilities, including expenses payable or accrued)
is determined each day during which the New York Stock Exchange is open for
trading ("Business Day"). As of the date of this Registration Statement, the
Exchange is open for trading every weekday except for the following holidays
(or the days on which they are observed): New Year's Day, Martin Luther King
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. This determination of net asset value
of the Portfolio is made once each day as of the close of regular trading on
the New York Stock Exchange (normally 4:00 p.m. Eastern time). As set forth in
more detail below, purchases and withdrawals will be effected at the time of
determination of net asset value next following the receipt of any purchase or
withdrawal order.
For the purpose of calculating the Portfolio's net asset value, all
assets and liabilities initially expressed in non-U.S. currencies will be
<PAGE>
converted into U.S. dollars at the prevailing market rates at the time of
valuation. Equity securities are valued at the last sale price on the exchange
on which they are primarily traded or on the NASDAQ system for unlisted
national market issues, or at the last quoted bid price for securities in which
there were no sales during the day or for unlisted securities not reported on
the NASDAQ system. Securities listed on a non-U.S. exchange are valued at the
last quoted sale price available before the time when net assets are valued.
Bonds and other fixed income securities (other than short-term obligations) are
valued on the basis of valuations furnished by a pricing service, use of which
has been approved by the Board of Trustees of the Trust. In making such
valuations, the pricing service utilizes both dealer-supplied valuations and
electronic data processing techniques that take into account appropriate
factors such as institutional-size trading in similar groups of securities,
yield, quality, coupon rate, maturity, type of issue, trading characteristics
and other market data, without exclusive reliance upon quoted prices or
exchange or over-the-counter prices, since such valuations are believed to
reflect more accurately the fair value of such securities. Short-term
obligations (maturing in 60 days or less) are valued at amortized cost, which
constitutes fair value as determined by the Board of Trustees. Futures
contracts are normally valued at the settlement price on the exchange on which
they are traded. Securities for which there are no such valuations are valued
at fair value as determined in good faith by or at the direction of the Board
of Trustees.
Trading in securities on most non-U.S. exchanges and over-the-counter
markets is normally completed before the close of regular trading on the New
York Stock Exchange and may also take place on days on which the Exchange is
closed. If events materially affecting the value of non-U.S. securities occur
between the time when the exchange on which they are traded closes and the time
when the Portfolio's net asset value is calculated, such securities may be
valued at fair value in accordance with procedures established by and under the
general supervision of the Board of Trustees.
Interest income on long-term obligations held for the Portfolio is
determined on the basis of interest accrued plus amortization of "original
issue discount" (generally, the difference between issue price and stated
redemption price at maturity) and premiums (generally, the excess of purchase
price over stated redemption price at maturity). Interest income on short-term
obligations is determined on the basis of interest accrued less amortization of
premium.
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each Business Day. As of the close of regular trading on the New
York Stock Exchange, on each Business Day, the value of each investor's
beneficial interest in the Portfolio is determined by multiplying the net asset
value of the Portfolio by the percentage, effective for that day, which
represents that investor's share of the aggregate beneficial interests in the
Portfolio. Any additions or withdrawals, which are to be effected on that day,
<PAGE>
are then effected. Thereafter, the investor's percentage of the aggregate
beneficial interests in the Portfolio is re-computed 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 regular trading on such day plus
or minus, as the case may be, the amount of any additions to or withdrawals
from the investor's investment in the Portfolio effected on such day, and (ii)
the denominator of which is the aggregate net asset value of the Portfolio as
of the same time on such day plus or minus, as the case may be, the amount of
the net additions to or withdrawals from the aggregate investments in the
Portfolio by all investors in the Portfolio. The percentage so determined is
then applied to determine the value of the investor's interest in the Portfolio
as of the close of regular trading on the following Business Day of the
Portfolio.
Subject to compliance with applicable regulations, the Trust has reserved
the right to pay the redemption price of beneficial interests in the Portfolio,
either totally or partially, by a distribution in kind of readily marketable
securities (instead of cash). The securities so distributed would be valued at
the same amount as that assigned to them in calculating the net asset value for
the beneficial interests being sold. If a holder of beneficial interests
received a distribution in kind, such holder could incur brokerage or other
charges in converting the securities to cash.
The Trust may suspend the right of redemption or postpone the date of
payment for beneficial interests in the Portfolio more than seven days during
any period when (a) trading in the markets the Portfolio normally utilizes is
restricted, or an emergency, as defined by the rules and regulations of the
SEC, exists making disposal of the Portfolio's investments or determination of
its net asset value not reasonably practicable; (b) the New York Stock Exchange
is closed (other than customary weekend and holiday closings); or (c) the SEC
has by order permitted such suspension.
Item 20. Tax Status.
The Trust is organized as a trust under New York law. The Trust has
determined that the Portfolio is properly treated as a partnership for U.S.
federal and New York State income tax purposes. Accordingly, under those tax
laws, the Portfolio is not subject to any income tax, but each investor in the
Portfolio must take into account its share of the Portfolio's ordinary income,
expense, capital gains, capital losses, credits and other items in determining
its income tax liability. The determination of such share is made in accordance
with the governing instruments of the Trust and the U.S. Internal Revenue Code
of 1986, as amended (the "Code"), and regulations promulgated thereunder.
The Portfolio's taxable year ends December 31. Although, as described
above, the Portfolio is not subject to U.S. federal income tax, it files
appropriate U.S. federal income tax returns.
<PAGE>
The Trust believes that, in the case of an investor in the Portfolio that
seeks to qualify as a regulated investment company ("RIC") under the Code, the
investor should be treated for U.S. federal income tax purposes as an owner of
an undivided interest in the assets and operations of the Portfolio, and
accordingly should be deemed to own a proportionate share of each of the assets
of the Portfolio and be entitled to treat as earned by it the portion of the
Portfolio's gross income attributable to that share. The Trust also believes
that each such investor should be deemed to hold its proportionate share of the
Portfolio's assets for the period the Portfolio has held the assets or for the
period the investor has been a partner in the Portfolio, whichever is shorter.
Each investor should consult its tax advisers regarding whether, in light of
its particular tax status and any special tax rules applicable to it, this
approach applies to its investment in the Portfolio, or whether the Portfolio
should be treated, as to it, as a separate entity as to which the investor has
no direct interest in Portfolio assets or operations.
In order to enable an investor in the Portfolio that is otherwise
eligible to qualify as a RIC under the Code to so qualify, the Trust intends
that the Portfolio will satisfy the requirements of Subchapter M of the Code
relating to the nature of the Portfolio's gross income and the composition
(diversification) of the Portfolio's assets as if those requirements were
directly applicable to the Portfolio and to allocate and permit withdrawals of
its net investment income and any net realized capital gains in a manner that
will enable an investor that is a RIC to comply with the qualification
requirements imposed by Subchapter M of the Code.
The Trust will allocate at least annually among the Portfolio's investors
each investor's distributive share of the Portfolio's net investment income,
net realized capital gains, and any other items of income, gain, loss,
deduction, or credit in a manner intended to comply with the Code and
applicable U.S. Treasury regulations.
To the extent the cash proceeds of any withdrawal or distribution exceed
an investor's adjusted tax basis in its partnership interest in the Portfolio,
the investor will generally realize gain for U.S. federal income tax purposes.
If, upon a complete withdrawal (i.e., a redemption of its entire interest in
the Portfolio), the investor's adjusted tax basis in its partnership interest
in the Portfolio exceeds the proceeds of the withdrawal, the investor will
generally realize a loss for federal income tax purposes. An investor's
adjusted tax basis in its partnership interest in the Portfolio will generally
be the aggregate price paid therefor, increased by the amounts of its
distributive shares of items of realized net income and gain (including income,
if any, exempt from U.S. Federal income tax), and reduced, but not below zero,
by the amounts of its distributive shares of items of net loss and the amounts
of any distributions received by the investor. This discussion does not address
<PAGE>
any distributions by the Portfolio in kind (i.e., any distributions of readily
marketable securities or other non-cash property), which will be subject to
special tax rules and may have consequences different from those described in
this paragraph.
The Portfolio may be subject to foreign withholding and other taxes with
respect to income on certain securities of non-U.S. issuers. These taxes may be
reduced or eliminated under the terms of an applicable U.S. income tax treaty.
The Portfolio intends to qualify for treaty reduced rates where available. It
is not possible, however, to determine the Portfolio effective rates of
non-U.S. tax in advance since the amount of the Portfolio's assets to be
invested within various countries is not known. Investors qualifying as RICs
and investing substantially all of their assets in the Portfolio may elect to
pass through to their shareholders any foreign tax credit for federal income
tax purposes with respect to the foreign withholding taxes paid by the
Portfolio, if any, if at the close of their respective taxable years the
Portfolio holds more than 50% of its assets in foreign stock and securities.
Foreign exchange gains and losses realized by the Portfolio will generally be
treated as ordinary income and losses for federal income tax purposes. Certain
uses of foreign currency and foreign currency forward contracts and investments
by the Portfolio in certain "passive foreign investment companies" may be
limited, or a tax election may be made, if available, in order to enable an
investor that is a RIC to preserve its qualification as a RIC and to avoid
imposition of a tax on such an investor.
The Portfolio's transactions in forward currency contracts, short sales
"against the box," and options will be subject to special tax rules that may
affect the amount, timing, and character of Portfolio income. For example,
certain positions held for the Portfolio on the last business day of each
taxable year will be marked to market (i.e., treated as if sold) on that day,
and any gain or loss associated with the positions will be treated as 60%
long-term and 40% short-term capital gain or loss. Certain positions held for
the Portfolio that substantially diminish its risk of loss with respect to
other positions in its portfolio may constitute "straddles," and may be subject
to special tax rules that would cause deferral of Portfolio losses and
adjustments in the holding periods of Portfolio securities. Certain tax
elections exist for straddles that may alter the effects of these rules. The
Portfolio will limit its activities in forward currency contracts and options
to the extent necessary to enable any investor that is a RIC to meet the
requirements of Subchapter M of the Code.
There are certain tax issues which will be relevant to only certain
investors, specifically, investors which are segregated asset accounts and
investors who contribute assets other than cash to the Portfolio. It is
intended that such segregated asset accounts will be able to satisfy
diversification requirements applicable to them and that such contributions of
assets will not be taxable provided certain requirements are met. Such
investors are advised to consult their own tax advisers as to the tax
consequences of an investment in the Portfolio.
<PAGE>
The Trust intends to conduct its activities and those of the Portfolio so
that they will not be deemed to be engaged in the conduct of a U.S. trade or
business for U.S. federal income tax purposes. Therefore, it is not anticipated
that an investor in the Portfolio, other than an investor which would be deemed
a "U.S. person" for U.S. federal income tax purposes, will be subject to U.S.
federal income taxation (other than a 30% withholding tax on dividends and
certain interest income) solely by reason of its investment in the Portfolio.
There can be no assurance that the U.S. Internal Revenue Service may not
challenge the above conclusions or take other positions that, if successful,
might result in the payment of U.S. federal income taxes by investors in the
Portfolio.
The above discussion does not address the special tax rules applicable to
certain classes of investors, such as tax-exempt entities, insurance companies,
and financial institutions, or the state, local, or non-U.S. tax laws that may
be applicable to certain investors. Investors should consult their own tax
advisers with respect to the special tax rules that may apply in their
particular situations, as well as the state, local, or non-U.S. tax
consequences to them of investing in the Portfolio.
Item 21. Underwriters.
CFBDS, exclusive placement agent for the Portfolio, receives no
compensation for serving in this capacity. Investment companies, insurance
company separate accounts, common and commingled trust funds and similar
organizations and entities may continuously invest in the Portfolio.
Item 22. Calculations of Performance Data.
Not applicable.
Item 23. Financial Statements.
The financial statements contained in the Annual Report of the Portfolio
for the fiscal year ended December 31, 1997, as filed with the Securities and
Exchange Commission, via the EDGAR system, on March 3, 1998 (Accession Number
0000950156-98-000199), are incorporated by reference into this Part B.
A copy of the Annual Report of the Portfolio accompanies this Part B.
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements Included in Part A:
Not applicable.
Financial Statements Included in Part B: Portfolio of
Investments at December 31, 1997*
Statement of Assets and Liabilities at December 31, 1997*
Statement of Operations for the year ended December 31, 1997*
Statement of Changes in Net Assets for the years ended
December 31, 1996 and 1997*
Financial Highlights for the period from August 23, 1995
(commencement of operations) to December 31, 1995 and for
the years ended December 31, 1996 and 1997*
Notes to Financial Statements - December 31, 1997*
Independent Auditors' Report - February 2, 1998*
- ---------------------
*Incorporated herein by reference to the Annual Report of the Registrant
relating to Emerging Asian Markets Equity Portfolio for the fiscal year ended
December 31, 1997 (Accession Number 0000950156-98-000200).
(b) Exhibits
1(a) The Declaration of Trust of the Trust
* and 1(b) Amendments to the Declaration of Trust of the Trust
filed
herewith
2 By-laws of the Trust
5 Investment Advisory Agreement between the
Registrant and Citibank, N.A., as investment adviser
6 Placement Agency Agreement between the Registrant
and CFBDS, Inc. (formerly known as The Landmark
Funds Broker-Dealer Services, Inc.), as exclusive
placement agent
<PAGE>
8 Custodian Agreement between the Registrant and
State Street Bank and Trust Company, as custodian
9(a) Administrative Services Agreement between the
Registrant and Signature Financial Group (Cayman)
Ltd., as administrator
9(b) Amended and Restated Administrative Services Plan
of the Registrant
9(c) Accounting Services Agreement between the
Registrant and State Street Cayman Trust Company,
Ltd.
27 Financial Data Schedule
- -----------------------
* Incorporated herein by reference to Amendment No. 1 to the
Registration Statement on Form N-1A of the Registrant relating to its
series Emerging Asian Markets Equity Portfolio, filed April 29, 1996.
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 (as of April 21, 1998)
Emerging Asian Markets Equity Portfolio 2
<PAGE>
Item 27. Indemnification.
Reference is hereby made to Article V of the Declaration of Trust
(Exhibit 1(a) to this Registration Statement).
The Trustees and officers of the Trust and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940,
as amended.
Item 28. Business and Other Connections of Investment Adviser.
Citibank, N.A. ("Citibank") is a commercial bank offering a wide range of
banking and investment services to customers across the United States and
around the world. Citibank is a wholly-owned subsidiary of Citicorp, a
registered bank holding company. Citibank also serves as investment adviser to
the following registered investment companies (or series thereof): Asset
Allocation Portfolios (Large Cap Value Portfolio, Small Cap Value Portfolio,
International Portfolio, Foreign Bond Portfolio, Intermediate Income Portfolio
and Short-Term Portfolio), The Premium Portfolios (Growth & Income Portfolio,
Large Cap Growth Portfolio, International Equity Portfolio, Government Income
Portfolio, Balanced Portfolio and Small Cap Growth Portfolio), Tax Free
Reserves Portfolio, U.S. Treasury Reserves Portfolio, Cash Reserves Portfolio,
CitiFundsSM Multi-State Tax Free Trust (CitiFundsSM New York Tax Free Reserves,
CitiFundsSM Connecticut Tax Free Reserves and CitiFundsSM California Tax Free
Reserves), CitiFundsSM Tax Free Income Trust (CitiFundsSM National Tax Free
Income Portfolio and CitiFundsSM New York Tax Free Income Portfolio),
CitiFundsSM Institutional Trust (CitiFundsSM Institutional Cash Reserves),
CitiFundsSM Fixed Income Trust (CitiFundsSM Intermediate Income Portfolio) and
Variable Annuity Portfolios (CitiSelect(R) VIP Folio 200, CitiSelect(R) VIP
Folio 300, CitiSelect(R) VIP Folio 400, CitiSelect(R) VIP Folio 500 and
CitiFundsSM Small Cap Growth VIP Portfolio). Citibank and its affiliates manage
assets in excess of $88 billion worldwide. The principal place of business of
Citibank is located at 399 Park Avenue, New York, New York 10043.
John S. Reed is the Chairman of the Board and a Director of Citibank. The
following are Vice Chairmen of the Board and Directors of Citibank: Paul J.
Collins and William R. Rhodes. Other Directors of Citibank are D. Wayne
Calloway, former Chairman and Chief Executive Officer, PepsiCo, Inc.; John M.
Deutch, Institute Professor, Massachusetts Institute of Technology; Reuben
Mark, Chairman and Chief Executive Officer, Colgate-Palmolive Company; Richard
D. Parsons, President, Time Warner, Inc.; Rozanne L. Ridgway, Former Assistant
Secretary of State for Europe and Canada; Robert B. Shapiro, Chairman,
<PAGE>
President and Chief Executive Officer, Monsanto Company; Frank A. Shrontz,
Chairman Emeritus, The Boeing Company; and Franklin A. Thomas, former
President, The Ford Foundation.
Each of the individuals named above is also a Director of Citicorp. In
addition, the following persons have the affiliations indicated:
D. Wayne Calloway Director, Exxon Corporation
Director, General Electric Company
Retired Chairman and Chief Executive Officer and
Director, PepsiCo, Inc.
Paul J. Collins Director, Kimberly-Clark Corporation
John M. Deutch Director, Ariad Pharmaceuticals, Inc.
Director, CMS Energy
Director, Palomar Medical Technologies, Inc.
Director, Cummins Engine Company, Inc.
Director, Schlumberger, Ltd.
Reuben Mark Director, Chairman and Chief Executive Officer
Colgate-Palmolive Company
Director, New York Stock Exchange
Director, Time Warner, Inc.
Non-Executive Director, Pearson, PLC
Richard D. Parsons Director, Federal National Mortgage Association
Director, Philip Morris Companies Incorporated
Member, Board of Representatives, Time Warner
Entertainment Company, L.P.
Director and President, Time Warner, Inc.
John S. Reed Director, Monsanto Company
Director, Philip Morris Companies
Incorporated
Stockholder, Tampa Tank & Welding, Inc.
William R. Rhodes Director, Private Export Funding
Corporation
<PAGE>
Rozanne L. Ridgway Director, 3M
Director, Bell Atlantic Corporation
Director, Boeing Company
Director, Emerson Electric Company
Member-International Advisory Board,
New Perspective Fund, Inc.
Director, RJR Nabisco, Inc.
Director, Sara Lee Corporation
Director, Union Carbide Corporation
Robert B. Shapiro Director, Chairman and Chief Executive
Officer, Monsanto Company
Director, Silicon Graphics
Frank A. Shrontz Director, 3M
Director, Baseball of Seattle, Inc.
Director and Chairman Emeritus, Boeing Company
Director, Boise Cascade Corp.
Director, Chevron Corporation
Franklin A. Thomas Director, Aluminum Company of America
Director, Cummins Engine Company, Inc.
Director, Lucent Technologies
Director, PepsiCo, Inc.
Item 29. Principal Underwriters.
(a) CFBDS, Inc. ("CFBDS"), the Registrant's exclusive placement agent, is
also the distributor for CitiFundsSM International Growth & Income Portfolio,
CitiFundsSM International Equity Portfolio, CitiFundsSM Emerging Asian Markets
Equity Portfolio, CitiFundsSM U.S. Treasury Reserves, CitiFundsSM Cash
Reserves, CitiFundsSM Premium U.S. Treasury Reserves, CitiFundsSM Premium
Liquid Reserves, CitiFundsSM Institutional U.S. Treasury Reserves, CitiFundsSM
Institutional Liquid Reserves, CitiFundsSM Institutional Cash Reserves,
CitiFundsSM Tax Free Reserves, CitiFundsSM Institutional Tax Free Reserves,
CitiFundsSM California Tax Free Reserves, CitiFundsSM Connecticut Tax Free
Reserves, CitiFundsSM New York Tax Free Reserves, CitiFundsSM Short-Term U.S.
Government Income Portfolio, CitiFundsSM Balanced Portfolio, CitiFundsSM
<PAGE>
Intermediate Income Portfolio, CitiFundsSM Small Cap Value Portfolio,
CitiFundsSM Growth & Income Portfolio, CitiFundsSM Large Cap Growth Portfolio,
CitiFundsSM Small Cap Growth Portfolio, CitiFundsSM National Tax Free Income
Portfolio, CitiFundsSM New York Tax Free Income Portfolio, CitiSelect(R) VIP
Folio 200, CitiSelect(R) VIP Folio 300, CitiSelect(R) VIP Folio 400,
CitiSelect(R) VIP Folio 500, CitiFundsSM Small Cap Growth VIP Portfolio,
CitiSelect(R) Folio 200, CitiSelect(R) Folio 300, CitiSelect(R) Folio 400, and
CitiSelect(R) Folio 500. CFBDS is also the placement agent for Large Cap Value
Portfolio, Small Cap Value Portfolio, International Portfolio, Foreign Bond
Portfolio, Intermediate Income Portfolio, Short-Term Portfolio, Growth & Income
Portfolio, Large Cap Growth Portfolio, Small Cap Growth Portfolio,
International Equity Portfolio, Government Income Portfolio, Balanced
Portfolio, Tax Free Reserves Portfolio, Cash Reserves Portfolio and U.S.
Treasury Reserves Portfolio.
(b) The information required by this Item 29 with respect to each
director and officer of CFBDS is incorporated by reference to Schedule A of
Form BD filed by CFBDS pursuant to the Securities and Exchange Act of 1934
(File No. 8-32417).
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
Name Address
Signature Financial Group Elizabethan Square, George Town,
(Cayman) Ltd. Grand Cayman, Cayman Islands, BWI
(administrator)
State Street Bank and Trust Company 225 Franklin Street
(custodian) Boston, MA 02110
State Street Cayman Trust P.O. Box 2508 GT
Company, Ltd. Grand Cayman
(accounting services agent) British West Indies
Citibank, N.A. 153 East 53rd Street
(investment adviser) New York, NY 10043
<PAGE>
CFBDS, Inc. c/o Signature Financial Group
(placement agent) (Cayman) Ltd.
Elizabethan Square
George Town, Grand Cayman
Cayman Islands BWI
Item 31. Management Services.
Not applicable.
Item 32. Undertakings.
The Registrant undertakes to comply with the provisions of Section 16(c)
of the Investment Company Act of 1940.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment to its Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereunto duly authorized,
in Southampton, Bermuda, on the 28th day of April, 1998.
THE PREMIUM PORTFOLIOS
on behalf of Emerging Asian
Markets Equity Portfolio
By: Philip W. Coolidge
Philip W. Coolidge
President of
The Premium Portfolios
<PAGE>
EXHIBIT INDEX
Exhibit
No.: Description:
1(a) The Declaration of Trust of the Trust
1(b) Amendments to the Declaration of Trust of the
Trust
2 By-laws of the Trust
5 Investment Advisory Agreement between the
Registrant and Citibank, N.A., as investment
adviser
6 Placement Agency Agreement between the Registrant
and CFBDS, Inc. (formerly known as The Landmark
Funds Broker-Dealer Services, Inc.), as exclusive
placement agent
8 Custodian Agreement between the Registrant and
State Street Bank and Trust Company, as custodian
9(a) Administrative Services Agreement between the
Registrant and Signature Financial Group (Cayman)
Ltd., as administrator
9(b) Amended and Restated Administrative Services
Plan of the Registrant
9(c) Accounting Services Agreement between the
Registrant and State Street Cayman Trust Company,
Ltd.
27 Financial Data Schedule
Exhibit 1a
THE PREMIUM PORTFOLIOS
----------------------
DECLARATION OF TRUST
Dated as of September 13, 1993
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I--The Trust .................................................... 1
Section 1.1 Name .................................................... 1
Section 1.2 Definitions ............................................ 1
ARTICLE II--Trustees .................................................... 3
Section 2.1 Number and Qualification ................................ 3
Section 2.2 Term and Election ....................................... 4
Section 2.3 Resignation, Removal and Retirement ..................... 4
Section 2.4 Vacancies ............................................... 4
Section 2.5 Meetings ................................................ 5
Section 2.6 Officers; Chairman of the Board ......................... 6
Section 2.7 By-Laws ................................................. 6
ARTICLE III--Powers of Trustees ........................................ 6
Section 3.1 General ................................................. 6
Section 3.2 Investments.............................................. 6
Section 3.3 Legal Title ............................................. 7
Section 3.4 Sale and Increases of Interests ......................... 7
Section 3.5 Decreases and Redemptions of Interests .................. 8
Section 3.6 Borrow Money ............................................ 8
Section 3.7 Delegation; Committees .................................. 8
Section 3.8 Collection and Payment .................................. 8
Section 3.9 Expenses ................................................ 8
Section 3.10 Miscellaneous Powers .................................... 9
Section 3.11 Further Powers .......................................... 9
ARTICLE IV--Investment Advisory, Administration and Placement
Agent Arrangements; Custodian ............................... 10
Section 4.1 Investment Advisory and Other Arrangements ............ 10
Section 4.2 Parties to Contract ..................................... 10
Section 4.3 Custodian ............................................... 10
Section 4.4 1940 Act Governance ..................................... 10
<PAGE>
ARTICLE V--Liabilitv of Holders; Limitations of Liability of Trustees,
Officers, etc. ............................................... 11
Section 5.1 Liability of Holders; Indemnification ................... 11
Section 5.2 Limitations of Liability of Trustees,Officers,
Employees, Agents, Independent Contractors
to Third Parties ........................................ 11
Section 5.3 Limitations of Liability of Trustees,Officers,
Employees, Agents, Independent Contractors
to Trust, Holders, etc. ................................. 11
Section 5.4 Mandatory Indemnification ............................... 12
Section 5.5 No Bond Required of Trustees ............................ 13
Section 5.6 No Duty of Investigation; Notice in Trust
Instruments, etc......................................... 13
Section 5.7 Reliance on Experts, etc. ............................... 13
Section 5.8 No Repeal or Modification ............................... 13
ARTICLE VI--Interests .................................................. 14
Section 6.1 Interests ............................................... 14
Section 6.2 Establishment and Designation of Series ................. 14
Section 6.3 Non-Transferability ..................................... 15
Section 6.4 Register of Interests ................................... 15
ARTICLE VII--Increases, Decreases And Redemptions of Interests .......... 15
ARTICLE VIII--Determination of Book Capital Account Balances,
and Distributions ......................................... 16
Section 8.1 Book Capital Account Balances ........................... 16
Section 8.2 Allocations and Distributions to Holders ................ 16
Section 8.3 Power to Modify Foregoing Procedures .................... 16
ARTICLE IX--Holders .................................................... 17
Section 9.1 Rights of Holders ....................................... 17
Section 9.2 Meetings of Holders ..................................... 17
Section 9.3 Notice of Meetings ...................................... 18
Section 9.4 Record Date for Meetings, Distributions, etc. ........... 18
Section 9.5 Proxies, etc. ........................................... 18
Section 9.6 Reports ................................................. 18
Section 9.7 Inspection of Records ................................... 19
Section 9.8 Holder Action by Written Consent ........................ 19
Section 9.9 Notices ................................................. 19
ARTICLE X--Duration; Termination; Dissolution; Amendment; Mergers; Etc... 19
Section 10.1 Duration ................................................ 19
Section 10.2 Dissolution ............................................. 20
Section 10.3 Termination ............................................. 20
Section 10.4 Amendment Procedure ..................................... 21
Section 10.5 Merger, Consolidation and Sale of Assets ................ 22
Section 10.6 Incorporation ........................................... 22
<PAGE>
ARTICLE XI--Miscellaneous ............................................... 23
Section 11.1 Certificate of Designation; Agent for Service of Process 23
Section 11.2 Governing Law ........................................... 23
Section 11.3 Counterparts ............................................ 23
Section 11.4 Reliance by Third Parties ............................... 23
Section 11.5 Provisions in Conflict with Law or Regulations .......... 23
<PAGE>
LM3063A
DECLARATION OF TRUST
OF
THE PREMIUM PORTFOLIOS
----------------------
This DECLARATION OF TRUST of The Premium Portfolios is made as of the 13th
day of September, 1993 by the parties signatory hereto, as Trustees (as defined
in Section 1.2 hereof).
W I T N E S S E T H:
WHEREAS, the Trustees desire to form a master trust fund or "Trust" (as
defined in Section 1.2 hereof) under the law of the State of New York
consisting of one or more subtrusts or "Series" (as defined in Section 1.2
hereof) for the investment and reinvestment of assets contributed thereto; and
WHEREAS, it is proposed that the trust assets be composed of money and
other property contributed to the Series, such assets to be held and managed in
trust for the benefit of the holders of beneficial interests in such Series;
NOW, THEREFORE, the Trustees hereby declare that they will hold in trust
all money and other property contributed to the Trust and will manage and
dispose of the same for the benefit of such holders of beneficial interests and
subject to the provisions hereof, to wit:
ARTICLE I
The Trust
1.1. Name. The name of the Trust shall be The Premium Portfolios 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
term "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 its holders of beneficial
interests.
1.2. Definitions. As used in this Declaration, the following terms shall
have the following meanings:
<PAGE>
"Administrator" shall mean any party furnishing services to one or more
Series pursuant to any administration contract described in Section 4.1 hereof.
"Book Capital Account" shall mean, for any Holder (as hereinafter defined)
at any time, the Book Capital Account of the Holder at such time with respect
to the Holder's beneficial interest in the Trust Property (as hereinafter
defined) of any Series, determined in accordance with the method established by
the Trustees pursuant to Section 8.1 hereof. The Trust shall maintain separate
records of Book Capital Accounts for each such Series.
"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 the record holder of any Interest.
"Institutional Investor(s)" shall mean any regulated investment company,
segregated asset account, foreign investment company, common trust fund, group
trust or other investment arrangement, whether organized within or without the
United States of America, other than an individual, S corporation, partnership
or grantor trust beneficially owned by any individual, S corporation or
partnership.
"Interested Person" shall have the meaning given it in the 1940 Act (as
hereinafter defined).
"Interest" shall mean the beneficial interest of a Holder in the Trust
Property of any Series, including all rights, powers and privileges accorded to
Holders by this Declaration, which interest may be expressed as a percentage,
determined by calculating for a particular Series, 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.
<PAGE>
"Investment Adviser" shall mean any party furnishing services to one or
more Series of the Trust pursuant to any investment advisory contract described
in Section 4.1 hereof.
"Majority Interests Vote" shall mean the vote, at a meeting of Holders of
one or more Series as the context may require, of (A) 67% or more of the
Interests present or represented at such meeting, if Holders of more than 50%
of all Interests in such one or more Series are present or represented by
proxy, or (B) more than 50% of all Interests in such one or more Series,
whichever is less.
"1940 Act" shall mean the United States Investment Company Act of 1940, as
amended~from time to time, and the rules and regulations thereunder.
"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.
"Series" shall mean the subtrusts of the Trust as the same are established
and designated pursuant to Article VI hereof, each of which shall be a separate
subtrust.
"Trust" shall mean the master trust fund established hereby and shall
include each Series hereof.
"Trust Property" shall mean as of any particular time any and all assets
or other property, real or personal, tangible or intangible, which at such time
is owned or held by or for the account of any Series or for the account of the
Trustees, each component of which shall be allocated and belong to a specific
Series to the exclusion of all other Series.
"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.
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. Any vacancy created by an increase in the number of Trustees
<PAGE>
may be filled by the appointment of an individual having the qualifications
described in this Section 2.1 made by action of the Trustees taken as provided
in Section 2.5 hereof. Any such appointment shall not become effective,
however, until the individual named in the written instrument of appointment
shall have accepted in writing such appointment and agreed in writing to be
bound by the terms of this Declaration. No reduction in the number of Trustees
shall have the effect of removing any Trustee from office. Whenever a vacancy
occurs, until such vacancy is filled as provided in Section 2.4 hereof, the
Trustees continuing in office, regardless of their number, shall have all the
powers granted to the Trustees and shall discharge all the duties imposed upon
the Trustees by this Declaration. A Trustee shall be an individual at least 21
years of age who is not under legal disability.
2.2. Term and Election. Each Trustee named herein, or elected or appointed
prior to the first meeting of Holders, shall (except in the event of
resignations, retirements, removals or vacancies pursuant to Section 2.3 or
Section 2.4 hereof) hold office until a successor to such Trustee has been
elected at such meeting and has qualified to serve as Trustee, as required
under the 1940 Act. Subject to the provisions or 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 with or without cause 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 for failure to comply with such written
policies as may from time to time 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 a
majority 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 physically or mentally
incapacitated 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
<PAGE>
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 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. The
Trustees may appoint a new Trustee as provided above in anticipation of a
vacancy expected to occur because of the retirement, resignation or removal of
a Trustee, or an increase in number of Trustees, provided that such appointment
shall become effective only when or after the expected vacancy occurs. Subject
to the foregoing sentence, as soon as any Trustee has accepted such appointment
in writing, the Trust estate shall vest in the new Trustee, together with the
continuing Trustees, without any further act or CONVEYANCE, AND he or she shall
be deemed a Trustee hereunder. The power of appointment is subject to Section
16(a) of the 1940 Act.
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
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.
<PAGE>
Any notice, waiver or written consent hereunder may be provided and
delivered to the Trust or a Trustee by facsimile or other similar electronic
mechanism.
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
3.1. General. The Trustees shall have exclusive and absolute control over
the Trust Property and over the business of the Trust and each Series 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 and
any Series. 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.
The Trustees shall have full power and authority to do any and all acts
and to make and execute any and all contracts and instruments that they may
consider necessary or appropriate in connection with the management of the
Trust. The Trustees shall have full authority and power to make any and all
investments which they, in their uncontrolled discretion, shall deem proper to
accomplish the purposes of this Trust.
3.2. Investments. The Trustees shall have the power with respect to the
Trust and each Series to:
<PAGE>
(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 United
States 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 any state 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 in respect of any of such investments; and the Trustees shall be
deemed to have the foregoing powers with respect to any additional instruments
in which the Trustees may determine to invest;
(c) definitively interpret the investment objectives, policies and
limitations of any Series.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust, nor shall the Trustees be limited
by any law limiting the investments which may be made by fiduciaries.
3.3. Legal Title. Legal title to all Trust Property shall be vested in the
Trustees as joint tenants except that the Trustees shall have the power to cause
legal title to any Trust Property to be held by or in the name of one or more of
the Trustees, or in the name of the Trust or any Series, or in the name or
nominee name of any other Person on behalf of the Trust or any Series, on such
terms as the Trustees may determine.
The right, title and interest of the Trustees in the Trust Property shall
vest automatically in each individual who may hereafter become a Trustee upon
his due election and qualification. Upon the resignation, removal or death of a
Trustee, such resigning, removed or deceased Trustee shall automatically cease
to have any right, title or interest in any Trust Property, and the right,
title and interest of such resigning, removed or deceased Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.
<PAGE>
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 in a Series, or increase such 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. The Trustees, in their discretion, may
refuse to sell an Interest in a Series to any person without any cause or
reason therefor. A Holder which has redeemed its Interest in a Series may not
be permitted to purchase an Interest in such Series until the later of 60
calendar days after the date of such Redemption or the first day of the Fiscal
Year next succeeding the Fiscal Year during which such Redemption occurred.
3.5 Decreases and Redemptions of Interests. Subject to Article VII hereof,
the Trustees, in their discretion, may, from time to time, without a vote of
the Holders, permit a Holder to redeem its Interest in a Series, or decrease
such 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 on behalf of any Series
to borrow money or otherwise obtain credit and to secure the same by
mortgaging, pledging or otherwise subjecting as security the assets belonging
to such Series, as appropriate, 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 and any Series, to delegate from time to
time to such of their number or to officers, employees, agents or independent
contractors of the Trust or any Series the doing of such things and the
execution of such instruments in either the name of the Trust or any Series 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 on behalf of any Series; to prosecute, defend, compromise or
abandon any claims relating to the Trust or the Trust Property on behalf of any
Series; 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
from the Trust Property which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of this Declaration, and to pay
reasonable compensation from the Trust Property to themselves as Trustees.
Permitted expenses of the Trust include, but are not limited to, interest
<PAGE>
charges, taxes, brokerage fees and commissions; expenses of sales, increases,
decreases or redemptions of Interests; certain insurance premiums; applicable
fees, interest charges and expenses of third parties, including the Trust's
investment advisers, managers, administrators, placement agents, custodians
transfer agents and fund accountants; fees of pricing, interest, dividend,
credit and other reporting services; costs of membership in trade associations;
telecommunications expenses; costs of forming the Trust and its Series and
maintaining its and their existence; costs of preparing and printing the
registration statements and Holder reports of the Trust and each Series and
delivering them to Holders; expenses of meetings of Holders; costs of
maintaining books and accounts; costs of reproduction, stationery and supplies;
fees and expenses of the Trustees; compensation of the Trust's officers and
employees and costs of other personnel performing services for the Trust or any
Series; costs of Trustee meetings; Commission registration fees and related
expenses; state or foreign securities laws registration fees and related
expenses; and for such nonrecurring items as may arise, including litigation to
which the Trust or a Series (or a Trustee or officer of the Trust acting as
such) is a party, and for all losses and liabilities by them incurred in
administering the Trust. The Trustees shall have a lien on the assets belonging
to the appropriate Series, or in the case of an expense allocable to more than
one Series, on the assets of each such Series, prior to any rights or interests
of the Holders thereto, for the reimbursement to them of such expenses,
disbursements, losses and liabilities. 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 or any Series.
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 or any Series and terminate such
employees or contractual relationships as they consider appropriate; (b) enter
into joint ventures, partnerships and any other combinations or associations;
(c) purchase, and pay for out of Trust Property insurance policies insuring the
Investment Adviser, Administrator, placement agent, Holders, Trustees,
officers, employees, agents or independent contractors of the Trust against all
claims arising by reason of holding any such position or by reason of any
action taken or omitted by any such Person in such capacity, whether or not the
Trust would have the power to indemnify such Person against such liability; (d)
establish pension, profit-sharing and other retirement, incentive and benefit
plans for the Trustees, officers, employees or agents of the Trust or any
Series; (e) prosecute, defend and settle lawsuits in the name of the Trust or
any Series and pay settlements and judgments out of the Trust Property; (f) to
the extent permitted by law, indemnify any Person with whom the Trust has
dealings, including the Investment Adviser, Administrator, placement agent,
Holders, Trustees, officers, employees, agents or independent contractors of
the Trust, to such extent as the Trustees shall determine; (9) guarantee
indebtedness or contractual obligations of others; (h) determine and change the
Fiscal Year of the Trust or any Series and the method by which its accounts
shall be kept; and (i) adopt a seal for the Trust or any Series, but the
<PAGE>
absence of such a seal shall not impair the validity of any instrument executed
on behalf of the Trust or such Series.
3.11. Further Powers. The Trustees shall have power to conduct the
business of the Trust or any Series 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 or any
Series although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust or any Series 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, Administration
and Placement Agent Arrangements; Custodian
4.1. Investment Advisory and Other Arrangements. The Trustees may in their
discretion, from time to time, enter into investment advisory contracts,
administration contracts, placement agent agreements or other service
agreements whereby the other party to such contract or agreement shall
undertake to furnish with respect to one or more particular Series such
investment advisory, administration, placement agent and/or other services as
the Trustees shall, from time to time, consider appropriate or desirable and
all upon such terms and conditions as the Trustees may in their sole discretion
determine. Notwithstanding any provision of this Declaration, the Trustees may
authorize any Investment Adviser (subject to such general or specific
instructions as the Trustees may, from time to time, adopt) to employ one or
more subadvisers and to effect purchases, sales, loans or exchanges of Trust
Property on behalf of any Series or may authorize any officer, employee or
Trustee to effect such purchases, sales, loans or exchanges pursuant to
recommendations of any such Investment Adviser (all without any further action
by the Trustees).
4.2. Parties to Contract. Any contract of the character described in
Section 4.1 or Section 4.3 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 or
any Series under or by reason of any such contract or accountable for any
profit realized directly or indirectly therefrom, provided that the contract
<PAGE>
when entered into was reasonable and fair and not inconsistent with the
provisions of this Article IV or the By-Laws. The same Person may be the other
party to one or more contracts entered into pursuant to Section 4.1 or Section
4.3 hereof or the By-Laws, 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.
4.3 Custodian. The Trustees shall at all times place and maintain the
securities and similar investments of the Trust on behalf of each Series in
custody meeting the requirements of Section 17(f) of the 1940 Act and the rules
thereunder. The Trustees, on behalf of the Trust or any Series, may enter into
an agreement with a custodian on terms and conditions acceptable to the
Trustees, providing for the custodian, among other things, (a) to hold the
securities owned by the Trust on behalf of any Series and deliver the same upon
written order or oral order confirmed in writing, (b) to receive and receipt
for any moneys due to the Trust on behalf of any Series and deposit the same in
its own banking department or elsewhere, (c) to disburse such funds upon orders
or vouchers, and (d) to employ one or more subcustodians.
4.4. 1940 Act Governance. Any contract referred to in Section 4.1 hereof
shall be consistent with and subject to the applicable requirements of Section
15 of the 1940 Act and the rules and orders thereunder with respect to its
continuance in effect, its termination, and the method of authorization and
approval of such contract or renewal. No amendment to a contract referred to in
Section 4.1 hereof shall be effective unless assented to in a manner consistent
with the requirements of Section 15 of the 1940 Act, and the rules and orders
thereunder.
ARTICLE V
Liability of Holders; Limitations of
Liability of Trustees, Officers, etc.
5.1. Lability of Holders; Indemnification. Each Holder of an Interest in a
Series shall be jointly and severally liable with every other Holder of an
Interest in that Series (with rights of contribution inter se in proportion to
their respective Interests in the Series) for the liabilities and obligations
of that Series (and of no other Series) in the event that the Trust fails to
satisfy such liabilities and obligations from the assets of that Series;
provided, however, that, to the extent assets of that Series are available in
the Trust, the Trust shall indemnify and hold each Holder harmless from and
against any claim or liability to which such Holder may become subject by
reason of being or having been a Holder of an Interest in that Series to the
extent that such claim or liability imposes on the Holder an obligation or
liability which, when compared to the obligations and liabilities imposed on
other Holders of Interests in that Series, 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
<PAGE>
entitled, nor shall anything contained herein restrict the right of the Trust
to indemnify or reimburse a Holder in any appropriate situation even though not
specifically provided herein. Notwithstanding the indemnification procedure
described above, it is intended that each Holder of an Interest in a Series
shall remain jointly and severally liable to the creditors of that Series as a
legal matter. The liabilities of a particular Series and the right to
indemnification granted hereunder to Holders of Interests in such Series shall
not be enforceable against any other Series or Holders of Interests in any
other Series.
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
or any Series 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 or Employees to Trust,
Holders, etc. No Trustee, officer or employee 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 or
employee 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, such liabilities and expenses being liabilities only of the
Series out of which such claim for indemnification arises; 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 (i) by the court or other body approving the
<PAGE>
settlement or other disposition; or (ii) based upon a review of readily
available facts (as opposed to a full trial-type inquiry), by written opinion
from independent legal counsel approved by the Trustees; or (iii) by a majority
of the Trustees who are neither Interested Persons of the Trust nor parties to
the matter, based upon a review of readily available facts (as opposed to a
full trial-type inquiry). 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 rights of indemnification provided herein may be insured against by
policies maintained by the Trust. The Trustees may make advance payments in
connection with indemnification under this Section 5.4, provided that the
indemnified Person shall have given a written undertaking to reimburse the
Trust in the event it is subsequently determined that such Person is not
entitled to such indemnification, and provided further that either (i) such
Person shall have provided appropriate security for such undertaking, or (ii)
the Trust is insured against losses arising out of any such advance payments,
or (iii) either a majority of the Trustees who are neither Interested Persons
of the Trust nor parties to the matter, or independent legal counsel in a
written opinion, shall have determined, based upon a review of readily
available facts (as opposed to a trial-type inquiry or full investigation),
that there is reason to believe that such Person will not be disqualified from
indemnification under this Section 5.4.
5.5. No Bond Required of Trustees. No Trustee shall, as such, be obligated
to give any bond or surety or other security for the performance of any of such
Trustee's duties hereunder.
5.6. No Duty of Investigation; Notice in Trust instruments, etc. No
purchaser, lender or other Person dealing with any Trustee, officer, employee,
agent or independent contractor of the Trust or any Series 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 or any Series, and every other act or
thing whatsoever executed in connection with the Trust or any series 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 or any Series. Every written obligation, contract,
instrument, certificate or other interest or undertaking of the Trust or any
Series made or sold by any Trustee, officer or employee of the Trust or any
Series, in such capacity, shall contain an appropriate recital to the effect
that the Trustee, officer or employee of the Trust or any Series 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,
<PAGE>
officer or employee of the Trust or any Series. 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 or employees of the Trust and
any Series in such amount as the Trustees shall deem adequate to cover possible
tort liability, and such other insurance as the Trustees in their sole judgment
shall deem advisable.
5.7. Reliance on Experts, etc. Each Trustee, officer or employee of the
Trust and any Series 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 or any Series (whether or not the Trust or any
Series would have the power to indemnify such Persons against such liability),
upon an opinion of counsel, or upon reports made to the Trust or any Series by
any of its officers or employees or by any Investment Adviser or Administrator,
accountant, appraiser or other experts or consultants selected with reasonable
care by the Trustees, officers or employees of the Trust or any Series,
regardless of whether such counsel or expert may also be a Trustee.
5.8. No Repeal or Modification. Any repeal or modification of this Article
V by the Holders, or adoption or modification of any other provision of this
Declaration or the By-Laws inconsistent with this Article V, shall be
prospective only, to the extent that such repeal or modification would, if
applied retrospectively, adversely affect any limitation on the liability of
any Person or indemnification available to any indemnified Person with respect
to any act or omission which occurred prior to such repeal, modification or
adoption.
ARTICLE VI
Interests
6.1. Interests. The beneficial interest in the Trust Property shall
consist of non-transferable Interests. Interests may be sold only to
Institutional Investors, as may be approved by the Trustees, for cash or other
consideration acceptable to the Trustees, subject to the requirements of the
1940 Act. The Interests shall be personal property giving only the rights in
this Declaration specifically set forth. The value of an Interest shall be
equal to the Book Capital Account balance of the Holder of the Interest.
The Trustees shall have authority, from time to time, to establish Series,
each of which shall be a separate subtrust and the Interests in which shall be
separate and distinct from the Interests in any other Series. The Series shall
include, without limitation, those Series specifically established and
designated pursuant to Section 6.2 hereof, and such other Series as the
Trustees may deem necessary or desirable. The Trustees shall have exclusive
power without the requirement of Holder approval to establish and designate
such separate and distinct Series, and, subject to the provisions of this
Declaration and the 1940 Act, to fix and determine the rights of Holders of
Interests in such Series, including with respect to the price, terms and manner
of purchase and redemption, dividends and other distributions, rights on
<PAGE>
liquidation, sinking or purchase fund provisions, conversion rights and
conditions under which the Holders of the several Series shall have separate
voting rights or no voting rights.
6.2. Establishment and Designation of Series. The establishment and
designation of any Series shall be effective upon the execution by the
Secretary or an Assistant Secretary of the Trust, pursuant to authorization by
a majority of the Trustees, of an instrument setting forth such establishment
and designation and the relative rights and preferences of the Interests in
such Series, or as otherwise provided in such instrument. At any time that
there are no Interests outstanding of any particular Series previously
established and designated, the Trustees may by resolution adopted by a
majority of their number, and evidenced by an instrument executed by the
Secretary or an Assistant Secretary of the Trust, abolish that Series and the
establishment and designation thereof. Each instrument referred to in this
paragraph shall have the status of an amendment to this Declaration of Trust.
Without limiting the authority of the Trustees set forth above to
establish and designate further Series, the Trustees hereby establish and
designate the Series set forth on Schedule A hereto. The Interests in each of
these Series and any Interests in any further Series that may from time to time
be established and designated by the Trustees shall (unless the Trustees
otherwise determine with respect to some further Series at the time of
establishing and designating the same) have the following relative rights and
preferences:
(a) Assets Belonging to Series. All consideration received by the
Trust for the issue or sale of Interests in a particular Series, together with
all assets in which such consideration is invested or reinvested, all income,
earnings, profits, and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may
be, shall be held by the Trustees in a separate trust for the benefit of the
Holders of Interests in that Series and shall irrevocably belong to that Series
for all purposes, and shall be so recorded upon the books of account of the
Trust. Such consideration, assets, income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or liquidation
of such assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein referred TO AS "ASSETS
BELONGING TO" that Series. No Series shall have any right to or interest in the
assets belonging to any other Series, and no Holder shall have any right or
interest with respect to the assets belonging to any Series in which it does
not hold an Interest.
(b) Liabilities Belonging to Series. The assets belonging to each
particular Series shall be charged with the liabilities in respect of that
Series and all expenses, costs, charges and reserves attributable to that
Series. The liabilities, expenses, costs, charges and reserves so charged to a
Series are herein referred to as "liabilities belonging to" that Series. No
Series shall be liable for or charged with the liabilities belonging to any
other Series, and no Holder shall be subject to any liabilities belonging to
any Series in which it does not hold an Interest.
<PAGE>
(c) Voting. On each matter submitted to a vote of the Holders, each
Holder shall be entitled to a vote proportionate to its Interest as recorded on
the books of the Trust. Each Series shall vote as a separate class except as to
voting for Trustees, as otherwise required by the 1940 Act, or if determined by
the Trustees to be a matter which affects all Series. As to any matter which
does not affect the interest of all Series, only the Holders in the one or more
affected Series shall be entitled to vote. On each matter submitted to a vote
of the Holders, a Holder may apportion its vote with respect to a proposal in
the same proportion as its own shareholders voted with respect to that
proposal.
6.3. Non-Transferabilitv. A Holder may not transfer its Interest.
6.4. 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 in each Series. 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
Increases. Decreases And Redemptions of Interests
Subject to applicable law, to the provisions of this Declaration and to
such restrictions as may from time to time be adopted by the Trustees, each
Holder may vary its Interest in any Series at any time by increasing (through a
capital contribution) or decreasing (through a capital withdrawal) or by a
Redemption of its Interest. An increase in the Interest of a Holder in a Series
shall be reflected as an increase in the Book Capital Account balance of that
Holder in that Series and a decrease in the Interest of a Holder in a Series or
the Redemption of the Interest of that Holder shall be reflected as a decrease
in the Book Capital Account balance of that Holder in that Series. 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.
<PAGE>
ARTICLE VIII
Determination of Book Capital Account
Balances and Distributions
8.1. Book Capital Account Balances. The Book Capital Account balance of
Holders with respect to a particular Series shall be determined on such days
and at such time or times as the Trustees may determine. The Trustees shall
adopt resolutions setting forth the method of determining the Book Capital
Account balance of each Holder. The power and duty to make calculations
pursuant to such resolutions may be delegated by the Trustees to the Investment
Adviser or 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 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 with respect
to each Series (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 of
each Series such amount as they may deem necessary to pay the liabilities and
expenses of that Series.
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
and net assets of the Trust and of each Series, the allocation of income of the
Trust and of each Series, 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 or a Series 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.
The Trust shall be entitled to treat a Holder of record as the holder in
fact and shall not be bound to recognize any equitable or other claim of
<PAGE>
interest in such Holder's Interest on the part of any other entity except as
may be otherwise expressly provided by law.
In addition, the Holders shall have power to vote only with respect to (a)
the election of Trustees as provided in Article II, Section 2.4; (b) the
removal of Trustees as provided in Article II, Section 2.3; (c) any investment
advisory contract as provided in Article IV, Section 4.1; (d) any dissolution
of a Series as provided in Article X, Section 10.2; (e) the amendment of this
Declaration to the extent and as provided in Article X, Section 10.4; (f) any
merger, consolidation or sale of assets as provided in Article X, Section 10.5;
and (9) such additional matters relating to the Trust as may be required or
authorized by law, by this Declaration or the By-Laws or any registration
statement of the Trust filed with the Commission, or as the Trustees may
consider desirable.
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 in one or more Series (if the meeting relates solely to such Series),
or not less than 10% of the Interests in the Trust (if the meeting relates to
the Trust and not solely to one or more particular Series), 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 at least one-third of the Interests in one
or more Series (if the meeting relates solely to such one or more Series) or
Holders of at least one-third of the Interests in the Trust (if the meeting
relates to the Trust and not solely to one or more particular Series), 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. If a quorum is present at a meeting, an
affirmative vote of the Holders present, in person or by proxy, holding more
than 50% of the total Interests of the Holders present in a Series or the
Trust, as applicable, either in person or by proxy, at such meeting constitutes
the action of the Holders in such Series or the Trust, as applicable, unless a
greater number of affirmative votes is required by the 1940 Act, other
applicable law, this Declaration or the By-Laws, and except that a plurality of
the total Interests of the Holders present shall elect a Trustee. 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 of the Series or the Trust, as the case may be, 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
<PAGE>
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 of the Series or the
Trust, as the case may be, 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 in the Series or the Trust, as
the case may be. When an Interest is held jointly by several Persons, any one
of them may vote at any meeting in person or by proxy in respect of such
Interest, but if more than one of them is present at such meeting in person or
by proxy, and such joint owners or their proxies so present disagree as to any
vote to be cast, such vote shall not be received in respect of such Interest. A
proxy purporting to be executed by or on behalf of a Holder, including proxies
received via telecopy, 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. As to each Series, the Trustees shall cause to be prepared
and furnished to each Holder thereof, 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 such Series 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, with respect to
each Series furnish to each Holder of such Series 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.
<PAGE>
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 on
behalf of the Trust or any Series by Holders and which has been approved by
vote at a meeting or by written consent of two-thirds of the Trustees then in
office 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 or of applicable law)
consent to the action in writing and the written consents are filed with the
records of the meetings of Holders. Any action which may be taken on behalf of
the Trust or any Series by Holders and which has not been so approved by
Trustees may be taken without a meeting if Holders holding 100% of all
Interests entitled to vote consent to the action in writing and the written
consents are filed with the records of the meetings of Holders. Such consents
shall be treated for all purposes as a vote taken at a meeting of Holders. Each
such written consent shall be executed by or on behalf of the Holder delivering
such consent and shall bear the date of such execution. No such written consent
shall be effective to take the action referred to therein unless, within one
year of the earliest dated consent, written consents executed by a sufficient
number of Holders to take such action are filed with the records of the
meetings of Holders.
9.9. Notices. Any and all communications, including any and all notices to
which any Holder may be entitled, shall be deemed duly served or given if
mailed, postage prepaid, addressed to a Holder at its last known address as
recorded on the register of the Trust or if delivered to a Holder by courier or
by facsimile or other similar electronic mechanism.
ARTICLE X
Duration; Termination; Dissolution;
Amendment; Mergers; Etc.
10.1. Duration. Subject to possible dissolution or termination in
accordance with the provisions of Section 10.2 and Section 10.3 hereof,
respectively, the Trust created hereby shall continue until the expiration of
20 years after the death of the last survivor of the initial Trustees named
herein and the following named persons:
Date of
Name Address Birth
---- ------- --------
Michelle Muriel Rumery 18 Rio Vista Street 07/11/93
North Billerica, MA 01862
Nicole Catherine Rumery 18 Rio Vista Street 12/21/91
North Billerica, MA 01862
<PAGE>
Shelby Sara Wyetzner 8 Oak Brook Lane 10/18/90
Merrick, NY 11566
Amanda Jehan Sher Coolidge 483 Pleasant Street, No. 9 08/16/89
Belmont, MA 02178
Caroline Bolger Cima 11 Beechwood Lane 12/23/88
Scarsdale, NY 10583
Adriana L. Saldana 58 Newell Road 3/22/88
Newton, MA 02166
10.2. Dissolution. Any Series shall be dissolved (i) by the affirmative
vote of the Holders of not less than two-thirds of the Interests in the Series
at any meeting of the Holders or by an instrument in writing, without a
meeting, signed by a majority of the Trustees and consented to by the Holders
of not less than two-thirds of such Interests, (ii) by the Trustees by written
notice of dissolution to the Holders of the Interests in the Series, or (iii)
upon the bankruptcy or expulsion of a Holder of an Interest in the Series,
unless the remaining Holders of Interests in such Series, by majority vote,
agree to continue the Series. The Trust may be dissolved by action of the
Trustees upon the dissolution of the last remaining Series.
10.3. Termination.
(a) Upon an event of dissolution of the Trust or a Series, unless the
Trust or Series is continued in accordance with the proviso to Section 10.2
above, the Trust or Series, as applicable, shall be terminated in accordance
with the following provisions:
(i) the Trust or Series, as applicable, 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 or Series, as applicable, and all of the powers of the Trustees
under this Declaration shall continue until the affairs of the Trust
or Series have been wound up, including the power to fulfill or
discharge the contracts of the Trust or Series, collect the assets of
the Trust of Series, sell, convey, assign, exchange or otherwise
dispose of all or any part of the Trust Property affected 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 or Series,
and do all other acts appropriate to liquidate the business of the
Trust or Series; provided that any sale, conveyance, assignment,
exchange or other disposition of all or substantially all the Trust
Property or substantially all of the assets belonging to a particular
Series, other than for cash, 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 the
total Interests in the Trust or Series, as applicable; and
<PAGE>
(iii) after paying or adequately providing for the payment of all
liabilities of the Trust or of the Series being terminated, and upon
receipt of such releases, indemnities and refunding agreements as
they deem necessary for their protection, the Trustees shall
distribute the remaining Trust Property of the Trust or Series, as
applicable, 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 or Series 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.
10.4. Amendment Procedure.
(a) The Trustees may, without any vote of Holders, amend or otherwise
supplement this Declaration by an instrument in writing executed by a majority
of the Trustees, provided that Holders shall have the right to vote on any
amendment (a) which would affect the voting rights of Holders granted in
Article IX, Section 9.1, (b) to this Section 10.4, (c) required to be approved
by Holders by law or by the Trust's registration statement filed with the
Commission, or (d) submitted to them by the Trustees. Any amendment submitted
to Holders which the Trustees determine would affect the Holders of certain but
not all Series shall be authorized by vote of the Holders of such Series
affected and no vote shall be required of Holders of a Series not affected. Any
amendment applicable to the Trust as a whole, unless otherwise required by law
or by this Declaration or the By-Laws, shall be authorized by vote of the
Holders of the Trust. Notwithstanding anything else herein, any amendment to
Article V which would have the effect of reducing the indemnification and other
rights provided thereby and any repeal or amendment of this sentence shall each
require the affirmative vote of the Holders of two-thirds of the Interests
entitled to vote thereon.
(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 any Series or by diminishing or
eliminating any voting rights pertaining thereto, except with the vote or
consent of Holders of two-thirds of all Interests which would be so affected by
such amendment.
(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.
<PAGE>
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 or any Series
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, or assets belonging to such Series, as applicable,
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
Majority Interests Vote of Interests in the Series affected by such action, or
by an instrument in writing without a meeting, consented to by Holders of not
less than a majority of the Interests in the Series affected by such action,
and any such merger, consolidation, sale, lease or exchange shall be deemed for
all purposes to have been accomplished under and pursuant to the law of the
State of New York, provided however that no such vote shall be required where
by reorganization, purchase of assets or otherwise, the Trust or any affected
Series is the surviving entity.
10.6. Incorporation. Upon a Majority Interests Vote, the Trustees may
cause to be organized or assist in organizing a corporation or corporations
under the law of any jurisdiction or a trust, partnership, association or other
organization to take over the Trust Property or to carry on any business in
which the Trust directly or indirectly has any interest, and to sell, convey
and transfer the Trust Property to any such corporation, trust, partnership,
association or other organization in exchange for the equity interests thereof
or otherwise, and to lend money to, subscribe for the equity interests of, and
enter into any contract with any such corporation, trust, partnership,
association or other organization, or any corporation, trust, partnership,
association or other organization in which the Trust holds or is about to
acquire equity interests. The Trustees may also cause a merger or consolidation
between the Trust or any successor thereto and any such corporation, trust,
partnership, association or other organization if and to the extent permitted
by law. Nothing contained herein shall be construed as requiring approval of
the Holders for the Trustees to organize or assist in organizing one or more
corporations, trusts, partnerships, associations or other organizations and
selling, conveying or transferring a portion of the Trust Property to one or
more of such organizations or entities.
ARTICLE XI
Miscellaneous
11.1. Certificate of Designation; Agent for Service of Process. If
required by New York law, 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 or New
York as an agent upon whom process in any action or proceeding against the
Trust or any Series may be served.
<PAGE>
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 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.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Declaration of
Trust of The Premium Portfolios as of the day and year first above written.
Philip W. Coolidge
-------------------------------
Philip W. Coolidge
As Trustee and not individually
Elliott J. Berv
-------------------------------
Elliott J. Berv
As Trustee and not individually
Mark T. Finn
-------------------------------
Mark T. Finn
As Trustee and not individually
Walter E. Robb III
-------------------------------
Walter E. Robb III
As Trustee and not individually
LM3063
<PAGE>
SCHEDULE A
THE PREMIUM PORTFOLIOS
Initial Series
U.S. Government Income Portfolio
Global Governments Portfolio
Intermediate Income Portfolio
Long-Term U.S. Government Income Portfolio
International Equity Portfolio
Equity Portfolio
Balanced Portfolio
Exhibit 1(b)
THE PREMIUM PORTFOLIOS
Amendment of Declaration of Trust
The undersigned, being a majority of the Trustees of The Premium
Portfolios, a trust established pursuant to a Declaration of Trust dated as of
September 13, 1993 (the "Declaration of Trust"), hereby, pursuant to the last
paragraph of Section 10.4 of the Declaration of Trust, amend the Declaration of
Trust by deleting in its entirety paragraph (a) of such Section 10.4 and
substituting for such paragraph (a) the following:
"(a) The Trustees may, without any vote of Holders, amend or
otherwise supplement this Declaration by an instrument in writing
executed by a majority of the Trustees, provided that Holders shall have
the right to vote on any amendment (a) required to be approved by Holders
by law or by the Trust's registration statement filed with the Commission
or (b) submitted to them by the Trustees. Any amendment submitted to
Holders which the Trustees determine would affect the Holders of certain
but not all Series shall be authorized by vote of the Holders of such
Series affected and no vote shall be required of Holders of a Series not
affected."
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of February 3, 1994 at Nassau, The Bahamas.
Elliott J. Berv
Trustee
Philip Coolidge
Trustee
Walter E. Robb
Trustee
<PAGE>
THE PREMIUM PORTFOLIOS
Second Amendment of Declaration of Trust
The undersigned, being a majority of the Trustees of The Premium
Portfolios (the "Trust"), a trust established pursuant to a Declaration of
Trust, dated as of September 13, 1993, as amended and as further amended from
time to time (as so amended from time to time, the "Declaration of Trust"),
hereby, pursuant to Section 10.4(a) of the Declaration of Trust, amend the
Declaration of Trust, effective May 5, 1995, as follows:
(a) Section 1.2 of the Declaration of Trust is hereby amended by adding
the following definition in appropriate place in the alphabetical sequence
thereof:
"Emergency Meeting" shall mean a meeting of the Trustees or of a
committee of the Trustees (a) called by the Chairman, if any, the
President, the Secretary, an Assistant Secretary or any two Trustees, (b)
the notice of which is given or confirmed in writing and specifies that
the meeting is an "Emergency Meeting" and (c) except as provided in
clauses (a) and (b) of this definition, held in accordance with the
provisions set forth in Section 2.5 hereof.
(b) Article III of the Declaration of Trust is hereby amended by adding
the following new section after Section 3.11 thereof:
3.12.Limitation on Powers. Anything in this Declaration of Trust to
the contrary notwithstanding, (a) no Trustee shall be authorized or
empowered by the terms of this Declaration of Trust or otherwise to take
any action on behalf of the Trust in his or her capacity as Trustee while
physically present in the United States of America or any of its
territories or possessions or areas subject to its jurisdiction unless
such action is taken at an Emergency Meeting by the Trustees or by a
committee of the Trustees thereunto duly authorized, and (b) unless such
action is taken at an Emergency Meeting by the Trustees or by a committee
of the Trustees thereunto duly authorized, no action taken on behalf of
the Trust by a Trustee or by the Trustees or any committee thereof while
physically present in the United States of America or any of its
territories or possessions or areas subject to its jurisdiction shall be
a valid exercise of such Trustee's or Trustees' authority and any such
action shall be considered null and void.
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed and delivered at Hamilton, Bermuda, on May 5, 1995.
Elliott J. Berv
Elliott J. Berv, Trustee
Philip W. Coolidge
Philip W. Coolidge, Trustee
Mark T. Finn
Mark T. Finn, Trustee
Walter E. Robb
Walter E. Robb, Trustee
<PAGE>
THE PREMIUM PORTFOLIOS
AMENDMENT TO
DECLARATION OF TRUST
The undersigned, constituting a majority of the Trustees of The Premium
Portfolios (the "Trust"), a trust organized under the laws of the State of New
York, pursuant to a Declaration of Trust dated September 13, 1993, as amended
(the "Declaration"), subject to approval by a majority of the investors in
Equity Portfolio and Small Cap Equity Portfolio, each a series of the Trust, do
hereby amend Sections 1.2, 3.2 and 5.1 of the Declaration as follows:
By deleting the definition of "Institutional Investor(s)" contained in
Section 1.2 of the Declaration and replacing it with the following:
"Institutional Investor(s)" shall mean, when used with respect to
each Series of the Trust other than the Series designated as Balanced
Portfolio, Government Income Portfolio, International Equity Portfolio
and Emerging Asian Markets Equity Portfolio, 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 or partnership or a grantor trust beneficially
owned by any individual, S corporation or partnership, unless, in the
case of a partnership or a grantor trust beneficially owned by a
partnership, the interests in the partnership are held by entities that
otherwise meet the definition of Institutional Investor. When used with
respect to those Series of the Trust designated as Balanced Portfolio,
Government Income Portfolio, International Equity Portfolio and Emerging
Asian Markets Equity Portfolio, Institutional Investor(s) shall mean any
regulated investment company, segregated asset account, foreign
investment company, common trust fund, group trust or other investment
arrangement, whether organized within or without the United States of
America, other than an individual, S corporation, partnership or grantor
trust beneficially owned by any individual, S corporation or partnership.
By adding the following paragraph (d) immediately after paragraph (c) of
Section 3.2:
(d) Notwithstanding any other provision of this Declaration to the
contrary, the Trustees shall have the power in their discretion without
any requirement of approval by investors to either invest all or a
portion of the Trust Property of each Series of the Trust (other than the
Series designated as Balanced Portfolio, Government Income Portfolio,
<PAGE>
International Equity Portfolio and Emerging Asian Markets Equity
Portfolio), or sell all or a portion of such Trust Property and invest
the proceeds of such sales, in one or more investment companies to the
extent not prohibited by the 1940 Act and exemptive orders granted under
such Act.
By deleting Section 5.1 of the Declaration in its entirety and replacing
it with the following:
5.1. Liability of Holders; Indemnification. (a) As to the Series of
the Trust designated as Balanced Portfolio, Government Income Portfolio,
International Equity Portfolio and Emerging Asian Markets Equity
Portfolio, each Holder of an Interest in such Series shall be jointly and
severally liable with every other Holder of an Interest in that Series
(with rights of contribution inter se in proportion to their respective
Interests in the Series) for the liabilities and obligations of that
Series (and of no other Series) in the event that the Trust fails to
satisfy such liabilities and obligations from the assets of that Series.
To the extent assets of a Series named in the preceding sentence are
available in the Trust, the Trust shall indemnify and hold each Holder of
an Interest in that Series harmless from and against any claim or
liability to which such Holder may become subject by reason of being or
having been a Holder of an Interest in that Series to the extent that
such claim or liability imposes on the Holder an obligation or liability
which, when compared to the obligations and liabilities imposed on other
Holders of Interests in that Series, is greater than such Holder's
proportionate share of such claim or liability, and shall reimburse such
Holder for all legal and other expenses reasonably incurred by such
Holder in connection with any such claim or liability.
(b) Notwithstanding any other provision of this Declaration, each
Holder of an Interest in a Series of the Trust other than Balanced
Portfolio, Government Income Portfolio, International Equity Portfolio
and Emerging Asian Markets Equity Portfolio shall not be subject to any
personal liability whatsoever to any Person in connection with the Trust
Property or the acts, obligations or affairs of the Trust with respect to
that Series; and if any such Holder is made a party to any suit or
proceeding to enforce any such liability, such Holder shall not, on
account thereof, be held to any personal liability. To the extent assets
of a Series enumerated in the preceding sentence are available in the
Trust, the Trust shall indemnify and hold each Holder of an Interest in
that Series harmless from and against any claim or liability to which
such Holder may become subject by reason of being or having been a Holder
of an Interest in that Series, and shall reimburse such Holder for all
legal and other expenses reasonably incurred by such Holder in connection
with any such claim or liability.
<PAGE>
(c) The rights accruing to a Holder under this Section 5.1 shall not
exclude any other right to which such Holder may be lawfully entitled,
nor shall anything contained herein restrict the right of the Trust to
indemnify or reimburse a Holder in any appropriate situation even though
not specifically provided herein. The liabilities of a particular Series
and the right to indemnification granted hereunder to Holders of
Interests in such Series shall not be enforceable against any other
Series or Holders of Interests in any other Series.
IN WITNESS WHEREOF, the undersigned have executed this instrument at
Tucker's Town, Bermuda as of the 8th day of August, 1997.
Elliott J. Berv Mark T. Finn
Elliott J. Berv Mark T. Finn
As Trustee and Not Individually As Trustee and Not Individually
Philip W. Coolidge Walter E. Robb, III
Philip W. Coolidge Walter E. Robb, III
As Trustee and Not Individually As Trustee and Not Individually
<PAGE>
THE PREMIUM PORTFOLIOS
AMENDED AND RESTATED
ESTABLISHMENT AND DESIGNATION OF SERIES OF
BENEFICIAL INTERESTS (WITHOUT PAR VALUE)
Pursuant to Section 6.2 of the Declaration of Trust, dated September 13,
1993, as amended (the "Declaration of Trust"), of The Premium Portfolios (the
"Trust"), the undersigned, being a majority of the Trustees of the Trust, do
hereby amend and restate the Trust's existing Establishment and Designation of
Series of Beneficial Interests (without par value) in order to establish one
series of Interests (as defined in the Declaration of Trust). No other changes
to the special and relative rights of the existing series are intended by this
amendment and restatement. This amendment and restatement shall become
effective on such date as any officer of the Trust may select by written notice
to the Trust.
1. The series shall be as follows:
The new series shall be designated as:
"Growth & Income Portfolio"
The remaining series are as follows:
Large Cap Growth Portfolio;
Small Cap Growth Portfolio;
Balanced Portfolio;
Government Income Portfolio;
International Equity Portfolio; and
Emerging Asian Markets Equity Portfolio.
2. Each series shall be authorized to hold cash, invest in securities,
instruments and other property and use investment techniques as from time to
time described in the Trust's then currently effective registration statement
under the Investment Company Act of 1940, as amended, to the extent pertaining
to the offering of Interests of such series. Each Interest of each series shall
have such redemption, voting and liquidation rights and shall represent such
proportionate ownership in the series as provided generally in the Declaration
of Trust. The proceeds of sales of Interests of each series, together with any
income and gain thereon, less any diminution or expenses thereof, shall
irrevocably belong to such series, unless otherwise required by law.
<PAGE>
3. Investors in each series shall vote separately as a class on any matter
to the extent required by, and any matter shall have been deemed effectively
acted upon with respect to such series as provided in, Rule 18f-2, as from time
to time in effect, under the Investment Company Act of 1940, as amended, or any
successor rule, and the Declaration of Trust.
4. The assets and liabilities of the Trust shall be allocated to each series
as set forth in Section 6.2 of the Declaration of Trust.
5. Subject to the provisions of Section 6.2 and Article X of the Declaration
of Trust, the Trustees (including any successor Trustees) shall have the right
at any time and from time to time to change the designation of any series now
or hereafter created, or to otherwise change the special and relative rights
of any series.
IN WITNESS WHEREOF, the undersigned have executed this instrument at Paget,
Bermuda as of the 14th day of November, 1997.
Elliott J. Berv Mark T. Finn
ELLIOTT J. BERV MARK T. FINN
As Trustee and Not Individually As Trustee and Not Individually
Philip W. Coolidge C. Oscar Morong, Jr.
PHILIP W. COOLIDGE C. OSCAR MORONG, JR.
As Trustee and Not Individually As Trustee and Not Individually
Walter E. Robb, III
WALTER E. ROBB, III
As Trustee and Not Individually
<PAGE>
The Premium Portfolios
c/o Signature Financial Group (Cayman) Ltd.
Suite #193
Hamilton HM 11
Bermuda
I, Susan Jakuboski, hereby certify that I am the duly elected, qualified
and acting Assistant Secretary of The Premium Portfolios, a New York trust (the
"Trust"), and, pursuant to authority granted by the Board of Trustees of the
Trust at a meeting held on November 14, 1997, do hereby give notice that the
Amended and Restated Establishment and Designation of Series of Beneficial
Interests (without par value) of the Trust, as executed by the Trustees of the
Trust on November 14, 1997, shall become effective as of December 15, 1997.
IN WITNESS WHEREOF, I have hereunto signed my name at Hamilton, Bermuda
this 15th day of December, 1997.
Susan Jakuboski
Susan Jakuboski, Assistant Secretary
Exhibit 2
THE PREMIUM PORTFOLIOS
BY-LAWS
These By-Laws are made and adopted pursuant to Section 2.7 of the
Declaration of Trust establishing THE PREMIUM PORTFOLIOS, dated September 13,
1993, as from time to time amended (hereinafter called 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
Holders Meeting
1.1 Chairman. The Chairman, if any, shall act as chairman at all
meetings of the Holders; in his absence, the President shall act as chairman;
and in the absence of the Chairman and the President, the Trustee or Trustees
present at each meeting may elect a temporary chairman for the meeting, who may
be one of themselves.
1.2 Proxies; Voting. Holders may vote either in person or by duly
executed proxy and each Holder of record shall be entitled to a vote
proportionate to its interest in the Series or the Trust, as the case may be
(each Holder's proportionate interest, an "Interest"). No proxy shall be valid
after eleven (11) months from the date of its execution, unless a longer period
is expressly stated in such proxy.
1.3 Fixing Record Dates. For the purpose of determining the Holders
who are entitled to notice of or to vote or act at a meeting, including any
adjournment thereof, or who are entitled to participate in any distributions,
or for any other proper purpose, the Trustees may from time to time fix a
record date in the manner provided in Section 9.4 of the Declaration. If the
Trustees do not, prior to any meeting of Holders, so fix a record date, then
the date of mailing notice of the meeting shall be the record date.
1.4 Inspectors of Election. In advance of any meeting of 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 Holders may, and on the request of any
Holder or his proxy shall, appoint Inspectors of Election of the meeting. The
number of Inspectors shall be either one or three. If appointed at the meeting
on the request of one or more Holders or proxies, a majority of Interests
present shall determine whether one or three Inspectors 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 person
appointed as Inspector fails to appear or fails or refuses to act, the vacancy
may be filled by appointment made by the Trustees in advance of the convening
of the meeting or at the meeting by the person acting as Chairman. The
<PAGE>
Inspectors of Election shall determine the proportion of 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, determine
the results, and do such other acts as may be proper to conduct the election or
vote with fairness to all Holders. If there are three Inspectors of Election,
the decision, act or certificate of a majority is effective in all respects as
the decision, act or certificate of all. On request of the Chairman, if any, of
the 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.
1.5 Records at Holder Meetings. At each meeting of the Holders there
shall be open for inspection the minutes of the last previous meeting of
Holders of the Trust and a list of the Holders of the Trust, certified to be
true and correct by the Secretary or other proper agent of the Trust, as of the
record date of the meeting. Such list of Holders shall contain the name of each
Holder in alphabetical order and the address and the proportion of Interests
owned by such Holder. Holders shall have the right to inspect books and records
of the Trust during normal business hours and for any purpose not harmful to
the Trust.
1.6 Series Holders Meetings. Whenever a matter is required to be
voted by Holders of the Trust in the aggregate under Section 9.1 and 9.2 of the
Declaration, the Trust may either hold a meeting of Holders of all series to
vote on such matter, or hold separate meetings of Holders of each of the
individual series to vote on such matter provided that (i) such separate
meetings shall be held within one year of each other, (ii) a quorum of the
individual series entitled to vote in person or by proxy shall be present at
each such separate meeting, and (iii) a quorum shall be present in the
aggregate at such separate meetings, and the votes of Holders at all such
separate meetings shall be aggregated in order to determine if sufficient votes
have been cast for such matter to be voted.
When separate meetings are held for Holders of each of the individual
series to vote on a matter required to be voted on by Holders of the Trust in
the aggregate, the record date of each separate meeting shall be determined in
the manner described above in Section 1.3.
ARTICLE II
Trustees
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. Regular meetings of the Trustees may be
held without call or notice at such place or places and times as the Trustees
may by resolution provide from time to time.
<PAGE>
2.2 Special Meetings. Special Meetings of the Trustees shall be held
upon the call of the Chairman, if any, the President, the Secretary or any two
Trustees, at such time, on such day and at such place, as shall be designated
in the notice of the meeting.
2.3 Notice. Notice of a meeting shall be given by mail or by telegram
(which term shall include a cablegram) or delivered personally. If notice is
given by mail, it shall be mailed not later than 48 hours preceding the meeting
and if given by telegram or personally, such telegram shall be sent or delivery
made not later than 48 hours preceding the meeting. Notice by telephone shall
constitute personal delivery for these purposes. Notice of a meeting of
Trustees may be waived before or after any meeting by signed written waiver.
Neither the business to be transacted at nor the purpose of, any meeting of the
Board of 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
unanimous written consent. The attendance of a Trustee at a meeting shall
constitute a waiver of notice of such meeting except where a Trustee attends a
meeting for the express purpose of objecting, at the commencement of such
meeting, to the transaction of any business on the ground that the meeting has
not been lawfully called or convened.
2.4 Chairman: Records. The Chairman, if any, shall act as chairman at
all meetings of the Trustees; in his absence the President shall act as
chairman; and, in the absence of the Chairman and the President, the Trustees
present shall elect one of their number to act as temporary chairman. The
results of all actions taken at a meeting of the Trustees, or by unanimous
written consent of the Trustees, shall be recorded by the Secretary.
ARTICLE III
Officers
3.1 Officers of the Trust. The officers of the Trust shall consist of
a Chairman, if any, a President, a Secretary, a Treasurer and such other
officers or assistant officers, including Vice Presidents, as may be elected by
the Trustees. Any two or more of the offices may be held by the same person,
except that the same person may not be both President and Secretary. 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
and the President shall be Trustees, but no other officer of the Trust need be
a Trustee.
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, President, Secretary, Treasurer and such other officers as
the Trustees shall deem necessary or appropriate in order to carry out the
business of the Trust. Such officers shall hold office until the next annual
meeting of the Trustees and until their successors have been duly elected and
qualified. The Trustees may fill any vacancy in office or add any additional
officers at any time.
<PAGE>
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, President, or Secretary, and such
resignation shall take effect immediately, or at a later date according to the
terms of such notice in writing.
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.
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 the Trustees. The President shall
be, ex officio, a member of all standing committees. Subject to direction of
the Trustees, the Chairman, if any, and the President shall each have 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 Chairman, if any, and the President shall each
have full authority and power, on behalf of all of the Trustees, to attend and
to act and to vote, on behalf of the Trust at any meetings of business
organizations in which the Trust holds an interest, or to confer such powers
upon any other persons, by executing any proxies duly authorizing such persons.
The Chairman, if any, and 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
President, and when so acting shall have all the powers of and be subject to
all of the restrictions upon the President. Subject to the direction of the
President, each Vice President shall have the power in the name and on behalf
of the Trust to execute any and all loan documents, contracts, agreements,
deeds, mortgages and other instruments in writing, and, in addition, shall have
such other duties and powers as shall be designated from time to time by the
Trustees or by the President.
3.6 Secretary. The Secretary shall keep the minutes of all meetings
of, and record all votes of, Holders, Trustees and the Executive Committee, if
any. He shall be custodian of the seal of the Trust, if any, and he (and any
other person so authorized by the Trustees) shall affix the seal or, if
<PAGE>
permitted, a facsimile thereof, to any instrument executed by the Trust which
would be sealed by a New York corporation executing the same or a similar
instrument and shall attest the seal and the signature or signatures of the
officer or officers executing such instrument on behalf of the Trust. The
Secretary shall also perform any other duties commonly incident to such office
in a New York business corporation, and shall have such other authorities and
duties as the Trustees shall from time to time determine.
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. He may endorse
for deposit or collection all notes, checks and other instruments payable to
the Trust or to its order. He shall deposit all funds of the Trust as may be
ordered by the Trustees or the President. He 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. He 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 any adviser,
administrator or manager to maintain bank accounts and deposit and disburse
funds on behalf of the Trust.
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 whom they assist and
shall assist that officer in the duties of his office. Each officer, employee
and agent of the Trust shall have such other duties and authority as may be
conferred upon him by the Trustees or delegated to him by the President.
ARTICLE IV
Miscellaneous
4.1 Depositories. In accordance with Section 4.3 of the Declaration,
the funds of the Trust shall be deposited in such depositories as the Trustees
shall designate and shall be drawn out on checks, drafts or other orders signed
by such officer, officers, agent or agents (including any adviser,
administrator or manager), as the Trustees may from time to time authorize.
4.2 Signatures. All contracts and other instruments shall be executed
on behalf of the Trust by such officer, officers, agent or agents, as provided
in these By-Laws or as the Trustees may from time to time by resolution
provide.
<PAGE>
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 business corporation.
4.4 Indemnification. Insofar as the conditional advancing of
indemnification monies under Section 5.4 of the Declaration of Trust, for
actions based upon the Investment Company Act of 1940 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 that amount of the advance which
exceeds that 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 repayments 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.
ARTICLE V
Interest Non-Transferability
5.1 Non-Transferability of Interests. Interests shall not be
transferable. Except as otherwise provided by law, the Trust shall be entitled
to recognize the exclusive right of a person in whose name any Interests stand
on the record of Holders as the owner of such Interests for all purposes,
including, without limitation, the rights to receive distributions, and to vote
as such owner, and the Trust shall not be bound to recognize any equitable or
legal claim to or interest in any such Interests on the part of any other
person.
5.2 Regulations. The Trustees may make such additional rules and
regulations, not inconsistent with these By-Laws, as they may deem expedient
concerning the issue of Interests of the Trust. They may appoint, or authorize
any officer or officers to appoint, one or more registrars.
5.3 Registrars and the Like. As provided in Section 2.6 of the
Declaration, the Trustees shall have authority to employ and compensate such
registrars with respect to the Interests of the Trust as the Trustees shall
deem necessary or desirable. In addition, the Trustees shall have power to
employ and compensate such distribution disbursing agents, warrant agents and
agents for the reinvestment of distributions as they shall deem necessary or
desirable. Any of such agents shall have such power and authority as is
delegated to any of them by the Trustee.
<PAGE>
ARTICLE VI
Amendment of By-Laws
6.1 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 al any lime. Action by the Trustees with
respect to the By-Laws shall be taken by an al affirmative vote of a majority
of the Trustees. The Trustees shall in no event adopt By-Laws which are in
conflict with the Declaration, and any apparent inconsistency shall be
construed in favor of the related provisions in the Declaration.
The Declaration establishing The Premium Portfolios provides that the
name The Premium Portfolios refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or personally; and no Trustee,
officer, employee or agent of The Premium Portfolios 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 said The Premium Portfolios but the Trust Property only shall be
liable.
Exhibit 5
INVESTMENT ADVISORY AGREEMENT
THE PREMIUM PORTFOLIOS
EMERGING ASIAN MARKETS EQUITY PORTFOLIO
INVESTMENT ADVISORY AGREEMENT, dated as of May 5, 1995, by and between
The Premium Portfolios, a New York trust (the "Trust"), and CITIBANK, N.A., a
national banking association ("Citibank" or the "Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act"), and
WHEREAS, the Trust wishes to engage the Adviser to provide certain
investment advisory services for the series of the Trust designated as Emerging
Asian Markets Equity Portfolio (the "Portfolio"), and the Adviser is willing to
provide such investment advisory services for the Portfolio on the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties hereto as herein set forth, the parties covenant and
agree as follows:
1. Duties of the Adviser. The Adviser shall provide the Portfolio
with such investment advice and supervision as the Trust may from time
to time consider necessary for the proper supervision of the
Portfolio's investment assets. Citibank shall act as the Adviser for
the Portfolio and as such shall furnish continuously an investment
program and shall determine from time to time what securities shall be
purchased, sold or exchanged and what portion of the assets of the
Portfolio shall be held uninvested, subject always to the restrictions
of the Trust's Declaration of Trust, dated September 13, 1993, and
By-laws, as each may be amended from time to time (respectively, the
"Declaration" and the "By-Laws"), to the provisions of the 1940 Act,
and to the then-current Registration Statement of the Trust with
respect to the Portfolio. The Adviser shall also make recommendations
as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Portfolio's
securities shall be exercised. Should the Board of Trustees of the
Trust at any time, however, make any definite determination as to
investment policy applicable to the Portfolio and notify the Adviser
thereof in writing, the Adviser shall be bound by such determination
for the period, if any, specified in such notice or until similarly
notified that such determination has been revoked. The Adviser shall
take, on behalf of the Portfolio, all actions which it deems necessary
to implement the investment policies determined as provided above, and
in particular to place all orders for the purchase or sale of
securities for the Portfolio's account with the brokers or dealers
selected by it, and to that end the Adviser is authorized as the agent
of the Trust to give instructions to the custodian of the Portfolio as
to deliveries of securities and payments of cash for the account of
the Portfolio. In connection with the selection of such brokers or
dealers and the placing of such orders, the Adviser is directed to
seek for the Portfolio in its best judgment, prompt execution in an
effective manner at the most favorable price. Subject to this
requirement of seeking the most favorable price, securities may be
bought from or sold to broker-dealers who have furnished statistical,
research and other information or services to the Adviser or the
Portfolio, subject to any applicable laws, rules and regulations. In
making purchases or sales of securities or other property for the
account of the Portfolio, the Adviser may deal with itself or with the
Trustees of the Trust or the Trust's exclusive placing agent, to the
extent such actions are permitted by the 1940 Act.
2. Allocation of Charges and Expenses. The Adviser shall furnish at
its own expense all necessary services, facilities and personnel in
connection with its responsibilities under Section 1 above. It is
understood that the Trust will pay from the assets of the Portfolio
all of its own expenses allocable to the Portfolio including, without
limitation, compensation of Trustees not "affiliated" with the
Adviser; governmental fees; interest charges; taxes; membership dues
in the Investment Company Institute allocable to the Trust; fees and
expenses of independent auditors, of legal counsel and of any transfer
agent, administrator, distributor, shareholder servicing agent,
registrar or dividend disbursing agent of the Trust; expenses of
issuing and redeeming interests and servicing investor accounts;
expenses of preparing, printing and mailing, notices, proxy statements
and reports to governmental officers and commissions and to investors
in the Portfolio; expenses connected with the execution, recording and
settlement of security transactions; insurance premiums; fees and
expenses of the custodian for all services to the Portfolio, including
safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of the
Portfolio; and expenses of meetings of the Portfolio's investors.
3. Compensation of the Adviser. For the services to be rendered,
the Trust shall pay to the Adviser from the assets of the Portfolio an
investment advisory fee computed and paid monthly at an annual rate
equal to 1.00% of the Portfolio's average daily net assets for the
Portfolio's then-current fiscal year. If Citibank serves as Adviser
for less than the whole of any period specified in this Section 3, the
compensation to Citibank, as Adviser, shall be prorated.
4. Covenants of the Adviser. The Adviser agrees that it will not
deal with itself, or with the Trustees of the Trust or the Trust's
principal underwriter or distributor, as principals in making
purchases or sales of securities or other property for the account of
the Portfolio, except as permitted by the 1940 Act, will not take a
long or short position in shares of the Portfolio except as permitted
by the Declaration, and will comply with all other provisions of the
Declaration and By-Laws and the then-current Registration Statement
applicable to the Portfolio relative to the Adviser and its Directors
and officers.
5. Limitation of Liability of the Adviser. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in the
execution of securities transactions for the Portfolio, except for
willful misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Section 5, the term "Adviser"
shall include Directors, officers and employees of the Adviser as well
as Citibank itself.
6. Activities of the Adviser. The services of the Adviser to the
Portfolio are not to be deemed to be exclusive, Citibank being free to
render investment advisory and/or other services to others. It is
understood that Trustees, officers, and investors of the Trust are or
may be or may become interested in the Adviser, as Directors,
officers, employees, or otherwise and that Directors, officers and
employees of the Adviser are or may become similarly interested in the
Trust and that the Adviser may be or may become interested in the
Trust as an investor or otherwise.
7. Duration, Termination and Amendments of this Agreement. This
Agreement shall become effective as of the day and year first above
written and shall govern the relations between the parties hereto
thereafter, and shall remain in force until May 5, 1997, on which date
it will terminate unless its continuance after May 5, 1997 is
"specifically approved at least annually" (a) by the vote of a
majority of the Trustees of the Trust who are not "interested persons"
of the Trust or of the Adviser at a meeting specifically called for
the purpose of voting on such approval, and (b) by the Board of
Trustees of the Trust or by "vote of a majority of the outstanding
voting securities" of the Portfolio.
This Agreement may be terminated at any time without the payment of
any penalty by the Trustees or by the "vote of a majority of the outstanding
voting securities" of the Portfolio, or by the Adviser, in each case on not
more than 60 days' nor less than 30 days' written notice to the other party.
This Agreement shall automatically terminate in the event of its "assignment".
This Agreement may be amended only if such amendment is approved by
the "vote of a majority of the outstanding voting securities" of the Portfolio.
The terms "specifically approved at least annually", "vote of a
majority of the outstanding voting securities", "assignment", "affiliated
person", and "interested persons", when used in this Agreement, shall have the
respective meanings specified in, and shall be construed in a manner consistent
with, the 1940 Act, subject, however, to such exemptions as may be granted by
the Securities and Exchange Commission under said Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered in their names and on their behalf by the
undersigned, thereunto duly authorized, all as of the day and year first above
written.
Each party acknowledges and agrees that all obligations of the Trust
under this Agreement are binding only with respect to the Portfolio; that any
liability of the Trust under this Agreement with respect to the Portfolio, or
in connection with the transactions contemplated herein with respect to the
Portfolio, shall be discharged only out of the assets of the Portfolio; and
that no other series of the Trust shall be liable with respect to this
Agreement or in connection with the transactions contemplated herein.
The undersigned Trustee or officer of the Trust has executed this
Agreement not individually, but as Trustee or officer under the Trust's
Declaration of Trust, dated September 13, 1993, as amended, and the obligations
of this Agreement are not binding upon any of the Trustees or officers of the
Trust individually.
THE PREMIUM PORTFOLIOS CITIBANK, N.A.
By: /s/ Philip Coolidge By: /s/ Andres B. Sharp
----------------------- -----------------------
Title: President Title: Vice President
----------------------- -----------------------
Exhibit 6
PLACEMENT AGENCY AGREEMENT
September 13, 1993
The Landmark Funds Broker-Dealer Services, Inc.
c/o Signature Financial Group (Cayman), Ltd.
Elizabethan Square, 2nd Floor
George Town, Grand Cayman, BWI
Gentlemen:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, THE PREMIUM PORTFOLIOS (the "Portfolio"), an
open-end diversified management investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), organized as a New
York trust, has agreed that The Landmark Funds Broker-Dealer Services, Inc.
("LFBDS") shall be the exclusive placement agent (the "Placement Agent") of
beneficial interests of the Portfolio and of each of its series ("Portfolio
Interests").
SERVICES AS PLACEMENT AGENT.
1.1 LFBDS will act as exclusive Placement Agent of the Portfolio Interests
covered by each registration statement then in effect under the 1940 Act.
In acting as Placement Agent under this Placement Agent Agreement, neither
LFBDS nor its employees nor any agents thereof shall make any offer or
sale of Portfolio Interests in a manner which would require the Interests
to be registered under the Securities Act of 1933, as amended (the "1933
Act").
1.2 All activities by LFBDS and its agents and employees as Placement Agent of
Portfolio Interests shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations
adopted pursuant to the 1940 Act by the Securities and Exchange Commission
(the "Commission").
1.3 LFBDS shall perform such specified activities and conduct all of its
activities as Placement Agent of Portfolio Interests, including any
activities described herein, as set forth in the Operating Policies and
Procedures (the "Operating Procedures") of the Portfolio (in such form as
may be approved from time to time by the Portfolio's Board of Trustees).
To the extent that any provision of this Agreement shall conflict with any
provision of the Operating Procedures, the applicable provision of the
Operating Procedures shall be deemed to govern.
1.4 Nothing herein shall be construed to require the Portfolio to accept any
offer to purchase any Portfolio Interests, all of which shall be subject
to approval by the Portfolio's Board of Trustees.
<PAGE>
1.5 The Portfolio shall furnish from time to time for use in connection with
the sale of Portfolio Interests such information with respect to the
Portfolio and Portfolio Interests as LFBDS may reasonably request. The
Portfolio shall also furnish LFBDS upon request with: (a) unaudited
semiannual statements of the Portfolio's books and accounts prepared by
the Portfolio, and (b) from time to time such additional information
regarding the Portfolio's financial or regulatory condition as LFBDS may
reasonably request.
1.6 The Portfolio represents to LFBDS that all registration statements filed
by the Portfolio with the Commission under the 1940 Act with respect to
Portfolio Interests have been prepared in conformity with the requirements
of such statute and the rules and regulations of the Commission
thereunder. As used in this Agreement the term "registration statement"
shall mean any registration statement filed with the Commission as
modified by any amendments thereto that at any time shall have been filed
with the Commission by or on behalf of the Portfolio or by the Portfolio
on behalf of any series thereof. The Portfolio represents and warrants to
LFBDS that any registration statement will contain all statements required
to be stated therein in conformity with both such statute and the rules
and regulations of the Commission; that all statements of fact contained
in any registration statement will be true and correct in all material
respects at the time of filing of such registration statements or
amendments thereto; and that no registration statement will include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading to a purchaser of Portfolio Interests. The Portfolio may
but shall not be obligated to propose from time to time such amendment to
any registration statement as in the light of future developments may, in
the opinion of the Portfolio's counsel, be necessary or advisable. If the
Portfolio shall not propose such amendment and/or supplement within
fifteen days after receipt by the Portfolio of a written request from
LFBDS to do so, LFBDS may, at its option, terminate this Agreement. The
Portfolio shall not file any amendment to any registration statement
without giving LFBDS reasonable notice thereof in advance; provided,
however, that nothing contained in this Agreement shall in any way limit
the Portfolio's right to file at any time such amendment to any
registration statement as the Portfolio may deem advisable, such right
being in all respects absolute and unconditional.
1.7 The Portfolio agrees to indemnify, defend and hold LFBDS, its several
officers and directors, and any person who controls LFBDS within the
meaning of Section 15 of the 1933 Act or Section 20 of the Securities and
Exchange Act of 1934 (the "1934 Act") (for purposes of this paragraph 1.7,
collectively, "Covered Persons") free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which any Covered Person
may incur under the 1933 Act, the 1934 Act, common law or otherwise,
arising out of or based on any untrue statement of a material fact
contained in any registration statement, private placement memorandum or
<PAGE>
other offering material ("Offering Material") or arising out of or based
on any omission to state a material fact required to be stated in any
Offering Material or necessary to make the statements in any Offering
Material not misleading; provided, however, that the Portfolio's agreement
to indemnify Covered Persons shall not be deemed to cover any claims,
demands, liabilities or expenses arising out of any financial and other
statements as arc furnished in writing to the Portfolio by LFBDS in its
capacity as Placement Agent for use in the answers to any items of any
registration statement or in any statements made in any Offering Material,
or arising out of or based on any omission or alleged omission to state a
material fact in connection with the giving of such information required
to be stated in such answers or necessary to make the answers not
misleading; and further provided that the Portfolio's agreement to
indemnify LFBDS and the Portfolio's representations and warranties herein
before set forth in paragraph 1.6 shall not be deemed to cover any
liability to the Portfolio or its investors to which a Covered Person
would otherwise be subject by reason of willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of a
Covered Person's reckless disregard of its obligations and duties under
this Agreement. The Portfolio shall be notified of any action brought
against a Covered Person, such notification to be given by letter or by
telegram addressed to the Portfolio, c/o Roger P. Joseph, Esq., gingham,
Dana & Gould, 15() Federal Street, Boston, Massachusetts 02110, with a
copy to Philip W. Coolidge, 6 St. James Avenue, 9th floor. Boston,
Massachusetts 02116 promptly after the summons or other first legal
process shall have been duly and completely served upon such Covered
Person. The failure to so notify the Portfolio of any such action shall
not relieve the Portfolio from any liability except to the extent that the
Portfolio shall have been prejudiced by such failure, or from any
liability that the Portfolio may have to the Covered Person against whom
such action is brought by reason of any such untrue statement or omission,
otherwise than on account of the Portfolio's indemnity agreement contained
in this paragraph. The Portfolio will be entitled to assume the defense of
any suit brought to enforce any such claim, demand or liability, but in
such case such defense shall be conducted by counsel of good standing
chosen by the Portfolio and approved by LFBDS, which approval shall not be
unreasonably withheld. In the event the Portfolio elects to assume the
defense of any such suit and retain counsel of good standing approved by
LFBDS, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case
the Portfolio does not elect to assume the defense of any such suit, or in
case LFBDS reasonably does not approve of counsel chosen by the Portfolio,
the Portfolio will reimburse the Covered Person named as defendant in such
suit, for the fees and expenses of any counsel retained by LFBDS or such
Covered Person. The Portfolio's indemnification agreement contained in
this paragraph and the Portfolio's representations and warranties in this
Agreement shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of Covered Persons, and shall
survive the delivery of any Portfolio Interests. This agreement of
indemnity will inure exclusively to Covered Persons and their successors.
The Portfolio agrees to notify LFBDS promptly of the commencement of any
<PAGE>
litigation or proceedings against the Portfolio or any of its officers or
Trustees in connection with the issue and sale of any Portfolio Interests.
1.8 LFBDS agrees to indemnify, defend and hold the Portfolio, its several
officers and trustees, and any person who controls the Portfolio within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
(for purposes of this paragraph 1.8, collectively, "Covered Persons") free
and harmless from and against any and all claims, demands, liabilities and
expenses (including the costs of investigating or defending such claims,
demands, liabilities and any counsel fees incurred in connection
therewith) that Covered Persons may incur under the 1933 Act, the 1934
Act, or common law or otherwise, but only to the extent that such
liability or expense incurred by a Covered Person resulting from such
claims or demands shall arise out of or be based on any untrue statement
of a material fact contained in information furnished in writing by LFBDS
in its capacity as Placement Agent to the Portfolio for use in the answers
to any of the items of any registration statement or in any statements in
any Offering Material or shall arise out of or be based on any omission to
state a material fact in connection with such information furnished in
writing by LFBDS to the Portfolio required to be stated in such answers or
necessary to make such information not misleading. LFBDS shall be notified
of any action brought against a Covered Person, such notification to be
given by letter or telegram addressed to LFBDS at 6 St. James Avenue,
Boston, Massachusetts 02116, Attention: Philip W. Coolidge, promptly after
the summons or other first legal process shall have been duly and
completely served upon such Covered Person. LFBDS shall have the right of
first control of the defense of the action with counsel of its own
choosing satisfactory to the Portfolio if such action is based solely on
such alleged misstatement or omission on LFBDS's part, and in any other
event each Covered Person shall have the right to participate IN the
defense or preparation of the defense of any such action. The failure to
so notify LFBDS of any such action shall not relieve LFBDS from any
liability except to the extent that LFBDS shall have been prejudiced by
such failure, or from any liability that LFBDS may have to Covered Persons
by reason of any such untrue or alleged untrue statement, or omission or
alleged omission, otherwise than on account of LFBDS's indemnity agreement
contained in this paragraph.
1.9 No Portfolio Interests shall be offered by either LFBDS or the Portfolio
under any of the provisions of this Agreement and no orders for the
purchase or sale of Portfolio interests hereunder shall be accepted by the
Portfolio if and so long as the effectiveness of the registration
statement or any necessary amendments thereto shall be suspended under any
of the provisions of the 1940 Act; provided, however, that nothing
contained in this paragraph shall in any way restrict or have an
application to or bearing on the Portfolio's obligation to redeem
Portfolio Interests from any investor in accordance with the provisions of
the Portfolio's registration statement or Declaration of Trust, as amended
from time to time.
<PAGE>
1.10 The Portfolio agrees to advise LFBDS as soon as reasonably practical by a
notice in writing delivered to LFBDS or its counsel:
(a) of any request by the Commission for amendments to the registration
statement then in effect or for additional information;
(b) in the event of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement then in effect
or the initiation by service of process on the Portfolio of any proceeding
for that purpose;
(c) of the happening of any event that makes untrue any statement of a
material fact made in the registration statement then in effect or that
requires the making of a change in such registration statement in order to
make the statements therein not misleading; and
(d) of all action of the Commission with respect to any amendment to any
registration statement that may from time to time be filed with the
Commission.
For purposes of this paragraph 1.10, informal requests by or acts of the Staff
of the Commission shall not be deemed actions of or requests by the Commission.
1.11 LFBDS agrees on behalf of itself and its employees to treat confidentially
and as proprietary information of the Portfolio all records and other
information not otherwise publicly available relative to the Portfolio and
its prior, present or potential investors and not to use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder, except after prior notification to and approval in
writing by the Portfolio, which approval shall not be unreasonably
withheld and may not be withheld where LFBDS may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so
requested by the Portfolio.
1.12 In addition to LFBDS's duties as Placement Agent, the Portfolio
understands that LFBDS may, in its discretion, perform additional
functions in connection with transactions in Portfolio Interests.
The processing of Portfolio Interest transactions may include, but is not
limited to, compilation of all transactions from LFBDS's various offices;
creation of a transaction tape and timely delivery of it to the Portfolio or
its designated agent for processing; reconciliation of all transactions
delivered to the Portfolio or its designated agent and the recording and
reporting of these transactions executed by the Portfolio or its designated
agent in customer statements; rendering of periodic customer statements; and
the reporting of IRS Form 1099 information at year end if required.
LFBDS may also provide other investor services, such as communicating with
Portfolio investors and other functions in administering customer accounts for
Portfolio investors.
<PAGE>
LFBDS understands that these services may result in cost savings to the
Portfolio or to the Portfolio's investment manager and neither the Portfolio
nor the Portfolio's investment manager will compensate LFBDS for all or a
portion of the costs incurred in performing functions in connection with
transactions in Portfolio Interests. Nothing herein is intended, nor shall be
construed, as requiring LFBDS to perform any of the foregoing functions.
2. TERM.
This Agreement shall become effective on the date first above written and,
unless sooner terminated as provided herein, shall continue until September
13,1994 and thereafter shall continue automatically for successive annual
periods, provided such continuance is specifically approved at least annually
by (i) the Portfolio's Board of Trustees or (ii) by a vote of a majority (as
defined in the 1940 Act) of the Portfolio's outstanding voting securities,
provided that in either event the continuance is also approved by the majority
of the Portfolio's Trustees who are not interested persons (as defined in the
1940 Act) of the Portfolio and who have no direct or indirect financial
interest in this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable without
penalty, on not less than 60 days' notice, by the Portfolio's Board of
Trustees, by vote of a majority (as defined in the 1940 Act) of the Portfolio's
outstanding voting securities, or by LFBDS. This Agreement will also terminate
automatically in the event of its assignment (as defined in the 1940 Act and
the rules thereunder).
3. REPRESENTATIONS AND WARRANTIES.
LFBDS and the Portfolio each hereby represents and warrants to the other that
it has all requisite authority to enter into, execute, deliver and perform its
obligations under this Agreement and that, with respect to it, this Agreement
is legal, valid and binding, and enforceable in accordance with its terms.
4. CONCERNING APPLICABLE PROVISIONS OF LAW, ETC.
This Agreement shall be subject to all applicable provisions of law, including
the applicable provisions of the 1940 Act and to the extent that any provisions
herein contained conflict with any such applicable provisions of law, the
latter shall control.
This Agreement is executed and delivered at a location or locations outside the
United States, and the laws of the Commonwealth of Massachusetts shall, except
to the extent that any applicable provisions of Federal Law shall be
controlling, govern the construction, validity and effect of this Agreement,
without reference to principles of conflicts of law.
If the contract set forth herein is acceptable to you, please so indicate by
executing the enclosed copy of this Agreement and returning the same to the
undersigned, whereupon this Agreement shall constitute a binding contract
between the parties hereto effective at the closing of business on the date
hereof.
<PAGE>
The undersigned Trustee or officer of the Trust has executed this Agreement not
individually, but as Trustee or officer under the Trust's Declaration of Trust,
dated September 13, 1993, as amended, and the obligations of this Agreement are
not binding upon any of the Trustees or officers of the Trust individually.
Yours very truly,
THE PREMIUM PORTFOLIOS
By: James B. Craver
-----------------------
Accepted:
THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC.
By: James B. Craver
----------------------
<PAGE>
The Premium Portfolios
Elizabethan Square, 2nd Floor
George Town, Grand Cayman, BWI
December 31, 1997
The Landmark Funds Broker-Dealer Services, Inc.
c/o Signature Financial Group (Cayman), Ltd.
Elizabethan Square, 2nd Floor
George Town, Grand Cayman, BWI
Re: The Premium Portfolios - Placement
Agency Agreement
Ladies and Gentlemen:
This letter serves as notice that Growth & Income Portfolio (the "Fund")
is added to the list of series of The Premium Portfolios (the "Trust") to which
The Landmark Funds Broker-Dealer Services, Inc. ("LFBDS") renders services as
placement agent pursuant to the terms of the Placement Agency Agreement dated
as of September 13, 1993 (the "Agreement") between the Trust and LFBDS.
Please sign below to acknowledge your receipt of this notice adding the
Fund as beneficiary under the Agreement.
THE PREMIUM PORTFOLIOS
By: Philip Coolidge
Title: President
Acknowledgment:
THE LANDMARK FUNDS BROKER-DEALER SERVICES, INC.
By: Philip Coolidge
Title: CEO
Exhibit 8
CUSTODIAN CONTRACT
Between
THE PREMIUM PORTFOLIOS
and
STATE STREET BANK AND TRUST COMPANY
Global/Series/Trust
21E593
<PAGE>
TABLE OF CONTENTS
Page
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................................. 2
2.3 Registration of Securities............................. 4
2.4 Bank Accounts.......................................... 4
2.5 Availability of Federal Funds.......................... 5
2.6 Collection of Income................................... 5
2.7 Payment of Fund Monies................................. 6
2.8 Liability for Payment in Advance of Receipt of
Securities Purchased................................... 7
2.9 Appointment of Agents.................................. 7
2.10 Deposit of Fund Assets in U.S. Securities System....... 7
2.11 Fund Assets Held in the Custodian's Direct
Paper System........................................... 8
2.12 Segregated Account..................................... 9
2.13 Ownership Certificates for Tax Purposes............... 10
2.14 Proxies............................................... 10
2.15 Communications Relating to Portfolio
Securities............................................ 10
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States................. 10
3.1 Appointment of Foreign Sub-Custodians................. 10
3.2 Assets to be Held..................................... 11
3.3 Foreign Securities Systems............................ 11
3.4 Holding Securities.................................... 11
3.5 Agreements with Foreign Banking Institutions.......... 11
3.6 Access of Independent Accountants of the Fund......... 11
3.7 Reports by Custodian.................................. 12
3.8 Transactions in Foreign Custody Account............... 12
3.9 Liability of Foreign Sub-Custodians................... 12
3.10 Liability of Custodian................................ 12
3.11 Reimbursement for Advances............................ 13
3.12 Monitoring Responsibilities........................... 13
3.13 Branches of U.S. Banks................................ 13
3.14 Tax Law............................................... 14
<PAGE>
4. Payments for Sales or Repurchases or Redemptions
of Beneficial Interests of the Fund........................ 14
5. Proper Instructions........................................ 14
6. Actions Permitted Without Express Authority................ 15
7. Evidence of Authority...................................... 15
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income.......... 16
9. Records.................................................... 16
10. Opinion of Fund's Independent Accountants.................. 16
11. Reports to Fund by Independent Public Accountants.......... 16
12. Compensation of Custodian.................................. 17
13. Responsibility of Custodian................................ 17
14. Effective Period, Termination and Amendment................ 18
15. Successor Custodian........................................ 19
16. Interpretive and Additional Provisions..................... 19
17. Additional Funds........................................... 20
18. Massachusetts Law to Apply................................. 20
19. Prior Contracts............................................ 20
20. No Liability of Other Series............................... 20
21. Beneficial Interestholder Communications Election.......... 20
<PAGE>
CUSTODIAN CONTRACT
This Contract between The Premium Portfolios, a trust organized and
existing under the laws of New York, having its principal place of business at
Elizabethan Square, Georgetown, Grand Cayman, Cayman Islands, British West
Indies 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:
WHEREAS, the Fund is authorized to issue beneficial interests in separate
series, with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund currently offers beneficial interests in one or more
series, including, the Equity Portfolio, Small Cap Equity Portfolio, Balanced
Portfolio, International Equity Portfolio, Emerging Asian Markets Equity
Portfolio and Government Income Portfolio (such series together with all other
series subsequently established by the Fund and made subject to this Contract
in accordance with paragraph 17, being herein referred to as the
"Portfolio(s)");
NOW THEREFORE, 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 the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio 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 on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of
income, payments of principal or capital distributions received by it with
respect to all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such beneficial interests of the Fund
representing interests in the Portfolios ("Beneficial Interests") as may be
issued or sold from time to time. The Custodian shall not be responsible for
any property of a Portfolio held or received by the Portfolio and not delivered
to the Custodian.
<PAGE>
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) 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 on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no 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 on behalf of the applicable Portfolio(s) 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 each Portfolio all non-cash property, to be held by it in
the United States including all domestic securities owned by such
Portfolio, 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
and certain federal agencies (each, a "U.S. 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
(the "Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a U.S.
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 from the Fund on behalf of the applicable
Portfolio, 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 Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a U.S.
Securities System, in accordance with the provisions of
Section 2.10 hereof;
<PAGE>
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
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 Portfolio 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 Portfolio,
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 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
Portfolio, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of
the Portfolio, 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
<PAGE>
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 Portfolio prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, 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 Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, 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 Portfolio of 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 Beneficial Interests in connection with distributions in
kind, as may be described from time to time in the currently
effective prospectus and statement of additional information of the
Fund, related to the Portfolio ("Prospectus"), in satisfaction of
requests by holders of Beneficial Interests for repurchase or
redemption; and
15) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions from the Fund on behalf of the applicable
Portfolio, a certified copy of a resolution of the Board of Trustees
or of the Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary, specifying the
<PAGE>
securities of the Portfolio to be delivered, setting forth the
purpose for which such delivery is to be made, declaring such
purpose to be a proper 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
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, 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
Portfolio, 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 Portfolio 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.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio of
the Fund, 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 Portfolio, other than cash maintained by the
Portfolio 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 Portfolio 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 on behalf of each
applicable Portfolio 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 on
behalf of each applicable Portfolio and the Custodian, the Custodian
<PAGE>
shall, upon the receipt of Proper Instructions from the Fund on behalf of
a Portfolio, make federal funds available to such Portfolio 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 Beneficial
Interests of such Portfolio which are deposited into the Portfolio'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
each Portfolio 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 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
Portfolio'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 each Portfolio on 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 Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio 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 Portfolio 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 of the Portfolio 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 U.S. 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
<PAGE>
agreements entered into between the Fund on behalf of the Portfolio
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 through 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 Portfolio
of securities owned by the Custodian along with written evidence of
the agreement by the Custodian to repurchase such securities from
the Portfolio 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 from the Fund as
defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For payment of the amount of dividends received in respect of
securities sold short;
4) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions from the Fund on behalf of the Portfolio, 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.
In connection with the following type of expenses, the Custodian shall
make payments upon Proper Instructions for the Fund from an account of the
Fund controlled from outside of the United States:
5) For the redemption or repurchase of Beneficial Interests issued by
the Portfolio as set forth in Article 4 hereof;
6) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for
the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses of
the Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
<PAGE>
7) For the payment of any dividends on Beneficial Interests of the
Portfolio declared pursuant to the governing
documents of the Fund;
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 Portfolio is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written instructions
from the Fund on behalf of such Portfolio 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
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.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio 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 "U.S. 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 securities of the Portfolio in a U.S.
Securities System provided that such securities are represented in
an account ("Account") of the Custodian in the U.S. Securities
System which shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System shall
identify by book-entry those securities belonging to the Portfolio;
<PAGE>
3) The Custodian shall pay for securities purchased for the account of
the Portfolio upon (i) receipt of advice from the U.S. 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 Portfolio.
The Custodian shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the U.S. 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 Portfolio. Copies of all advices from the U.S. Securities System
of transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Portfolio;
4) The Custodian shall provide the Fund for the Portfolio with any
report obtained by the Custodian on the U.S. Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the U.S.Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial certificate required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from use
of the U.S. 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 U.S. 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 U.S. Securities System or any
other person which the Custodian may have as a consequence of any
such loss or damage if and to the extent that the Portfolio has not
been made whole for any such loss or damage.
<PAGE>
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by a Portfolio 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 from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio 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 Portfolio which are maintained in the Direct
Paper System shall identify by book-entry those
securities belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the account of
the Portfolio 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 Portfolio. The Custodian shall transfer securities
sold for the account of the Portfolio 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 Portfolio;
5) The Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio, 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 on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transaction in the U.S.
Securities System for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the Portfolio with
any report on its system of internal accounting control as the Fund
may reasonably request from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on behalf
of each such Portfolio, into which account or accounts may be transferred
cash and/or securities, including securities maintained in an account by
<PAGE>
the Custodian pursuant to Section 2.10 hereof, (i) in accordance with the
provisions of any agreement among the Fund on behalf of the Portfolio,
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 Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act Release
No. 10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper purposes, but
only, in the case of clause (iv), upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of Trustees or of the
Executive Committee signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper purposes.
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 each Portfolio held by it and in
connection with transfers of securities.
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 Portfolio or a nominee of the Portfolio, all proxies, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio 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 on behalf of the Portfolio and
<PAGE>
the maturity of futures contracts purchased or sold by the Portfolio)
received by the Custodian from issuers of the securities being held for
the Portfolio. With respect to tender or exchange offers, the Custodian
shall transmit promptly to the Portfolio 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 Portfolio desires to take action with respect to
any tender offer, exchange offer or any other similar transaction, the
Portfolio 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 Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt
of "Proper Instructions", as defined in Section 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 Proper
Instructions, the Fund may instruct the Custodian to cease the employment
of any one or more such sub-custodians for maintaining custody of the
Portfolio'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 Portfolio'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 Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Portfolios shall be
maintained in a clearing agency which acts as a securities depository or
in a book-entry system for the central handling of securities located
outside the United States (each a "Foreign Securities System") only
through arrangements implemented by the foreign banking institutions
<PAGE>
serving as sub-custodians pursuant to the terms hereof (Foreign
Securities Systems and U.S. Securities Systems are collectively referred
to herein as the "Securities Systems"). Where possible, such arrangements
shall include entry into agreements containing the provisions set forth
in Section 3.5 hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i)
the records of the Custodian with respect to securities and other
non-cash property of the Fund which are maintained in such account shall
identify by book-entry those securities and other non-cash property
belonging to the Fund and (ii) the Custodian shall require that
securities and other non-cash property so held by the foreign
sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall provide that: (a) the assets of each
Portfolio will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution or
its creditors or agent, except a claim of payment for their safe custody
or administration; (b) beneficial ownership for the assets of each
Portfolio 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 each applicable
Portfolio; (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 Portfolios held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents.
3.6 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.
3.7 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 Portfolio(s) held by foreign sub-custodians,
<PAGE>
including but not limited to an identification of entities having
possession of the Portfolio(s) securities and other assets and advices 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 each applicable Portfolio indicating, as to securities acquired
for a Portfolio, the identity of the entity having physical possession of
such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and
2.7 of this Contract shall apply, mutatis mutandis to the foreign
securities 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 Portfolio and delivery of securities maintained for the
account of each applicable Portfolio 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.
3.9 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, 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.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
<PAGE>
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 3.13 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 3.10, in delegating custody duties to State
Street London Ltd., the Custodian shall not be relieved 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.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to advance
cash or securities for any purpose for the benefit of a Portfolio
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 applicable Portfolio 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 Portfolio's assets to the extent necessary to obtain reimbursement.
3.12 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
<PAGE>
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).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Portfolios 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 Portfolio of the 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.
3.14 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 Fund to notify the Custodian of the obligations
imposed on the Fund or the Custodian as custodian of the Fund by the tax
law of jurisdictions other than those mentioned in the above sentence,
including responsibility for withholding and other taxes, assessments or
other governmental charges, certifications and governmental reporting.
The sole responsibility of the Custodian with regard to such tax law
shall be to use reasonable efforts to assist the Fund with respect to any
claim for exemption or refund under the tax law of jurisdictions for
which the Fund has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Beneficial Interests
of the Fund
The Custodian shall receive from the distributor for the Beneficial
Interests or from the Transfer Agent of the Fund and deposit into the account
of the appropriate Portfolio such payments as are received for beneficial
interests of that Portfolio issued or sold from time to time by the Fund. The
Custodian will provide timely notification to the Fund on behalf of each such
Portfolio and the Transfer Agent of any receipt by it of payments for
Beneficial Interests of such Portfolio.
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
<PAGE>
instructions from the Transfer Agent, make funds available to the Fund at an
account of the Fund controlled from outside of the United States for payment to
holders of Beneficial Interests who have delivered to the Transfer Agent a
request for redemption or repurchase of their Beneficial Interests. In
connection with the redemption or repurchase of Beneficial Interests of a
Portfolio, 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 Beneficial Interestholders. In connection with the redemption or
repurchase of Beneficial Interests of the Fund, the Custodian shall honor
checks drawn on the Custodian by a holder of Beneficial Interests, which checks
have been furnished by the Fund to the holder of Beneficial Interests, 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.
5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing
signed or initialled by one or more person or persons as the Board of Trustees
shall have from time to time authorized. 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. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes
them to have been given by a person authorized to give such instructions with
respect to the transaction involved. The Fund shall cause all oral instructions
to be confirmed in writing. Upon receipt of a certificate of the Secretary or
an Assistant Secretary as to the authorization by the Board of Trustees of the
Fund accompanied by a detailed description of procedures approved 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 Portfolios' 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 on behalf of each applicable Portfolio:
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 on behalf of the Portfolio;
<PAGE>
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, 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 Portfolio 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 each Portfolio and/or compute the net asset value per
interest of the outstanding beneficial interests of each Portfolio or, if
directed in writing to do so by the Fund on behalf of the Portfolio, shall
itself keep such books of account and/or compute such net asset value per
beneficial interest. If so directed, the Custodian shall also calculate daily
the net income of the Portfolio as described in the Fund's currently effective
prospectus related to such Portfolio 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 such net income among its various components.
<PAGE>
The calculations of the net asset value per beneficial interest and the daily
income of each Portfolio shall be made at the time or times described from time
to time in the Fund's currently effective prospectus related to such Portfolio.
9. Records
The Custodian shall with respect to each Portfolio create and maintain 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, 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
shall at all times during the regular business hours of the Custodian be open
for inspection by duly authorized officers, employees or agents of 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
owned by each Portfolio 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.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio 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.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at 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 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.
12. Compensation of Custodian
<PAGE>
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 on behalf of each applicable Portfolio and the Custodian.
13. 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 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 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.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances
beyond the reasonable control of the Custodian or any sub-custodian or
Securities System or any agent or nominee of any of the foregoing, including,
without limitation, nationalization or expropriation, imposition of currency
controls or restrictions, the interruption, suspension or restriction of
trading on or the closure of any securities market, power or other mechanical
or technological failures or interruptions, computer viruses or communications
disruptions, acts of war or terrorism, riots, revolutions, work stoppages,
natural disasters or other similar events or acts; (ii) errors by the Fund or
the Investment Advisor in their instructions to the Custodian provided such
instructions have been in accordance with this Contract; (iii) the insolvency
of or acts or omissions by a Securities System; (iv) any delay or failure of
any broker, agent or intermediary, central bank or other commercially prevalent
payment or clearing system to deliver to the Custodian's sub-custodian or agent
securities purchased or in the remittance or payment made in connection with
securities sold; (v) any delay or failure of any company, corporation, or other
body in charge or registering or transferring securities in the name of the
Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
<PAGE>
any disorder in market infrastructure with respect to any particular security
or Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of
competent jurisdiction.
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.
If the Fund on behalf of the Portfolio 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 Portfolio being liable for the
payment of money or incurring liability of some other form, the Fund on behalf
of the Portfolio, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
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
Portfolio 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 Portfolio's assets to the extent necessary to obtain
reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. 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 with respect to any Portfolio 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 with
respect to a Portfolio 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
<PAGE>
Securities System by such Portfolio, as required by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall not
with respect to a Portfolio act under Section 2.11 hereof in the absence of
receipt of an initial certificate of the Secretary or an Assistant Secretary
that the Board of Trustees has approved the initial use of the Direct Paper
System by such Portfolio ; 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 on behalf of one or more of the Portfolios 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 on behalf of each applicable
Portfolio 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.
15. Successor Custodian
If a successor custodian for the Fund, of one or more of the Portfolios
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 of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio 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 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
<PAGE>
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to
transfer to an account of such successor custodian all of the securities of
each such Portfolio 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.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, 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.
17. Additional Funds
In the event that the Fund establishes one or more series of Beneficial
Interests in addition to Equity Portfolio, Small Cap Equity Portfolio, Balanced
Portfolio, International Equity Portfolio, Emerging Asian Markets Equity
Portfolio and Government Income Portfolio with respect to which it desires to
have the Custodian render services as custodian under the terms hereof, it
shall so notify the Custodian in writing, and if the Custodian agrees in
writing to provide such services, such series of Beneficial Interests shall
become a Portfolio hereunder.
18. 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.
<PAGE>
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the
Custodian relating to the custody of the Fund's assets.
20. No Liability of Other Series
Notwithstanding any other provision of this Agreement, the parties agree
that the assets and liabilities of each Portfolio are separate and distinct
from the assets and liabilities of each other Portfolio and that no Portfolio
shall be charged for any debt, obligation or liability of any other Portfolio,
whether arising under this Agreement or otherwise.
21. Beneficial Interestholder 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 [ ] The Custodian is not authorized to release the Fund's name,
address, and share positions.
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 1st day of September, 1997.
<PAGE>
ATTEST THE PREMIUM PORTFOLIOS
By Philip Coolidge
ATTEST STATE STREET BANK AND TRUST
COMPANY
By Ronald E. Logue
Executive Vice President
<PAGE>
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of The Premium
Portfolios for use as sub-custodians for the Fund's securities and other
assets:
(Insert banks and securities depositories)
Certified:
Fund's Authorized Officer
Date:
<PAGE>
The Premium Portfolios
Elizabethan Square, 2nd Floor
George Town, Grand Cayman, BWI
November 14, 1997
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
Re: The Premium Portfolios - Custodian Contract
Ladies and Gentlemen:
Pursuant to Section 17 of the Custodian Contract dated as of September 1,
1997 (the "Contract"), between The Premium Portfolios (the "Trust") and State
Street Bank and Trust Company ("the Custodian"), we hereby request that Growth
& Income Portfolio (the "Fund") be added to the list of series of the Trust to
which the Custodian renders services as custodian under the terms of the
Contract.
Please sign below to evidence your agreement to provide such services to
the Fund and to add the Fund as beneficiary under the Contract.
THE PREMIUM PORTFOLIOS
By: Philip Coolidge
Title: President
Agreed:
STATE STREET BANK AND TRUST COMPANY
By: Ronald E. Logue
Title: Executive Vice President
Exhibit 9(a)
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT, dated as of September 13, 1993, by
and between THE PREMIUM PORTFOLIOS, a New York trust (the "Trust"), and
SIGNATURE FINANCIAL GROUP (GRAND CAYMAN) LTD., a Cayman Islands company (the
"Administrator").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment
company registered under the Investment Company Act of 1940 (collectively with
the rules and regulations promulgated thereunder, the "1940 Act");
WHEREAS, the beneficial interests of the Trust ("Interests") are
divided into separate series (together with any series which may in the future
be established, the "Portfolios");
WHEREAS, the Board of Trustees of the Trust has adopted an
Administrative Services Plan, dated as of September 13, 1993, (as amended and
in effect from time to time, the "Plan"), which is incorporated herein by
reference and pursuant to which the Trust desires to enter into this
Administrative Services Agreement; and
WHEREAS, the Trust wishes to engage the Administrator, or an
affiliated company, to provide certain administrative and management services,
and the Administrator is willing to provide such administrative and management
services to the Trust, on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements of the parties hereto as herein set forth, the parties covenant and
agree as follows:
1. Duties of the Administrator. Subject to the direction and
control of the Board of Trustees of the Trust, the Administrator shall
perform such administrative and management services as may from time
to time be reasonably requested by the Trust, which shall include
without limitation: (a) providing office space, equipment and clerical
personnel necessary for maintaining the organization of the Trust and
for performing the administrative and management functions herein set
forth; (b) arranging, if desired by the Trust, for Directors, officers
and employees of the Administrator to serve as Trustees, officers or
agents of the Trust if duly elected or appointed to such positions and
subject to their individual consent and to any limitations imposed by
law; (c) supervising the overall administration of the Trust,
including negotiation of contracts and fees with and the monitoring of
performance and billings of the Trust's transfer agent, if any,
shareholder servicing agents, custodian and other independent
contractors or agents; (d) preparing and, if applicable, filing all
<PAGE>
documents required for compliance by the Trust with applicable laws
and regulations, including registration statements, semi-annual and
annual reports to the Trust's investors, proxy statements and tax
returns; (e) preparation of agendas and supporting documents for and
minutes of meetings of Trustees, committees of Trustees and the
Trust's investors; and (f) arranging for maintenance of books and
records of the Trust. The Administrator shall perform such specified
activities and shall conduct all of its activities as administrator of
the Trust, including any activities described in this Agreement, as
set forth in the Operating Policies and Procedures (the "Operating
Procedures") of the Trust (in such form as may be approved from time
to time by the Trust's Board of Trustees). To the extent that any
provision of this Agreement shall conflict with any provision of the
Operating Procedures, the applicable provision of the Operating
Procedures shall be deemed to govern. Notwithstanding the foregoing,
the Administrator shall not be deemed to have assumed any duties with
respect to, and shall not be responsible for, the management of the
Trust's assets or the rendering of investment advice and supervision
with respect thereto or the sale of Interests, nor shall the
Administrator be deemed to have assumed or have any responsibility
with respect to functions specifically assumed by any transfer agent,
custodian or shareholder servicing agent of the Trust.
2. Allocation of Charges and Expenses. The Administrator shall pay
the entire salaries and wages of all of the Trust's Trustees, officers
and agents who devote part or all of their time to the affairs of the
Administrator or its affiliates, and the wages and salaries of such
persons shall not be deemed to be expenses incurred by the Trust for
purposes of this Section 2. Except as provided in the foregoing
sentence, the Trust will pay all of its own expenses including,
without limitation, compensation of Trustees not affiliated with the
Administrator; governmental fees; interest charges; taxes; membership
dues in the Investment Company Institute allocable to the Trust; fees
and expenses of the Trust's independent auditors, of legal counsel and
of any transfer agent, distributor, registrar or dividend disbursing
agent of the Trust; expenses of preparing, printing and mailing
reports, notices, proxy statements and reports to the Trust's
investors and governmental officers and commissions; expenses
connected with the execution, recording and settlement of security
transactions; insurance premiums; fees and expenses of the Trust's
custodian for all services to the Trust, including safekeeping of
funds and securities and maintaining required books and accounts;
expenses of calculating the net asset value of shares of the Trust;
expenses of meetings of investors in the Trust; and expenses relating
to the issuance, registration and qualification of shares of the
Trust.
3. Compensation of the Administrator. For the services to be
rendered and the facilities to be provided by the Administrator
hereunder, the Trust shall pay to the Administrator an administrative
fee computed and paid monthly at an annual rate of 0.05% of the
<PAGE>
average daily net assets of each Portfolio for its then-current fiscal
year. If the Administrator serves as administrator for less than the
whole of any period specified in this Section 3, the compensation to
the Administrator, shall be prorated. For purposes of computing the
fees payable to the Administrator hereunder, the value of the net
assets of each Portfolio shall be computed in the manner specified in
the Trust's then-current Registration Statement under the 1940 Act
with respect to such Portfolio.
4. Limitation of Liability of the Administrator. The Administrator
shall not be liable for any error of judgment or mistake of law or for
any act or omission in the administration or management of the Trust
or the performance of its duties hereunder, except for willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of the reckless disregard of its obligations and
duties hereunder. As used in this Section 4, the term "Administrator"
shall include Signature Financial Group (Grand Cayman) Ltd. and/or any
of its affiliates and the Directors, officers and employees of
Signature Financial Group (Grand Cayman) Ltd. and/or any of its
affiliates.
5. Activities of the Administrator. The services of the
Administrator to the Trust are not to be deemed to be exclusive, the
Administrator being free to render administrative and/or other
services to other parties. It is understood that Trustees, officers,
and shareholders of the Trust are or may become interested in the
Administrator and/or any of its affiliates, as Directors, officers,
employees, or otherwise, and that Directors, officers and employees of
the Administrator and/or any of its affiliates are or may become
similarly interested in the Trust and that the Administrator and/or
any of its affiliates may be or become interested in the Trust as an
investor or otherwise.
6. Subcontracting by the Administrator. The Administrator may
subcontract for the performance of the Administrator' obligations
hereunder with any one or more persons; provided, however, that the
Administrator shall not enter into any such subcontract unless the
Trustees of the Trust shall have found the subcontracting party to be
qualified to perform the obligations sought to be subcontracted; and
provided, further, that, unless the Trust otherwise expressly agrees
in writing, the Administrator shall be as fully responsible to the
Trust for the acts and omissions of any subcontractor as it would be
for its own acts or omissions.
7. Duration, Termination and Amendments of this Agreement. This
Agreement shall become effective as of the day and year first above
written and shall govern the relations between the parties hereto
thereafter, and shall remain in force until September 13, 1995 on
which date it will terminate unless its continuance after September
13, 1995 is "specifically approved at least annually" (a) by the vote
<PAGE>
of a majority of the Board of Trustees of the Trust who are not
"interested persons" of the Trust or of the Administrator at a meeting
specifically called for the purpose of voting on such approval, and
(b) by the Board of Trustees of the Trust or by the "vote of a
majority of the outstanding voting securities" of the Portfolio as to
which this Agreement is to continue.
This Agreement may be terminated with respect to the Trust or to any
Portfolio at any time, without the payment of any penalty, by the Board of
Trustees of the Trust or by the "vote of a majority of the outstanding voting
securities" of the Trust or such Portfolio, or by the Administrator, in each
case on not more than 60 days' nor less than 30 days' written notice to the
other party. This Agreement shall automatically terminate in the event of its
"assignment", provided, however, that the term "assignment" shall include
(without limitation) any sale, transfer or conversion of a controlling interest
of any class of voting securities of the Administrator or of any entity which
holds a controlling interest of any class of voting securities of the
Administrator or another such entity.
The terms "specifically approved at least annually", "vote of a
majority of the outstanding voting securities", "assignment", and "interested
persons", when used in this Agreement, shall have the respective meanings
specified in, and shall be construed in a manner consistent with, the 1940 Act,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered at a location or locations outside the United States
in their names and on their behalf by the undersigned, thereunto duly
authorized, all as of the day and year first above written. The undersigned
Trustee or officer of the Trust has executed this Agreement not individually,
but as Trustee or officer under the Trust's Declaration of Trust, dated
September 13, 1993, as amended, and the obligations of this Agreement are not
binding upon any of the Trustees or officers of the Trust individually.
THE PREMIUM PORTFOLIOS SIGNATURE FINANCIAL GROUP
(GRAND CAYMAN) LTD.
By: Philip Coolidge By: Philip Coolidge
------------------------ ---------------------
Title: Title:
------------------------ ---------------------
Exhibit 9(b)
AMENDED AND RESTATED
ADMINISTRATIVE SERVICES PLAN
ADMINISTRATIVE SERVICES PLAN, dated as of September 13, 1993, and
amended and restated as of May 6, 1994 of The Premium Portfolios, a New York
trust (the "Trust").
WITNESSETH:
WHEREAS, the beneficial interests of the Trust (the "Interests") are
divided into one or more separate series (together with any series which may in
the future be established, the "Portfolios"); and
WHEREAS, each of the Portfolios is engaged in business as an open-end
management investment company and is registered under the Investment Company
Act of 1940 (collectively with the rules and regulations promulgated
thereunder, the "1940 Act"); and
WHEREAS, the Trust desires to adopt this Administrative Services Plan
(the "Plan") in order to provide for certain administrative services to the
Trust and holders of Interests in each Portfolio; and
WHEREAS, the Trust desires, at such time as may be deemed necessary or
convenient to do so, to enter into a transfer agency agreement (in such form as
may from time to time be approved by the Board of Trustees of the Trust (the
"Transfer Agency Agreement")) with a financial institution, as transfer agent
for the Trust (the "Transfer Agent"), whereby the Transfer Agent will provide
transfer agency services to the Trust; and
WHEREAS, the Trust desires to enter into a custodian agreement (in
such form as may from time to time be approved by the Board of Trustees of the
Trust (the "Custodian Agreement")) with a financial institution, as custodian
for the Trust (the "Custodian"), whereby the Custodian will provide custodial
services to the Trust with respect to each Portfolio; and
WHEREAS, the Trust desires to enter into an accounting services
agreement (in such form as may from time to time be approved by the Board of
Trustees of the Trust (the "Accounting Services Agreement")) with a provider of
accounting services (the "Accounting Services Agent"), whereby the Accounting
Services Agent will provide certain fund accounting services to the Trust; and
WHEREAS, the Trust desires to enter into an administrative services
agreement (in such form as may from time to time be approved by the Board of
Trustees of the Trust (the "Administrative Services Agreement")) with Signature
Financial Group (Cayman), Ltd., a Cayman Islands company, or an affiliated
company, as administrator of the Trust (the "Administrator"), whereby the
Administrator will provide certain administrative and management services to
the Trust; and
<PAGE>
WHEREAS, the Board of Trustees of the Trust, in considering whether
the Trust should adopt and implement this Plan, has evaluated such information
as it deemed necessary to an informed determination as to whether this Plan
should be adopted and implemented and has considered such pertinent factors as
it deemed necessary to form the basis for a decision to use assets of each
Portfolio for such purposes, and has determined that there is a reasonable
likelihood that the adoption and implementation of this Plan will benefit the
Trust and each Portfolio and the holders of Interests;
NOW, THEREFORE, the Board of Trustees of the Trust hereby adopts this
Plan for the Trust, on the following terms and conditions:
1. As specified in the Transfer Agency Agreement, if any, the
Transfer Agent shall act as dividend disbursing agent for the Trust
and perform other transfer agency functions for each Portfolio. The
Trust shall pay to the Transfer Agent, if any, such compensation from
the assets of each Portfolio as may from time to time be agreed to by
the Trust and the Transfer Agent.
2. As specified in the Custodian Agreement, the Custodian shall
safeguard and control the cash and securities of each Portfolio,
handle receipt and delivery of securities for each Portfolio,
determine income and collect interest on the investments of each
Portfolio, and, in general, act as the custodian of the Trust's assets
pertaining to each Portfolio, but the Custodian shall have no power to
determine the investment policies of the Trust or to determine which
securities the Trust will buy or sell on behalf of any Portfolio. The
Trust shall pay to the Custodian such compensation from the assets of
each Portfolio as may from time to time be agreed to by the Trust and
the Custodian.
3. As specified in the Accounting Services Agreement, the
Accounting Services Agent shall maintain books of original entry for
Portfolio and Trust accounting and other required books and accounts
and calculate the daily net asset value of, and net income on, the
Interests. As consideration for services performed under the
Accounting Services Agreement, the Trust shall periodically pay to the
Accounting Services Agent such compensation from the assets of each
Portfolio as may from time to time be agreed to by the Trust and the
Accounting Services Agent.
4. As specified in the Administrative Services Agreement, the
Administrator shall perform certain administrative and management
services on behalf of the Trust, including, but not necessarily
limited to: providing office space, equipment and clerical personnel
necessary for maintaining the organization of the Trust and for
providing the administrative and management services to be performed
by the Administrator; arranging, if desired by the Trust, for
Directors, officers and employees of the Administrator to serve as
Trustees, officers or agents of the Trust if duly elected or appointed
to such positions and subject to their individual consent and to any
<PAGE>
limitations imposed by law; supervising the overall administration of
the Trust, including negotiation of contracts and fees with and the
monitoring of performance and billings of the Trust's Transfer Agent,
Custodian and other independent contractors or agents; preparing and,
if applicable, filing all documents required for compliance by the
Trust with applicable laws and regulations, including registration
statements, semi-annual and annual reports to the Trust's investors,
proxy statements and tax returns; preparation of agendas and
supporting documents for and minutes of meetings of Trustees,
committees of Trustees and the Trust's investors; arranging for
computation of performance statistics with respect to each Portfolio
and arranging for maintenance of books and records of the Trust and
each Portfolio. The Administrator shall perform such specified
activities and shall conduct all of its activities as administrator of
the Trust, including any activities described above or in the
Administrative Services Agreement, as set forth in the Operating
Policies and Procedures (the "Operating Procedures") of the Trust (in
such form as may be approved from time to time by the Trust's Board of
Trustees). To the extent that any provision of the Administrative
Services Agreement shall conflict with any provision of the Operating
Procedures, the applicable provision of the Operating Procedures shall
be deemed to govern. As consideration for services performed under the
Administrative Services Agreement, the Trust shall periodically pay to
the Administrator a fee at an annual rate of 0.05% of the average
daily net assets of each Portfolio for its then-current fiscal year.
5. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Declaration of Trust or By-Laws or any
applicable statutory or regulatory requirement to which it is subject
or by which it is bound, or to relieve or deprive the Board of
Trustees of the Trust of the responsibility for and control of the
conduct of the affairs of the Trust.
6. This Plan shall become effective upon (a) approval by a vote of
at least a "majority of the outstanding voting securities" of each
Portfolio, and (b) approval by a vote of the Board of Trustees of the
Trust and vote of a majority of the Trustees who are not "interested
persons" of the Trust and who have no direct or indirect financial
interest in the operation of the Plan or in any of the agreements
related to the Plan (the "Qualified Trustees"), such votes to be cast
in person at a meeting called for the purpose of voting on this Plan.
7. This Plan shall continue in effect indefinitely, provided that
such continuance is subject to annual approval by a vote of the Board
of Trustees of the Trust and a majority of the Qualified Trustees,
such votes to be cast in person at a meeting called for the purpose of
voting on continuance of this Plan. If such annual approval is not
obtained, this Plan shall expire on the date which is 15 months after
the date of the last approval.
<PAGE>
8. This Plan may be amended at any time by the Board of Trustees of
the Trust, provided that (a) any amendment to increase materially the
amount to be expended from the assets of any Portfolio for the
services described herein shall be effective only upon approval by a
vote of a "majority of the outstanding voting securities" of such
Portfolio, and (b) any material amendment of this Plan shall be
effective only upon approval by a vote of the Board of Trustees of the
Trust and a majority of the Qualified Trustees, such votes to be cast
in person at a meeting called for the purpose of voting on such
amendment. This Plan may be terminated at any time by vote of a
majority of the Qualified Trustees or by a vote of a "majority of the
outstanding voting securities" of such Portfolio.
9. The Treasurer of the Trust shall provide the Board of Trustees
of the Trust, and the Board of Trustees of the Trust shall review, at
least quarterly, a written report of the amounts expended under the
Plan and the purposes for which such expenditures were made.
10. While this Plan is in effect, the selection and nomination of
Qualified Trustees shall be committed to the discretion of the
Trustees who are not "interested persons" of the Trust.
11. For the purposes of this Plan, the terms "interested person"
and "majority of the outstanding voting securities" are used as
defined in the 1940 Act. In addition, for purposes of determining the
fees payable to the Administrator, the value of a Portfolio's net
assets shall be computed in the manner specified in the Trust's
then-current Registration Statement for such Portfolio under the 1940
Act.
12. The Trust shall preserve copies of this Plan, and each
agreement related hereto and each report referred to in paragraph 8
hereof (collectively the "Records"), for a period of six years from
the end of the fiscal year in which such Record was made and each such
Record shall be kept in an easily accessible place for the first two
years of said record-keeping.
13. This Plan shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the 1940 Act.
14. If any provision of this Plan shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of the
Plan shall not be affected thereby.
Exhibit 9(c)
ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of the 1st day of September, 1997 by and between
STATE STREET CAYMAN TRUST COMPANY, LTD., a trust company duly organized under
the laws of the Cayman Islands (the "ACCOUNTING AGENT") and THE PREMIUM
PORTFOLIOS, a trust organized under the laws of the State of New York (the
"FUND").
W I T N E S S E T H:
WHEREAS, the Fund is authorized to issue beneficial interests in separate
series, with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund currently offers beneficial interests in one or more
series, including, Equity Portfolio, Small Cap Equity Portfolio, Balanced
Portfolio, International Equity Portfolio, Emerging Asian Markets Equity
Portfolio and Government Income Portfolio (such series, together with all other
series subsequently established by the Fund and made subject to this Agreement
in accordance with Section 7.1 below, each a "Portfolio" and collectively, the
"PORTFOLIOS"); and
WHEREAS, the Fund desires to retain the Accounting Agent to perform
certain accounting and recordkeeping duties on behalf of each Portfolio and the
Accounting Agent is willing to perform such services upon the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein (the adequacy of which consideration with respect to each
party is hereby mutually admitted), the parties hereto hereby agree as follows:
Section 1. DUTIES OF THE ACCOUNTING AGENT.
Section 1.1 BOOKS OF ACCOUNT.
The Accounting Agent shall maintain the books of account of each Portfolio
and shall perform the following duties, using information provided to the
Accounting Agent by the Fund and others, in the manner prescribed by each
Portfolio's currently effective Registration Statement and the Declaration of
Trust of the Fund, certified copies of which have been supplied to the
Accounting Agent (with respect to each Portfolio, the "CONSTITUTIVE DOCUMENTS")
and in accordance with such written procedures as may be agreed upon by the
Fund and the Accounting Agent from time to time:
<PAGE>
(a) Record general ledger entries;
(b) Calculate daily net income;
(c) Reconcile activity to the trial balance;
(d) Calculate book capital account balances;
(e) Prepare capital allocation reports in accordance with Regulation
1.704-3(e)(3) ("Special aggregation rule for securities
partnerships") under the U.S. Internal Revenue Code, based upon
tax adjustments supplied by the Fund;
(f) Calculate and publish daily net asset value; and
(g) Prepare account balances.
In performing the foregoing services the Accounting Agent will provide to
the Fund on a daily basis the information requested by the Fund in order that
the Fund may calculate each Portfolio's percentage allocations of its
investment activities to be applied to the Portfolio's feeder funds, and the
Accounting Agent will use and rely on the Fund's allocations as so calculated.
The Fund shall provide timely prior notice to the Accounting Agent of any
modification in the manner in which such calculations are to be performed
pursuant to any revision to the Constitutive Documents of a Portfolio and shall
supply the Accounting Agent with certified copies of all amendments and/or
supplements to each Portfolio's Constitutive Documents in a timely manner. For
purposes of calculating the net asset value of each Portfolio, the Accounting
Agent shall value such Portfolio's portfolio securities utilizing prices
obtained from sources designated by the Fund on a Price Source Authorization
substantially in the form attached hereto as Exhibit A, as the same may be
amended by the Fund and the Accounting Agent from time to time, or otherwise
designated by means of Proper Instructions (as such term is defined in Section
2.2 below) (collectively, the "AUTHORIZED PRICE SOURCES"). The Accounting Agent
shall not be responsible for any revisions to the methods of calculation
prescribed by the Constitutive Documents of any Portfolio unless and until such
revisions are communicated in writing to the Accounting Agent. The Accounting
Agent represents and warrants to the Fund that it has all consents, approvals,
licenses, rights and authority necessary to perform the services to be provided
hereunder.
Section 1.2 RECORDS.
The Accounting Agent shall create and maintain all records relating to its
activities and obligations under this Agreement with respect to each Portfolio
in a manner which shall meet the obligations of such Portfolio under its
Constitutive Documents. All such records shall be the property of the relevant
<PAGE>
Portfolio and shall at all times during the regular business hours of the
Accounting Agent be open for inspection by duly authorized officers, employees
or agents of the Fund and employees and agents of the regulatory agencies
having jurisdiction over the Portfolio. Subject to Section 3 below, the
Accounting Agent shall preserve the records required to be maintained
thereunder for the period required by law. The Accounting Agent agrees that all
services to be performed by it hereunder shall be performed outside the United
States.
Section 1.3 APPOINTMENT OF AGENTS.
The Accounting Agent may at is own expense employ agents in the
performance of its duties and the exercise of its rights under this Agreement,
provided that the employment of such agents shall not reduce the Accounting
Agent's obligations or liabilities hereunder.
Section 2. DUTIES OF THE FUND.
Section 2.1 PROVISION OF INFORMATION.
The Fund shall provide to the Accounting Agent, or shall cause a third
party to so provide, certain data with respect to each Portfolio as a condition
to the Accounting Agent's obligations under Sectio1n 1 above. The data required
to be provided with respect to each Portfolio pursuant to this Section is set
forth on Schedule A hereto, which schedule may be separately amended or
supplemented by the Fund and the Accounting Agent from time to time.
The Accounting Agent is authorized and instructed to rely upon the
information it receives from the Fund or any third party authorized by the Fund
(a "THIRD PARTY AGENT") to provide such information to the Accounting Agent.
The Accounting Agent shall have no responsibility to review, confirm or
otherwise assume any duty with respect to the accuracy or completeness of any
information supplied to it by the Fund or any Third Party Agent.
Section 2.2 PROPER INSTRUCTIONS.
The term "PROPER INSTRUCTIONS" shall mean instructions received by the
Accounting Agent from the Fund, the investment advisor of the Portfolios
appointed by the Fund from time to time (the "INVESTMENT ADVISOR") or any
person duly authorized by them. Such instructions may be in writing signed by
the authorized person or may be in a tested communication or in a communication
utilizing access codes effected between electro-mechanical or electronic
devices or may be by such other means as may be agreed upon from time to time
by the Accounting Agent and the party giving such instructions (including,
<PAGE>
without limitation, oral instructions). All oral instructions shall be promptly
confirmed in writing. The Fund and the Investment Advisor shall each cause its
duly authorized representative to certify to the Accounting Agent in writing
the names and specimen signatures of persons authorized to give Proper
Instructions. The Accounting Agent shall be entitled to rely upon the identity
and authority of such persons until it receives written notice from the Fund or
the Investment Advisor, as the case may be, to the contrary. The Accounting
Agent may rely upon any Proper Instruction reasonably believed by it to be
genuine and to have been properly issued by or on behalf of the Fund or the
Investment Advisor, as the case may be. The Fund shall give timely Proper
Instructions to the Accounting Agent in regard to matters affecting accounting
practices and the Accounting Agent's performance pursuant to this Agreement.
Section 3. SUCCESSOR AGENT.
If a successor accounting agent for the Portfolios shall be appointed by
the Fund, the Accounting Agent shall upon termination of this Agreement deliver
to such successor agent at the office of the Accounting Agent all books and
records of account of each Portfolio maintained by the Accounting Agent
hereunder. In the event this Agreement is terminated by either party without
the appointment of a successor agent, the Accounting Agent shall, upon receipt
of Proper Instructions, deliver such properties at its office in accordance
with such instructions.
In the event that no written order designating a successor agent or Proper
Instructions shall have been delivered to the Accounting Agent on or before the
effective date of such termination, then the Accounting Agent shall have the
right to deliver to a bank or trust company of its own selection, having
aggregate capital, surplus and undivided profits, as shown by its last
published report, of not less than $2,000,000, all property of the Portfolios
held by the Accounting Agent hereunder. Thereafter, such bank or trust company
shall be the successor of the Accounting Agent under this Agreement.
Section 4. STANDARD OF CARE; LIMITATION ON LIABILITY.
The Accounting Agent shall at all times exercise reasonable care and
diligence and act in good faith in the performance of its duties hereunder,
provided, however, that the Accounting Agent shall assume no responsibility and
shall be without liability for any loss, damage or expense suffered or incurred
by the Fund or any Portfolio unless caused by its own fraud, wilful default,
negligence or wrongful act or that of its agents or employees.
Without in any way limiting the generality of the foregoing, the
Accounting Agent shall in no event be liable for any loss or damage arising
<PAGE>
from causes beyond its reasonable control, including, without limitation, delay
or cessation of services hereunder or any damages to the Fund or any Portfolio
resulting therefrom as a consequence of any work stoppage, power or other
mechanical failure, natural disaster, governmental action, communications
disruption or other impossibility of performance. The Accounting Agent shall
not be liable for any special, indirect, incidental, or consequential damages
of any kind whatsoever (including, without limitation, attorneys' fees) in any
way due to any Portfolio's use of the accounting services or the performance of
or failure to perform the Accounting Agent's obligations under this Agreement.
The Fund and any Third Party Agents or Authorized Price Sources from which
the Accounting Agent shall receive or obtain certain records, reports and other
data included in the accounting services provided hereunder are solely
responsible for the contents of such information, including, without
limitation, the accuracy thereof. The Accounting Agent shall have no
responsibility to review, confirm or otherwise assume any duty with respect to
the accuracy or completeness of any such information and shall be without
liability for any loss or damage suffered by the Fund or any Portfolio as a
result of the Accounting Agent's reasonable reliance on and utilization of such
information, except as otherwise required by the terms of the Price Source
Authorization form attached hereto as Exhibit A with respect to the use of data
obtained from Authorized Price Sources. The Accounting Agent shall have no
responsibility and shall be without liability for any loss or damage caused by
the failure of the Fund or any Third Party Agent to provide it with the
information required by Section 2.1 hereof.
Section 5. INDEMNIFICATION.
The Fund hereby agrees to indemnify and hold harmless the Accounting Agent
from and against any loss, liability, claim or expense (including reasonable
attorney's fees and disbursements) suffered or incurred by the Accounting Agent
in connection with the performance of its duties hereunder, including, without
limitation, any liability or expense suffered or incurred as a result of the
acts or omissions of the Fund or any Third Party Agent or Authorized Price
Source whose data or services, including records, reports and other
information, the Accounting Agent must rely upon in performing accounting
services hereunder. Notwithstanding the immediately preceding sentence, the
Fund in no event shall indemnify or hold harmless the Accounting Agent from any
loss, liability, claim or expenses involving any breach or alleged breach or
violation of U.S. Patent No. 5,193,056, entitled Data Processing System for Hub
and Spoke Financial Services Configuration.
Section 6. DATA ACCESS AND PROPRIETARY INFORMATION.
<PAGE>
The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals which may be furnished to it by the Accounting Agent as part of the
Fund's ability to access certain Portfolios-related data ("CUSTOMER DATA")
maintained by the Accounting Agent on data bases under the control and
ownership of the Accounting Agent ("DATA ACCESS SERVICES") constitute
copyrighted, trade secret, or other proprietary information (collectively,
"PROPRIETARY INFORMATION") of substantial value to the Accounting Agent. The
Fund agrees to treat all Proprietary Information as proprietary to the
Accounting Agent and further agrees that it shall not divulge any Proprietary
Information to any person or organization except as may be provided hereunder.
Without limiting the foregoing, the Fund agrees for itself and its employees
and agents:
(a) to access Customer Data solely from locations as may be designated
in writing by the Accounting Agent and solely in accordance with the
Accounting Agent's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently
obtained, to inform the Accounting Agent in a timely manner of such
fact and dispose of such information in accordance with the
Accounting Agent's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer facility or
other location, except with the prior written consent of the
Accounting Agent;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties; and
(f) to honor all reasonable written requests made by the Accounting
Agent to protect at the Accounting Agent's expense and risk the
rights of the Accounting Agent in Proprietary Information at common
law, under federal copyright law and under other federal or state
law.
Each party shall take reasonable efforts to advise its employees and agents of
their obligations pursuant to this Section 6. The obligations of this Section
shall survive for a period of five (5) years any earlier termination of this
Agreement.
<PAGE>
The Fund hereby acknowledges that the data and information it may access
from the Accounting Agent utilizing the Data Access Services will be unaudited
and may not be accurate due to inaccurate pricing of securities, delays of a
day in updating a Portfolio's account and other causes for which Accounting
Agent will not be liable to the Fund or any Portfolio.
If the Fund notifies the Accounting Agent that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Accounting Agent shall use its best
efforts to correct such failure as promptly as possible. Data access services
and all computer programs and software specifications used in connection
therewith are provided on an as is, as available basis. The Accounting Agent
expressly disclaims all warranties except those expressly stated herein
including, but not limited to, the implied warranties of merchantability and
fitness for a particular purpose.
If the transactions available to the Fund include the ability to originate
electronic instructions to the Accounting Agent in order to (i) effect the
transfer or movement of cash or beneficial interests or (ii) transmit
interestholder information or other information (such transactions constituting
a "COEFI"), then in such event the Accounting Agent shall be entitled to rely
on the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity with
mutually acceptable security procedures established by the Accounting Agent and
the Fund from time to time.
Notwithstanding anything to the contrary in this Section 6, the Fund and
its employees and agents may copy and duplicate Proprietary Information for its
own internal use in a manner consistent with this Agreement.
The Fund and its employees and agents may disclose any Proprietary
Information (i) if and to the extent the Fund and its employees and agents are
required to do so by applicable law or an order of a court of competent
jurisdiction or other government agency having appropriate authority, in which
case the Fund shall provide the Accounting Agent with timely notice prior to
such disclosure and (ii) to the extent any of such documents, materials and
information are made public by means other than a breach by the Fund or its
respective employees and agents of the obligations hereunder.
Notwithstanding anything in this Section 6 to the contrary, the Fund and
its employees and agents shall have the right to independently develop
products, provided they do so without any misappropriation of the Proprietary
<PAGE>
Information or violation of the Accounting Agent's copyright or patent rights
or interests.
Section 7. GENERAL.
Section 7.1 ADDITIONAL PORTFOLIOS
In the event that the Fund establishes one or more series of beneficial
interests in addition to Equity Portfolio, Small Cap Equity Portfolio, Balanced
Portfolio, International Equity Portfolio, Emerging Asian Markets Equity
Portfolio and Government Income Portfolio, with respect to which it desires to
have the Accounting Agent render services under the terms of this Agreement, it
shall so notify the Accounting Agent in writing, and if the Accounting Agent
agrees in writing to provide such services, such series shall become a
Portfolio hereunder.
Section 7.2 TERM OF AGREEMENT.
This Agreement shall be effective from the date first stated above and
shall remain in full force and effect until terminated as hereinafter provided.
Either party may, in its discretion, terminate this Agreement with respect to
any Portfolio for any reason by giving the other party at least sixty (60) days
prior written notice of termination.
Section 7.3 FEES AND EXPENSES.
The Fund agrees to pay the Accounting Agent such reasonable compensation
for its services and expenses as may be agreed upon from time to time in a
written fee schedule approved by the Fund and the Accounting Agent.
Section 7.4 CONFIDENTIALITY.
The Accounting Agent agrees on behalf of itself and its employees to treat
confidentially all records and other information relating to the Fund and each
Portfolio, except where required to be disclosed by law or where the Accounting
Agent has determined that such disclosure is necessary for the protection of
its interests or has received the prior written consent of the Fund, which
consent shall not be unreasonably withheld.
Section 7.5 NOTICES.
All notices shall be in writing and shall be deemed given when delivered
in person, by facsimile, by overnight delivery through a commercial courier
service, or by registered or certified mail, return receipt requested. Notices
<PAGE>
shall be addressed to each party at its address set forth below, or such other
address as the recipient may have specified by earlier notice to the sender.
If to the Accounting Agent: STATE STREET CAYMAN TRUST COMPANY,LTD.
P.O. Box 2508 GT
Grand Cayman, Cayman Islands
Attention: Jacqueline Henning
Telephone: 809-949-6644
Telecopy: 809-949-3181
With a copy to: STATE STREET FUND SERVICES TORONTO INC.
100 King Street, West
Suite 3600
Toronto, Ontario
Canada M5X 1A9
Attention: Mike Larkin
Telephone: (416) 956-2987
Telecopy: (416) 956-2874
If to the Fund: THE PREMIUM PORTFOLIOS
Elizabethan Square
Grand Cayman, Cayman Islands
Attention: Susan Jakuboski
Telephone: 809-945-1824
Telecopy: 809-945-1823
With a copy to: CITIBANK GLOBAL ASSET MANAGEMENT
153 East 53rd Street
New York, NY 10043
Attention: Andrew Shoup
Telephone: 212-559-1177
Telecopy: 212-793-1812
Section 7.6 ASSIGNMENT; SUCCESSORS.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign its
rights and obligations hereunder to a party controlling, controlled by, or
under common control with such party.
Section 7.7 ENTIRE AGREEMENT.
<PAGE>
This Agreement (including all schedules and attachments hereto)
constitutes the entire Agreement between the parties with respect to its
subject matter.
Section 7.8 AMENDMENTS.
No amendment to this Agreement shall be effective unless it is in writing
and signed by a duly authorized representative of each party. The term
"Agreement", as used herein, includes all schedules and attachments hereto and
any future written amendments, modifications, or supplements made in accordance
herewith.
Section 7.9 HEADINGS NOT CONTROLLING.
Headings used in this Agreement are for reference purposes only and shall
not be deemed a part of this Agreement.
Section 7.10 SURVIVAL.
All provisions regarding indemnification, warranty, liability and limits
thereon shall survive following the expiration or termination of this
Agreement.
Section 7.11 SEVERABILITY.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
Section 7.12 COUNTERPARTS.
This Agreement may be simultaneously executed in several counterparts,
each of which shall be deemed to be an original, and all such counterparts
shall together constitute but one and the same Agreement.
Section 7.13 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the Cayman Islands.
<PAGE>
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first written above.
State Street Cayman Trust Company, Ltd.
By: Jacqueline Henning
Its: Managing Director
The Premium Portfolios
By: Philip Coolidge
Its: President
<PAGE>
SCHEDULE A
REQUIRED INFORMATION RESPONSIBLE PARTY
Portfolio Trade Authorizations Investment Adviser
Currency Transactions Investment Adviser
Cash Transaction Report Custodian
Portfolio Prices Third Party Vendors/Investment
Adviser
Exchange Rates Third Party Adviser
Capital Stock Activity Report Transfer Agent
Dividend/Distribution Schedule Fund
Dividend/Distribution Declaration Fund
Dividend Reconciliation/Confirmation Transfer Agent
Corporate Actions Third Party
Service Provider Fee Schedules Fund
Expense Budget Fund
Expense Payments and other
Cash Disbursements Fund
Amortization Policy Fund
Accounting Policy/Complex Investments Fund
Audit Management Letter Auditor
Annual Interestholder Letter Fund
Annual/Semi-Annual Reports Fund
Master/Feeder Allocation Methodology Fund
Tax Adjustments to Book Capital
Account Fund
<PAGE>
EXHIBIT A
ACCOUNTING SERVICES AGREEMENT
dated
_____ __, 1997
by and between
THE PREMIUM PORTFOLIOS
and
STATE STREET CAYMAN TRUST COMPANY, LTD.
(the "ACCOUNTING AGENT")
Pursuant to the terms of the Accounting Services Agreement, the Fund has
directed the Accounting Agent to calculate the net asset value of each
Portfolio and to perform certain other accounting services in accordance with
the Constitutive Documents (as such term is defined therein) of each Portfolio.
The Fund hereby authorizes and instructs the Accounting Agent to utilize the
pricing sources specified on the attached forms as sources for securities
prices in calculating the net asset value of each Portfolio and acknowledges
and agrees that the Accounting Agent shall have no liability for any incorrect
data provided by pricing sources selected by the Fund or otherwise authorized
by Proper Instructions (as such term is defined in the Accounting Services
Agreement), except as may arise from the Accounting Agent's lack of reasonable
care in performing the agreed-upon tolerance checks as to the data furnished
and calculating the net asset value of a Portfolio in accordance with the data
furnished and the Accounting Agent's performance of the agreed-upon tolerance
checks.
The Premium Portfolios
By:_____________________________
Title:
Date:____________________________
<PAGE>
<TABLE>
<CAPTION>
STATE STREET CAYMAN TRUST COMPANY, LTD.
PRICE SOURCE AUTHORIZATION
FUND:_____________________________ SIGNATURE:__________________________________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SECURITY TELEKURS OPTIONS PRICE (3) (2) (1) (1)
TYPE NYSE NASDAQ REPORTING AUTHORITY MANUAL BACK-UP TOLERANCE
AMEX BID MEAN LS/BID LS/MEAN TELEKURS LS BID LS/MEAN QUOTES SOURCE INDEX PERCENTAGE
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
I. LISTED
EQUITIES
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
II. OTC
EQUITIES
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
III. FOREIGN
EQUITIES
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
IV. EQUITY
OPTIONS
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
V. FUTURES
N/A
--------------------------------------------------------------------------------------------
</TABLE>
INSTRUCTIONS: For each security type, allowed by the Fund prospectus, please
indicate the primary price source and a back-up source to be used in calculating
Net Asset Value for the Fund identified above. Also, please indicate a
published market index and tolerance range (in terms of percent) to be used for
reasonability testing. If you do not wish to use a published index please
indicate N/A but do not leave blank.
(1) * INDEX/TOLERANCE CHECK: The price movement for a particular security is
compared to the index movement. If the security price movement exceeds the
index movement by more than the percentage authorized on this form, then the
security price will be verified using the back-up source authorized. The index
and tolerance information authorized here will be the basis for this
reasonability test.
2) BACK-UP SOURCE: The following sources are available for back-up, price
verification and historical price and yield information: Bloomberg, Bridge,
Reuters, and Telerate. Please do not leave blank.
(3) MANUAL QUOTES AND PRIVATE PLACEMENTS: Please specify the source for private
placements or manual quotes as necessary. See page 3 to list additional
information if needed.
<PAGE>
STATE STREET CAYMAN TRUST COMPANY, LTD.
PRICE SOURCE AUTHORIZATION
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SECURITY MERRILL INTERACTIVE
TYPE LYNCH STANDARD MULLER DATA KENNY (3) (2) (1) (1)
CAPITAL & POORS DATA SERVICES INFORMATION IDC/ MANUAL BACK-UP TOLERANCE
MARKETS MEAN BID MEAN BID MEAN BID SYSTEMS EXTEL QUOTES QUOTES INDEX PERCENTAGE
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
VI. LISTED
BONDS
IS LAST
SALE
REQUIRED
WHEN
AVAILABLE
YES_____
NO_______
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
VII. CORPORATE
BONDS
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
VIII.U.S.
GOVERNMENT
OBLIGATIONS
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
IX. MORTAGE -
BACKED
SECURITIES
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
X. MUNICIPAL
BONDS
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
XI. FIXED
INCOME
OPTIONS
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
XII. FOREIGN
BONDS
--------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
STATE STREET CAYMAN TRUST COMPANY, LTD.
PRICE SOURCE AUTHORIZATION
XII. Private Placements and Other Manual Quotes Information
<TABLE>
<S> <C> <C> <C> <C>
----------------------------------------------------------------------------------------------------------
SECURITY TYPE ADVISOR BROKER OTHER ADDITIONAL INFORMATION:
CONTACT NAME, TELEPHONE
NUMBER
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
</TABLE>
INSTRUCTIONS: For all securities types which require manual quotes, please
list the source of the quotes and any additional information needed to obtain
these quotes.
<PAGE>
The Premium Portfolios
Elizabethan Square, 2nd Floor
George Town, Grand Cayman, BWI
2 11, 1998
State Street Cayman Trust Company, Ltd.
P.O. Box 2508 GT
Grand Cayman, Cayman Islands
Re: The Premium Portfolios - Accounting
Services Agreement
Ladies and Gentlemen:
Pursuant to Section 7.1 of the Accounting Services Agreement dated as of
September 1, 1997 (the "Agreement"), between The Premium Portfolios (the
"Trust") and State Street Cayman Trust Company, Ltd. ("State Street"), we
hereby request that Growth & Income Portfolio (the "Fund") be added to the list
of series of the Trust to which State Street renders services as accounting
agent pursuant to the terms of the Agreement.
Please sign below to evidence your agreement to provide such services to
the Fund and to add the Fund as beneficiary under the Agreement.
THE PREMIUM PORTFOLIOS
By: Philip Coolidge
Title: President
Agreed:
STATE STREET CAYMAN TRUST COMPANY, LTD.
By: Jacqueline Henning
Title: Managing Director
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000944631
<NAME> EMERGING ASIAN MARKETS EQUITY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 5,023,199
<INVESTMENTS-AT-VALUE> 2,637,345
<RECEIVABLES> 9,822
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 30,208
<TOTAL-ASSETS> 2,677,375
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 2,672,184
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 2,672,184
<DIVIDEND-INCOME> 34,150
<INTEREST-INCOME> 83,612
<OTHER-INCOME> 0
<EXPENSES-NET> 83,978
<NET-INVESTMENT-INCOME> 33,784
<REALIZED-GAINS-CURRENT> (3,015,565)
<APPREC-INCREASE-CURRENT> (3,247,601)
<NET-CHANGE-FROM-OPS> (6,229,382)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,724,617
<NUMBER-OF-SHARES-REDEEMED> (4,215,811)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (8,720,576)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 83,978
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 90,678
<AVERAGE-NET-ASSETS> 8,398,805
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.00
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
