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As filed with the Securities and Exchange Commission on October 17, 1995.
File No. 811-07363
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940
GROWTH PORTFOLIO
(Exact Name of Registrant as Specified in Charter)
50 California Street, 27th Floor
San Francisco, California 94111
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: 415-392-6181
David J. Thelander, Esq.
Assistant General Counsel
G.T. Capital Management, Inc.
50 California Street, 27th Floor
San Francisco, California 94111
(Name and Address of Agent for Service)
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EXPLANATORY NOTE
This Registration Statement has been filed by the Registrant pursuant
to Section 8(b) of the Investment Company Act of 1940, as amended (the
"1940 Act"). Beneficial interests in the Registrant have not been
registered under the Securities Act of 1933, as amended (the "1933 Act")
because such interests are offered solely in private placement
transactions which do not involve any "public offering" within the meaning
of Section 4(2) of the 1933 Act. Investments in the Registrant may only
be made by investment companies, insurance company separate accounts,
common or commingled trust funds or similar organizations or entities
which are "accredited investors" as defined in Regulation D under the
1933 Act. This 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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GROWTH PORTFOLIO
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
Item No. of Part A of
Form N-1A Captions in Document
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1. Cover Page . . . . . . . . . . . . . . . . . . . . . . . [Not Applicable]
2. Synopsis . . . . . . . . . . . . . . . . . . . . . . . . [Not Applicable
3. Condensed Financial Information . . . . . . . . . . . . . [Not Applicable]
4. General Description of Registrant . . . . . . . . . . . . General Description of Registrant
5. Management of the Fund . . . . . . . . . . . . . . . . . Management of the Portfolio
6. Capital Stock and Other Securities . . . . . . . . . . . Capital Stock and Other Securities
7. Purchase of Securities Being Offered . . . . . . . . . . Purchase of Securities
8. Redemption or Repurchase . . . . . . . . . . . . . . . . Redemption or Repurchase
9. Pending Legal Proceedings . . . . . . . . . . . . . . . . Pending Legal Proceedings
Item No. of Part B of
Form N-1A Captions in Document
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10. Cover Page . . . . . . . . . . . . . . . . . . . . . . . [Not Applicable]
11. Table of Contents . . . . . . . . . . . . . . . . . . . . Table of Contents
12. General Information and History . . . . . . . . . . . . . General Information and History
13. Investment Objectives and Policies . . . . . . . . . . . Investment Objectives and Policies
14. Management of the Registrant . . . . . . . . . . . . . . Management of the Portfolio
15. Control Persons and Principal Holders of Securities . . . Control Persons and Principal Holders of
Securities
16. Investment Advisory and Other Investment Advisory and Other Services
Services . . . . . . . . . . . . . . . . . . . . . .
17. Brokerage Allocation . . . . . . . . . . . . . . . . . . Brokerage Allocation and Other Practices
18. Capital Stock and Other Securities . . . . . . . . . . . Capital Stock and Other Securities
19. Purchase, Redemption and Pricing of Securities Being Purchase, Redemption and Pricing of
Offered . . . . . . . . . . . . . . . . . . . . . . . . . Securities
20. Tax Status . . . . . . . . . . . . . . . . . . . . . . . Tax Status
21. Underwriters . . . . . . . . . . . . . . . . . . . . . . [Not Applicable]
22. Calculation of Performance Data . . . . . . . . . . . . . [Not Applicable]
23. Financial Statements Financial Statements
</TABLE>
<PAGE>
GROWTH PORTFOLIO
CONTENTS OF REGISTRATION STATEMENT
This registration statement of Growth Portfolio contains the following
documents:
Facing Sheet
Contents of Registration Statement
Cross-Reference Sheet
Part A
Part B
Part C
Signature Page
Exhibits
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PART A
Responses to Items 1 through 3 have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant.
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Growth Portfolio is a diversified, open-end management investment
company which was organized as a New York common law trust pursuant to a
Declaration of Trust dated as of May 4, 1995, and amended and restated as
of September 25, 1995.
Beneficial interests in the Growth Portfolio are divided currently
into two separate subtrusts or "series" -- Small Cap Portfolio and Value
Portfolio (individually, "Portfolio"; collectively, "Portfolios") -- each
having a distinct investment objective and distinct investment policies.
Each Portfolio is described herein. Additional subtrusts of Growth
Portfolio may be organized at a later date. The assets of each Portfolio
belong only to that Portfolio, and the liabilities of each Portfolio are
borne solely by that Portfolio, and no other. See Item 6, "Capital Stock
and Other Securities."
Beneficial interests in the Portfolios are offered solely in private
placement transactions which do not involve any "public offering" within
the meaning of Section 4(2) of the 1933 Act. Investments in the
Portfolios may only be made by investment companies, insurance company
separate accounts, common or commingled trust funds or similar
organizations or entities which are "accredited investors" as defined in
Regulation D under the 1933 Act. The Registration Statement does not
constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.
Each Portfolio's investment manager and administrator is G.T. Capital
Management, Inc. ("G.T. Capital"), part of the G.T. Group, an
international investment advisory organization.
INVESTMENT OBJECTIVES
The investment objective of each Portfolio is to seek long-term
capital appreciation. The Small Cap Portfolio seeks its investment
objective by normally investing at least 65% of its total assets in equity
securities, including common stocks, convertible preferred stocks, conver-
tible debt securities and warrants of small cap companies domiciled in the
United States. For purposes of the foregoing, "small cap" companies are
companies that, at the time of purchase of their securities by the Small
Cap Portfolio, have market capitalizations of up to $500 million. Market
capitalization means the total market value of a company's outstanding
common stock. There is no necessary correlation between market
capitalization and the financial attributes (such as level of assets,
revenues or income) often used to measure a company's size. The remainder
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of the Small Cap Portfolio's assets may be invested in common stocks,
convertible preferred stocks, convertible debt securities and warrants of
companies that are larger than small cap companies as defined above, non-
convertible preferred stocks, non-convertible debt securities, government
securities and high quality money market instruments such as government
obligations, high grade commercial paper, bank certificates of deposit and
bankers' acceptances of issuers domiciled in the United States. Small cap
companies may be more vulnerable than larger companies to adverse
business, economic or market developments. Securities of small cap
companies may also be less liquid and their prices more volatile than
those of larger companies.
The Value Portfolio seeks its investment objective by normally
investing at least 65% of its total assets in equity securities, including
common stocks, convertible preferred stocks, convertible debt securities
and warrants of medium to large cap issuers domiciled in the United States
that G.T. Capital believes to be undervalued in relation to the long-term
earning power or other factors. For purposes of the foregoing, "medium to
large cap" issuers are issuers with a market capitalization greater than
$500 million at the time of purchase by the Value Portfolio. The remainder
of the Value Portfolio's assets may be invested in common stocks,
convertible preferred stocks, convertible debt securities and warrants of
companies that are smaller than the issuers defined above, non-convertible
preferred stocks, non-convertible debt securities, government securities
and high quality money market instruments such as government obligations,
high grade commercial paper, bank certificates of deposit and bankers'
acceptances of issuers domiciled in the United States.
In selecting issuers for the Value Portfolio, G.T. Capital attempts
to identify securities of issuers whose prospects and growth potential, in
G.T. Capital's opinion, are currently undervalued by investors. In G.T.
Capital's view, an issuer may show favorable prospects as a result of many
factors, including, but not limited to, changes in management, shifts in
supply and demand conditions in the industry in which it operates,
technological advances, new products or product cycles or changes in
macroeconomic trends. The securities of such issuers may be undervalued by
the market due to many factors, including market decline, tax-loss
selling, poor economic conditions, limited coverage by the investment
community, investors' reluctance to overlook perceived financial,
operational, managerial or other problems affecting the issuer or the
industry in which it operates, and other factors. G.T. Capital will
attempt to identify those undervalued issuers with the potential for
attractive returns.
For purposes of the foregoing, an issuer is considered domiciled in
the United States if it is incorporated under the laws of any of its
states or territories or the District of Columbia and either (i) at least
50% of the value of its assets is located in the United States, or (ii) it
normally derives at least 50% of its income from operations or sales in
the United States. There is no assurance that any Portfolio will achieve
its investment objective.
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The debt obligations that the Portfolios may invest in are limited to
U.S. government securities and corporate debt securities of issuers
domiciled in the United States. The Portfolios will limit their purchases
of debt securities to investment grade obligations. "Investment grade"
debt securities are those debt securities rated within one of the four
highest ratings categories by Moody's Investors Service, Inc. ("Moody's")
or by Standard & Poor's ("S&P") or, if not similarly rated by any other
nationally recognized statistical rating organization ("NRSRO"), deemed by
G.T. Capital to be of equivalent quality. Moody's considers securities
rated in the lowest category of investment grade, i.e., securities rated
Baa, to have speculative characteristics.
OTHER INFORMATION REGARDING THE PORTFOLIOS. The approval of the
investors in a Portfolio is not required to change the investment
objective, policies or limitations of that Portfolio, unless otherwise
specified. Written notice shall be provided to investors in a Portfolio at
least thirty days prior to any changes in that Portfolio's investment
objective.
GENERAL POLICIES
TEMPORARY DEFENSIVE STRATEGIES. Each Portfolio retains the
flexibility to respond promptly to changes in market and economic
conditions. Accordingly, in the interest of preserving interestholders'
capital and consistent with each Portfolio's investment objective,
G.T. Capital may employ a temporary defensive investment strategy if it
determines such a strategy to be warranted due to market, economic or
political conditions. Under a defensive strategy, each Portfolio may hold
cash and/or invest any portion or all of its assets in debt securities or
high quality money market instruments issued by corporations or the U.S.
government. To the extent a Portfolio adopts a temporary defensive
investment position, it will not be invested so as to achieve directly its
investment objective.
In addition, pending investment of proceeds from sales of Portfolio
interests or to meet ordinary daily cash needs, each Portfolio may hold
cash and may invest in high quality domestic money market instruments.
Money market instruments in which the Portfolios may invest include, but
are not limited to, the following: U.S. government securities, high-grade
commercial paper, bank certificates of deposit and banker's acceptances of
issuers domiciled in the United States; and repurchase agreements related
to any of the foregoing. High-grade commercial paper refers to commercial
paper rated A-1 by S&P or P-1 by Moody's at the time of investment or, if
not similarly rated by another NRSRO, determined by G.T. Capital to be of
comparable quality.
OTHER POLICIES. Each Portfolio may invest up to 15% of its net assets
in illiquid securities.
Each Portfolio may purchase debt securities on a "when-issued" basis
and may purchase or sell such securities on a "forward commitment" basis
in order to hedge against anticipated changes in interest rates and
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prices. The price, which is generally expressed in yield terms, is fixed
at the time the commitment is made, but delivery and payment for the
securities take place at a later date. When-issued securities and forward
commitments may be sold prior to the settlement date, but each Portfolio
will enter into when-issued and forward commitments only with the
intention of actually receiving or delivering the securities, as the case
may be. No income accrues on securities which have been purchased pursuant
to a forward commitment or on a when-issued basis prior to delivery of the
securities to the Portfolio. If a Portfolio disposes of the right to
acquire a when-issued security prior to its acquisition or disposes of its
right to deliver or receive against a forward commitment, it may incur a
gain or loss. At the time a Portfolio enters into a transaction on a when-
issued or forward commitment basis, a segregated account consisting of
cash or high-grade liquid debt securities equal to the value of the when-
issued or forward commitment securities will be established and maintained
with its custodian and will be marked to market daily. There is a risk
that the securities may not be delivered and that a Portfolio may incur a
loss on such a transaction.
From time to time, it may be advantageous for a Portfolio to borrow
money rather than sell existing portfolio positions to meet redemption
requests. Accordingly, each Portfolio may borrow from banks or through
reverse repurchase agreements and "roll" transactions in connection with
meeting requests for redemptions of a Portfolio's interests.
Each Portfolio also may borrow up to 5% of its total assets for
temporary or emergency purposes other than to meet redemptions. However,
no Portfolio will borrow for leveraging purposes, nor will any Portfolio
purchase securities while borrowings are outstanding.
Each Portfolio is authorized to make loans of portfolio securities,
for the purpose of realizing additional income, to broker/dealers or to
other institutional investors. At all times a loan is outstanding, the
borrower must maintain with the Portfolio's custodian collateral
consisting of cash, U.S. government securities or other liquid, high-grade
debt securities equal to at least the value of the borrowed securities,
plus any accrued interest. Each Portfolio will receive any interest paid
on the loaned securities and a fee and/or a portion of the interest earned
on the collateral. Each Portfolio will limit loans of portfolio securities
to an aggregate of 30% of the value of its total assets, measured at the
time any such loan is made. The risks in lending portfolio securities, as
with other extensions of secured credit, consist of possible delay in
receiving additional collateral or in recovery of the securities or
possible loss of rights in the collateral should the borrower fail
financially.
RISK FACTORS
Each Portfolio's net asset value ("NAV") will fluctuate, reflecting
fluctuations in the market value of its portfolio positions.
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SMALL CAP PORTFOLIO. Small cap companies may be more vulnerable than
larger companies to adverse business, economic or market developments.
Small cap companies may also have more limited product lines, markets or
financial resources than companies with larger capitalizations and may be
more dependent on a relatively small management group. In addition, small
cap companies may not be well-known to the investing public, may not have
institutional ownership and may have only cyclical, static or moderate
growth prospects. Most small cap company stocks pay low or no dividends.
Securities of small cap companies are generally less liquid and their
prices more volatile than those of securities of larger companies. The
securities of some small cap companies may not be widely traded; the Small
Cap Portfolio's position in securities of such companies may be
substantial in relation to the market for such securities. Accordingly, it
may be difficult for the Small Cap Portfolio to dispose of securities of
these small cap companies at prevailing market prices in order to meet
redemptions.
RISKS ASSOCIATED WITH DEBT SECURITIES. G.T. Capital allocates
investments among fixed income securities of particular issuers on the
basis of its views as to the best values then currently available in the
market place. Such values are a function of yield, maturity, issue
classification and quality characteristics, coupled with expectations
regarding the economy, movements in the general level of interest rates
and political developments. If market interest rates decline, fixed income
securities generally appreciate in value, and vice versa.
OPTIONS AND FUTURES. Each Portfolio may use options on securities,
options on indices, futures contracts and options on futures contracts to
implement strategies to attempt to hedge its portfolio, i.e., reduce the
overall level of investment risk normally associated with the Portfolio.
These instruments are often referred to as "derivatives," which may be
defined as financial instruments whose performance is derived, at least in
part, from the performance of another asset (such as a security or an
index of securities). Each Portfolio may enter into such instruments up to
the full value of its portfolio assets. There can be no assurance that
these hedging efforts will succeed. These techniques are described below
and are further detailed in Item 13 of Part B.
Each Portfolio may purchase and sell put and call options on equity
and debt securities to hedge against the risk of fluctuations in the
prices of securities held by the Portfolio or that G.T. Capital intends to
include in the Portfolio's securities portfolio. The Portfolios also may
buy and sell put and call options on equity and debt security indices.
Such stock index options serve to hedge against overall fluctuations in
the securities markets or market sectors generally, rather than
anticipated increases or decreases in the value of a particular security.
Further, the Portfolios may sell stock index futures contracts and
may purchase put options or write call options on such futures contracts
to protect against a general stock market or market sector decline that
could adversely affect the Portfolios' holdings. The Portfolios also may
buy stock index futures contracts and purchase call options or write put
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options on such contracts to hedge against a general stock market or
market sector advance and thereby attempt to lessen the cost of future
securities acquisitions. A Portfolio may use interest rate futures
contracts and options thereon to hedge the debt portion of its portfolio
against changes in the general level of interest rates.
In addition, each Portfolio may purchase and sell put and call
options on securities and indices that are traded on recognized securities
exchanges and over-the-counter ("OTC") markets.
These practices may result in the loss of principal under certain
conditions. In addition, certain provisions of the Internal Revenue Code
of 1986, as amended ("Code"), limit the extent to which a Portfolio may
enter into future contracts or engage in options transactions. See "Tax
Status--Hedging Strategies" in Item 20 of Part B.
Although a Portfolio might not employ any of the foregoing
strategies, the use of options and futures would involve certain
investment risks and transaction costs to which it might not otherwise be
subject. These risks include: (1) dependence on G.T. Capital's ability to
predict movements in the prices of individual securities, fluctuations in
the general securities markets and movements in interest rates; (2)
imperfect correlation, or even no correlation, between movements in the
price of options, futures contracts or options thereon and movements in
the price of the security hedged or used for cover; (3) the fact that
skills and techniques needed to trade options, futures contracts and
options thereon are different from those needed to select the securities
in which the Portfolios invest; (4) lack of assurance that a liquid
secondary market will exist for any particular option, futures contract or
option thereon at any particular time; (5) the possible inability of a
Portfolio to purchase or sell a portfolio security at a time when it would
otherwise be favorable for it to do so, or the possible need for a
Portfolio to sell a security at a disadvantageous time, due to the need
for the Portfolio to maintain "cover" or to segregate securities in
connection with hedging transactions; and (6) the possible need to defer
closing out certain options, futures contracts and options thereon in
order to qualify for the beneficial tax treatment afforded regulated
investment companies under the Code. If G.T. Capital incorrectly forecasts
securities market movements or interest rates in utilizing a strategy for
a Portfolio, the Portfolio would be in a better position if it had not
hedged at all.
REPURCHASE AGREEMENTS. Each Portfolio may enter into repurchase
agreements, which are transactions in which a Portfolio purchases a
security from a bank or recognized securities dealer and simultaneously
commits to resell that security to the bank or dealer at an agreed-upon
price, date and market rate of interest unrelated to the coupon rate or
maturity of the purchased security. The Portfolios intend to enter into
repurchase agreements only with banks and dealers believed by G.T. Capital
to present minimum credit risks in accordance with guidelines established
by Growth Portfolio's Board of Trustees.
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INVESTMENT LIMITATIONS
Each Portfolio is subject to certain investment limitations that
constitute fundamental policies. Fundamental policies of a Portfolio
cannot be changed without the approval of the holders of a majority of
that Portfolio's outstanding voting securities, as defined in the
1940 Act. Unless specifically noted, the Portfolios' investment policies
described herein, including the policies with respect to investment in its
market sector's securities and the percentage limitations with respect to
such investments, are not fundamental policies and may be changed by vote
of Growth Portfolio's Board of Trustees without approval of its
interestholders. Each Portfolio's policies regarding lending, the
percentage of that Portfolio's assets that may be committed to borrowing
and diversification of investments are fundamental policies and may not be
changed without approval of that Portfolio's interestholders. See
"Investment Limitations" in Item 13 of Part B.
ITEM 5. MANAGEMENT OF THE PORTFOLIOS.
Growth Portfolio's Board of Trustees has overall responsibility for
the operation of each Portfolio. See "Trustees and Executive Officers" in
Item 14 of Part B for a complete description of the Trustees of Growth
Portfolio.
INVESTMENT MANAGEMENT AND ADMINISTRATION. Services provided by
G.T. Capital as each Portfolio's investment manager and administrator
include determining the composition of its investment portfolio and
placing orders to buy, sell or hold particular securities. In addition,
G.T. Capital provides the following administration services to each
Portfolio: furnishing corporate officers and clerical staff; providing
office space, services and equipment; and supervising all matters relating
to its operations. For these services, each Portfolio pays investment
management fees directly to G.T. Capital based on the average daily net
assets of that Portfolio at the annualized rate of 0.725% on the first
$500 million, 0.70% on the next $500 million, 0.675% on the next $500
million, and 0.65% on all amounts thereafter.
G.T. Capital, organized in 1973, provides investment management
and/or administrative services to all the G.T. Global Mutual Funds as well
as to other institutional, corporate and individual clients. The offices
of G.T. Capital are located at 50 California Street, 27th Floor, San
Francisco, California 94111.
G.T. Capital is the U.S. member of the G.T. Group, an international
investment advisory organization established in 1969 for the purpose of
rendering international portfolio management services to both
institutional and individual clients. Since the G.T. Group was
established, it has gained a reputation as a leader in identifying and
investing in emerging and established markets around the world. As of
August 31, 1995, aggregate assets under G.T. Group management exceeded $22
billion.
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In addition to the San Francisco office, the G.T. Group maintains
fully staffed investment offices in London, Hong Kong, Tokyo, Singapore
and Sydney. Many of G.T. Capital's investment managers are natives of the
countries in which they invest and have the advantage of being close to
the financial markets they follow and speaking the languages of local
corporate and government leaders. G.T. Capital's experienced management
team is situated to react quickly to changes in foreign markets that are
in time zones different from those in the United States.
G.T. Capital and the other companies in the G.T. Group are
subsidiaries of BIL GT Group Limited ("BIL GT Group"), a financial
services holding company. BIL GT Group in turn is controlled by the Prince
of Liechtenstein Foundation, which serves as the parent organization for
the various business enterprises of the Princely Family of Liechtenstein.
Its principal business address is Herrengasse 12, FL-9490, Vaduz,
Liechtenstein.
In managing each Portfolio, G.T. Capital employs a team approach,
taking advantage of the resources of its various investment offices around
the world in seeking to achieve each Portfolio's investment objective. In
addition, in managing each Portfolio these individuals utilize the
research and related work of other members of G.T. Capital's investment
staff.
The investment professionals primarily responsible for the portfolio
management of each Portfolio are as follows:
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SMALL CAP PORTFOLIO
Responsibilities Business Experience
Name/Office for the Portfolio Last Five Years
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Kevin L. Wenck Portfolio manager since its Portfolio Manager for G.T. Capital since 1991.
San Francisco inception Prior thereto Mr. Wenck was a Portfolio Manager for
Matuschka & Co. (Greenwich, CT).
VALUE PORTFOLIO
Responsibilities Business Experience
Name/Office for the Portfolio Last Five Years
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Soraya M. Betterton Portfolio Manager since its Portfolio Manager for G.T. Capital.
San Francisco inception
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In placing orders for a Portfolio's securities transactions, G.T.
Capital seeks to obtain the best net results. G.T. Capital has no
agreement or commitment to place orders with any broker/dealer. Debt
securities generally are traded on a "net" basis with a dealer acting as
principal for its own account without a stated commission, although the
price of the security usually includes a profit to the dealer. U.S.
government securities and money market instruments generally are traded in
the OTC markets. In underwritten offerings, securities usually are
purchased at a fixed price that includes an amount of compensation to the
underwriter. On occasion, securities may be purchased directly from an
issuer, in which case no commissions or discounts are paid. Broker/dealers
may receive commissions on futures and options transactions. Consistent
with its obligation to obtain the best net results, G.T. Capital may
consider a broker/dealer's sale of shares of the G.T. Global Mutual Funds
as a factor in considering through whom portfolio transactions will be
effected. Brokerage transactions for the Portfolios may be executed
through any of the BIL GT Group affiliates.
G.T. Capital anticipates that the annual turnover rate of each
Portfolio will not exceed 75%. However, G.T. Capital does not regard
portfolio turnover as a limiting factor and will buy or sell securities
for each Portfolio as necessary in response to market conditions to meet
each Portfolio's objective of long-term capital appreciation. The
portfolio turnover rate is calculated by dividing the lesser of sales or
purchases of portfolio securities by each Portfolio's average month-end
portfolio value, excluding short-term investments. For purposes of this
calculation, portfolio securities exclude purchases and sales of debt
securities having a maturity at the date of purchase of one year or less.
High portfolio turnover involves correspondingly greater transaction costs
in the form of dealer spreads or brokerage commissions and other costs
that a Portfolio will bear directly and may result in the realization of
net capital gains that are taxable to that Portfolio's interestholders.
Growth Portfolio has not retained the services of a principal
underwriter or distributor, as beneficial interests in each Portfolio are
offered solely in private placement transactions.
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, is each Portfolio's custodian.
EXPENSES. Each Portfolio pays all of its expenses not assumed by
G.T. Capital and other agents. These expenses include, in addition to the
investment management and administration and brokerage fees discussed
herein, legal and audit expenses, custodian fees, trustees' fees,
registration fees, organizational expenses, fidelity bond and other
insurance premiums, taxes, extraordinary expenses and the expenses of
reports sent to existing investors.
ITEM 5A. MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE.
Not Applicable.
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ITEM 6. CAPITAL STOCK AND OTHER SECURITIES.
Growth Portfolio is organized as a New York state common law trust.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in separate subtrusts or "series" of Growth
Portfolio. Growth Portfolio currently has two series (i.e., the
Portfolios). Growth Portfolio reserves the right to create and issue
additional series. Each investor in a Portfolio is entitled to participate
equally in the Portfolio's earnings and assets and to a vote in proportion
to the amount of its interest in the Portfolio. Investments in a Portfolio
may not be transferred, but an investor may withdraw all or any portion of
its investment at any time at NAV. Each investor in a Portfolio will be
liable for all obligations of that Portfolio but not of the other
Portfolios. However, because a Portfolio will indemnify each investor
therein with respect to any liability to which the investor may become
subject by reason of being such an investor, the risk of an investor in a
Portfolio incurring financial loss on account of such liability would be
limited to circumstances in which that Portfolio had inadequate insurance
and was unable to meet its obligations (including indemnification
obligations) out of its assets.
Growth Portfolio is not required to hold annual meetings of
investors, but it will hold special meetings of investors when in the
judgment of the Trustees it is necessary or desirable to submit matters
for an investor vote. Investors have the right to communicate with other
investors to the extent provided in Section 16(c) of the 1940 Act in
connection with requesting a meeting of investors for the purpose of
removing one or more Trustees, which removal requires a two-thirds vote of
Growth Portfolio's beneficial interests. Investors also have under certain
circumstances the right to remove one or more Trustees without a meeting.
Upon liquidation of a Portfolio, investors would be entitled to share pro
rata in that Portfolio's net assets available for distribution to
investors.
A Portfolio's net income consists of (i) all dividends, accrued
interest (including earned discount, both original issue and market
discount), and other income, including any net realized gains on the
Portfolio's assets, less (ii) all actual and accrued expenses of the
Portfolio, amortization of any premium, and net realized losses on the
Portfolio's assets, all as determined in accordance with generally
accepted accounting principles. All of a Portfolio's net income is
allocated pro rata among the investors in the Portfolio. A Portfolio's
net income generally is not distributed to the investors in the Portfolio,
except as determined by the Trustees from time to time, but instead is
included in the NAV of the investors' respective beneficial interests in
the Portfolios.
Under Growth Portfolio's anticipated method of operation, no
Portfolio will be subject to any income tax. However, each investor in a
Portfolio will be taxable on its share (as determined in accordance with
the governing instruments of Growth Portfolio and the Code and the
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regulations promulgated thereunder) of that Portfolio's income, gains,
losses, deductions, and credits in determining its income tax liability.
See Item 20 in Part B.
It is intended that each Portfolio's assets, income and distributions
will be managed in such a way that an investor in a Portfolio will be able
to satisfy the requirements of Subchapter M of the Code, assuming that the
investor invested all of its assets in the Portfolio. See Item 20 in Part
B.
Investor inquiries may be directed to G.T. Capital.
ITEM 7. PURCHASE OF SECURITIES.
Beneficial interests in each Portfolio are issued solely in private
placement transactions that do not involve any "public offering" within
the meaning of Section 4(2) of the 1933 Act. Investments in a Portfolio
may only be made by investment companies, insurance company separate
accounts, common or commingled trust funds or similar organizations or
entities that are "accredited investors" as defined in 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 a Portfolio may be made without a sales load at the
NAV next determined after an order is received in "good order" by a
Portfolio. There is no minimum initial or subsequent investment in a
Portfolio. However, investments must be made in federal funds (i.e.,
monies credited to the account of a Portfolio's custodian bank by a
Federal Reserve Bank).
Each Portfolio reserves the right to cease accepting investments at
any time or to reject any investment order.
ITEM 8. REDEMPTION OR REPURCHASE.
An investor in a Portfolio may redeem any portion or all of its
investment at any time at the NAV next determined after a request in "good
order" is furnished by the investor to that Portfolio. The proceeds of a
redemption will be paid by a Portfolio in federal funds normally on the
next business day after the redemption is effected, but in any event
within seven days. Investments in a Portfolio may not be transferred.
The right of any investor to receive payment with respect to any
redemption may be suspended or the payment of the proceeds therefrom
postponed during any period (1) when the New York Stock Exchange, Inc.
("NYSE") is closed (other than customary weekend or holiday closings) or
trading on the NYSE is restricted as determined by the Securities and
Exchange Commission ("SEC"), (2) when an emergency exists, as defined by
the SEC, which would prohibit a Portfolio in disposing of its portfolio
securities or in fairly determining the value of its assets, or (3) as the
SEC may otherwise permit.
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ITEM 9. PENDING LEGAL PROCEEDINGS.
Not applicable.
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PART B
ITEM 10. COVER PAGE.
Part A contains information about the investment objectives and
policies of Small Cap Growth Portfolio ("Small Cap Portfolio") and Value
Portfolio (individually, "Portfolio"; collectively, "Portfolios"), each a
subtrust or "series" of Growth Portfolio. This Part B should only be read
in conjunction with Part A. This section contains supplemental
information concerning the investment policies and portfolio strategies
that the Portfolios may utilize, the types of securities and other
instruments in which the Portfolios may invest and certain risks attendant
to those investment policies and strategies.
ITEM 11. TABLE OF CONTENTS.
Page
General Information and History . . . . . . . . . . . . . . . . B-1
Investment Objectives and Policies . . . . . . . . . . . . . . B-1
Management of the Portfolios . . . . . . . . . . . . . . . . . B-17
Control Persons and Principal Holders of Interests . . . . . . B-19
Investment Advisory and Other Services . . . . . . . . . . . . B-19
Brokerage Allocation and Other Practices . . . . . . . . . . . B-20
Capital Stock and Other Securities . . . . . . . . . . . . . . B-22
Purchase, Redemption and Pricing of Interests . . . . . . . . . B-23
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . B-25
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . B-26
Calculation of Performance Data . . . . . . . . . . . . . . . . B-26
Financial Statements . . . . . . . . . . . . . . . . . . . . . B-26
ITEM 12. GENERAL INFORMATION AND HISTORY.
Not applicable.
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES.
SELECTION OF EQUITY INVESTMENTS
For investment purposes, an issuer is considered as domiciled in the
United States if it is incorporated under the laws of any of its states or
territories or the District of Columbia and either (i) at least 50% of the
value of its assets is located in the United States or (ii) it normally
derives at least 50% of its income from operations or sales in the United
States.
INVESTMENT IN OTHER INVESTMENT COMPANIES
Each Portfolio may invest in the securities of closed-end investment
companies within the limits of the Investment Company Act of 1940, as
amended ("1940 Act"). These limitations currently provide that, in
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general, a Portfolio may purchase shares of an investment company unless
(a) such a purchase would cause that Portfolio to own in the aggregate
more than 3% of the total outstanding voting stock of the investment
company or (b) such a purchase would cause that Portfolio to have more
than 5% of its assets invested in the investment company or more than 10%
of its assets invested in an aggregate of all such investment companies.
Investment in closed-end investment companies may involve the payment of
substantial premiums above the value of such companies' portfolio
securities. The Portfolios do not intend to invest in such investment
companies unless, in the judgment of G.T. Capital Management, Inc. ("G.T.
Capital"), the investment manager for each Portfolio, the potential
benefits of such investment justify the payment of any applicable
premiums. The yield of such securities will be reduced by operating
expenses of such companies including payments to the investment managers
of those investment companies.
WARRANTS OR RIGHTS
Warrants or rights may be acquired by a Portfolio in connection with
other securities or separately and provide that Portfolio with the right
to purchase at a later date other securities of the issuer. A Portfolio's
investments in warrants or rights, valued at the lower of cost or market,
will not exceed 5% of the value of its net assets and not more than 2% of
such assets will be invested in warrants and rights which are not listed
on the New York or American Stock Exchange. Warrants or rights acquired
by each Portfolio in units or attached to securities will be deemed to be
without value for purpose of this restriction. These limits are not
fundamental policies of the Portfolios and may be changed by a vote of the
Portfolios' Board of Trustees without the approval of interestholders.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, each Portfolio may
make secured loans of its securities holdings amounting to not more than
30% of its total assets. Securities loans are made to broker dealers or
institutional investors pursuant to agreements requiring that the loans
continuously be secured by collateral at least equal at all times to the
value of the securities lent plus any accrued interest, "marked to market"
on a daily basis. The collateral received will consist of cash, U.S.
short-term government securities, bank letters of credit or such other
collateral as may be permitted under a Portfolio's investment program and
by regulatory agencies and approved by Growth Portfolio's Board of
Trustees. The Portfolios may pay reasonable administrative and custodial
fees in connection with the loans of their securities. While the
securities loan is outstanding, a Portfolio will continue to receive the
equivalent of the interest or dividends paid by the issuer on the
securities, as well as interest on the investment of the collateral or a
fee from the borrower. If the borrower failed to maintain the requisite
amount of collateral, the loan would terminate automatically and the
Portfolio could use the collateral to replace the securities while holding
the borrower liable for any excess of the replacement over the value of
the collateral. Each Portfolio has a right to call each loan and obtain
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the securities on five business days' notice. The Portfolios will not
have the right to vote equity securities while they are being lent, but
they retain the right to call for the return of the loaned securities at
any time on reasonable notice and may call in a loan in anticipation of
any important vote. The Portfolios also will be able to call such loans
if G.T. Capital made the investment decision that the loaned securities
should be sold. On termination of a loan, the borrower would be required
to return the securities to the Portfolio and any gain or loss in market
price during the loan would inure to the Portfolio. The risks in lending
portfolio securities, as with other extensions of secured credit, consist
of possible delay in receiving additional collateral or in the recovery of
the securities or possible loss of rights in the collateral should the
borrower fail financially. In the event of the default or bankruptcy by
such party, the Portfolios would suffer a loss. The law regarding the
rights of the Portfolios is unsettled with respect to a borrower becoming
subject to bankruptcy or similar proceedings. Under these circumstances,
there may be a restriction on the Portfolios' ability to sell the
collateral and the Portfolios could suffer a loss. Loans will be made only
to firms deemed by G.T. Capital to be of good standing and will not be
made unless, in the judgment of G.T. Capital, the consideration to be
earned from such loans would justify the risk.
COMMERCIAL BANK OBLIGATIONS
For the purposes of each Portfolio's investment policies with respect
to bank obligations, obligations of foreign branches of U.S. banks are
obligations of the issuing bank and may be general obligations of the
parent bank. Such obligations, however, may be limited by the terms of a
specific obligation and by government regulation. Although a Portfolio
typically will acquire obligations issued and supported by the credit of
U.S. banks having total assets at the time of purchase in excess of
$1 billion, this $1 billion figure is not an investment policy or
restriction of any Portfolio. For the purposes of calculation with
respect to the $1 billion figure, the assets of a bank will be deemed to
include the assets of its U.S. and non-U.S. branches.
REPURCHASE AGREEMENTS
Each Portfolio will invest only in repurchase agreements
collateralized at all times in an amount at least equal to the repurchase
price plus accrued interest. To the extent that the proceeds from any
sale of such collateral upon a default in the obligation to repurchase
were less than the repurchase price, the Portfolio would suffer a loss.
Repurchase agreements carry certain risks not associated with direct
investments in securities, including possible decline in the market value
of the underlying securities and delays and costs to the Portfolio if the
other party to the repurchase agreement becomes bankrupt. If the financial
institution which is party to the repurchase agreement petitions for
bankruptcy or otherwise becomes subject to bankruptcy or liquidation
proceedings, there may be restrictions on a Portfolio's ability to sell
the collateral and that Portfolio could suffer a loss. However, with
respect to financial institutions whose bankruptcy or liquidation
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proceedings are subject to the U.S. Bankruptcy Code, the Portfolio intends
to comply with provisions under the U.S. Bankruptcy Code that would allow
it immediately to resell the collateral. G.T. Capital reviews and monitors
the creditworthiness of such institutions under the general supervision of
Growth Portfolio's Board. Each Portfolio will not enter into a repurchase
agreement with a maturity of more than seven days if, as a result, more
than 15% of the value of its net assets would be invested in such
repurchase agreements and other illiquid investments.
BORROWING, REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS
Each Portfolio's borrowings will not exceed 33-1/3% of the
Portfolio's total assets, i.e., a Portfolio's total assets at all times
will equal at least 300% of the amount of outstanding borrowings. No
Portfolio will purchase securities while borrowings are outstanding. If
market fluctuations in the value of a Portfolio's securities holdings or
other factors cause the ratio of a Portfolio's total assets to outstanding
borrowings to fall below 300%, within three days (excluding Sundays and
holidays) of such event that Portfolio may be required to sell portfolio
securities to restore the 300% asset coverage, even though from an
investment standpoint such sales might be disadvantageous. Each Portfolio
also may borrow up to an additional 5% of its total assets for temporary
or emergency purposes other than to meet redemptions. Any borrowing by a
Portfolio may cause greater fluctuation in the value of its shares than
would be the case if that Portfolio did not borrow.
Each Portfolio's fundamental investment limitations permit that
Portfolio to borrow money for leveraging purposes. Each Portfolio,
however, is prohibited, pursuant to a non-fundamental investment policy,
from borrowing money in order to purchase securities. Nevertheless, this
policy may be changed in the future by Growth Portfolio's Board of
Trustees. In the event that a Portfolio employs leverage in the future,
it would be subject to certain additional risks. Use of leverage creates
an opportunity for greater growth of capital but would exaggerate any
increases or decreases in a Portfolio's NAV. When a Portfolio's income
and gains on securities purchased with the proceeds of borrowing exceed
the cost of such borrowing, that Portfolio's earnings will increase faster
than otherwise would be the case; conversely, if such income and gains
fail to exceed such costs, that Portfolio's earnings would decline faster
than would otherwise be the case.
Each Portfolio may enter into reverse repurchase agreements. A
reverse repurchase agreement is a borrowing transaction in which the
Portfolio transfers possession of a security to another party, such as a
bank or broker/dealer in return for cash, and agrees to repurchase the
security in the future at an agreed upon price, which includes an interest
component. Each Portfolio also may engage in "roll" borrowing
transactions, which involve the sale of Government National Mortgage
Association certificates or other securities together with a commitment
(for which that Portfolio may receive a fee) to purchase similar, but not
identical, securities at a future date. Each Portfolio will maintain in a
segregated account with a custodian, cash, U.S. government securities or
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other liquid, high-grade debt securities in an amount sufficient to cover
its obligations under "roll" transactions and reverse repurchase
agreements with broker-dealers. No segregation is required for reverse
repurchase agreements with banks.
OPTIONS AND FUTURES
SPECIAL RISKS OF OPTIONS AND FUTURES
The use of options and futures contracts involves special
considerations and risks, as described below. Risks pertaining to
particular instruments are described in the sections that follow.
(1) Successful use of most of these instruments depends upon G.T.
Capital's ability to predict movements of the overall securities markets,
which requires different skills than predicting changes in the prices of
individual securities. While G.T. Capital is experienced in the use of
these instruments, there can be no assurance that any particular strategy
adopted will succeed.
(2) There might be imperfect correlation, or even no correlation,
between price movements of an instrument and price movements of the
investments being hedged. For example, if the value of an instrument used
in a short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. Such a lack of
correlation might occur due to factors unrelated to the value of the
investments being hedged, such as speculative or other pressures on the
markets in which the hedging instrument is traded. The effectiveness of
hedges using hedging instruments on indices will depend on the degree of
correlation between price movements in the index and price movements in
the investments being hedged.
(3) Hedging strategies, if successful, can reduce risk of loss by
wholly or partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies
can also reduce opportunity for gain by offsetting the positive effect of
favorable price movements in the hedged investments. For example, if a
Portfolio entered into a short hedge because G.T. Capital projected a
decline in the price of a security in the Portfolio's securities
portfolio, and the price of that security increased instead, the gain from
that increase might be wholly or partially offset by a decline in the
price of the hedging instrument. Moreover, if the price of the hedging
instrument declined by more than the increase in the price of the
security, the Portfolio could suffer a loss. In either such case, the
Portfolio would have been in a better position had it not hedged at all.
(4) As described below, a Portfolio might be required to maintain
assets as "cover," maintain segregated accounts or make margin payments
when it takes positions in instruments involving obligations to third
parties (i.e., instruments other than purchased options). If the
Portfolio were unable to close out its positions in such instruments, it
might be required to continue to maintain such assets or accounts or make
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such payments until the position expired or matured. The requirements
might impair the Portfolio's ability to sell a portfolio security or make
an investment at a time when it would otherwise be favorable to do so, or
require that the Portfolio sell a portfolio security at a disadvantageous
time. The Portfolio's ability to close out a position in an instrument
prior to expiration or maturity depends on the existence of a liquid
secondary market or, in the absence of such a market, the ability and
willingness of the other party to the transaction ("contra party") to
enter into a transaction closing out the position. Therefore, there is no
assurance that any position can be closed out at a time and price that is
favorable to the Portfolio.
WRITING CALL OPTIONS
Each Portfolio may write (sell) call options on securities and
indices. Call options generally will be written on securities that, in
the opinion of G.T. Capital, are not expected to make any major price
moves in the near future but that, over the long term, are deemed to be
attractive investments for a Portfolio.
A call option gives the holder (buyer) the right to purchase a
security at a specified price (the exercise price) at any time until
(American style) or on (European style) a certain date (the expiration
date). So long as the obligation of the writer of a call option
continues, he or she may be assigned an exercise notice, requiring him or
her to deliver the underlying security against payment of the exercise
price. This obligation terminates upon the expiration of the call option,
or such earlier time at which the writer effects a closing purchase
transaction by purchasing an option identical to that previously sold.
Portfolio securities on which call options may be written will be
purchased solely on the basis of investment considerations consistent with
each Portfolio's investment objective. When writing a call option, a
Portfolio, in return for the premium, gives up the opportunity for profit
from a price increase in the underlying security above the exercise price,
and retains the risk of loss should the price of the security decline.
Unlike one who owns securities not subject to an option, a Portfolio has
no control over when it may be required to sell the underlying securities,
since most options may be exercised at any time prior to the option's
expiration. If a call option that a Portfolio has written expires, the
Portfolio will realize a gain in the amount of the premium; however, such
gain may be offset by a decline in the market value of the underlying
security during the option period. If the call option is exercised, the
Portfolio will realize a gain or loss from the sale of the underlying
security, which will be increased or offset by the premium received. Each
Portfolio does not consider a security covered by a call option to be
"pledged" as that term is used in each Portfolio's policy that limits the
pledging or mortgaging of its assets.
Writing call options can serve as a limited short hedge because
declines in the value of the hedged instrument would be offset to the
extent of the premium received for writing the option. However, if the
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security appreciates to a price higher than the exercise price of the call
option, it can be expected that the option will be exercised and a
Portfolio will be obligated to sell the security at less than its market
value.
The premium that a Portfolio receives for writing a call option is
deemed to constitute the market value of an option. The premium each
Portfolio will receive when it writes a call option will reflect, among
other things, the current market price of the underlying investment, the
relationship of the exercise price to such market price, the historical
price volatility of the underlying investment, and the length of the
option period. In determining whether a particular call option should be
written, G.T. Capital will consider the reasonableness of the anticipated
premium and the likelihood that a liquid secondary market will exist for
those options.
Closing transactions will be effected in order to realize a profit on
an outstanding call option, to prevent an underlying security from being
called, or to permit the sale of the underlying security. Furthermore,
effecting a closing transaction will permit a Portfolio to write another
call option on the underlying security with either a different exercise
price, expiration date or both.
Each Portfolio will pay transaction costs in connection with the
writing of options and in entering into closing purchase contracts.
Transaction costs relating to options activity normally are higher than
those applicable to purchases and sales of portfolio securities.
The exercise price of the options may be below, equal to or above the
current market values of the underlying securities at the time the options
are written. From time to time, a Portfolio may purchase an underlying
security for delivery in accordance with the exercise of an option, rather
than delivering such security from its portfolio. In such cases,
additional costs will be incurred.
A Portfolio will realize a profit or loss from a closing purchase
transaction if the cost of the transaction is less or more, respectively,
than the premium received from writing the option. Because increases in
the market price of a call option generally will reflect increases in the
market price of the underlying security, any loss resulting from the
repurchase of a call option is likely to be offset in whole or in part by
appreciation of the underlying security owned by a Portfolio.
WRITING PUT OPTIONS
Each Portfolio may write put options on securities and indices. A
put option gives the purchaser of the option the right to sell, and the
writer (seller) the obligation to buy, the underlying security at the
exercise price at any time until (American style) or on (European style)
the expiration date. The operation of put options in other respects,
including their related risks and rewards, is substantially identical to
that of call options.
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A Portfolio generally would write put options in circumstances where
G.T. Capital wishes to purchase the underlying security for that
Portfolio's holdings at a price lower than the current market price of the
security. In such event, that Portfolio would write a put option at an
exercise price that, reduced by the premium received on the option,
reflects the lower price it is willing to pay. Since that Portfolio would
also receive interest on debt securities maintained to cover the exercise
price of the option, this technique could be used to enhance current
return during periods of market uncertainty. The risk in such a
transaction would be that the market price of the underlying security
would decline below the exercise price less the premium received.
Writing put options can serve as a limited long hedge because
increases in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the
security depreciates to a price lower than the exercise price of the put
option, it can be expected that the put option will be exercised and a
Portfolio will be obligated to purchase the security at more than its
market value.
PURCHASING PUT OPTIONS
Each Portfolio may purchase put options on securities and indices.
As the holder of a put option, a Portfolio would have the right to sell
the underlying security at the exercise price at any time until (American
style) or on (European style) the expiration date. That Portfolio may
enter into closing sale transactions with respect to such options,
exercise such options or permit such options to expire.
Each Portfolio may purchase a put option on an underlying security
("protective put") owned by that Portfolio in order to protect against an
anticipated decline in the value of the security. Such hedge protection
is provided only during the life of the put option when the Portfolio, as
the holder of the put option, is able to sell the underlying security at
the put exercise price regardless of any decline in the underlying
security's market price. For example, a put option may be purchased in
order to protect unrealized appreciation of a security when G.T. Capital
deems it desirable to continue to hold the security because of tax
considerations. The premium paid for the put option and any transaction
costs would reduce any profit otherwise available for distribution when
the security is eventually sold.
Each Portfolio also may purchase put options at a time when that
Portfolio does not own the underlying security. By purchasing put options
on a security it does not own, that Portfolio seeks to benefit from a
decline in the market price of the underlying security. If the put option
is not sold when it has remaining value, and if the market price of the
underlying security remains equal to or greater than the exercise price
during the life of the put option, that Portfolio will lose its entire
investment in the put option. In order for the purchase of a put option
to be profitable, the market price of the underlying security must decline
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sufficiently below the exercise price to cover the premium and transaction
costs, unless the put option is sold in a closing sale transaction.
PURCHASING CALL OPTIONS
A Portfolio may purchase call options on securities and indices. As
the holder of a call option, such Portfolio would have the right to
purchase the underlying security at the exercise price at any time until
(American style) or on (European style) the expiration date. Such
Portfolio may enter into closing sale transactions with respect to such
options, exercise such options or permit such options to expire.
Call options may be purchased by a Portfolio for the purpose of
acquiring the underlying security for its portfolio. Utilized in this
fashion, the purchase of call options would enable a Portfolio to acquire
the security at the exercise price of the call option plus the premium
paid. At times, the net cost of acquiring the security in this manner may
be less than the cost of acquiring the security directly. This technique
may also be useful to a Portfolio in a purchasing a large block of
securities that would be more difficult to acquire by direct market
purchases. So long as it holds such a call option, rather than the
underlying security itself, the Portfolio is partially protected from any
unexpected decline in the market price of the underlying security and, in
such event, could allow the call option to expire, incurring a loss only
to the extent of the premium paid for the option.
A Portfolio also may purchase call options on underlying securities
it owns in order to protect unrealized gains on call options previously
written by it. A call option could be purchased for this purpose where
tax considerations make it inadvisable to realize such gains through a
closing purchase transaction. Call options also may be purchased at times
to avoid realizing losses that would result in a reduction of a
Portfolio's current return. For example, where a Portfolio has written a
call option on an underlying security having a current market value below
the price at which such security was purchased by that Portfolio, an
increase in the market price could result in the exercise of the call
option written by that Portfolio and the realization of a loss on the
underlying security. Accordingly, a Portfolio could purchase a call
option on the same underlying security, which could be exercised to
fulfill the Portfolio's delivery obligations under its written call (if it
is exercised). This strategy could allow the Portfolio to avoid selling
the portfolio security at a time when it has an unrealized loss; however,
the Portfolio would have to pay a premium to purchase the call option plus
transaction costs.
Aggregate premiums paid for put and call options will not exceed 5%
of each Portfolio's total assets at the time of purchase.
Options either may be listed on an exchange or traded over-the-
counter ("OTC options"). Listed options are third-party contracts (i.e.,
performance of the obligations of the purchaser and seller is guaranteed
by the exchange or clearing corporation) and have standardized strike
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prices and expiration dates. A Portfolio will not purchase an OTC option
unless it believes that daily valuations for such options are readily
obtainable. OTC options differ from exchange-traded options in that OTC
options are transacted with dealers directly and not through a clearing
corporation (which guarantees performance). Consequently, there is a risk
of non-performance by the dealer. Since no exchange is involved, OTC
options are valued on the basis of a quote provided by the dealer. In the
case of OTC options, there can be no assurance that a liquid secondary
market will exist for any particular option at any specific time.
The staff of the SEC considers purchased OTC options to be illiquid
securities. A Portfolio may also sell OTC options and, in connection
therewith, segregate assets or cover its obligations with respect to OTC
options written by the Portfolio. The assets used as cover for OTC
options written by a Portfolio will be considered illiquid unless the OTC
options are sold to qualified dealers who agree that the Portfolio may
repurchase any OTC option it writes at a maximum price to be calculated by
a formula set forth in the option agreement. The cover for an OTC option
written subject to this procedure would be considered illiquid only to the
extent that the maximum repurchase price under the formula exceeds the
intrinsic value of the option.
A Portfolio's ability to establish and close out positions in
exchange-listed options depends on the existence of a liquid market. A
Portfolio intends to purchase or write only those exchange-traded options
for which there appears to be a liquid secondary market. However, there
can be no assurance that such a market will exist at any particular time.
Closing transactions can be made for OTC options only by negotiating
directly with the contra party, or by a transaction in the secondary
market if any such market exists. Although a Portfolio will enter into
OTC options only with contra parties that are expected to be capable of
entering into closing transactions with the Portfolio, there is no
assurance that the Portfolio will in fact be able to close out an OTC
option position at a favorable price prior to expiration. In the event of
insolvency of the contra party, the Portfolio might be unable to close out
an OTC option position at any time prior to its expiration.
INDEX OPTIONS
Puts and calls on indices are similar to puts and calls on securities
or futures contracts except that all settlements are in cash and gain or
loss depends on changes in the index in question (and thus on price
movements in the securities market or a particular market sector
generally) rather than on price movements in individual securities or
futures contracts. When a Portfolio writes a call on an index, it
receives a premium and agrees that, prior to the expiration date, the
purchaser of the call, upon exercise of the call, will receive from the
Portfolio an amount of cash if the closing level of the index upon which
the call is based is greater than the exercise price of the call. The
amount of cash is equal to the difference between the closing price of the
index and the exercise price of the call times a specified multiple (the
"multiplier"), which determines the total dollar value for each point of
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such difference. When a Portfolio buys a call on an index, it pays a
premium and has the same rights as to such call as are indicated above.
When a Portfolio buys a put on an index, it pays a premium and has the
right, prior to the expiration date, to require the seller of the put,
upon the Portfolio's exercise of the put, to deliver to the Portfolio an
amount of cash if the closing level of the index upon which the put is
based is less than the exercise price of the put, which amount of cash is
determined by the multiplier, as described above for calls. When the
Portfolio writes a put on an index, it receives a premium and the
purchaser has the right, prior to the expiration date, to require the
Portfolio to deliver to it an amount of cash equal to the difference
between the closing level of the index and the exercise price times the
multiplier, if the closing level is less than the exercise price.
The risks of investment in index options may be greater than options
on securities. Because index options are settled in cash, when a
Portfolio writes a call on an index it cannot provide in advance for its
potential settlement obligations by acquiring and holding the underlying
securities. A Portfolio can offset some of the risk of writing a call
index option position by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, a
Portfolio cannot, as a practical matter, acquire and hold a portfolio
containing exactly the same securities as underlie the index and, as a
result, bears a risk that the value of the securities held will vary from
the value of the index.
Even if a Portfolio could assemble a securities portfolio that
exactly reproduced the composition of the underlying index, it still would
not be fully covered from a risk standpoint because of the "timing risk"
inherent in writing index options. When an index option is exercised, the
amount of cash that the holder is entitled to receive is determined by the
difference between the exercise price and the closing index level on the
date when the option is exercised. As with other kinds of options, the
Portfolio as the call writer will not know that it has been assigned until
the next business day at the earliest. The time lag between exercise and
notice of assignment poses no risk for the writer of a covered call on a
specific underlying security, such as common stock, because there the
writer's obligation is to deliver the underlying security, not to pay its
value as of a fixed time in the past. So long as the writer already owns
the underlying security, it can satisfy its settlement obligations by
simply delivering it, and the risk that its value may have declined since
the exercise date is borne by the exercising holder. In contrast, even if
the writer of an index call holds securities that exactly match the
composition of the underlying index, it will not be able to satisfy its
assignment obligations by delivering those securities against payment of
the exercise price. Instead, it will be required to pay cash in an amount
based on the closing index value on the exercise date; and by the time it
learns that it has been assigned, the index may have declined, with a
corresponding decline in the value of its securities portfolio. This
"timing risk" is an inherent limitation on the ability of index call
writers to cover their risks exposure by holding securities positions.
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If a Portfolio has purchased an index option and exercises it before
the closing index value for that day is available, it runs the risk that
the level of the underlying index may subsequently change. If such a
change causes the exercised option to fall out-of-the money, the Portfolio
will be required to pay the difference between the closing index value and
the exercise price of the option (times the applicable multiplier) to the
assigned writer.
INTEREST RATE AND STOCK INDEX FUTURES CONTRACTS
Each Portfolio may enter into interest rate or stock index futures
contracts (collectively, "Futures" or "Futures Contracts"), as a hedge
against changes in prevailing levels of interest rates or stock price
levels in order to establish more definitely the effective return on
securities held or intended to be acquired by the Portfolio. A
Portfolio's hedging may include sales of Futures as an offset against the
effect of expected increases in interest rates, and decreases in stock
prices, and purchases of Futures as an offset against the effect of
expected declines in interest rates or increases in stock prices.
The Portfolios only will enter into Futures Contracts that are traded
on futures exchanges and are standardized as to maturity date and
underlying financial instrument. Futures exchanges and trading thereon in
the United States are regulated under the Commodity Exchange Act by the
Commodity Futures Trading Commission ("CFTC").
Although techniques other than sales and purchases of Futures
Contracts could be used to reduce a Portfolio's exposure to interest rate
and stock market fluctuations, the Portfolio may be able to hedge exposure
more effectively and at a lower cost through using Futures Contracts.
A Futures Contract provides for the future sale by one party and
purchase by another party of a specified amount of a specific financial
instrument for a specified price at a designated date, time and place. A
stock index Futures Contract provides for the delivery, at a designated
date, time and place, of an amount of cash equal to a specified dollar
amount times the difference between the stock index value at the close of
trading on the contract and the price at which the Futures Contract is
originally struck; no physical delivery of stocks comprising the index is
made. Brokerage fees are incurred when a Futures Contract is bought or
sold, and margin deposits must be maintained at all times the Futures
Contract is outstanding.
Although Futures Contracts typically require future delivery of and
payment for financial instruments, Futures Contracts usually are closed
out before the delivery date. Closing out an open Futures Contract sale
or purchase is effected by entering into an offsetting Futures Contract
purchase or sale, respectively, for the same aggregate amount of the
identical financial instrument and the same delivery date. If the
offsetting purchase price is less than the original sale price, a
Portfolio would realize a gain; if it is more, a Portfolio realizes a
loss. Conversely, if the offsetting sale price is more than the original
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purchase price, a Portfolio realizes a gain; if it is less, a Portfolio
realizes a loss. The transaction costs also must be included in these
calculations. There can be no assurance, however, that a Portfolio will
be able to enter into an offsetting transaction with respect to a
particular Futures Contract at a particular time. If a Portfolio is not
able to enter into an offsetting transaction, that Portfolio will continue
to be required to maintain the margin deposits on the Futures Contract.
As an example of an offsetting transaction, the contractual
obligations arising from the sale of one September stock index Futures
Contract on an exchange may be fulfilled at any time before delivery under
the Futures Contract is required (i.e., on a specified date in September,
the "delivery month") by the purchase of another September stock index
Futures Contract on the same exchange. In such instance, the difference
between the price at which the Futures Contract was sold and the price
paid for the offsetting purchase, after allowance for transaction costs,
represents the profit or loss to a Portfolio.
Each Portfolio's Futures transactions will be entered into for
hedging purposes; that is, Futures Contracts will be sold to protect
against a decline in the price of securities that a Portfolio owns, or
Futures Contracts will be purchased to protect the Portfolio against an
increase in the price of securities it has committed to purchase or
expects to purchase.
"Margin" with respect to Futures Contracts is the amount of funds
that must be deposited by a Portfolio in order to initiate Futures trading
and to maintain that Portfolio's open positions in Futures Contracts. A
margin deposit made when the Futures Contract is entered into ("initial
margin") is intended to assure a Portfolio's performance under the Futures
Contract. The margin required for a particular Futures Contract is set by
the exchange on which the Futures Contract is traded and may be modified
significantly from time to time by the exchange during the term of the
Futures Contract.
Subsequent payments, called "variation margin," to and from the
futures commission merchant through which the Portfolio entered into the
Futures Contract will be made on a daily basis as the price of the
underlying security or index fluctuates making the Futures Contract more
or less valuable, a process known as marking-to-market.
Risks of Using Futures Contracts. The prices of Futures Contracts
are volatile and are influenced, among other things, by actual and
anticipated changes in interest rates and in stock market movements, which
in turn are affected by fiscal and monetary policies and national and
international political and economic events.
There is a risk of imperfect correlation between changes in prices of
Futures Contracts and prices of the securities in a Portfolio's portfolio
being hedged. The degree of imperfection of correlation depends upon
circumstances such as variations in speculative market demand for Futures
and for securities, including technical influences in Futures trading; and
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<PAGE>
differences between the financial instruments being hedged and the
instruments underlying the standard Futures Contracts available for
trading. A decision of whether, when, and how to hedge involves skill and
judgment, and even a well-conceived hedge may be unsuccessful to some
degree because of unexpected market behavior or interest rate trends.
Because of the low margin deposits required, Futures trading involves
an extremely high degree of leverage. As a result, a relatively small
price movement in a Futures Contract may result in immediate and
substantial loss to the investor. For example, if at the time of
purchase, 10% of the value of the Futures Contract is deposited as margin,
a subsequent 10% decrease in the value of the Futures Contract would
result in a total loss of the margin deposit, before any deduction for the
transaction costs, if the account were then closed out. A 15% decrease
would result in a loss equal to 150% of the original margin deposit, if
the Futures Contract were closed out. Thus, a purchase or sale of a
Futures Contract may result in losses in excess of the amount invested in
the Futures Contract.
Most U.S. Futures exchanges limit the amount of fluctuation permitted
in Futures Contract and options on Futures Contracts prices during a
single trading day. The daily limit establishes the maximum amount that
the price of a Futures Contract or option may vary either up or down from
the previous day's settlement price at the end of a trading session. Once
the daily limit has been reached in a particular type of Futures Contract
or option, no trades may be made on that day at a price beyond that limit.
The daily limit governs only price movement during a particular trading
day and therefore does not limit potential losses, because the limit may
prevent the liquidation of unfavorable positions. Futures Contract and
option prices occasionally have moved to the daily limit for several
consecutive trading days with little or no trading, thereby preventing
prompt liquidation of positions and subjecting some traders to substantial
losses.
If a Portfolio were unable to liquidate a Futures or option on
Futures position due to the absence of a liquid secondary market or the
imposition of price limits, it could incur substantial losses. The
Portfolio would continue to be subject to market risk with respect to the
position. In addition, except in the case of purchased options, the
Portfolio would continue to be required to make daily variation margin
payments and might be required to maintain the position being hedged by
the Future or option or to maintain cash or securities in a segregated
account.
Certain characteristics of the Futures market might increase the risk
the movements in the prices of Futures Contracts or options on Futures
might not correlate perfectly with movements in the prices of the
investments being hedged. For example, all participants in the Futures
and options on Futures markets are subject to daily variation margin calls
and might be compelled to liquidate Futures or options on Futures
positions whose prices are moving unfavorably to avoid being subject to
further calls. These liquidations could increase price volatility of the
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instruments and distort the normal price relationship between the Futures
or options and the investments being hedged. Also, because initial margin
deposit requirements in the Futures market are less onerous than margin
requirements in the securities markets, there might be increased
participation by speculators in the Futures markets. This participation
also might cause temporary price distortions. In addition, activities of
large traders in both the Futures and securities markets involving
arbitrage, "program trading" and other investment strategies might result
in temporary price distortions.
OPTIONS ON FUTURES CONTRACTS
Options on Futures Contracts are similar to options on securities
except that options on Futures Contracts give the purchaser the right, in
return for the premium paid, to assume a position in a Futures Contract (a
long position if the option is a call and a short position if the option
is a put) at a specified exercise price at any time during the period of
the option. Upon exercise of the option, the delivery of the Futures
position by the writer of the option to the holder of the option will be
accompanied by delivery of the accumulated balance in the writer's Futures
margin account, which represents the amount by which the market price of
the Futures Contract, at exercise, exceeds (in the case of a call) or is
less than (in the case of a put) the exercise price of the option on the
Futures Contract. If an option is exercised on the last trading day prior
to the expiration date of the option, the settlement will be made entirely
in cash equal to the difference between the exercise price of the option
and the closing level of the securities, currencies or index upon which
the Futures Contract is based on the expiration date. Purchasers of
options who fail to exercise their options prior to the exercise date
suffer a loss of the premium paid.
The purchase of call options on Futures can serve as a long hedge,
and the purchase of put options on Futures can serve as a short hedge.
Writing call option on Futures can serve as a limited short hedge, and
writing put options on Futures can serve as a limited long hedge, using a
strategy similar to that used for writing options on securities, foreign
currencies or indices.
If a Portfolio writes an option on a Futures Contract, it will be
required to deposit initial and variation margin pursuant to requirements
similar to those applicable to Futures Contracts. Premiums received from
the writing of an option on a Futures Contract are included in the initial
margin deposit.
A Portfolio may seek to close out an option position by selling an
option covering the same Futures Contract and having the same exercise
price and expiration date. The ability to establish and close out
positions on such options is subject to the maintenance of a liquid
secondary market.
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LIMITATION ON USE OF FUTURES AND OPTIONS ON FUTURES
To the extent that a Portfolio enters into Futures Contracts and
options on Futures Contracts, in each case other than for bona fide
hedging purposes (as defined by the CFTC), the aggregate initial margin
and premiums required to establish these positions (excluding the amount
by which options are "in-the-money") will not exceed 5% of the liquidation
value of the Portfolio's portfolio, after taking into account unrealized
profits and unrealized losses on any contracts the Portfolio has entered
into. In general, a call option on a Futures Contract is "in-the-money"
if the value of the underlying Futures Contract exceeds the strike, i.e.,
exercise price of the call; a put option on a Futures Contract is "in-the-
money" if the value of the underlying Futures Contract is exceeded by the
strike price of the put. This guideline may be modified by Growth
Portfolio's Board of Trustees without a shareholder vote. This limitation
does not limit the percentage of a Portfolio's assets at risk to 5%.
COVER
Transactions using Futures Contracts and options (other than options
that a Portfolio has purchased) expose the Portfolio to an obligation to
another party. A Portfolio will not enter into any such transactions
unless it owns either (1) an offsetting ("covered") position in securities
or other options or Futures Contracts, or (2) cash, receivables and short-
term debt securities with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. Each
Portfolio will comply with SEC guidelines regarding cover for these
instruments and, if the guidelines so require, set aside cash, U.S.
government securities or other liquid, high-grade debt securities in a
segregated account with its custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold
while the position in the corresponding Futures Contract or option is
open, unless they are replaced with other appropriate assets. If a large
portion of a Portfolio's assets are used for cover or segregated accounts,
it could affect portfolio management or the Portfolio's ability to meet
redemption requests or other current obligations.
RISK FACTORS
ILLIQUID SECURITIES. A Portfolio may invest up to 15% of its net
assets in illiquid securities. Securities may be considered illiquid if a
Portfolio cannot reasonably expect within seven days to sell the
securities for approximately the amount at which the Portfolio values such
securities. See "Investment Limitations" below. The sale of illiquid
securities if they can be sold at all, generally will require more time
and result in higher brokerage charges or dealer discounts and other
selling expenses than the sale of liquid securities such as securities
eligible for trading on U.S. securities exchanges or in the OTC markets.
Moreover, restricted securities, which may be illiquid for purposes of
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<PAGE>
this limitation, often sell, if at all, at a price lower than similar
securities that are not subject to restrictions on resale.
With respect to liquidity determinations generally, Growth
Portfolio's Board of Trustees has the ultimate responsibility for
determining whether specific securities, including restricted securities
eligible for resale to qualified institutional buyers pursuant to Rule
144A under the Securities Act of 1933, are liquid or illiquid. The Board
of Trustees has delegated the function of making day-to-day determinations
of liquidity to G.T. Capital in accordance with procedures approved by the
Board. G.T. Capital takes into account a number of factors in reaching
liquidity decisions, including, but not limited to: (i) the frequency of
trading in the security; (ii) the number of dealers who make quotes for
the security; (iii) the number of dealers who have undertaken to make a
market in the security; (iv) the number of other potential purchasers; and
(v) the nature of the security and how trading is effected (e.g., the time
needed to sell the security, how offers are solicited, and the mechanics
of transfer.) G.T. Capital monitors the liquidity of securities in each
Portfolio's securities portfolio and periodically reports such
determinations to Growth Portfolio's Board of Trustees.
RISKS OF DEBT SECURITIES
Each Portfolio is permitted to purchase investment grade debt
securities. In selecting securities for each Portfolio, G.T. Capital
reviews and monitors the creditworthiness of each issuer and issue and
analyzes interest rate trends and specific developments which may affect
individual issuers, in addition to relying on ratings assigned by S&P,
Moody's or another NRSRO as indicators of quality. Debt securities rated
Baa by Moody's or BBB by S&P are investment grade, although Moody's
considers securities rated Baa to have speculative characteristics.
Changes in economic conditions or other circumstances are more likely to
lead to a weakened capacity for such securities to make principal and
interest payments than is the case for higher grade debt securities. Each
Portfolio is also permitted to purchase debt securities that are not rated
by S&P, Moody's or another NRSRO but that G.T. Capital determines to be of
comparable quality to that of rated securities in which such Portfolio may
invest. Such securities are included in the computation of any percentage
limitations applicable to the comparable rated securities.
Ratings of Portfolio securities represent the rating agencies'
opinions regarding their quality, are not a guarantee of quality and may
be reduced after a Portfolio has acquired the security. G.T. Capital will
consider such an event in determining whether a Portfolio should continue
to hold the security but is not required to dispose of it. Credit ratings
attempt to evaluate the safety of principal and interest payments and do
not reflect an assessment of the volatility of the security's market value
or the liquidity of an investment in the security. Also, NRSROs may fail
to make timely changes in credit ratings in response to subsequent events,
so that an issuer's current financial condition may be better or worse
than the rating indicates.
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<PAGE>
OTHER POLICIES
There may be times when, in the opinion of G.T. Capital, changes in
market, political, or economic conditions warrant reducing the proportion
of a Portfolio's assets invested in equity securities and increasing the
proportion held in or high quality domestic money market instruments
issued by corporations or the U.S. government as part of a defensive
strategy. To the extent a Portfolio adopts a temporary defensive
position, it will not be investing so as to directly achieve its
investment objectives. In addition, pending investment proceeds from new
shares or to meets its ordinary daily cash needs, each Portfolio may hold
cash and may invest in high quality domestic money market instruments.
Money market instruments in which the Portfolios may invest include, but
are not limited to, the following: U.S. government securities, high grade
commercial paper, bank certificates of deposit and bankers' acceptances of
issuers domiciled in the United States and repurchase agreements related
to any of the foregoing. High grade commercial paper refers to commercial
paper rated P-1 by Moody's or A-1 by S&P at the time of investment or, if
not similarly rated by another NRSRO, deemed by G.T. Capital to be of
comparable quality.
INVESTMENT LIMITATIONS
Each Portfolio has adopted the following fundamental investment
limitations which (unless otherwise noted) may not be changed without
approval by the holders of the lesser of (i) 67% of the total beneficial
interests of that Portfolio represented at a meeting at which more than
50% of the total beneficial interests of that Portfolio are represented,
or (ii) more than 50% of the total beneficial interests of that Portfolio.
No Portfolio may:
(1) Invest in companies for the purpose of exercising control or
management;
(2) Purchase or sell real estate; provided that a Portfolio may
invest in securities secured by real estate or interests therein or issued
by companies that invest in real estate or interests therein;
(3) Purchase or sell interests in oil, gas or other mineral
exploration or development programs, except that the Portfolio may invest
in the securities of companies that engage in these activities;
(4) Purchase or sell commodities or commodity contracts, except that
each Portfolio may purchase and sell futures contracts and options;
(5) Mortgage, pledge, or in any other manner transfer as security for
any indebtedness, any of its assets except to secure permitted borrowings.
Collateral arrangements with respect to initial or variation margin for
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<PAGE>
futures contracts and options will not be deemed to be a pledge of a
Portfolio's assets;
(6) Borrow money in excess of 33-1/3% of the Portfolio's total assets
(including the amount borrowed), less all liabilities and indebtedness
(other than borrowing). Transactions involving options, futures contracts,
options on futures contracts and collateral arrangements relating thereto
will not be deemed to be borrowings;
(7) Purchase securities on margin or effect short sales, except that
a Portfolio may obtain such short-term credits as may be necessary for the
clearance of purchases or sales of securities and except in connection
with the use of options, futures contracts or options thereon. The
Portfolios may make deposits of margin in connection with futures
contracts and options thereon;
(8) Participate on a joint or a joint and several basis in any
trading account in securities. (The "bunching" of orders for the sale or
purchase of marketable portfolio securities with other accounts under the
management of G.T. Capital to save brokerage costs or average prices among
them is not deemed to result in a securities trading account);
(9) Make loans, except that each Portfolio may purchase debt
securities and enter into repurchase agreements and make loans of
portfolio securities;
(10) Purchase or retain the securities of an issuer if, to the
knowledge of the Portfolio after reasonable inquiry, any of the Trustees
or officers of Growth Portfolio or the Portfolio's investment adviser
individually own beneficially more than 1/2 of 1% of the outstanding
securities of such issuer and together own beneficially more than 5% of
the securities;
(11) Underwrite securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities, the
Portfolio may be deemed an underwriter under federal or state securities
laws; and
(12) Invest more than 25% of the value of the Portfolio's total
assets in securities of issuers conducting their principal business
activities in any one industry, except that this limitation shall not
apply to securities issued or guaranteed as to principal and interest by
the U.S. government or any of its agencies or instrumentalities.
Each Portfolio is classified as a "diversified" portfolio under the
1940 Act. This means that, with respect to 75% of those Portfolio's total
assets, no more than 5% will be invested in the securities of any one
issuer (excluding the United States Government, its agencies or
instrumentalities), and each Portfolio will purchase no more than 10% of
the outstanding voting securities of any one issuer. This policy cannot
be changed without approval by the holders of a majority of a Portfolio's
outstanding voting securities, as defined above.
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<PAGE>
The following investment restrictions of each Portfolio are not
fundamental and may be changed by action of Growth Portfolio's Board of
Trustees without investor approval. Each Portfolio may not:
(1) Invest more than 15% of its net assets in illiquid
securities, a term which means securities that cannot be
disposed of within seven days in the normal course of business
at approximately the amount at which the Portfolio has valued
the securities and includes, among other things, repurchase
agreements maturing in more than seven days;
(2) Invest more than 5% of its assets in securities of
companies which, together with their predecessors, have been in
operation for less than three years;
(3) Borrow money except for temporary or emergency
purposes (not for leveraging) not in excess of 33 1/3% of the
value of the Portfolio's total assets;
(4) Enter into a futures contract, or an option on a
futures contract, in each case other than for bona fide hedging
purposes (as defined by the CFTC), if the aggregate initial
margin and premiums required to establish all of these positions
(excluding the amount by which options are "in-the-money")
exceeds 5% of the liquidation value of the Portfolio's
portfolio, after taking into account unrealized profits and
unrealized losses on any contracts the Portfolio has entered
into; or
(5) Purchase securities of other investment companies,
except to the extent permitted by the 1940 Act, in the open
market at no more than customary commission rates. This
limitation does not apply to securities received or acquired as
dividends, through offers of exchange, or as a result of
reorganization, consolidation, or merger.
A Portfolio will not knowingly exercise rights or otherwise acquire
securities when to do so would jeopardize the Portfolio's status under the
1940 Act as a diversified investment company. If a percentage restriction
on investment or utilization of assets in a fundamental policy or
restriction is adhered to at the time an investment is made, a later
change in percentage ownership of a security or kind of securities
resulting from changing market values or a similar type of event will not
be considered a violation of a Portfolio's investment policies or
restrictions. A Portfolio may exchange securities, exercise conversion or
subscription rights, warrants, or other rights to purchase common stock or
other equity securities and may hold, except to the extent limited by the
1940 Act, any such securities so acquired without regard to the
Portfolio's investment policies and restrictions. The original cost of
the securities so acquired will be included in any subsequent
determination of a Portfolio's compliance with the investment percentage
limitations referred to above.
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ITEM 14. MANAGEMENT OF THE PORTFOLIOS.
The Growth Portfolio's Trustees and executive officers are listed
below.
<TABLE>
<CAPTION>
Names, Position(s) with the Principal Occupations and Business
Portfolios and Address Experience for the Past 5 Years
---------------------- -----------------------------------
<S> <C>
David A. Minella,* 43 Director of BIL GT Group Limited (holding
Trustee, Chairman of the Board company of the various international
and President G.T. companies) since 1990; President,
50 California Street Asset Management Division, BIL GT Group
San Francisco, CA 94111 Limited; Director and President of
G.T. Capital since 1989; Director and
President of G.T. Global since 1987;
Director and President of G.T. Services
since 1990; and President of G.T. Global
Insurance Agency, Inc. since 1992. Mr.
Minella also is a director or trustee of
each of the other investment companies
registered under the 1940 Act that is
managed or administered by G.T. Capital.
* Mr. Minella is an "interested person" of the Growth Portfolio
as defined by the 1940 Act due to his affiliations with the
G.T. companies.
The Board of Trustees has a Nominating and Audit Committee, comprised
of Ms. Quigley and Messrs. Anderson, Bayley and Patterson, which is
responsible for nominating persons to serve as Trustees, reviewing audits
of Growth Portfolio and its Portfolios recommending firms to serve as
independent auditors for Growth Portfolio. Each of the Trustees and
officers of the Growth Portfolio is also a Director and officer of G.T.
Investment Portfolios, Inc., G.T. Investment Funds, Inc., G.T. Global
Developing Markets Fund, Inc., a Trustee and officer of G.T. Global Growth
Series, G.T. Greater Europe Fund, G.T. Global Variable Investment Trust,
G.T. Global Variable Investment Series, Global Investment Portfolio and
Global High Income Portfolio, which also are registered investment
companies managed and administered by G.T. Capital. Each Trustee and
Officer serves in total as a Director, Trustee and/or Officer,
respectively, of 10 registered investment companies with 42 series managed
or administered by G.T. Capital.
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Names, Position(s) with the Principal Occupations and Business
Portfolios and Address Experience for the Past 5 Years
---------------------- -----------------------------------
C. Derek Anderson, 54 Chairman and Chief Executive Officer,
Trustee Anderson Capital Management, Inc. from 1988
220 Sansome Street to present; Chairman and Chief Executive
Suite 400 Officer, Plantagenet Holdings, Ltd. from
San Francisco, CA 94104 1991 to present; Director, Munsingwear,
Inc.; Director, American Heritage Group
Inc. and Director, various other companies.
Mr. Anderson also is a director or trustee
of each of the other investment companies
registered under the 1940 Act that is
managed or administered by G.T. Capital.
Frank S. Bayley, 55 A Partner of Baker & McKenzie (a law firm),
Trustee and serves as Director and Chairman of C.D.
2 Embarcadero Center Stimson Company (a private investment
Suite 2400 company), and Trustee, Seattle Art Museum.
San Francisco, CA 94111 Mr. Bayley also is a director or trustee of
each of the other investment companies
registered under the 1940 Act that is
managed or administered by G.T. Capital.
Arthur C. Patterson, 52 Managing Partner of Accel Partners (a
Trustee venture capital firm). Mr. Patterson also
One Embarcadero Center serves as a director of various computing
Suite 3820 and software companies. Mr. Patterson also
San Francisco, CA 94111 is a director or trustee of each of the
other investment companies registered under
the 1940 Act that is managed or
administered by G.T. Capital.
Ruth H. Quigley, 59 Private investor. From 1984 to 1986, Ms.
Trustee Quigley was President of Quigley
1055 California Street Friedlander & Co., Inc. (a financial
San Francisco, CA 94108 advisory services firm). Ms. Quigley also
is a director or trustee of each of the
other investment companies registered under
the 1940 Act that is managed or
administered by G.T. Capital.
F. Christian Wignall, 39 Senior Vice President, Chief Investment
Vice President and Chief Officer -- Global Equities and a Director
Investment Officer - Global of G.T. Capital since 1987, and Chairman of
Equities the Investment Policy Committee of the
50 California Street affiliated international G.T. companies
San Francisco, CA 94111 since 1990.
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Names, Position(s) with the Principal Occupations and Business
Portfolios and Address Experience for the Past 5 Years
---------------------- -----------------------------------
Gary Kreps, 40 Vice President and Chief Investment Officer
Vice President and Chief -- Global Fixed Income Investments and a
Investment Officer -- Director of G.T. Capital since 1992. Prior
Global Fixed Income to joining G.T. Capital, Mr. Kreps was
50 California Street Senior Vice President of the Putnam
San Francisco, CA 94111 Companies from 1988 to 1992.
Helge K. Lee, 48 Senior Vice President, General Counsel and
Vice President and Secretary Secretary of G.T. Capital, G.T. Global and
50 California Street G.T. Services since May, 1994. Mr. Lee was
San Francisco, CA 94111 the Senior Vice President, General Counsel
and Secretary of Strong/Corneliuson
Management, Inc. and Secretary of each of
the Strong Funds from October, 1991 through
May, 1994. For more than five years prior
to October, 1991, he was a shareholder in
the law firm of Godfrey & Kahn, S.C.,
Milwaukee, Wisconsin.
Peter R. Guarino, 36 Assistant General Counsel of G.T. Capital,
Assistant Secretary G.T. Global and G.T. Services since 1991.
50 California Street From 1989 to 1991, Mr. Guarino was an
San Francisco, CA 94111 attorney at The Dreyfus Corporation. Prior
thereto, he was associated with Colonial
Management Associates, Inc.
David J. Thelander, 40 Assistant General Counsel of G.T. Capital
Assistant Secretary since January 1995. From 1993 to 1994, Mr.
50 California Street Thelander was an associate at Kirkpatrick &
San Francisco, CA 94111 Lockhart LLP (a law firm). Prior thereto,
he was an attorney with the U.S. Securities
and Exchange Commission.
James R. Tufts, 37 Senior Vice President--Finance and
Chief Administration of G.T. Capital, G.T. Global
Financial Officer and G.T. Services since 1994. Prior
50 California Street thereto, Mr. Tufts, was Vice President -
San Francisco, CA 94111 Finance of G.T. Capital and G.T. Global
since 1987; Vice President--Finance of
G.T. Services since 1990; and a Director of
G.T. Capital, G.T. Global and G.T. Services
since 1991.
Kenneth W. Chancey, 50 Vice President of G.T. Capital and
Vice President and G.T. Global since 1992. Mr. Chancey was
Chief Accounting Vice President of Putnam Fiduciary Trust
Officer Company from 1989 to 1992.
50 California Street
San Francisco, CA 94111
</TABLE>
B-23
<PAGE>
Each Trustee who is not a director, officer or employee of
G.T. Capital or any affiliated company is paid an annual fee of $5,000 a
year, plus $300 per fund for each meeting of the Board attended, and is
reimbursed travel and other expenses incurred in connection with attending
Board meetings. Other Trustees and officers receive no compensation or
expense reimbursement from Growth Portfolio. For the fiscal year ended
December 31, 1994, Mr. Anderson, Mr. Bayley, Mr. Patterson and Ms.
Quigley, who are not directors, officers or employees of G.T. Capital or
any affiliated company, each received total compensation of $86,260.80,
$91,278.72, $74,492.00 and $78,665.19, respectively, from the 38 G.T.
Funds for which he or she served as a Director or Trustee. Fees and
expenses disbursed to the Trustees contained no accrued or payable
pension, or retirement benefits. As of the date of this filing, the
officers and Trustees and their families as a group owned in the aggregate
beneficially or of record less than 1% of the outstanding interests of
each Portfolio.
ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDERS OF BENEFICIAL INTERESTS.
As of the date of this filing, G.T. Global: America Small Cap Growth
Fund and G.T. Global: America Value Fund (each a "Fund," collectively,
"Funds") owned 99.9% and 99.9% of the value of the outstanding beneficial
interests in Small Cap Portfolio and Value Portfolio, respectively (a
"corresponding Portfolio"). Because each Fund currently controls its
corresponding Portfolio, each Fund may take actions affecting its
corresponding Portfolio without the approval of any other investor.
Each Fund has informed its corresponding Portfolio that whenever it
is requested to vote on any proposal of its corresponding Portfolio, it
will hold a meeting of shareholders and will cast its vote as instructed
by its shareholders.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES.
INVESTMENT MANAGEMENT AND ADMINISTRATION. G.T. Capital serves as
each Portfolio's investment manager under an Investment Management and
Administration Contract ("Management Contract"). As investment manager
and administrator, G.T. Capital makes all investment decisions for the
Portfolios and administers each Portfolio's affairs. G.T. Capital
provides a continuous investment program for each Portfolio, including
investment research and management with respect to all
securities and cash equivalents of each Portfolio. G.T. Capital
determines from time to time what securities and other investments will be
purchased, retained or sold by each Portfolio and the brokers and dealers
through whom trades will be executed. G.T. Capital also furnishes the
services and pays the compensation and travel expenses of persons who
perform the executive, administrative, clerical and bookkeeping functions
of each Portfolio and provides suitable office space, necessary small
office equipment and utilities. For these services, each Portfolio pays
G.T. Capital investment management and administration fees, based on its
average daily net assets, at the annualized rate of 0.725% on the first
B-24
<PAGE>
$500 million, 0.70% on the next $500 million, 0.675% on the next $500
million, and 0.65% on all amounts thereafter.
The Management Contract has an initial two-year term. The Management
Contract may be renewed for additional one-year terms thereafter, provided
that any such renewal has been specifically approved at least annually by
(i) Growth Portfolio's Board of Trustees, or by the vote of a majority of
a Portfolio's outstanding voting interests (as defined in the 1940 Act),
and (ii) a majority of Trustees who are not parties to the Management
Contract or "interested persons" of any such party (as defined in the
1940 Act), cast in person at a meeting called for the purpose of voting on
such approval. The Management Contract was approved with respect to each
Portfolio by vote of the Board of Trustees of Growth Portfolio on June 30,
1995 and by G.T. Capital as the initial interestholder of each Portfolio
on October __, 1995. The Management Contract provides with respect to
each Portfolio that either the Portfolio or G.T. Capital may terminate the
Management Contract without penalty upon sixty days' written notice to the
other party. The Management Contract, which is an investment advisory
contract as defined under the 1940 Act, would terminate automatically in
the event of its assignment (as defined in the 1940 Act).
Under the Management Contract, G.T. Capital has agreed to reimburse
each Portfolio if that Portfolio's annual ordinary expenses exceed the
most stringent limits prescribed by any state in which its corresponding
Fund's shares are offered for sale. Currently, the most restrictive
applicable limitation provides that a Fund's expenses may not exceed an
annual rate of 2 1/2% of the first $30 million of average net assets, 2%
of the next $70 million of average net assets and 1 1/2% of assets in
excess of that amount.
CUSTODIAN. State Street Bank and Trust Company, 225 Franklin Street,
Boston, Massachusetts 02110, is custodian of each Portfolio's assets.
INDEPENDENT ACCOUNTANTS. Growth Portfolio's independent accountants
are Coopers & Lybrand L.L.P., One Post Office Square, Boston,
Massachusetts 02109.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES.
Subject to policies established by Growth Portfolio's Board of
Trustees, G.T. Capital is responsible for the execution of each
Portfolio's securities transactions and the selection of broker/dealers
who execute such transactions on behalf of each Portfolio. In executing
portfolio transactions, G.T. Capital seeks the best net results for each
Portfolio, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order,
difficulty of execution and operational facilities of the firm involved.
While G.T. Capital generally seeks reasonably competitive commission rates
and spreads, payment of the lowest commission or spread is not necessarily
consistent with the best net results. While the Portfolios may engage in
soft dollar arrangements for research services, as described below, the
B-25
<PAGE>
Portfolios have no obligation to deal with any broker/dealer or group of
broker/dealers in the execution of portfolio transactions.
Consistent with the interests of the Portfolios, G.T. Capital may
select brokers to execute the Portfolios' securities transactions on the
basis of the research and brokerage services they provide to G.T. Capital
for its use in managing the Portfolios and its other advisory accounts.
Such services may include furnishing analyses, reports and information
concerning issuers, industries, securities, geographic regions, economic
factors and trends, portfolio strategy, and performance of accounts, and
effecting securities transactions and performing functions incidental
thereto (such as clearance and settlement). Research and brokerage
services received from such brokers are in addition to, and not in lieu
of, the services required to be performed by G.T. Capital under the
Management Contract. A commission paid to such brokers may be higher than
that which another qualified broker would have charged for effecting the
same transaction, provided that G.T. Capital determines in good faith that
such commission is reasonable in terms either of that particular
transaction or the overall responsibility of G.T. Capital to the
Portfolios and its other clients and that the total commissions paid by
the Portfolios will be reasonable in relation to the benefits received by
the Portfolios over the long term. Research services may also be received
from dealers who execute portfolio transactions in over-the-counter
markets.
G.T. Capital may allocate brokerage transactions to broker/dealers
who have entered into arrangements under which the broker/dealer allocates
a portion of the commissions paid by the Portfolios toward payment of the
Portfolios' expenses, such as custodian fees.
Investment decisions for each Portfolio and for other investment
accounts managed by G.T. Capital are made independently of each other in
light of differing conditions. However, the same investment decision
occasionally may be made for two or more of such accounts, including a
Portfolio. In such cases simultaneous transactions may occur. Purchases
or sales are then allocated as to price or amount in a manner deemed fair
and equitable to all accounts involved. While in some cases this practice
could have a detrimental effect upon the price or value of the security as
far as a Portfolio is concerned, in other cases G.T. Capital believes that
coordination and the ability to participate in volume transactions will be
beneficial to the Portfolios.
Under a policy adopted by Growth Portfolio's Board of Trustees, and
subject to the policy of obtaining the best net results, G.T. Capital may
consider a broker/dealer's sale of the shares of the mutual funds for
which G.T. Capital serves as investment manager in selecting brokers and
dealers for the execution of the Portfolios' portfolio transactions. This
policy does not imply a commitment to execute portfolio transactions
through all broker/dealers that sell shares of such other funds.
Each Portfolio contemplates that, consistent with the policy of
obtaining the best net results, brokerage transactions may be conducted
B-26
<PAGE>
through certain companies that are members of the BIL GT Group. The
Growth Portfolio's Board of Trustees has adopted procedures in conformity
with Rule 17e-1 under the 1940 Act to ensure that all brokerage
commissions paid to such affiliates are reasonable and fair in the context
of the market in which they are operating. Any such transactions will be
effected and related compensation paid only in accordance with applicable
SEC regulations.
PORTFOLIO TRADING AND TURNOVER. Although each Portfolio generally
does not intend to trade for short-term profits, the securities held by
that Portfolio will be sold whenever management believes it is appropriate
to do so, without regard to the length of time a particular security may
have been held (except to the extent necessary to avoid non-compliance
with the "Short-Short Limitation" described in Item 20).
A Portfolio engages in such trading when G.T. Capital has concluded
that the sale of a security owned by that Portfolio and/or the purchase of
another security of better value can enhance principal and/or increase
income. A security may be sold to avoid any prospective decline in market
value, or a security may be purchased in anticipation of a market rise.
Consistent with each Portfolio's investment objective, a security may also
be sold and a comparable security purchased coincidentally in order to
take advantage of what is believed to be a disparity in the normal yield
and price relationship between the two securities.
Each Portfolio anticipates that its annual portfolio turnover rate
should not exceed 75%. However, the portfolio turnover rate will not be a
limiting factor when management deems portfolio changes appropriate. A
75% portfolio turnover rate would occur if the lesser of the value of
purchases or sales of portfolio securities for a Portfolio (excluding
purchases of U.S. Treasury and other securities with a maturity at the
date of purchase of one year or less) were equal to 75% of the average
monthly value of the securities, excluding short-term investments, held by
that Portfolio during such year. Higher portfolio turnover involves
correspondingly greater brokerage commissions and other transaction costs
that a Portfolio will bear directly.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES.
Under the Declaration of Trust, the Trustees are authorized to issue
beneficial interests in each Portfolio. An investor in a Portfolio is
entitled to participate pro rata in distributions of the Portfolio's
income and gains and to be allocated a pro rata share of the Portfolio's
income, gains, losses, deductions, and credits. Upon liquidation or
dissolution of a Portfolio, investors are entitled to share pro rata in
that Portfolio's net assets available for distribution to its investors.
Investments in a Portfolio have no preference, preemptive, conversion or
similar rights. Investments in each Portfolio may not be transferred.
Each investor in a Portfolio is entitled to a vote in proportion to
the amount of its investment in that Portfolio. Investors in the
Portfolios will all vote together in certain circumstances (e.g., election
B-27
<PAGE>
of the Trustees and auditors, and as required by the 1940 Act and the
rules thereunder). Investors in a Portfolio do not have cumulative voting
rights, and investors holding more than 50% of the aggregate beneficial
interest in Growth Portfolio or in a Portfolio, as the case may be, may
control the outcome of these votes. Growth Portfolio is not required to
hold annual meetings of investors but Growth Portfolio will hold special
meetings of investors when (1) a majority of the Trustees determines to do
so; or (2) investors holding at least 10% of the interests in Growth
Portfolio (or a Portfolio) request in writing a meeting of investors in
Growth Portfolio (or Portfolio). No amendment required to be approved by
investors by law may be made to Growth Portfolio's Declaration of Trust
without the affirmative majority vote of investors (with the vote of each
being in proportion to the amount of its investment).
Growth Portfolio may enter into a merger or consolidation, or sell
all or substantially all of its (or a Portfolio's) assets, upon such terms
and conditions and for such consideration when and as authorized by the
Trustees. Any such merger shall be deemed for all such purposes to have
been accomplished under and pursuant to the law of the State of New York.
A Portfolio may also be dissolved (i) upon liquidation and distribution of
its assets, if approved by the vote of two-thirds of the beneficial
interests in such Portfolio (with the vote of each being in proportion to
the amount of their investment), (ii) by the Trustees by written notice to
its investors, or (iii) 120 days after a holder of beneficial interests in
a Portfolio either (a) makes an assignment for the benefit of creditors,
or (b) files a voluntary petition in bankruptcy, or (c) is adjudged a
bankrupt or insolvent or has entered against it an order for relief in any
bankruptcy or insolvency proceeding, or (d) files a petition or answer
seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
bankruptcy statute or regulation, or (e) files an answer or other pleading
admitting or failing to contest the material allegations of a petition
filed against it in any proceeding referred to in clauses (iii) or (iv)
above, or (vi) seeks, consents to or acquiesces in the appointment of a
trustee, receiver or liquidator of such holder of beneficial interest or
of all or any substantial part of its properties, or (vii) is expelled
from the Portfolio, whichever occurs first. However, within such 120
days, holders of beneficial interests of the Portfolio (excluding the
holder with respect to which an event described in (i) - (vii) has
occurred) owning a majority of the beneficial interests in a Portfolio may
vote to continue its business, even if such a dissolution has occurred.
Growth Portfolio is organized as a New York common law trust.
Investors in each Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by that
Portfolio in the event that there is imposed upon an investor a greater
portion of the liabilities and obligations of that Portfolio than its
proportionate beneficial interest in such Portfolio. The Declaration of
Trust also provides that each Portfolio may maintain appropriate insurance
(for example, fidelity bonding and errors and omissions insurance)
covering certain kinds of potential liabilities. Thus, the risk of an
investor incurring financial loss on account of investor liability is
B-28
<PAGE>
limited to circumstances in which both inadequate insurance existed and
the investor's Portfolio itself was unable to meet its obligations.
The Declaration of Trust further provides that obligations of each
Portfolio are not binding upon the Trustees individually but only upon the
property of that Portfolio and that the Trustees will not be liable for
any action or failure to act, but nothing in the Declaration of Trust
protects a Trustee against any liability to which he would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her
office. The Declaration of Trust provides that the trustees and officers
will be indemnified by Growth Portfolio against liabilities and expenses
incurred in connection with litigation in which they may be involved
because of their offices with Growth Portfolio, unless, as to liability to
Growth Portfolio or its investors, it is finally adjudicated that they
engaged in willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in their offices, or unless with respect
to any other matter it is finally adjudicated that they did not act in
good faith in the reasonable belief that their actions were in the best
interests of the Growth Portfolio. In the case of settlement, such
indemnification will not be provided unless it has been determined by a
court or other body approving the settlement or other disposition, or by a
reasonable determination, based upon a review of readily available facts,
by vote of a majority of disinterested Trustees or in a written opinion of
independent counsel, that such officers or Trustees have not engaged in
willful misfeasance, bad faith, gross negligence or reckless disregard of
their duties.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.
Beneficial interests in each Portfolio are issued solely in private
placement transactions which do not involve any "public offering" within
the meaning of Section 4(2) of the Securities Act of 1933, as amended.
See Items 4 and 7 in Part A.
Each Portfolio determines its NAV as of the close of regular trading
on the NYSE (currently 4:00 p.m. Eastern Time, unless weather, equipment
failure or other factors contribute to an earlier closing time).
Currently the NYSE is closed on weekends and on certain days relating to
the following holidays: New Year's Day, President's Day, Good Friday,
Memorial Day, July 4th, Labor Day, Thanksgiving Day and Christmas Day.
Additions or reductions will be effected at the time of determination of
NAV next following the receipt of an order.
Each Portfolio's portfolio securities and other assets are valued as
follows:
Equity securities, which are traded on stock exchanges, are valued at
the last sale price on the exchange on which such securities are traded,
as of the close of business on the day the securities are being valued or,
lacking any sales, at the last available bid price. In cases where
securities are traded on more than one exchange, the securities are valued
B-29
<PAGE>
on the exchange determined by G.T. Capital to be the primary market.
Securities traded in the over-the-counter market are valued at the last
available bid price prior to the time of valuation. Securities and other
assets for which market quotations are not readily available (including
restricted securities that are subject to limitations as to their sale)
are valued at fair value as determined in good faith by or under the
direction of the Board of Trustees.
Long-term debt obligations are valued at the mean of representative
quoted bid or asked prices for such securities or, if such prices are not
available, at prices for securities of comparable maturity, quality and
type; however, when G.T. Capital deems it appropriate, prices obtained for
the day of valuation from a bond pricing service will be used. Short-term
debt investments are amortized to maturity based on their cost, adjusted
for foreign exchange translation, provided such valuations represent fair
value.
Options on indices and securities purchased by the Portfolios are
valued at their last bid price in the case of listed options or at the
average of the last bid prices obtained from dealers in the case of OTC
options. When market quotations for futures and options on futures held by
a Portfolio are readily available, those positions will be valued based
upon such quotations.
Securities and other assets for which market quotations are not
readily available are valued at fair value as determined in good faith by
or under the direction of the Board of Trustees. The valuation procedures
applied in any specific instance are likely to vary from case to case.
However, consideration generally is given to the financial position of the
issuer and other fundamental analytical data relating to the investment
and to the nature of the restrictions on disposition of the securities
(including any registration expenses that might be borne by a Portfolio in
connection with such disposition). In addition, other factors, such as
the cost of the investment, the market value of any unrestricted
securities of the same class (both at the time of purchase and at the time
of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities and any available
analysts' reports regarding the issuer, generally are considered.
Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of regular
trading on the NYSE will not be reflected in the Portfolios' NAVs unless
G.T. Capital, under the supervision of Growth Portfolio's Board of
Trustees, determines that the particular event would materially affect
NAV. As a result, a Portfolio's NAV may be significantly affected by such
trading on days when an interest holder has no access to the Portfolio.
Each Portfolio reserves the right, if conditions exist which make
cash payments undesirable, to honor any request for redemption or
repurchase order by making payment in whole or in part in readily
marketable securities chosen by that Portfolio and valued as they are for
purposes of computing the Portfolio's NAV (a redemption in kind). If
B-30
<PAGE>
payment is made in securities, an investor may incur transaction expenses
in selling any such securities so received and would be subject to any
increase or decrease in the value of the securities until they were sold.
Each investor in a Portfolio may add to or reduce its investment in
that Portfolio on each day that the NYSE is open for trading. At the
close of trading, on each such day, the value of each investor's interest
in a Portfolio will be determined by multiplying the NAV of such Portfolio
by the percentage representing that investor's share of the aggregate
beneficial interests in that Portfolio. Any additions or reductions which
are to be effected on that day will then be effected. The investor's
percentage of the aggregate beneficial interests in a Portfolio will then
be recomputed as the percentage equal to the fraction (i) the numerator of
which is the value of such investor's investment in the Portfolio as of
the close of trading on such day plus or minus, as the case may be, the
amount of net additions to or reductions in the investor's investment in
that Portfolio effected on such day, and (ii) the denominator of which is
the aggregate NAV of the Portfolio as of the close of trading on such day
plus or minus, as the case may be, the amount of the net additions to or
reductions in the aggregate investments in that Portfolio by all investors
in that Portfolio. The percentage so determined will then be applied to
determine the value of the investor's interest in that Portfolio as of the
close of trading on the following day the NYSE is open for trading.
ITEM 20. TAX STATUS.
GENERAL
Each Portfolio is treated for federal income tax purposes as a
separate partnership that is not a "publicly traded partnership." As a
result, neither Portfolio is subject to federal income tax; instead, each
Fund, as an investor in its corresponding Portfolio, is required to take
into account, in determining its federal income tax liability, its share
of the Portfolio's income, gains, losses, deductions and credits, without
regard to whether it has received any cash distributions from the
Portfolio. The Portfolios are not subject to any income or franchise tax
in the State of New York or the Commonwealth of Massachusetts.
Each Fund, as an investor in its corresponding Portfolio, also is
deemed to own a proportionate share of the Portfolio's assets, and to earn
a proportionate share of the Portfolio's income, for purposes of
determining whether the Fund satisfies the requirements to qualify as a
regulated investment company ("RIC"). For that reason, each Portfolio
intends to conduct its operations so that its corresponding Fund will be
able to satisfy all those requirements.
Distributions to a Fund from its corresponding Portfolio (whether
pursuant to a partial or complete withdrawal or otherwise) generally will
not result in the Fund's recognizing any gain or loss for federal income
tax purposes, except that (1) gain will be recognized to the extent any
cash that is distributed exceeds the Fund's basis for its interest in the
B-31
<PAGE>
Portfolio prior to the distribution, (2) income or gain will be recognized
if the distribution is made in liquidation of the Fund's entire interest
in the Portfolio and includes a disproportionate share of any unrealized
receivables held by the Portfolio, and (3) loss will be recognized if a
liquidation distribution consists solely of cash and/or unrealized
receivables. A Fund's basis for its interest in its corresponding
Portfolio generally will equal the amount of cash and the basis of any
property the Fund invests in the Portfolio, increased by the Fund's share
of the Portfolio's net income and gains and decreased by (a) the amount of
any cash and the basis of any property distributed from the Portfolio to
the Fund and (b) the Fund's share of the Portfolio's losses.
HEDGING TRANSACTIONS
The Portfolios' use of hedging transactions, such as writing
(selling) and purchasing options and Futures (collectively "Hedging
Instruments"), involves complex rules that will determine for federal
income tax purposes the character and timing of recognition of the gains
and losses the Portfolios realize in connection therewith. For each
Portfolio, income from transactions in Hedging Instruments derived by it
with respect to its business of investing in securities will qualify as
permissible income for its corresponding Fund and other RIC investors
under the requirement that at least 90% of a RIC's gross income each
taxable year consist of specified types of income. However, income from
the disposition by a Portfolio of Hedging Instruments held for less than
three months will be subject to the requirement applicable to its
corresponding Fund and other RIC investors that less than 30% of a RIC's
gross income each taxable year consist of certain short-term gains
("Short-Short Limitation").
If a Portfolio satisfies certain requirements, any increase in value
of a position that is part of a "designated hedge" will be offset by any
decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether the Portfolio's corresponding Fund and other RIC investors satisfy
the Short-Short Limitation. Thus, only the net gain (if any) from the
designated hedge will be included in gross income for purposes of that
limitation. Each Portfolio will consider whether it should seek to
qualify for this treatment for its hedging transactions. To the extent a
Portfolio does not so qualify, it may be forced to defer the closing out
of certain Hedging Instruments beyond the time when it otherwise would be
advantageous to do so, in order for its corresponding Fund and other RIC
investors to qualify as RICs.
Exchange-traded Futures Contracts and listed options thereon that are
subject to section 1256 of the Code (other than those that are part of a
mixed straddle) ("section 1256 contracts") and that are held by a
Portfolio at the end of its taxable year generally will be deemed to have
been sold at market value federal income tax purposes. Sixty percent of
any net gain or loss recognized as a result of these "deemed sales," and
60% of any net gain or loss realized from any actual sales, of section
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<PAGE>
1256 contracts will be treated as long-term capital gain or loss, and the
balance will be treated as short-term capital gain or loss.
ITEM 21. UNDERWRITERS.
Not applicable.
ITEM 22. CALCULATION OF PERFORMANCE DATA.
Not applicable.
ITEM 23. FINANCIAL STATEMENTS.
The Statement of Assets and Liabilities of each Portfolio are
included in reliance on the report of Coopers & Lybrand L.L.P.,
independent auditors, given on the authority of said firm as experts in
auditing and accounting.
B-33
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANT
To the Board of Trustees of
Growth Portfolio
Small Cap Portfolio
Value Portfolio
We have audited the accompanying statement of assets and liabilities of
Growth Portfolio (Small Cap Portfolio and Value Portfolio) as of October
17, 1995. This financial statement is the responsibility of the Fund's
management. Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statement. Our procedures included confirmation of cash held by the
custodian of October 17, 1995. An audit also includes assessing the
accounting principles used and significant estimates made by management,
as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities referred to above
present fairly, in all material respects, the financial position of Growth
Portfolio (Small Cap Portfolio and Value Portfolio) as of October 17,
1995, in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
----------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 17, 1995
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<PAGE>
GROWTH PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
October 17, 1995
<TABLE>
<CAPTION>
Small Cap
Growth Value
Portfolio Portfolio
<S> <C> <C>
Assets:
Cash.......... $100,100 $100,100
Deferred organization expenses....... 25,000 25,000
Liabilities:
Accrued organization expenses....... 25,000 25,000
Net assets.......... 100,100 100,100
</TABLE>
NOTES
1. Growth Portfolio (the "Portfolio") was organized as a New York trust
pursuant to a Declaration of Trust dated as of May 4, 1995, and
amended and restated as of September 25, 1995. Beneficial interests
in the Portfolio are divided currently into two separate subtrusts or
"Series": Small Cap Growth Portfolio and Value Portfolio. The
Portfolio has been inactive except for matters relating to its
organization and registration as an investment company under the
Investment Company Act of 1940 and the sale of beneficial interests
therein at the aggregate purchase price of $200,000 to G.T. Global:
America Small Cap Growth Fund ($100,000) and G.T. Global: America
Value Fund ($100,000) and the sale of beneficial interests therein at
the purchase price of $100 each to G.T. Capital Management, Inc.
("G.T. Capital") (the "Initial Interests").
2. Organization expenses are being deferred and will be amortized on a
straight line basis over a period not to exceed five years that
commences on the effective date of the Portfolio's Registration
Statement on Form N-1A. The amount paid by the Portfolio on any
withdrawal by a Series or G.T. Capital of any of the respective
Initial Interests will be reduced by a portion of any unamortized
organization expenses, determined by the proportion of the amount of
the Initial Interest withdrawn to the aggregate amount of the Initial
Interests then outstanding after taking into account any prior
withdrawals of any of the Initial Interests.
B-35
<PAGE>
3. At 4:00 p.m., Eastern time, on each business day of the Portfolio,
the value of an investor's beneficial interest in the Portfolio is
equal to the product of (i) the aggregate net asset value of the
Portfolio and (ii) the percentage representing that investor's share
of the aggregate beneficial interest in the Portfolio effective for
that day.
B-36
<PAGE>
PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
The following reports and financial statements are included by
amendment in Part B: Report of Coopers & Lybrand L.L.P.,
Indepen-dent Auditors; Statement of Assets and Liabilities of
Growth Portfolio (consisting of Small Cap Portfolio and Value
Portfolio).
(b) Exhibits
1. Amended and Restated Declaration of Trust of the Registrant
(filed herewith).
2. Form of By-Laws of the Registrant (filed herewith).
5. Investment Management and Administration Contract between
the Registrant and G.T. Capital Management, Inc. (filed
herewith).
8. Custodian Agreement between the Registrant and State Street
Bank and Trust Company (filed herewith).
9. Transfer Agency Agreement between the Registrant and G.T.
Global Investor Services, Inc. (filed herewith).
11. Consent of Coopers & Lybrand L.L.P., Independent
Accountants (filed herewith).
13. Investment representation letters of initial investors (to
be filed by amendment).
_______________
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
Series of Beneficial (as of October 17, 1995)
Interests
Small Cap Portfolio 2
Value Portfolio 2
<PAGE>
ITEM 27. INDEMNIFICATION.
Reference is hereby made to Article V of the Registrant's Declaration
of Trust, filed as Exhibit 1 to this Registration Statement.
The Registrant's Trustees and officers will be insured under a
directors and officers/errors and omissions liability insurance policy and
the Registrant will be insured under a 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.
See the material under Item 5 (Management of the Portfolios) included
in Part A of this Registration Statement and the material under Items 14
(Management of the Portfolios) and 16 (Investment Advisory and Other
Services) included in Part B of this Registration Statement. Information
as to the directors and officers of G.T. Capital Management, Inc.,
Registrant's investment manager, is included in such manager's Form ADV
(File No. 801-10254), filed with the Commission, which is incorporated
herein by reference thereto.
ITEM 29. PRINCIPAL UNDERWRITERS.
Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2
under the Investment Company Act of 1940, as amended, are maintained and
held in the offices of the Registrant and its investment manager, G.T.
Capital Management, Inc., 50 California Street, 27th Floor, San Francisco,
California 94111.
Records covering stockholder accounts and portfolio transactions are
also maintained and kept by the Registrant's Custodian, State Street Bank
and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110.
ITEM 31. MANAGEMENT SERVICES.
Other than as set forth in Parts A and B of this Registration
Statement, the Registrant is not a party to any management-related service
contract.
ITEM 32. UNDERTAKINGS.
Not applicable.
C-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940,
Registrant has duly caused this Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of San Francisco and State of California on the 16th day of October,
1995.
GROWTH PORTFOLIO
By /s/ Helge K. Lee
----------------------------
Helge K. Lee
Vice President and Secretary
C-3
<PAGE>
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
GROWTH PORTFOLIO
--------------------------
This AMENDED AND RESTATED DECLARATION OF TRUST of the Growth
Portfolio hereby is made as of the 25th day of September, 1995, 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, pursuant to a Declaration of Trust dated as of the 4th
day of May, 1995 ("Original Declaration"), the Trustees formed a master
trust fund under the law of the State of New York for the investment and
reinvestment of its assets; and
WHEREAS, no assets have yet been contributed to such master trust
fund; and
WHEREAS, it is proposed that the trust assets be composed of
money and other property contributed to the subtrusts of the master trust
fund established hereby, such assets to be held and managed in trust for
the benefit of the holders of beneficial interests in such subtrusts; and
WHEREAS, the Trustees desire to amend the Original Declaration
and restate the same herein.
NOW, THEREFORE, the Trustees hereby declare that they will hold
in trust all such money and other property contributed to the subtrusts of
the master trust fund established hereby and will manage and dispose of
the same for the benefit of the holders of beneficial interests in such
subtrusts and subject to the provisions hereof (which amend and replace in
their entirety the provisions of the Original Declaration), to wit:
ARTICLE I
The Trust
---------
1.1 Name. The name of the master trust fund established
hereby (the "Trust") shall be the Growth Portfolio and so far as may be
practicable the Trustees shall conduct the Trust's activities, execute all
documents and sue or be sued under that name, which name (and the word
"Trust" wherever hereinafter used) shall refer to the Trustees as
Trustees, and not individually, and shall not refer to the officers,
employees, agents or independent contractors of the Trust or its holders
of beneficial interests.
<PAGE>
1.2 Definitions. As used in this Declaration, the following
terms shall have the following meanings:
"Administrator" shall mean any party furnishing services to the
Trust pursuant to any investment management or administration contract
described in Section 4.1 hereof.
"Book Capital Account" shall mean, for any Holder at any time,
the Book Capital Account of the Holder for such day, determined in
accordance with Section 8.1 hereof.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended from time to time, as well as any nonsuperseded
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.
"Holders" shall mean as of any particular time all holders of
record of interest in the Trust.
"Institutional Investors(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 an
individual, S corporation or partnership.
"Interested Person" shall have the meaning given it in the 1940
Act.
"Interest(s)" 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
- 2 -
<PAGE>
percentage of fraction of the combined Book Capital Account balances of
all, or a specified group of, Holders.
"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 (or 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 are present or represented by
proxy, or (b) more than 50% of all Interests, whichever is less.
"1940 Act" shall mean the United States Investment Company Act of
1940, as amended, 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 fund established
hereby as the same are established 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 the Trust or 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.
- 3 -
<PAGE>
ARTICLE II
Trustees
--------
2.1. Number and Qualification. The number of Trustees shall be
fixed from time to time by action of the Trustees taken as provided in
Section 2.5 hereof; provided, however, that the number of Trustees so
fixed shall in no event be less than two. Any vacancy created by an
increase in the number of Trustees may be filled by the appointment of an
individual having the qualifications described in this Section 2.1 made by
action of the Trustees taken as provided in Section 2.5 hereof. Any such
appointment shall not become effective, however, until the individual
named in the written instrument of appointment shall have accepted in
writing such appointment and agreed in writing to be bound by the terms of
this Declaration. No reduction in the number of Trustees shall have the
effect of removing any Trustee from office. Whenever a vacancy occurs,
until such vacancy is filled as provided in Section 2.4 hereof, the
Trustees continuing in office, regardless of their number, shall have all
the powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Declaration. A Trustee shall be an
individual at least 21 years of age who is not under legal disability.
2.2. Term and Election. Each Trustee named herein, or elected
or appointed prior to the first meeting of Holders, shall (except in the
event of resignations, retirements, removals or vacancies pursuant to
Section 2.3 or Section 2.4 hereof) hold office until a successor to such
Trustee has been elected at such meeting and has qualified to serve as
Trustee, as required under the 1940 Act. Subject to the provisions of
Section 16(a) of the 1940 Act and except as provided in Section 2.3
hereof, each Trustee shall hold office during the lifetime of the Trust
and until its termination as hereinafter provided.
2.3 Resignation, Removal and Retirements. 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), by the action of two-thirds of the
remaining Trustees. Any Trustee who has attained a mandatory retirement
age, if any, established pursuant to any written policy adopted from time
to time by at least two-thirds of the Trustees shall, automatically and
without action by such Trustee or the remaining Trustees, be deemed to
have retired in accordance with the terms of such policy, effective as of
the date determined in accordance with such policy. Any Trustee who has
become incapacitated by illness or injury as determined by a majority of
the other Trustees, may be retired by written instrument executed by a
majority of the other Trustees, specifying the date of such Trustee's
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<PAGE>
retirement. Upon the resignation, retirement or removal of a Trustee, or
a Trustee otherwise ceasing to be a Trustee, such resigning, retired,
removed or former Trustee shall execute and deliver such documents as the
remaining Trustees shall require for the purpose of conveying to the Trust
or the remaining Trustees any Trust Property held in the name of such
resigning, retired, removed or former Trustee. Upon the death of any
Trustee or upon removal, retirement or resignation due to any Trustee's
incapacity to serve as Trustee, the legal representative of such deceased,
removed, retired or resigning Trustee shall execute and deliver on behalf
of such deceased, removed, retired or resigning Trustee such documents as
the remaining Trustees shall require for the purpose set forth in the
preceding sentence.
2.4. Vacancies. The term of office of a Trustee shall terminate
and a vacancy shall occur in the event of the death, resignation,
retirement, adjudicated incompetence or other incapacity to perform the
duties of the office, or removal of a Trustee. No such vacancy shall
operate to annul this Declaration or to revoke any existing agency created
pursuant to the terms of this Declaration. In the case of a vacancy,
Holders of at least a majority of the Interests entitled to vote, acting
at any meeting of Holders held in accordance with Section 9.2 hereof, or,
to the extent permitted by the 1940 Act, a majority vote of the Trustees
continuing in office acting by written instrument or instruments, may fill
such vacancy, and any Trustee continuing in the 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 the
number of Trustees, provided that such appointment shall become effective
only when or after the expected vacancy occurs. As soon as any Trustee
has accepted his or her 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 otherwise provided in this Declaration,
any action of the Trustees may be taken at a meeting by vote of a majority
- 5 -
<PAGE>
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 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 otherwise provided 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.
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.
Any Trustee may, by power of attorney, delegate his or her powers
as Trustee for a period not exceeding six months at any one time to any
other Trustee or Trustees.
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 to the
same extent as if the Trustees were the sole owners of the Trust Property
- 6 -
<PAGE>
and such business in their own right, but with such powers of delegation
as may be permitted by this Declaration. The Trustees may perform such
acts as in their sole discretion they deem proper for conducting the
business of the Trust. The enumeration of or failure to mention any
specific power herein shall not be construed as limiting such exclusive
and absolute control. The powers of the Trustees may be exercised without
order of or resort to any court.
3.2. Investments. The Trustees shall have power with respect to
the Trust and each Series thereof to
(a) conduct, operate and carry on the business of an
investment company; and
(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, options, futures contracts, and other
securities, including, without limitation, those issued, guaranteed or
sponsored by any state, territory or possession of the United States and
the District of Columbia and their political subdivisions, agencies and
instrumentalities, or by the U.S. Government, any foreign government, or
any agency, instrumentality or political subdivision of the U.S.
Government or any foreign government, or any international
instrumentality, or by any bank, savings institution, corporation or other
business entity organized under the laws of the United States or under any
foreign laws; and to exercise any and all rights, powers and privileges of
ownership or interest in respect of any and all such investments of any
kind and description, including, without limitation, the right to consent
and otherwise act with respect thereto, with power to designate one or
more Persons to exercise any of such rights, powers and privileges with
respect to any of such investments; and the Trustees shall be deemed to
have the foregoing powers with respect to any additional instruments in
which the Trustees may determine to invest.
The Trustees shall not be limited to investing in obligations
maturing before the possible termination of the Trust, nor shall the
Trustees be limited by any law limiting the investments which may be made
by fiduciaries.
3.3. Title. Legal title to all Trust Property shall be vested
in the Trustees as joint tenants except that the Trustees shall have the
power to cause legal title to any Trust Property to be held by or in the
name of one or more of the Trustees, or in the name of the Trust, or in
the name or nominee name of any other Person on behalf of the Trust, on
such terms as the Trustees may determine.
- 7 -
<PAGE>
The right, title and interest of the Trustees in the Trust
Property shall vest automatically in each individual who may hereafter
become a Trustee upon his due election and qualification. Upon the
resignation, removal or death of a Trustee, such resigning, removed or
deceased Trustee shall automatically cease to have any right, title or
interest in any Trust Property, and the right, title and interest of such
resigning, removed or deceased Trustee in the Trust Property shall vest
automatically in the remaining Trustees. Such vesting and cessation of
title shall be effective whether or not conveyancing documents have been
executed and delivered.
3.4. Sale and Increases of Interests. The Trustees, in their
discretion, may, from time to time, without a vote of the Holders, permit
any Institutional Investor to purchase an Interest 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 reasons 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 to borrow
money or otherwise obtain credit and to secure the same by mortgaging,
pledging or otherwise subjecting as security the assets of the Trust,
including the lending of portfolio securities, and to endorse, guarantee,
or undertake the performance of any obligation, contract or engagement of
any other Person.
3.7. Delegation. The Trustees shall have power, consistent with
their continuing exclusive and absolute control over the Trust Property
and over the business of the Trust or any Series, to delegate from time to
time to such of their number or to officers, employees, agents or
independent contractors of the Trust the doing of such things and the
execution of such instruments in either the name of the Trust or any
Series or the names of the Trustees or otherwise as the Trustees may deem
expedient.
- 8 -
<PAGE>
3.8 Collection and Payment. The Trustees shall have power to
collect all property due to the Trust or any Series; and to pay all
claims, including taxes, against the Trust Property; to prosecute, defend,
compromise or abandon any claims relating to the Trust or any Series or
the Trust Property; to foreclose any security interest securing any
obligation, by virtue of which any property is owed to the Trust or any
Series; 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 or the assets belonging to a
particular Series, 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 or the assets
belonging to a particular Series to themselves as 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. 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 interest 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.
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 or any Series 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 or the Trustees, officers, employees or agents
of the Trust or any Series; (e) to the extent permitted by law, indemnify
any Person with whom the Trust or any Series has dealings, including the
Investment Adviser, Administrator, placement agent, Holders, Trustees,
officers, employees, agents or independent contractors of the Trust or any
Series, to such extent as the Trustees shall determine; (f) guarantee
indebtedness or contractual obligations of others; (g) determine and
change the Fiscal Year of the Trust or any Series and the method by which
its accounts shall be kept; and (h) adopt a seal for the Trust or any
Series, but the absence of such a seal shall not impair the validity of
any instrument executed on behalf of the Trust or any Series.
3.11 Further Powers. The Trustees shall have power to
(a) conduct the business of the Trust or any Series and carry on its
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<PAGE>
operations in any and all of its branches, (b) establish 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 (c) 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 and Administration
and Placement Agent Arrangements
--------------------------------------
4.1 Investment Advisory and Other Arrangements. The Trustees
may in their discretion, from time to time, enter into investment
advisory, administration or placement agent contracts or 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 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, provided that any investment advisory contract shall be subject
to a Majority Interests Vote. 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 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). Any such purchase, sale, loan or exchange shall
be deemed to have been authorized by the Trustees.
4.2 Parties to Contract. Any contract of the character
described in Section 4.1 or Section 4.3 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, or shall any
individual holding such relationship be liable merely by reason of such
relationship for any loss or expense to the Trust under or by reason of
any such contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this
- 10 -
<PAGE>
Article IV or the By-Laws of the Trust. The same Person may be the other
party to one or more contracts entered into pursuant to Section 4.1 or
Section 4.3 hereof or the By-Laws of the Trust, and any individual may be
financially interested or otherwise affiliated with Persons who are
parties to any or all of the contracts mentioned in this Section 4.2 or in
the By-Laws of the Trust.
4.3 Custodian. The Trustees shall at all times place and
maintain securities and similar investments of the Trust and 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 or any Series
and to deliver the same upon written order or oral order confirmed in
writing, (b) to receive a receipt for any monies due the Trust or 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 custodians.
ARTICLE V
Liability of Holders; Limitations of
Liability of Trustees, Officers, etc.
-------------------------------------
5.1. Liability of Holders; Indemnification. Each Holder of an
Interest in a Series shall be jointly and severally liable (with rights of
contribution inter se in proportion to their respective Interests in the
Series) for the liabilities and obligations of the 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 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 the Series shall remain jointly and severally liable to the Trust's
creditors of that Series as a legal matter. The liabilities of a
particular Series and the right to indemnification granted hereunder to
Holders of Interest in such Series shall not be enforceable against any
other Series or Holders of Interest in any other Series.
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<PAGE>
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 otherwise 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, Agents,
Independent Contractors to Trust, Holders, etc. No Trustee, officer,
employee, agent or independent contractor (except in the case of an agent
or independent contractor to the extent otherwise provided by written
contract) of the Trust or any Series shall be liable to the Trust or the
Holders for any action or failure to act (including, without limitation,
the failure to compel in any way any former or acting Trustee to redress
any breach of trust) except for such Person's own bad faith, willful
misfeasance, gross negligence or reckless disregard of such Person's
duties.
5.4 Mandatory Indemnification. The Trust shall indemnify, to
the fullest extent permitted by law (including the 1940 Act), each
Trustee, officer, employee, agent or independent contractor (except in the
case of an agent or independent contractor to the extent otherwise
provided by written contract) of the Trust (including any Person who
serves at the Trust's request as a director, officer or trustee of another
organization in which the Trust has any interest as a shareholder,
creditor or otherwise against all liabilities and expenses (including
amounts paid in satisfaction of judgments, in compromise, as fines and
penalties, and as counsel fees) reasonably incurred by such Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which such Person may be
involved or with which such Person may be threatened, while in office or
thereafter, by reason of such Person being or having been such a Trustee,
officer, employee, agent or independent contractor, except with respect to
any matter as to which such Person shall have been adjudicated to have
acted in bad faith, willful misfeasance, gross negligence or reckless
disregard of such Person's duties; provided, however, that as to any
matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for such payment or
for any other expenses shall be provided unless there has been a
determination that such Person did not engage in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in
the conduct of such Person's office (a) by the court or other body
approving the settlement or other disposition; (b) by a reasonable
determination, based upon a review of readily available facts as opposed
to a full trial-type inquiry), that such Person did not engage in such
conduct by written opinion from independent legal counsel approved by the
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<PAGE>
Trustees; or (c) 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 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 (a) such Person shall have provided appropriate
security for such undertaking, (b) the Trust is insured against losses
arising out of any such advanced payments, or (c) 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 steadily 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 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, employee, agent or independent contractor of the Trust or any
Series, in such capacity, shall contain an appropriate recital to the
effect that the Trustee, officer, employee, agent or independent
contractor 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
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<PAGE>
recital shall not operate to impose personal liability on any Trustee,
officer, employee, agent or independent contractor 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, employees, agents and independent contractors of the
Trust or 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. Each Trustee, officer, employee,
agent or independent contractor of the Trust or 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,
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 nontransferable 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. At no time shall the number of Holders of
Interests in any Series exceed 500. 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
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<PAGE>
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
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 subtrusts or 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.
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<PAGE>
(b) Liabilities Belonging to Series. The assets
belonging to each particular Series shall be charged with the liabilities
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 Holders shall be subject
to any liabilities belonging to any Series in which it does not hold an
Interest.
(c) Voting. On each matter submitted to a vote of the
Holders, each Holder of an Interest in each Series shall be entitled to a
vote proportionate to its Interest in such Series as recorded on the books
of the Trust and all Holders of Interests in each Series shall vote as a
separate class except as to voting for Trustees and as otherwise required
by the 1940 Act. As to any matter which does not affect the interest of a
particular Series, only the Holders of Interests in the one or more
affected Series shall be entitled to vote.
6.3 Nontransferability. A Holder may not transfer, sell or
exchange 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. 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 shall have the right to vary its investment in any
Series at any time without limitation by increasing (through a capital
contribution) or decreasing (through a capital withdrawal) or by a
Redemption of its Interest. An increase in the investment of a Holder in
a Series shall be reflected as an increase in the Book Capital Account
balance of that Holder and a decrease in the investment of a Holder in the
Series or the Redemption of the Interest of a Holder shall be reflected as
a decrease in the Book Capital Account balance of that Holder. The Trust
shall, upon appropriate and adequate notice from any Holder increase,
decrease or redeem such Holder's Interest for an amount determined by the
application of a formula adopted for such purpose by resolution of the
Trustees; provided that (a) the amount received by the Holder upon any
such decrease or Redemption shall not exceed the decrease in the Holder's
Book Capital Account balance effected by such decrease or Redemption of
its Interest, and (b) if so authorized by the Trustees, the Trust may, at
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any time and from time to time, charge fees for effecting any such
decrease or Redemption, at such rates as the Trustees may establish, and
may, at any time and from time to time, suspend such right of decrease or
Redemption. The procedures for effecting decreases or Redemptions shall
be as determined by the Trustees from time to time.
ARTICLE VIII
Determination of Book Capital Account
Balances and Distributions
--------------------------------------
8.1. Book Capital Account Balances. The Book Capital Account
balance of each Holder 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, sell or exchange its Book Capital Account balance.
8.2. Allocations and Distributions to Holders. The Trustees
shall, in compliance with the Code, the 1940 Act and generally accepted
accounting principles, establish the procedures by which the Trust shall
make with respect to each Series (a) 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, (b) the payment of distributions, if
any, to Holders, and (c) 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
the Trust to meet obligations of each Series, and 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 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.
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<PAGE>
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. 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 (g) 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 a Series (if the meeting relates solely to that
Series), or not less than 10% of the Interests in the Trust (if the
meeting relates to the Trust and not solely to a 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 the Series (if the meeting relates solely to that
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 a 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, either in person or by proxy, at such
meeting constitutes the action of the Holders, unless a greater number of
affirmative votes is required by the 1940 Act, other applicable law, this
Declaration or the By-Laws, 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
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<PAGE>
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 shall constitute a waiver of notice of such
meeting except in the situation in which a Holder attends 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 with respect to such Interest, but if more than one of them is
present at such meeting in person or by proxy, and such joint owners or
their proxies so present disagree as to any vote to be cast, such vote
shall not be received with respect to such Interest. A proxy purporting
to be executed by or on behalf of a Holder shall be deemed valid unless
challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger.
9.6 Reports. The Trustees shall cause to be prepared and
furnished to each Holder, at least annually as of the end of each Fiscal
Year, a report of operations containing a balance sheet and a statement of
income of each 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 at least semi-annually
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<PAGE>
interim reports of operations containing an unaudited balance sheet as of
the end of such period and an unaudited statement of income for the period
from the beginning of the then-current Fiscal Year to the end of such
period.
9.7 Inspection of Records. The records of the Trust shall be
open to inspection by Holders during normal business hours for any purpose
not harmful to the Trust.
9.8 Holder Action by Written Consent. Any action which may be
taken on behalf of the Trust or any Series by Holders may be taken without
a meeting if Holders holding more than 50% of all Interests entitled to
vote (or such larger proportion thereof as shall be required by any
express provision of this Declaration or of applicable law) 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 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; Incorporation
----------------------------------
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:
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<PAGE>
<TABLE>
<CAPTION>
Name Address Date of Birth
---- ------- -------------
<S> <C> <C>
Nelson Stewart Ruble 65 Duck Pond Road 04/10/91
Glen Cove, NY 11542
Shelby Sara Wyetzner 8 Oak Brook Lane 10/18/90
Merrick, NY 11566
Amanda Jehan Sher Coolidge 483 Pleasant Street, No. 9 08/16/89
Belmont, MA 02178
David Cornelius Johnson 752 West End Avenue, Apt. 10J 05/02/89
New York, NY 10025
Conner Leahy McCabe 100 Parkway Road, Apt. 3C 02/22/89
Bronxville, NY 10708
Andrea Hellegers 530 East 84th Street, Apt. 5H 12/22/88
New York, NY 10028
Emilie Blair Ruble 65 Duck Pond Road 02/24/89
Glen Cove, NY 11542
Brian Patrick Lyons 152-48 Jewel Avenue 01/20/89
Flushing, NY 11367
Caroline Bolger Cima 11 Beechwood Lane 12/23/88
Scarsdale, NY 10583
</TABLE>
or until such later date as may be permitted by the applicable law of the
State of New York.
10.2. Dissolution. Any Series shall be dissolved --
-----------
(a) 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,
(b) by the Trustees by written notice of dissolution to
the Holders of the Interests in the Series, or
(c) 120 days after a Holder of an Interest in the Series
either (i) makes an assignment for the benefit of creditors, or
(ii) files a voluntary petition in bankruptcy, or (iii) is
adjudged a bankrupt or insolvent, or has entered against it an
order for relief in any bankruptcy or insolvency proceeding, or
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<PAGE>
(iv) files a petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment, liq-
uidation, dissolution or similar relief under any bankruptcy
statute or regulation, or (v) files an answer or other pleading
admitting or failing to contest the material allegations of a
petition filed against it in any proceeding referred to in
clauses (iii) or (iv), or (vi) seeks, consents to or acquiesces
in the appointment of a trustee, receiver or liquidator of such
Holder or of all or any substantial part of its properties, or
(vii) is expelled from the Series, whichever shall first occur.
However, within such 120 days Holders (excluding the Holder with
respect to which such event of dissolution has occurred) owning a
majority of the Interests in such Series may vote to continue its
business, even if such a dissolution has occurred.
The Trust shall be dissolved upon the dissolution of the last remaining
Series.
10.3. Termination.
-----------
(a) Upon an event of dissolution of the Trust or a
Series, the Trust or Series 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 or 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
(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
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<PAGE>
protection, the Trustees shall distribute the remaining Trust
Property of the Trust or Series, as applicable, in cash or in
kind or party 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) to this Section 10.4, (b) required
to be approved by Holders by law or by the Trust's registration statement
filed with the Commission, or (c) submitted to them by the Trustees. Any
amendment submitted to Holders which the Trustees determine would affect
the Holders of any Series shall be authorized by vote of the Holders of
such Series and no vote shall be required of Holders of a Series not
affected. 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) A certification in recordable form executed by a
majority of the Trustees setting forth an amendment and reciting that it
was duly adopted by the Holders or by the Trustees as aforesaid or a copy
of the Declaration, as amended, in recordable form, and executed by a
majority of the Trustees, shall be conclusive evidence of such amendment
when filed with the records of the Trust.
Notwithstanding any other provision hereof, until such time as
Interests are first sold, this Declaration may be terminated or amended in
any respect by the affirmative vote of a majority of the Trustees at any
meeting of Trustees or by an instrument executed by a majority of the
Trustees.
10.5. Merger, Consolidation and Sale of Assets. The Trust 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 by the Board
of Trustees. Any such merger, consolidation, sale, lease or exchange
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<PAGE>
shall be deemed for all purposes to have been accomplished under and
pursuant to the law of the State of New York.
ARTICLE XI
Miscellaneous
--------------
11.1. Principal Office; Certificate of Designation; Agent for
Service of Process. The Trust shall maintain its principal office at 375
Park Avenue, Suite 3401, New York, New York 10152, which office shall be
in addition to any offices established and maintained pursuant to Section
3.11 hereof. 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 of New York as an agent upon whom process
in any action or proceeding against the Trust or any Series may be served.
Unless so required, the Trust hereby designates as such agent G.T. Capital
Management, Inc., 375 Park Avenue, Suite 3401, New York, New York 10152.
The Trustees by resolution may designate a law firm with an office in New
York City or any other entity authorized to serve as such agent, as
determined by the Trustees in their sole discretion.
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 determined 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.
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<PAGE>
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 (or any part
thereof) shall be held invalid or unenforceable in any jurisdiction, such
invalidity or unenforceability shall attach only to such provision (or
such part) in such jurisdiction and shall not in any manner affect such
provision (or the balance of such provision) in any other jurisdiction or
any other provision of this Declaration in any jurisdiction.
IN WITNESS WHEREOF, the undersigned have executed this
Declaration of Trust of Growth Portfolio Trust as of the day and year
first above written.
/s/ David A. Minella
-------------------------------
David A. Minella
As Trustee and not individually
/s/ C. Derek Anderson
-------------------------------
C. Derek Anderson
As Trustee and not individually
/s/ Frank S. Bayley
-------------------------------
Frank S. Bayley
As Trustee and not individually
/s/ Arthur C. Patterson
-------------------------------
Arthur C. Patterson
As Trustee and not individually
/s/ Ruth H. Quigley
--------------------------------
Ruth H. Quigley
As Trustee and not individually
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<PAGE>
SCHEDULE A
INITIAL SERIES
Small Cap Portfolio
Value Portfolio
- 26 -
<PAGE>
<PAGE>
GROWTH PORTFOLIO
_____________________________________________
BY-LAWS
As Adopted August ___, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I - Meetings of Holders . . . . . . . . . . . . . . 1
Section 1.1 Fixing Record Dates . . . . . 1
Section 1.2 Records at Holder Meetings . . 1
Section 1.3 Inspectors of Election . . . . 1
Section 1.4 Proxies; Voting . . . . . . . 2
ARTICLE II - Meetings of Trustees . . . . . . . . . . . . . . 2
Section 2.1 Annual and Other Meetings . . 2
Section 2.2 Notice . . . . . . . . . . . . 2
ARTICLE III - Officers . . . . . . . . . . . . . . . . . . . . 2
Section 3.1 Officers of the Trust . . . . 2
Section 3.2 Election and Tenure . . . . . 2
Section 3.3 Removal of Officers . . . . . 3
Section 3.4 Bonds and Surety . . . . . . . 3
Section 3.5 Chairman, President and Vice
President . . . . . . . . . . 3
Section 3.6 Secretary . . . . . . . . . . 4
Section 3.7 Treasurer . . . . . . . . . . 4
Section 3.8 Other Officers and Duties . . 4
ARTICLE IV - Miscellaneous . . . . . . . . . . . . . . . . . 5
Section 4.1 Depositories . . . . . . . . . 5
Section 4.2 Signatures . . . . . . . . . . 5
Section 4.3 Seal . . . . . . . . . . . . . 5
Section 4.5 Indemnification . . . . . . . 5
Section 4.5 Distribution Disbursing Agents
and the Like . . . . . . . . . 5
ARTICLE V - Regulations; Amendments of By-Laws . . . . . . . 6
Section 5.1 Regulations . . . . . . . . . 6
Section 5.2 Amendment and Repeal of By-Laws 6
<PAGE>
BY-LAWS
OF
GROWTH PORTFOLIO
_______________________________
These By-Laws are made and adopted pursuant to Section 2.7 of the
Declaration of Trust establishing GROWTH PORTFOLIO (the "Trust"), dated as
of August ___, 1995, as from time to time amended (the "Declaration").
All words and terms capitalized in these By-Laws shall have the meaning or
meanings set forth for such words or terms in the Declaration.
ARTICLE I
Meetings of Holders
Section 1.1. Fixing Record Dates. If the Trustees do not, prior to
any meeting of the Holders, fix a record date, then the date of mailing
notice of the meeting shall be the record date.
Section 1.2. Records at Holder Meetings. At each meeting of the
Holders there shall be open for inspection the minutes of the last
previous meeting of Holders of the Trust and a list of the Holders of the
Trust, certified to be true and correct by the Secretary or other proper
agent of the Trust, as of the record date of the meeting. Such list of
Holders shall contain the name of each Holder in alphabetical order and
the address and Interest owned by such Holder on such record date.
Section 1.3. Inspectors of Election. In advance of any meeting of
the Holders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman, if any, of any meeting of the Holders may, and on
the request of any Holder or his proxy shall, appoint Inspectors of
Election. The number of Inspectors of Election shall be either one or
three. If appointed at the meeting on the request of one or more Holders
or proxies, a Majority Interests Vote shall determine whether one or three
Inspectors of Election are to be appointed, but failure to allow such
determination by the Holders shall not affect the validity of the
appointment of Inspectors of Election. In case any individual appointed
as an Inspector of Election fails to appear or fails or refuses to so act,
the vacancy may be filled by appointment made by the Trustees in advance
of the convening of the meeting or at the meeting by the individual acting
as chairman of the meeting. The Inspectors of Election shall determine
the Interest owned by each Holder, the Interests represented at the
meeting, the existence of a quorum, the authenticity, validity and effect
of proxies, shall receive votes, ballots or consents, shall hear and
determine all challenges and questions in any way arising in connection
with the right to vote, shall count and tabulate all votes or consents,
shall determine the results, and shall do such other acts as may be proper
to conduct the election or vote with fairness to all Holders. If there
are three Inspectors of Election, the decision, act or certificate of a
<PAGE>
majority is effective in all respects as the decision, act or certificate
of all. On request of the chairman, if any, of the meeting, or of any
Holder or his proxy, the Inspectors of Election shall make a report in
writing of any challenge or question or matter determined by them and
shall execute a certificate of any facts found by them.
Section 1.4. Proxies; Voting. No proxy shall be valid after one
year from the date of its execution, unless a longer period is expressly
stated in such proxy.
ARTICLE II
Meetings of Trustees
Section 2.1. Annual and Other 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, and may hold such other
meetings as the President may direct.
Section 2.2. Notice. Notice of a meeting shall be given by mail,
by telegram (which term shall include a cablegram), by telecopier or
delivered personally (which term shall include by telephone). Neither the
business to be transacted at, nor the purpose of, any meeting of the
Trustees need be stated in the notice or waiver of notice of such meeting,
and no notice need be given of action proposed to be taken by written
consent.
ARTICLE III
Officers
Section 3.1. Officers of the Trust. The Trustees may designate a
Vice President, if any, as an Executive Vice President and may designate
the order in which the other Vice Presidents, if any, may act. The
Chairman shall be a Trustee, but no other officer of the Trust, including
the President, need be a Trustee. Any two or more of the offices may be
held by the same person.
Section 3.2. Election and Tenure. At the initial organization
meeting and thereafter at each annual meeting of the Trustees, the
Trustees shall elect the Chairman, if any, the President, the Secretary,
the Treasurer and such other officers as the Trustees shall deem necessary
or appropriate in order to carry out the business of the Trust. Such
officers shall hold office until the next annual meeting of the Trustees
and until their successors have been duly elected and qualified. The
Trustees may fill any vacancy in office or add any additional officer at
any time.
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<PAGE>
Section 3.3. Removal of Officers. Any officer may be removed at
any time, with or without cause, by action of a majority of the Trustees.
This provision shall not prevent the making of a contract of employment
for a definite term with any officer and shall have no effect upon any
cause of action which any officer may have as a result of removal in
breach of a contract of employment. Any officer may resign at any time by
notice in writing signed by such officer and delivered or mailed to the
Chairman, if any, the President or the Secretary, and such resignation
shall take effect immediately, or at a later date according to the terms
of such notice in writing.
Section 3.4. Bonds and Surety. Any officer may be required by the
Trustees to be bonded for the faithful performance of his duties in such
amount and with such sureties as the Trustees may determine.
Section 3.5. Chairman, President and Vice Presidents. The
Chairman, if any, shall, if present, preside at all meetings of the
Holders and of the Trustees and shall exercise and perform such other
powers and duties as may be from time to time assigned to him by the
Trustees. Subject to such supervisory powers, if any, as may be given by
the Trustees to the Chairman, if any, the President shall be the chief
executive officer of the Trust and, subject to the control of the
Trustees, shall have general supervision, direction and control of the
business of the Trust and of its employees and shall exercise such general
powers of management as are usually vested in the office of President of a
corporation. In the absence of the Chairman, if any, the President shall
preside at all meetings of the Holders and, in the absence of the
Chairman, the President shall preside at all meetings of the Trustees.
The President shall be, ex officio, a member of all standing committees of
Trustees. Subject to the direction of the Trustees, the President shall
have the power, in the name and on behalf of the Trust, to execute any and
all loan documents, contracts, agreements, deeds, mortgages and other
instruments in writing, and to employ and discharge employees and agents
of the Trust. Unless otherwise directed by the Trustees, the President
shall have full authority and power to attend, to act and to vote, on
behalf of the Trust, at any meeting of any business organization in which
the Trust holds an interest, or to confer such powers upon any other
person, by executing any proxies duly authorizing such person. The
President shall have such further authorities and duties as the Trustees
shall from time to time determine. In the absence or disability of the
President, the Vice Presidents, if any, in order of their rank or the Vice
President designated by the Trustees, shall perform all of the duties of
the President, and when so acting shall have all the powers of and be
subject to all of the restrictions upon the President. Subject to the
direction of the President, each Vice President shall have the power in
the name and on behalf of the Trust to execute any and all loan documents,
contracts, agreements, deeds, mortgages and other instruments in writing,
and, in addition, shall have such other duties and powers as shall be
designated from time to time by the Trustees or by the President.
Section 3.6. Secretary. The Secretary shall keep the minutes of
all meetings of, and record all votes of, Holders, Trustees and the
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<PAGE>
Executive Committee, if any. The results of all actions taken at a
meeting of the Trustees, or by written consent of the Trusts, shall be
recorded by the Secretary. The Secretary shall be custodian of the seal
of the Trust, if any, and the Secretary (and any other person so
authorized by the Trustees) shall affix the seal or, if permitted, a
facsimile thereof, to any instrument executed by the Trust which would be
sealed by a New York corporation executing the same or a similar
instrument and shall attest the seal and the signature or signatures of
the officer or officers executing such instrument on behalf of the Trust.
The Secretary shall also perform any other duties commonly incident to
such office in a New York corporation, and shall have such other
authorities and duties as the Trustees shall from time to time determine.
Section 3.7. Treasurer. Except as otherwise directed by the
Trustees, the Treasurer shall be the Chief Financial Officer and shall
have the general supervision of the monies, funds, securities, notes
receivable and other valuable papers and documents of the Trust, and shall
have and exercise under the supervision of the Trustees and of the
President all powers and duties normally incident to his office. The
Treasurer may endorse for deposit or collection all notes, checks and
other instruments payable to the Trust or to its order and shall deposit
all funds of the Trust as may be ordered by the Trustees or the President.
The Treasurer shall keep accurate account of the books of the Trust's
transactions, which shall be the property of the Trust, and which together
with all other property of the Trust in his possession, shall be subject
at all times to the inspection and control of the Trustees. The Treasurer
shall have such other duties and authorities as the Trustees shall from
time to time determine. Notwithstanding anything to the contrary herein
contained, the Trustees may authorize the Investment Manager and
Administrator to maintain bank accounts and deposit and disburse funds on
behalf of the Trust.
Section 3.8. Other Officers and Duties. The Trustees may elect
such other officers and assistant officers as they shall from time to time
determine to be necessary or desirable in order to conduct the business of
the Trust. Assistant officers shall act generally in the absence of the
officer whom they assist and shall assist that officer in the duties of
his office. Each officer, employee and agent of the Trust shall have such
other duties and authorities as may be conferred upon him by the Trustees
or delegated to him by the President.
ARTICLE IV
Miscellaneous
Section 4.1. Depositories. The funds of the Trust shall be
deposited in such depositories as the Trustees shall designate and shall
be drawn out on checks, drafts or other orders signed by such officer,
officers, agent or agents (including the Investment Manager and
Administrator) as the Trustees may from time to time authorize.
- 4 -
<PAGE>
Section 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.
Section 4.3. Seal. The seal of the Trust, if any, may be affixed
to any document, and the seal and its attestation may be lithographed,
engraved or otherwise printed on any document with the same force and
effect as if it had been imprinted and attested manually in the same
manner and with the same effect as if done by a New York corporation.
Section 4.4. Indemnification. Insofar as the conditional advancing
of indemnification monies under Section 5.4 of the Declaration for actions
based upon the 1940 Act may be concerned, such payments will be made only
on the following conditions: (i) the advances must be limited to amounts
used, or to be used, for the preparation or presentation of a defense to
the action, including costs connected with the preparation of a
settlement; (ii) advances may be made only upon receipt of a written
promise by, or on behalf of, the recipient to repay the amount of the
advance which exceeds the amount which it is ultimately determined that he
is entitled to receive from the Trust by reason of indemnification; and
(iii) (a) such promise must be secured by a surety bond, other suitable
insurance or an equivalent form of security which assures that any
repayment may be obtained by the Trust without delay or litigation, which
bond, insurance or other form of security must be provided by the
recipient of the advance, or (b) a majority of a quorum of the Trust's
disinterested, non-party Trustees, or an independent legal counsel in a
written opinion, shall determine, based upon a review of readily available
facts, that the recipient of the advance ultimately will be found entitled
to indemnification.
Section 4.5. Distribution Disbursing Agents and the Like. The
Trustees shall have the power to employ and compensate such distribution
disbursing agents, warrant agents and agents for the reinvestment of
distributions as they shall deem necessary or desirable. Any of such
agents shall have such power and authority as is delegated to any of them
by the Trustees.
ARTICLE V
Regulations; Amendment of By-Laws
Section 5.1. Regulations. The Trustees may make such additional
rules and regulations, not inconsistent with these By-Laws, as they may
deem expedient concerning, the sale and purchase of Interests of the
Trust.
Section 5.2. Amendment and Repeal of By-Laws. In accordance with
Section 2.7 of the Declaration, the Trustees shall have the power to
alter, amend or repeal the By-Laws or adopt new By-Laws at any time.
- 5 -
<PAGE>
Action by the Trustees with respect to the By-Laws shall be taken by an
affirmative vote of a majority of the Trustees. The Trustees shall in no
event adopt By-Laws which are in conflict with the Declaration.
The Declaration refers to the Trustees as Trustees, but not as
individuals or personally; and no Trustee, officer, employee or agent of
the Trust shall be held to any personal liability, nor shall resort be had
to their private property for the satisfaction of any obligation or claim
or otherwise in connection with the affairs of the Trust.
________________________________
- 6 -
<PAGE>
<PAGE>
INVESTMENT MANAGEMENT AND ADMINISTRATION CONTRACT
BETWEEN GROWTH PORTFOLIO AND
G.T. CAPITAL MANAGEMENT, INC.
Contract made as of October 1, 1995, between Growth Portfolio
("Master Portfolio"), a New York common law trust, and G.T. Capital
Management, Inc. ("G.T. Capital"), a California corporation.
WITNESSETH:
WHEREAS the Master Portfolio, which is registered under the
Investment Company Act of 1940, as amended ("1940 Act") as an open-end
management investment company, has established several subtrusts with each
subtrust having its own assets and investment policies; and
WHEREAS the Master Portfolio desires to retain G.T. Capital as
investment manager and administrator to furnish certain administrative,
investment advisory and portfolio management services to the subtrusts
listed in Schedule A attached hereto, and to such other subtrusts of the
Master Portfolio hereinafter established as may be agreed to from time to
time by the parties, and listed in an addendum to Schedule A (hereinafter
"Portfolios" shall refer to each subtrust that is subject to this
Agreement), and G.T. Capital is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. Appointment. The Master Portfolio hereby appoints G.T. Capital
as investment manager and administrator of the Portfolios for the period
and on the terms set forth in the Contract. G.T. Capital accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. Duties as Investment Manager.
(a) Subject to the suspension of the Master Portfolio's Board
of Trustees ("Board"), G.T. Capital will provide a continuous investment
program for each Portfolio, including investment research and management
with respect to all securities and investments and cash equivalents of
each Portfolio. G.T. Capital will determine from time to time what
securities and other investments will be purchased, retained or sold by
each Portfolio, and the brokers and dealers through whom trades will be
executed.
(b) G.T. Capital agrees that in placing orders with brokers and
dealers it will attempt to obtain the best net results in terms of price
and execution. Consistent with this obligation, G.T. Capital may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who sell shares of investment companies which invest all of their
<PAGE>
investable assets in a Portfolio or provide a Portfolio or G.T. Capital's
other clients with research, analysis, advice and similar services. G.T.
Capital may pay to brokers and dealers, in return for research and
analysis, a higher commission or spread than may be charged by other
brokers and dealers, subject to G.T. Capital's determining in good faith
that such commission or spread is reasonable in terms either of the
particular transaction or of the overall responsibility of G.T. Capital to
the Portfolios and its other clients and that the total commissions or
spreads paid by the Portfolios will be reasonable in relation to the
benefits to the Portfolios over the long term. In no instance will
portfolio securities be purchased from or sold to G.T. Capital or any
affiliated person thereof except in accordance with the federal securities
laws and the rules and regulations thereunder. Whenever G.T. Capital
simultaneously places orders to purchase or sell the same security on
behalf of a Portfolio and one or more other accounts advised by G.T.
Capital, such orders will be allocated as to price and amount among all
such accounts in a manner believed to be equitable to each account. The
Portfolios recognize that in some cases this procedure may adversely
affect the results obtained for a Portfolio.
(c) G.T. Capital will oversee the maintenance of all books and
records with respect to the securities transactions of the Portfolios, and
will furnish the Board with such periodic and special reports as the Board
reasonably may request. In compliance with the requirements of Rule 31a-3
under the 1940 Act, G.T. Capital hereby agrees that all records which it
maintains for the Portfolios are the property of the Portfolios, agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any
records which it maintains for the Portfolios and which are required to be
maintained by Rule 31a-1 under the 1940 Act, and further agrees to
surrender promptly to the Portfolios any records which it maintains for
the Portfolios upon request.
(d) G.T. Capital will oversee the computation of the net asset
value and the net income of each Portfolio as described in the
registration statement of the Master Portfolio under the 1940 Act
("Registration Statement") or as more frequently requested by the Board.
3. Duties as Administrator. G.T. Capital will administer the
affairs of the Portfolios subject to the supervision of the Board and the
following understandings:
(a) G.T. Capital will supervise all aspects of the operations
of the Portfolios. including the oversight of custodial, pricing and
accounting services, except as hereinafter set forth; provided, however,
that nothing herein contained shall be deemed to relieve or deprive the
Board of its responsibility for control of the conduct of the affairs of
the Portfolios.
(b) At G.T. Capital's expense, G.T. Capital will provide the
Portfolios with such corporate, administrative and clerical personnel
(including officers of the Master Portfolio) and services as are
reasonably deemed necessary or advisable by the Board.
- 2 -
<PAGE>
(c) G.T. Capital will arrange, but not pay, for the periodic
preparation, updating, filing and dissemination (as applicable) of the
Portfolios' proxy material, tax returns and required reports with or to
the Portfolios' investors, the Securities and Exchange Commission and
other appropriate federal or state regulatory authorities.
(d) G.T. Capital will provide the Portfolios with, or obtain
for them, adequate office space and all necessary office equipment and
services, including telephone service, heat, utilities, stationery
supplies and similar items.
4. Further Duties. In all matters relating to the performance of
this Contract, G.T. Capital will act in conformity with the Declaration of
Trust, By-Laws and Registration Statement of the Master Portfolio and with
the instructions and directions of the Board and will comply with the
requirements of the 1940 Act, the rules thereunder, and all other
applicable federal and state laws and regulations.
5. Delegation of G.T. Capital's Duties as Investment Manager and
Administrator. G.T. Capital may enter into one or more agreements
("Sub-Advisory or Sub-Administration Contract") with a sub-adviser or
sub-administrator in which G.T. Capital delegates to such subadviser or
sub-administrator the performance of any or all of the services specified
in Paragraphs 2 and 3 of this Contract, provided that: (i) each Sub-
Advisory or Sub-Administration Contract imposes on the sub-adviser or
sub-administrator bound thereby all the duties and conditions to which
G.T. Capital is subject with respect to the delegated services under
Paragraphs 2, 3 and 4 of this Contract; (ii) each Sub-Advisory or
Sub-Administration Contract meets all requirements of the 1940 Act and
rules thereunder; and (iii) G.T. Capital shall not enter into a
Sub-Advisory or Sub-Administration Contract unless it is approved by the
Board prior to implementation.
6. Services Not Exclusive. The services furnished by G.T. Capital
hereunder are not to be deemed exclusive and G.T. Capital shall be free to
furnish similar services to others so long as its services under this
Contract are not impaired thereby. Nothing in this Contract shall limit or
restrict the right of any director, officer or employee of G.T. Capital,
who may also be a Trustee, officer or employee of the Master Portfolio, to
engage in any other business or to devote his or her time and attention in
part to the management or other aspects of any other business, whether of
a similar nature or a dissimilar nature.
7. Expenses.
(a) During the term of this Contract, the Portfolios will bear
all expenses which are not specifically assumed by G.T. Capital.
(b) Expenses borne by the Portfolios will include but not be
limited to the following: (i) the cost (including brokerage commissions,
if any, of securities purchased or sold by a Portfolio and any losses
incurred in connection therewith; (ii) fees payable to and expenses
- 3 -
<PAGE>
incurred on behalf of the Portfolios by G.T. Capital under this Contract;
(iii) expenses of organizing the Portfolios; (iv) filing fees and expenses
relating to the registration and qualification of the Master Portfolio or
any of the Portfolios under federal and/or state securities laws and
maintaining such registrations and qualifications; (v) fees and salaries
payable to the Master Portfolio's Trustees who are not parties to this
Contract or interested persons of any such party ("Independent Trustees");
(vi) all expenses incurred in connection with the Independent Trustees'
services, including travel expenses; (vii) taxes (including any income or
franchise taxes) and governmental fees; (viii) costs of any liability,
uncollectible items of deposit and other insurance and fidelity bonds;
(ix) any costs, expenses or losses arising out of a liability of or claim
for damages or other relief asserted against the Master Portfolio or any
of the Portfolios for violation of any law; (x) legal, accounting and
auditing expenses, including legal fees of special counsel for the
Independent Trustees; (xi) charges of custodians, pricing agents and other
agents; (xii) expenses of setting in type, printing and mailing reports
and proxy materials for existing investors; (ix) any extraordinary
expenses (including fees and disbursements of counsel, costs of actions,
suits or proceedings to which the Master Portfolio or the Portfolios are a
party and the expenses the Master Portfolio may incur as a result of its
legal obligation to provide indemnification to its Trustees, officers,
employees and agents) incurred by the Master Portfolio or the Portfolios;
(xiv) fees, voluntary assessments and other expenses incurred in
connection with membership in investment company organizations; (xv) costs
of mailing and tabulating proxies and costs of meetings of investors, the
Board and any committees thereof; (xvi) the cost of investment company
literature and other publications provided by the Master Portfolio to its
Trustees and officers; and (xvii) costs of mailing, stationery and
communications equipment.
(c) All general expenses of the Master Portfolio and joint
expenses of the Portfolios shall be allocated among the Portfolios on a
basis deemed fair and equitable by G.T. Capital, subject to the Board's
supervision.
(d) G.T. Capital will assume the cost of any compensation for
services provided to the Master Portfolio received by the officers of the
Master Portfolio and by the Trustees of the Master Portfolio who are not
Independent Trustees.
(e) The payment or assumption by G.T. Capital of any expense of
the Master Portfolio or any Portfolio that G.T. Capital is not required by
this Contract to pay or assume shall not obligate G.T. Capital to pay or
assume the same or any similar expense of the Master Portfolio or any
Portfolio on any subsequent occasion.
8. Compensation.
(a) For the services provided under this Contract, each
Portfolio will pay G.T. Capital a fee, based on the average daily net
assets of each Portfolio, at the annualized rate of .725% on the first
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<PAGE>
$500 million, .70% on the next $500 million, .675% on the next $500
million, and .65% on all amounts thereafter.
(b) For the services provided under this Contract, each
Portfolio as hereafter may be established and become subject to this
Contract, will pay to G.T. Capital a fee in an amount to be agreed upon in
a written fee agreement ("Fee Agreement") executed by the Master Portfolio
on behalf of such Portfolio and by G.T. Capital. All such Fee Agreements
shall provide that they are subject to all terms and conditions of this
Agreement.
(c) The fee shall be computed daily and paid monthly to G.T.
Capital on or before the last business day of the next succeeding calendar
month.
(d) G.T. Capital agrees to reduce the fee payable to it under
this Contract by the amount by which the ordinary operating expenses
(exclusive of brokerage commissions, organization expenses, interest,
taxes, certain expenses attributable to investing outside the United
States and extraordinary expenses) of a Portfolio for any fiscal year
borne by an investor in that Portfolio, together with the direct ordinary
operating expenses (exclusive of organization expenses, taxes, interest,
distribution-related expenses and extraordinary expenses) of that investor
(collectively, "Expenses"), shall exceed the most stringent limits
prescribed by any state in which shares of any investor in the Portfolio
are offered for sale. Proper accruals shall be made for the Portfolio for
any projected reduction hereunder and corresponding amounts shall be
withheld from the fees paid by such Portfolio to G.T. Capital. Any
additional reduction computed as being necessary at the end of the fiscal
year shall be deducted from the fee for the last month of such fiscal
year. If the amount of the fee payable by a Portfolio to G.T. Capital is
less than the amount by which such Portfolio's Expenses exceed an
applicable expense limitation, G.T. Capital shall reimburse that Portfolio
in an amount sufficient to enable that Portfolio to meet such limitation.
(e) If this Contract becomes effective or terminates before the
end of any month, the fee for the period from the effective date to the
end of the month or from the beginning of such month to the date of
termination, as the case may be, shall be prorated according to the
proportion which such period bears to the full month in which such
effectiveness or termination occurs.
9. Limitation of Liability of G.T. Capital and Indemnification.
G.T. Capital shall not be liable, and the Master Portfolio and the
Portfolios shall indemnify G.T. Capital and its directors, officers and
employees, for any costs or liabilities arising from any error of judgment
or mistake of law or any loss suffered by the Master Portfolio or the
Portfolios in connection with the matters to which this Contract relates,
except a loss resulting from willful misfeasance. bad faith or gross
negligence on the part of G.T. Capital in the performance by G.T. Capital
of its duties or from reckless disregard by G.T. Capital of its
obligations and duties under this Contract. Any person, even though also
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<PAGE>
an officer, partner, employee, or agent of G.T. Capital, who may be or
become a Trustee, officer, employee or agent of the Master Portfolio shall
be deemed, when rendering services to the Portfolios or acting with
respect to any business of the Portfolios to be rendering such service to
or acting solely for the Portfolios and not as an officer, partner,
employee, or agent or one under the control or direction of G.T. Capital
even though paid by it.
10. Duration and Termination.
(a) This Contract shall become effective with respect to a
Portfolio upon the date written above, provided that this Contract shall
not take effect unless it has first been approved (i) by a vote of a
majority of the Independent Trustees, cast in person at a meeting called
for the purpose of voting on such approval, and (ii) by vote of a majority
of such Portfolio's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract
shall continue in effect for two years from the above written date or
until June 30, 1997, whichever is earlier. Thereafter, if not terminated,
with respect to each Portfolio, this Contract shall continue automatically
for successive periods ending on June 30, provided that such continuance
is specifically approved at least annually (i) by a vote of a majority of
the Independent Trustees, cast in person at a meeting called for the
purpose of voting on such approval, and (ii)by the Board or by vote of a
majority of the outstanding voting securities of that Portfolio.
(c) Notwithstanding the foregoing, this Contract may be
terminated at any time, without the payment of any penalty, by vote of the
Board or by a vote of a majority of the outstanding voting securities of a
Portfolio on sixty days' written notice to G.T. Capital or by G.T. Capital
at any time, without the payment of any penalty, on sixty days' written
notice to the Master Portfolio. Termination of this Contract with respect
to one Portfolio shall not effect the continued effectiveness of this
Contract with respect to any other Portfolio. This Contract will
automatically terminate in the event of its assignment.
11. Amendment. No provision of this Contract may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver,
discharge or termination is sought, and no amendment of this Contract
shall be effective until approved by vote of a majority of the respective
Portfolio's outstanding voting securities.
12. Governing Law. This Contract shall be construed in accordance
with the laws of the State of California and the 1940 Act. To the extent
that the applicable laws of the State of California conflict with the
applicable provisions of the 1940 Act, the latter shall control.
13. Miscellaneous. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
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<PAGE>
provision of this Contract shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Contract shall
not be affected thereby. This Contract shall be binding upon and shall
inure to the benefit of the parties hereto and their respective
successors. As used in this Contract, the terms "majority of the
outstanding voting securities," "interested person," "assignment,"
"broker," "dealer," "investment adviser," "national securities exchange,"
"net assets," "prospectus," "sale," "sell" and "security" shall have the
same meaning as such terms have in the 1940 Act, subject to such exemption
as may be granted by the Securities and Exchange Commission by any rule,
regulation or order. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Contract is made less restrictive by a
rule, regulation or order of the Securities and Exchange Commission,
whether of special or general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated as of the day and year first
above written.
Attest: GROWTH PORTFOLIO
/s/ Peter R. Guarino /s/ James R. Tufts
______________________________ _____________________________
By: James R. Tufts
Vice President
Attest: G.T. CAPITAL MANAGEMENT INC.
/s/ Peter R. Guarino /s/ James R. Tufts
______________________________ _____________________________
By: James R. Tufts
President
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<PAGE>
SCHEDULE A
Small Cap Portfolio
Value Portfolio
<PAGE>
<PAGE>
CUSTODIAN CONTRACT
Between
GROWTH PORTFOLIO
and
STATE STREET BANK AND TRUST COMPANY
SCGS 4/88
WP0809c
<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 . . . . . . . . . . . . . . . . . . . . . . . . 5
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 Securities System . . . . . . . . . 7
2.10A Fund Assets Held in the Custodian's Direct
Paper System . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.11 Segregated Account . . . . . . . . . . . . . . . . . . . . . . 10
2.12 Ownership Certificates for Tax Purposes . . . . . . . . . . . 10
2.13 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.14 Foreign Securities Depositories . . . . . . . . . . . . . . . 11
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States . . . . . . . . . . 11
3.1 Appointment of Foreign Sub-Custodian . . . . . . . . . . . . . 11
3.2 Assets to be Held . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Foreign Securities Depositories . . . . . . . . . . . . . . . 11
3.4 Segregation of Securities . . . . . . . . . . . . . . . . . . 12
3.5 Agreements with Foreign Banking Institutions . . . . . . . . . 12
3.6 Access of Independent Accountants of the Fund . . . . . . . . 12
3.7 Reports by Custodian . . . . . . . . . . . . . . . . . . . . . 12
3.8 Transactions in Foreign Custody Account . . . . . . . . . . . 13
3.9 Liability of Foreign Sub-Custodians . . . . . . . . . . . . . 13
3.10 Liability of Custodian . . . . . . . . . . . . . . . . . . . . 13
3.11 Reimbursement for Advances . . . . . . . . . . . . . . . . . . 14
3.12 Monitoring Responsibilities . . . . . . . . . . . . . . . . . 14
3.13 Branches of U.S. Banks . . . . . . . . . . . . . . . . . . . . 14
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Fund . . . . . . . . . . . . . . . . . . . . 14
5. Proper Instructions . . . . . . . . . . . . . . . . . . . . . 15
6. Actions Permitted Without Express Authority . . . . . . . . . 15
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<PAGE>
7. Evidence of Authority . . . . . . . . . . . . . . . . . . . . 16
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 . . . . . . . . . . 17
11. Reports to Fund by Independent Public Accountants . . . . . . 17
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 . . . . . . . . . . . . 20
17. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . 20
18. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . 20
19. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . 20
20. Limitation of Trustee, Officer and Shareholder
Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 20
21. No Liability of Other
Portfolios . . . . . . . . . . . . . . . . . . . . . . . . . . 21
22. Shareholder Communications . . . . . . . . . . . . . . . . . . 21
- ii -
<PAGE>
CUSTODIAN CONTRACT
This Contract between Growth Portfolio, a business trust
organized and existing under the laws of Massachusetts, having its
principal place of business at 50 California Street, San Francisco,
California 94111 hereinafter called the "Fund, and State Street Bank and
Trust Company, a Massachusetts trust company, having its principal place
of business at 225 Franklin Street, Boston, Massachusetts, 02110,
hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate
series, with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in two
series, the G.T. Global: America Small Cap Growth Fund and G.T. Global:
America Value Fund (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 THEREFOR, 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 new or treasury shares of beneficial interest of
the Fund representing interests in the Portfolios, ("Shares") 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.
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
<PAGE>
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, collectively referred to herein as "Securities System"
and (b) commercial paper of an issuer for which State Street Bank
and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian pursuant to Section 2.10A.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or
in a Securities System account of the Custodian or in the
Custodian's Direct Paper book entry system account ("Direct Paper
System Account") only upon receipt of Proper Instructions 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 Securities
System, in accordance with the provisions of Section 2.10
hereof;
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
- 2 -
<PAGE>
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 l; 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 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
- 3 -
<PAGE>
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 shares 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 Shares for repurchase or
redemption; and
15) For any other proper corporate 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 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 corporate purpose, and naming the person or
persons to whom delivery of such securities shall be
made.
2.3 Registration of Securities. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in
the name of the Portfolio or in the name of any nominee of the
Fund on behalf of the Portfolio or of any nominee of the
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<PAGE>
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.
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 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 Shares of such Portfolio which
are deposited into the Portfolio's account.
2.6 Collection of Income. 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
- 5 -
<PAGE>
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 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 2.10A; (d) in the
case of repurchase 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;
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<PAGE>
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in
Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;
4) 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;
5) For the payment of any dividends on Shares of the
Portfolio declared pursuant to the governing documents
of the Fund;
6) For payment of the amount of dividends received in
respect of securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of,
in addition to Proper Instructions 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.
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 80 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
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<PAGE>
relieve the Custodian of its responsibilities or liabilities
hereunder.
2.10 Deposit of Fund Assets in 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 "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
Securities System provided that such securities are
represented in an account ("Account") of the Custodian
in the Securities System which shall not include any
assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities
of the Portfolio which are maintained in a Securities
System shall identify by book-entry those securities
belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from
the Securities System that such securities have been
transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such
payment and transfer for the account of the Portfolio.
The Custodian shall transfer securities sold for the
account of the Portfolio upon (i) receipt of advice from
the Securities System that payment for such securities
has been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the 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 Securities System for the
account of the Portfolio.
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<PAGE>
4) The Custodian shall provide the Fund for the Portfolio
with any report obtained by the Custodian on the
Securities System's accounting system, internal
accounting control and procedures for safeguarding
securities deposited in the Securities System;
5) The Custodian shall have received from the Fund on behalf
of the Portfolio the initial or annual certificate, as
the case may be, required by Article 14 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Fund for the benefit of the Portfolio for any 1088 or
damage to the Portfolio resulting from use of the
Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the
Securities System; at the election of the Fund, it shall
be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the
Securities System or any other person which the
Custodian may have as a consequence of any such loss or
damage if and to the extent that the Portfolio has not
been made whole for any such loss or damage.
2.10A 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.
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<PAGE>
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 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.
2.11 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 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 corporate 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 corporate purposes.
- 10 -
<PAGE>
2.12 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.
2.13 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 prosy soliciting
materials and all notices relating to such securities.
2.14 Communications Relating to Portfolio Securities. 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 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
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<PAGE>
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)(l) 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.
3.3 Foreign Securities Depositories. Except as may otherwise be
agreed upon in writing by the Custodian and the Fund, assets of
the Portfolios shall be maintained in foreign securities
depositories only through arrangements implemented by the
foreign banking institutions serving as sub-custodians pursuant
to the terms hereof. Where possible, such arrangements shall
include entry into agreements containing the provisions set
forth in Section 3.5 hereof.
3.4 Holding Securities. The Custodian may hold securities and other
non-cash property for all of its customers, including the
Portfolios of 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 Portfolios which are maintained in such account
shall identify by book-entry those securities and other non-cash
property belonging to the Portfolios 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 be substantially in the
form set forth in Exhibit 1 hereto and 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
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<PAGE>
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, 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 each Fund from
and against any loss, damage, cost, expense, liability or claim
arising out of or in connection with the institution's
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<PAGE>
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 1088, damage, cost,
expense, liability or claim if and to the extent that the Fund
has not been made whole for any such 1088, 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 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 Portfolios 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
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<PAGE>
this Contract. In addition, the Custodian will promptly inform
the Fund in the event that the Custodian learns of a material
adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or
in the case of any foreign sub-custodian not the subject of an
exemptive order from the Securities and Exchange Commission is
notified by such foreign sub-custodian that there appears to be
a substantial likelihood that its shareholders' equity will
decline below $200 million (U.S. dollars or the equivalent
thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally
accepted U.S. accounting principles).
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.
4. Payments for Sales or Repurchases or Redemptions of Shares of the
Fund
----------------------------------------------------------------
The Custodian shall receive from the distributor for the Shares
or from the Transfer Agent of the Fund and deposit into the account of the
appropriate Portfolio such payments as are received for Shares 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
Shares 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 instructions from the Transfer
Agent, make funds available for payment to holders of Shares who have
delivered to the Transfer Agent a request for redemption or repurchase of
their Shares. In connection with the redemption or repurchase of Shares
of 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 shareholders. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian shall honor
checks drawn on the Custodian by a holder of Shares, which checks have
been furnished by the Fund to the holder of Shares, when presented to the
Custodian in accordance with such procedures and controls as are mutually
agreed upon from time to time between the Fund and the Custodian.
- 15 -
<PAGE>
5. Proper Instructions
-------------------
Proper Instructions as used throughout this Contract means a
writing signed or initialed by two or more 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 2.11.
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;
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
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<PAGE>
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 keep the books of account and compute the
net asset value per share of each Portfolio. 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
80, shall advise the Transfer Agent periodically of the division of such
net income among its various components. The calculations of the net
asset value per share 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, applicable
federal and state tax laws and any other law or administrative rules or
procedures which may be applicable to the Fund. 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 80 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-lA, 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
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<PAGE>
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 80 state.
12. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for
its services and expenses as Custodian, as agreed upon from time to time
between the Fund 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.
Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the Fund.
The Custodian shall be liable for the acts or omissions of a
foreign banking institution appointed pursuant to the provisions of
Article 3 to the same extent as set forth in Article 1 hereof with
respect to sub-custodians located in the United States (except as
specifically provided in Article 3.10) 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 3.11 hereof, the Custodian shall not be liable for any 1088,
damage, cost, expense, liability or claim resulting from, or caused by,
the direction of or authorization by the Fund to maintain custody or any
securities or cash of the Fund in a foreign country including, but not
limited to, losses resulting from nationalization, expropriation, currency
restrictions, or acts of war or terrorism.
- 18 -
<PAGE>
If the Fund on behalf of a 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 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.
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 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 Securities System by such Portfolio and the receipt
of an annual certificate of the Secretary or an Assistant Secretary that
the Board of Trustees has reviewed the use by such Portfolio of such
Securities System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall
not with respect to a Portfolio act under Section 2.10A 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 and the receipt of an
annual certificate of the Secretary or an Assistant Secretary that the
Board of Trustees has reviewed the use by such Portfolio of the Direct
Paper System; PROVIDED FURTHER, however, that the Fund shall not amend or
terminate this Contract in contravention of any applicable federal or
state regulations, or any provision of the Declaration of Trust, and
further provided, that the Fund 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
- 19 -
<PAGE>
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 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.
- 20 -
<PAGE>
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
Shares in addition to G.T. Global: America Small Cap Growth Fund and G.T.
Global: American Value Fund 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 Shares 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.
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. Limitation of Trustee, Officer and Shareholder Liability
--------------------------------------------------------
It is expressly agreed that the obligations of the Fund and each
Portfolio hereunder shall not be binding upon any of the Trustees,
officers, agents or employees of the Fund or upon the shareholders of any
Portfolio personally, but shall only bind the assets and property of the
Fund, as provided in its Trust Instrument. The execution and delivery of
this Agreement have been authorized by the Trustees of the Fund, and this
Agreement has been executed and delivered by an authorized officer of the
Fund acting as such; neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made
by any of them individually or to impose any liability on any of them
personally, but shall bind only the assets and property of the Fund, as
provided in its Trust Instrument.
21. No Liability of Other Portfolios
- 21 -
<PAGE>
--------------------------------
Notwithstanding any other provision of this Contract, 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 liable or shall be charged for any debt, obligation
or liability of any other Portfolio, whether arising under this Contract
or otherwise.
22. Shareholder Communications
--------------------------
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 on behalf
of the Portfolios to indicate whether it authorizes the Custodian to
provide the Portfolio's name, address, and share position to requesting
companies whose stock the Portfolios own. If the Fund on behalf of the
Portfolios tells the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund on behalf of the
Portfolios tells the Custodian "yes" or does not check either "yes" or
"no" below, the Custodian is required by the rule to treat the Portfolios
as consenting to disclosure of this information for all securities owned
by the Portfolios or any funds or accounts established by the Portfolios.
For the Portfolios' protection, the Rule prohibits the requesting
company from using a Portfolio's name and address for any purpose other
than corporate communications. Please indicate below whether the Fund on
behalf of the Portfolios consents or objects by checking one of the
alternatives below.
YES [ ] The Custodian is authorized to release the
Portfolios' names, addresses, and share positions.
NO [ X ] The Custodian is not authorized to release the
Portfolios' names, addresses, and share positions.
- 22 -
<PAGE>
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 August, 1995.
ATTEST GROWTH PORTFOLIO
/s/ Peter R. Guarino By: /s/ Helge Krist Lee
------------------------- ----------------------------
Peter R. Guarino Helge Krist Lee
Assistant Secretary Vice President and Secretary
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Janice M. Duffy By: /s/ Ronald E. Logue
------------------------ -------------------------------
Janice M. Duffy Ronald E. Logue
Executive Vice President
- 23 -
<PAGE>
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of Growth
Portfolio for use as sub-custodians for the Fund's securities and other
assets:
(Insert banks and securities depositories)
- 24 -
<PAGE>
<PAGE>
TRANSFER AGENCY CONTRACT BETWEEN
GROWTH PORTFOLIO
AND
G.T. GLOBAL INVESTOR SERVICES, INC.
This Transfer Agency Contract ("Contract") is made as of October
____, 1995 between Growth Portfolio ("Portfolio"), a New York common law
trust, and G.T. Global Investor Services, Inc. ("G.T."), a California
corporation.
WHEREAS, the Portfolio is registered under the Investment Company Act
of 1940, as amended ("1940 Act"), as an open-end management investment
company; and
WHEREAS, the Portfolio currently operates two separate subtrusts,
each organized as a separate and distinct series of shares of beneficial
interest in the Portfolio; and
WHEREAS, the Portfolio may from time to time in the future establish
one or more additional subtrusts, each organized as a separate and
distinct series of shares of beneficial interest in the Portfolio (the
Portfolio's existing subtrusts and subtrusts as may hereafter be
established are referred to in this Contract as the "Subtrusts," and may
singly be referred to as "Subtrust"); and
WHEREAS, the Portfolio desires to retain G.T. to act as transfer
agent and dividend disbursing agent to each of the Subtrusts, and G.T. is
willing to act in such capacities;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
I. APPOINTMENT
The Portfolio hereby appoints G.T. to act as transfer agent and
dividend disbursing agent of each Subtrust for the period and on the terms
set forth in this Contract. G T. accepts such appointment and agrees to
render the services herein set forth. for the compensation herein
provided.
II. DEFINITIONS
As used in this Contract, the following terms shall have the
definition described to them in this Paragraph.
(A) "Agent" means a broker, dealer or other agent authorized to
act on behalf of a Shareholder in transactions involving Shares.
(B) "Agent Firm" means an investment, stock brokerage or other
business firm employing an Agent.
<PAGE>
(C) "Authorized Person" means any officer of the Portfolio and
any other person, whether or not any such person is an officer or employee
of the Portfolio, duly authorized by the Board of Trustees, the President
or any Vice President of the Portfolio to give Oral and Written
Instructions on behalf of the Portfolio. The Portfolio will provide to
G.T. and keep current a written list of all Authorized Persons.
(D) "Custodian" means the custodian or custodians employed by
the Portfolio to maintain custody of the Subtrusts' assets.
(E) "Distributor" means the principal underwriter of the Shares
of each Subtrust.
(F) "Governing Corporate Documents" means the Declaration of
Trust, By-laws and other applicable governing corporate documents of the
Portfolio, all as may be amended from time to time.
(G) "Oral Instructions" means oral instructions actually
received by G.T. from an Authorized Person or from a person reasonably
believed by G.T. to be an Authorized Person.
(H) "Prospectus" means the current prospectus and statement of
additional information of a Subtrust, taken together.
(I) "Shares" means shares of common stock of any of the
Subtrusts.
(J) "Shareholder" means the owner of Shares.
(K) "Written Instructions" means written instructions delivered
by hand, mail, tested telegram or telex, cable, or facsimile sending
device, received by G.T. and signed by an Authorized Person.
III. AUTHORIZED AND REGISTERED SHARES
(A) As of the date of this Contract, the Portfolio represents
that an unlimited number of Shares of each Subtrust are authorized for
issuance under the Portfolio's Declaration of Trust, as amended. The
Portfolio agrees to keep G.T. apprised, to the extent necessary for G.T.
to adequately perform its duties hereunder, of the number of Shares of
each Subtrust authorized for issuance.
(B) As of the date of this Contract, beneficial interests in
the Portfolio have not been registered under the Securities Act of 1933,
as amended (the "1933 Act") because such interests are offered solely in
private placement transactions which do not involve any "public offering"
within the meaning of Section 4(2) of the 1933 Act. Investments in the
Portfolio may only be made by investment companies, insurance company
separate accounts, common or commingled trust funds or similar
organizations or entities which are "accredited investors" as defined in
Regulation D under the 1933 Act.
- 2 -
<PAGE>
IV. COMPLIANCE BY G.T. WITH GOVERNING CORPORATE DOCUMENTS,
PROSPECTUS AND APPLICABLE LAW AND REGULATION
All of G.T.'s actions in fulfilling its responsibilities under this
Contract shall be made in accordance with the Prospectus, the Governing
Corporate Documents, the rules and regulations of the Securities and
Exchange Commission and the laws and regulations of the State of New York
relating to the issuance and transfer of securities such as the Shares.
V. RECORDS
(A) G.T. shall maintain records of the accounts for each
Shareholder which include the following information with respect to each
Subtrust:
(1) name, address and United States Taxpayer
Identification Number;
(2) number of Shares held and number of Shares for which
certificates, if any, have been issued, including certificate numbers and
denominations;
(3) historical information regarding the account of each
Shareholder, including dividends and distributions paid and the date and
price of all transactions in a Shareholder's account:
(4) any stop or restraining order placed against a
Shareholder's account;
(5) any correspondence relating to the current maintenance
of a Shareholder's account;
(6) information with respect to all tax withholdings; and
(7) any information required to enable G.T. to perform any
calculations contemplated or required by this Agreement or that may
reasonably be requested by the Portfolio.
(B) The books and records pertaining to the Portfolio which are
in the possession of G.T. shall be the property of the Portfolio. G.T.
shall prepare and maintain in complete and accurate form all books and
records necessary for it to serve as transfer agent, registrar, dividend
disbursing agent and shareholder servicing agent to the Portfolio,
including (a) all those records required to be prepared and maintained by
the Portfolio under the 1940 Act, by other applicable Securities Laws,
rules and regulations and by state laws and (b) such books and records as
are necessary for G.T. to perform all of the services it agrees to provide
in this Agreement. The Portfolio or its authorized representatives shall
have access to such books and records at all times during G.T.'s normal
business hours. Upon the reasonable request of the Portfolio, copies of
any such books and records shall be provided by G.T. to the Portfolio or
its authorized representatives, at the Portfolio's expense.
- 3 -
<PAGE>
VI. TRANSACTIONS NOT REQUIRING INSTRUCTIONS
In the absence of contrary Written Instructions, G.T. is
authorized to take the following actions in providing services under this
Contract, all in accordance with the provisions of the Prospectus:
(A) Share Transactions -- Uncertificated Shares
(1) Issuance of Shares. Upon receipt by G.T. of a purchase
order for Shares from the Distributor, upon the further receipt by G.T. of
sufficient information necessary to enable G.T. to establish an account,
and after confirmation of receipt of payment for such Shares, G.T. shall
create an account and issue and credit Shares to such account.
(2) Transfers of Shares. When the Distributor, a
Shareholder or a Shareholder's Agent provides G.T. with instructions to
transfer Shares on the books of a Subtrust, and G.T. further receives such
documentation as is necessary to process the transfer, G.T. shall transfer
the registration of such Shares and if necessary deliver them pursuant to
such instructions.
(3) Redemptions. Upon receipt of a redemption order from
the Distributor, a Shareholder or a Shareholder's Agent, G.T. shall redeem
the number of Shares indicated thereon from the redeeming Shareholder's
account and receive from the pertinent Subtrust's custodian and disburse
to the redeeming Shareholder or the Shareholder's Agent, if so instructed,
the redemption proceeds therefor.
(B) Share Transactions -- Certificated Shares
(1) The Portfolio shall supply G.T. with a sufficient
supply of certificates representing Shares, in the form approved from time
to time by the Board of Trustees or officers of the Portfolio, and, from
time to time, shall replenish such supply upon the request of G.T.
Certificates shall be properly executed, manually or by facsimile
signature, by the duly authorized officers of the Portfolio.
Notwithstanding the death, resignation or removal of any officer of the
Portfolio, such executed certificates bearing the manual or facsimile
signature of such officer shall remain valid and may be issued to
Shareholders until G.T. is otherwise directed.
(2) In the case of the loss or destruction of any
certificate representing Shares, no new certificate shall be issued in
lieu thereof, unless there shall first have been furnished an appropriate
bond of indemnity issued by a surety company approved by G.T.
(3) Upon receipt of written instructions from a
Shareholder or a Shareholder's Agent of uncertificated Shares for a
certificate in the number of shares in the Shareholder's account, G.T.
shall issue the requested certificate and deliver it to the Shareholder in
accordance with the Shareholder's instructions.
- 4 -
<PAGE>
(4) G.T. shall process all orders for the purchase,
transfer, redemption and exchange of certificated Shares in the same
fashion as it processes such orders for uncertificated Shares, as
specified in subparagraph VI(A) of this Contract, provided that, as
specified in the Prospectus, G.T. receives properly executed and completed
certificates and stock power transfers or similar documents necessary to
effectuate the contemplated transaction.
(5) Upon receipt of certificates, which shall be in proper
form for transfer, together with Shareholder's instructions to hold such
certificates for safekeeping, G.T. shall reduce such Shares to
uncertificated status, while retaining the appropriate registration in the
name of the Shareholder upon the transfer books.
(C) Special Investment and Withdrawal Plans. G.T. shall process
transactions of Shareholders participating in any special investment
and/or withdrawal plans or programs established by the Portfolio or the
Distributor with respect to Shares, such as automatic investment plans,
systematic withdrawal plans and dollar cost averaging investing programs,
in accordance with the terms of such plans or programs as provided to G.T.
by the Portfolio or the Distributor.
VII. RELIANCE BY G.T. ON INSTRUCTIONS
Unless otherwise provided in this Contract, G.T. shall act only upon
Oral or Written Instructions (collectively, "Instructions"). G.T. shall be
entitled to rely upon any Instructions actually received by it under this
Contract. The Portfolio agrees that G.T. shall incur no liability to the
Portfolio in acting upon Instructions given to G.T. hereunder, provided
that such Instructions reasonably appear to have been received from an
Authorized Person.
VIII. DIVIDENDS AND DISTRIBUTIONS
(A) The Portfolio shall furnish G.T. with appropriate evidence of
action by the Portfolio's Board of Trustees declaring dividends and
distributions and authorizing their payment as described in the
Prospectus. After deducting any amount required to be withheld by any
applicable tax laws, rules and regulations or other applicable laws, rules
and regulations, in accordance with the instructions in proper form from a
Shareholder and the provisions of the Governing Corporate Documents and
Prospectus, G.T. shall issue and credit the account of the Shareholder
with Shares or pay such dividends or distributions to the Shareholder in
cash, upon the election of the Shareholder as provided for in the
Prospectus. In lieu of receiving from the Custodian and paying to
Shareholders cash dividends or distributions, G.T. may arrange for the
direct payment of cash dividends and distributions to Shareholders by the
Custodian, in accordance with such procedures and controls as are mutually
agreed upon from time to time by and among the Portfolio, G.T. and the
Custodian.
- 5 -
<PAGE>
(B) G.T. shall prepare and file with the Internal Revenue Service
and other appropriate taxing authorities, and address and mail to
Shareholders, such returns and information relating to dividends and
distributions paid by the Subtrusts as are required to be so prepared,
filed and mailed by applicable laws, rules and regulations, or such
substitute form of notice as may from time to time be permitted or
required by the Internal Revenue Service. On behalf of the Portfolio, G.T.
shall mail certain requests for Shareholders' certifications under
penalties of perjury of taxpayer identification numbers and/or other
information and pay on a timely basis to the appropriate Federal
authorities any taxes withheld on dividends and distributions paid by a
Subtrust, all as required by applicable Federal tax laws and regulations.
IX. COMMUNICATIONS WITH SHAREHOLDERS
(A) Communications to Shareholders. G.T. will address and mail
all communications by the Portfolio to the shareholders of the Subtrusts,
including reports to Shareholders, confirmations of purchases and sales of
Shares, periodic account statements, dividend and distribution notices and
proxy materials for meetings of shareholders. G.T. will receive and
tabulate the proxy cards for meetings of Shareholders, and, if requested
by the Portfolio, attend meetings of Shareholders for purposes of
reporting on and certifying such tabulations.
(B) Correspondence. G.T. will answer such correspondence from
Shareholders, Agents and others relating to its duties hereunder and such
other correspondence as may from time to time be mutually agreed upon by
G.T. and the Portfolio.
X. OTHER ONGOING SERVICES
As requested by the Portfolio, G.T. shall also provide the following
services on an ongoing basis:
(A) Furnish to the Portfolio or its designated agent such
state-by-state registration reports reasonably necessary to enable the
Portfolio to keep current the registration of each class of shares with
state securities authorities.
(B) Provide toll-free phone lines for direct Shareholder use,
plus customer liaison staff with on-line inquiry capacity.
(C) File with the Internal Revenue Service such information on
behalf of each Shareholder as is required by law.
(D) Provide the Portfolio with Shareholder lists and such
statistical information as the Portfolio reasonably may request.
(E) Provide the Custodian with such information as the
Portfolio and the Custodian reasonably may request.
- 6 -
<PAGE>
(F) Mail duplicate confirmations and/or statements to Agents
with respect to their clients' accounts and transactions in Shares,
whether such transactions were executed through such Agents or directly
through G.T.
(G) Provide detail for confirmations and/or statements to be
provided to Shareholders by Agent Firms, and provide such other
Shareholder accounting information to Agent Firms as may be agreed upon
between the Portfolio and G.T.
(H) Provide to the Custodian timely notification of Share
transactions and such other information as may be agreed upon from time to
time by the Portfolio, G.T. and the Custodian.
XI. COOPERATION WITH ACCOUNTANTS
G.T. shall cooperate with the Portfolio's independent public
accountants and shall take all reasonable action in the performance of its
obligations under this Contract to assure that all necessary information
is made available to such accountants for the timely expression of their
opinion with respect to the financial statements of the Subtrusts.
XII. CONFIDENTIALITY
G.T. agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the Subtrusts
and their prior, present or potential Shareholders, except, after prior
notification to and approval in writing by the Portfolio, which approval
shall not be unreasonably withheld and may not be withheld when G.T. 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 Subtrust.
XIII. COMPENSATION
As compensation for the services rendered by G.T. during the
term of this Contract, each Subtrust will pay to G.T. monthly fees that
shall be agreed to from time to time by the Portfolio and G.T. In
addition, as may be agreed to from time to time by the Portfolio and G.T.,
each Subtrust shall reimburse G.T. for certain expenses incurred by G.T.
in rendering services with respect to that Subtrust under this Contract.
XIV. STANDARD OF CARE
(A) In the performance of its duties hereunder, G.T. shall be
obligated to exercise care and diligence and to act in good faith and to
use its best efforts within reasonable limits to ensure the accuracy and
completeness of all services provided under this Contract.
(B) G.T. shall be under no duty to take any action on behalf of
the Portfolio except as specifically set forth herein or as may be
specifically agreed to by G.T. in writing.
- 7 -
<PAGE>
(C) G.T. shall be responsible and liable for all losses,
damages and costs (including reasonable attorneys fees) incurred by the
Portfolio which is due to or caused by G.T.'s negligence in the
performance of its duties under this Contract or for G.T.'s negligent
failure to perform such duties as are specifically ascribed to G.T. in
this Contract; provided that, to the extent that duties, obligations and
responsibilities are not expressly set forth in this Contract, G.T. shall
not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of G.T. or reckless
disregard by G.T. of such duties, obligations and responsibilities.
(D) Without limiting the generality of the foregoing
subparagraphs of this Paragraph XIV or of any other provision of this
Contract, in connection with G.T.'s duties under this Contract G.T. shall
not be under any duty or obligation to inquire into and shall not be
liable for or in respect of:
(1) the validity or invalidity or authority or lack
thereof of any Oral or Written Instruction, notice or other instrument
which conforms to the applicable requirements of this Contract, if any,
and which G.T. reasonably believes to be genuine;
or
(2) delays or errors or loss of data occurring by reason
of circumstances beyond G.T.'s control, including acts of civil or
military authority, national emergencies, labor difficulties, fire,
mechanical breakdown, earthquake, flood or catastrophe, acts of God,
insurrection, war, riots or failure of the mails, transportation,
communication or power supply.
XV. RECEIPTS OF ADVICE
(A) Advice of the Portfolio. If G.T. is in doubt as to any
action to be taken or omitted by it, G.T. may request and shall receive
from the Portfolio directions or advice, including Oral or Written
Instructions where appropriate.
(B) Advice of Counsel. If G.T. is in doubt as to any question
of law involved in any action to be taken or omitted by it, G.T. may
request advice from counsel of its own choosing (who may also be counsel
for the Portfolio, the Distributor and/or the investment adviser of the
Portfolio).
(C) Conflicting Advice. In case of conflict between directions,
advice or Oral or Written Instructions received by G.T. pursuant to
subparagraph (A) of this Paragraph and advice received by G.T. pursuant to
subparagraph (b) of this Paragraph, G.T. shall be entitled to rely on and
follow the advice received pursuant to subparagraph (B) alone.
(D) Protection of G.T.
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(1) G.T. shall be protected in any action or inaction
which it takes in reliance on any directions, advice or Oral or Written
Instructions received pursuant to subparagraphs (A) or (B) of this
Paragraph which G.T., after receipt of any such directions, advice or Oral
or Written Instructions, in good faith believes to be consistent with such
directions, advice or Oral or Written Instructions, as the case may be.
(2) Notwithstanding the foregoing, nothing in this
Paragraph shall be constructed as imposing upon G.T. any obligation (a) to
seek such directions, advice or Oral or Written Instructions, or (b) to
act in accordance with such directions, advice or Oral or Written
Instructions when received, unless, under the terms of another provision
of this Contract, the same is a condition to G.T.'s properly taking or
omitting to take such actions.
XVI. INDEMNIFICATION OF G.T.
The Portfolio agrees to indemnify and hold harmless G.T. and its
nominees and subcontractors, if any, from all taxes, charges, expenses,
assessments, claims and liabilities (including, without limitation,
liabilities arising under the 1933 Act, the 1940 Act, the Securities
Exchange Act of 1934, the Commodities Exchange Act, and any state and
foreign securities and blue sky laws, all as or to be amended from time to
time) and expenses, including (without limitation) reasonable attorneys'
fees and disbursements, arising directly or indirectly from any action or
thing which G.T. takes or does or omits to take or do:
(A) at the request or on the direction of or in reliance upon
the advice of the Portfolio;
(B) upon Oral or Written Instructions; or
(C) in the performance by G.T. or its responsibilities under
this Contract;
provided that G.T. shall not be indemnified against any liability to the
Portfolio or the Shareholders (or any expenses incident to such liability)
arising out of G.T.'s own willful misfeasance, bad faith or negligence or
reckless disregard of its duties in connection with the performance of its
duties and obligations specifically described in this Contract.
XVII. INDEMNIFICATION OF THE PORTFOLIO
G.T. agrees to indemnify and hold harmless the Portfolio from all
taxes, charges, expenses, assessments, claims and liabilities (including,
without limitation, liabilities arising under the 1933 Act, the 1940 Act,
the Securities Exchange Act of 1934, the Commodities Exchange Act, and any
state and foreign securities and blue sky laws, all as or to be amended
from time to time) and expenses, including (without limitation) reasonable
attorneys' fees and disbursements, arising directly or indirectly from any
action or omission of G.T. that does not meet the standard of care to
which G.T. is subject under Paragraph XlV of this Contract.
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XVIII. LIMITATION OF LIABILITY OF SHAREHOLDERS AND TRUSTEES OF THE
PORTFOLIO
It is expressly agreed that the obligations of the Portfolio
hereunder shall not be binding upon any of the shareholders, Trustees,
nominees, officers, agents or employees of the Portfolio personally, but
shall only bind the assets and property of the pertinent Subtrust(s), as
provided in the Portfolio's Declaration of Trust, as amended. The
execution and delivery of this Contract have been authorized by the
Trustees of the Portfolio, and this Contract has been executed and
delivered by an authorized officer of the Portfolio acting as such;
neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the assets and property of the pertinent Subtrust(s), as
provided in the Portfolio's Declaration of Trust, as amended.
XIX. DURATION AND TERMINATION
This Contract shall continue with respect to each Subtrust until
termination with respect to that Subtrust by the Portfolio or G.T. on
sixty (60) days' prior written notice.
XX. REGISTRATION AS A TRANSFER AGENT
G.T. represents that it is currently registered as a transfer agent
with the Securities and Exchange Commission, and that it will remain so
registered for the duration of this Contract. G.T. agrees that it will
promptly notify the Portfolio in the event of any material change in its
status as a registered transfer agent. Should G.T. fail to be registered
with the Securities and Exchange Commission as a transfer agent at any
time during the term of this Contract, the Portfolio may immediately
terminate this Contract, upon written notice to G.T.
XXI. NOTICES
All notices and other communications hereunder, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex
or facsimile sending device. Notices with respect to a party shall be
directed to such address as may from time to time be designated by that
party to the other.
XXII. FURTHER ACTIONS
Each party agrees to perform such further acts and execute such
further documents as are necessary to effect the purposes of this
Contract.
XXIII. AMENDMENTS
This Contract or any part hereof may be amended only by an instrument
in writing signed by both parties hereto.
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XXIV. COUNTERPARTS
This Contract may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument
XXV. MISCELLANEOUS
This Contract embodies the entire agreement and understanding between
the parties hereto, and supersedes all prior agreements and understandings
relating to the subject matter hereof, provided that the parties may
embody in one or more separate documents their agreement or agreements
with respect to such matters that this Contract provides may be later
agreed to by and between the parties from time to time. The captions in
this Contract are included for convenience of reference only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Contract shall be governed by and construed
in accordance with California law. If any provision of this Contract shall
be held or made invalid by a court decision, statute, rule or otherwise,
the remainder of this Contract shall not be affected thereby. This
Contract shall be binding and shall inure to the benefit of the parties
hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this Contract to
be executed by their officers designated below on the day and year first
written above.
GROWTH PORTFOLIO
Attest:______________________ By:_________________________
James R. Tufts
Vice President
G.T. GLOBAL INVESTOR SERVICES,
INC.
Attest:______________________ By:_________________________
James R. Tufts
President
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CONSENT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees of
Growth Portfolio:
Small Cap Portfolio
Value Portfolio
We consent to the inclusion in the Registration Statement on Form N-1A of
our report dated October 17, 1995 on our audits of the statement of assets
and liabilities of Growth Portfolio (Small Cap Portfolio and Value
Portfolio). We also consent to the references to our firm under the
captions "Financial Highlights" and "Independent Accountants."
/s/ Coopers & Lybrand L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
October 17, 1995
DC-227285.1
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