SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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Eaton Vance Mutual Funds Trust
(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND
The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
February 25, 2004
Dear Shareholder:
We cordially invite you to attend a Special Meeting of Shareholders of
Eaton Vance Tax-Managed International Growth Fund (the "Fund"), a series of
Eaton Vance Mutual Funds Trust (the "Trust"), on Friday, April 16, 2004 to
consider three Proposals. We ask you to read the enclosed information carefully
and to submit your vote promptly.
In the proxy statement that follows this letter, the Trustees are asking
shareholders to approve an Investment Sub-Advisory Agreement for Tax-Managed
International Growth Portfolio (the "Portfolio"), the underlying registered
investment company in which all of the assets of the Fund are invested. On
February 9, 2004, the Board of Trustees of the Portfolio approved an Investment
Sub-Advisory Agreement between Boston Management and Research, the Portfolio's
investment adviser, and Eagle Global Advisors, L.L.C. The Trustees are also
asking Fund shareholders to approve an amendment to the Portfolio's Investment
Advisory Agreement and to authorize Trustees to select new sub-advisers without
shareholder approval to the extent permitted by applicable law.
We realize that most shareholders will not be able to attend the meeting
and vote their shares in person. However, the Fund does need your vote. You can
vote by mail, telephone, or over the Internet, as explained in the enclosed
material. If you later decide to attend the meeting, you may revoke your proxy
and vote your shares in person. By voting promptly, you can help the Fund avoid
the expense of additional mailings.
If you would like additional information concerning either proposal, please
call one of our service representatives at 1-800-262-1122. Your participation in
this vote is extremely important.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President and Chief Executive Officer
Eaton Vance Management
YOUR VOTE IS IMPORTANT - PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE URGED TO SIGN AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED
POSTAGE PREPAID ENVELOPE OR VOTE BY TELEPHONE OR OVER THE INTERNET BY FOLLOWING
THE ENCLOSED INSTRUCTIONS. YOUR VOTE IS IMPORTANT WHETHER YOU OWN A FEW SHARES
OR MANY SHARES.
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND
The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
Notice of Special Meeting of Shareholders
To Be Held April 16, 2004
A Special Meeting of Shareholders of Eaton Vance Tax-Managed International
Growth Fund will be held at the principal office of the Fund, The Eaton Vance
Building, 255 State Street, Boston, Massachusetts 02109, on Friday, April 16,
2004 at 1:30 P.M. (Eastern Standard Time), for the following purposes:
1. To consider and act upon a proposal to approve an Investment
Sub-Advisory Agreement between Boston Management and Research and
Eagle Global Advisors, L.L.C. for the Portfolio.
2. To consider and act upon a proposal to amend the Investment Advisory
Agreement for the Portfolio.
3. To authorize the Board of Trustees to select investment sub-advisers
and enter into investment sub-advisory agreements without obtaining
shareholder approval to the extent permitted by applicable law.
4. To consider and act upon any other matters which may properly come
before the meeting and any adjourned session thereof.
These proposals are discussed in greater detail in the following pages.
The meeting is called pursuant to the By-Laws of the Trust. The Board of
Trustees of the Trust has fixed the close of business on February 20, 2004 as
the record date for the determination of the shareholders of the Fund entitled
to notice of and to vote at the meeting and any adjournments thereof.
By Order of the Board of Trustees
/s/ Alan R. Dynner
Alan R. Dynner
Secretary
February 25, 2004
Boston, Massachusetts
IMPORTANT
Shareholders can help the Board of Trustees avoid the necessity and additional
expense to the Fund of further solicitations to obtain a quorum by promptly
returning the enclosed proxy or voting by telephone or over the Internet. The
enclosed addressed envelope requires no postage if mailed in the United States
and is intended for your convenience.
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND
The Eaton Vance Building
255 State Street
Boston, Massachusetts 02109
PROXY STATEMENT
A proxy is enclosed with the foregoing Notice of a Special Meeting of the
Fund to be held April 16, 2004 at The Eaton Vance Building, 255 State Street,
Boston, MA 02109, for the benefit of shareholders who wish to vote, but do not
expect to be present at the meeting. Shareholders may also vote by telephone or
over the Internet. The proxy is solicited on behalf of the Board of Trustees of
the Trust. A written proxy is revocable by the person giving it prior to
exercise by a signed writing filed with the Fund's proxy tabulator, Management
Information Services, an ADP Company, P.O. Box 9123, Hingham, MA 02043-9123, or
by executing and delivering a later dated proxy, or by attending the meeting and
voting the shares in person. Proxies voted by telephone or over the Internet may
be revoked at any time in the same manner that proxies voted by mail may be
revoked. Each proxy will be voted in accordance with its instructions; if no
instruction is given, an executed proxy will authorize the persons named as
attorneys, or any of them, to vote in favor of each matter. This proxy material
is initially being mailed to shareholders on or about February 25, 2004.
Supplementary solicitations may be made by mail, telephone, telegraph, facsimile
or electronic means.
The Trustees have fixed the close of business on February 20, 2004 as the
record date for the determination of the shareholders entitled to notice of and
to vote at the meeting and any adjournments thereof. Shareholders at the close
of business on the record date will be entitled to one vote for each share held.
As of February 20, 2004, there were 11,129,661.848 shares of beneficial interest
of the Fund consisting of Class A, B, C and D shares.
The persons who held of record more than 5% of the outstanding shares of
each class of the Fund as of February 2, 2004 are set forth in Exhibit A. To the
knowledge of the Fund no other person owns (of record or beneficially) 5% or
more of the outstanding shares of a class of the Fund. The Trustees and
executive officers of the Trust as a group own beneficially less than 1% of the
outstanding shares of the Fund. Shareholders of all classes of shares of the
Fund will vote jointly on each proposal.
The Trustees know of no business other than the business mentioned in
Proposals 1, 2 and 3 of the Notice of Meeting that will be presented for
consideration. If any other matters are properly presented, it is the intention
of the persons named as attorneys in the enclosed proxy to vote the proxies in
accordance with their judgment on such matters.
THE FUND WILL FURNISH WITHOUT CHARGE A COPY OF THE FUND'S MOST RECENT
ANNUAL REPORT TO ANY SHAREHOLDER UPON REQUEST. SHAREHOLDERS DESIRING TO OBTAIN A
COPY OF SUCH REPORT SHOULD WRITE TO THE FUND C/O EATON VANCE MANAGEMENT, THE
EATON VANCE BUILDING, 255 STATE STREET, BOSTON, MA 02109, ATTN: PROXY
COORDINATOR, OR CALL 1-800-262-1122.
BACKGROUND
The Fund's investment objective is to seek long-term, after-tax returns by
investing in a diversified portfolio of foreign equity securities. The Fund
seeks its objective by investing in the Portfolio, which has the same investment
objective as the Fund. Boston Management and Research ("BMR") manages the assets
of the Portfolio pursuant to an Investment Advisory Agreement dated as of
February 13, 2001 (the "Advisory Agreement"). A description of the Advisory
Agreement appears in Proposal 2 below. See "Advisory Agreement."
At a meeting of the Boards of Trustees of the Trust and Portfolio held on
February 9, 2004, BMR suggested several changes to the Fund and Portfolio. BMR
recommended that the Fund and Portfolio continue to invest primarily in equity
securities but to move away from their "growth focus". BMR further suggested
that a sub-adviser specializing in large capitalization international securities
be appointed to take over the day-to-day management of the Portfolio under BMR's
supervision. BMR indicated to the Trustees that it believes these changes are in
the best interests of Fund shareholders and Portfolio interestholders.
In response to these recommendations, the Board of Trustees of the
Portfolio approved an Investment Sub-Advisory Agreement (the "Sub-Advisory
Agreement") between BMR and Eagle Global Advisors, L.L.C. ("Eagle"), subject to
approval by a "majority of the outstanding voting securities" of the Portfolio
as required by the Investment Company Act of 1940. In addition, the Boards of
Trustees of the Trust and the Portfolio approved changing the names of the Fund
and Portfolio to Eaton Vance Tax-Managed International Equity Fund and
Tax-Managed International Equity Portfolio, respectively, and the adoption by
each of the Fund and Portfolio of a policy to invest at least 80% of net assets
in equity securities. The name changes and 80% policies will become effective
upon approval of the Sub-Advisory Agreement by the Portfolio's interestholders.
The 80% policy is consistent with the manner in which the Portfolio has operated
historically and will not result in a management change.
The Portfolio will seek the approval of its interestholders, including the
Fund, for the Sub-Advisory Agreement and the other proposals described in this
Proxy Statement. In turn, Fund shareholders are being asked to vote on the
Sub-Advisory Agreement and the other proposals described in this proxy statement
because the Trust's Board of Trustees has decided to seek instructions from Fund
shareholders as to how to vote on these matters.
PROPOSAL 1. APPROVAL OF THE SUB-ADVISORY AGREEMENT
As noted above, BMR manages the assets of the Portfolio pursuant to the
Advisory Agreement. The Advisory Agreement was most recently approved by the
Board of Trustees of the Portfolio, including a majority of the Trustees who are
not "interested persons" as that term is defined in the Investment Company Act
of 1940 of any party to such agreement (referred to as the "Noninterested
Trustees"), on March 17, 2003. The Advisory Agreement was most recently
submitted to a vote of interestholders on February 13, 2001 in connection with
its initial approval.
Under the Advisory Agreement, BMR is authorized to employ one or more
sub-advisers for the Portfolio subject to approval by the Board of Trustees of
the Portfolio and a "majority of the outstanding voting securities" (as
described below) of the Portfolio. On February 9, 2004, the Portfolio's Board of
Trustees approved the Sub-Advisory Agreement with Eagle.
A description of Eagle, the Sub-Advisory Agreement, the fees BMR will pay
Eagle for its sub-advisory services and the Board of Trustee's evaluation of the
sub-advisory arrangement follows.
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ABOUT EAGLE
Eagle, a Texas limited liability company located at 5847 San Felipe, Suite
930, Houston, TX 77057, has been an investment adviser registered with the
Securities and Exchange Commission since it was founded in 1996. Eagle provides
advisory services to institutional clients and high net worth individuals.
Eagle's investment philosophy on its international portfolios is to seek capital
appreciation through investments in large capitalization international
companies. As of December 31, 2003, Eagle had $545 million of assets under
management.
At Eagle, the day to day management of the Portfolio will be the
responsibility of Edward R. Allen, III and Thomas N. Hunt, III. Messrs. Allen
and Hunt are each partners of Eagle and have been with the firm since its
inception in 1996. Mr. Allen earned a bachelor's degree in engineering from
Princeton University and a Ph.D. in economics from the University of Chicago.
Mr. Hunt received a bachelor's degree in accounting from the University of Texas
and a MBA from Harvard Business School.
Eagle is over 95% owned by its partners and employees. Eagle does not
currently act as investment adviser or sub-adviser for any registered investment
companies.
SUB-ADVISORY AGREEMENT
The Sub-Advisory Agreement between BMR and Eagle, a copy of the form of
which is attached as Exhibit B, requires Eagle to provide a continuous
investment program for the Portfolio, including making determinations with
respect to its purchase, retention or sale of securities, cash or other
investments in accordance with the Portfolio's investment objective, policies
and restrictions contained in its Registration Statement, the provisions of the
Investment Company Act and the diversification requirements of the Internal
Revenue Code.
Under the Sub-Advisory Agreement, Eagle may select the broker-dealers
through which Portfolio transactions are executed and negotiate commissions;
however the Sub-Advisory Agreement provides that Eagle's primary consideration
in effecting such transactions will be obtaining best execution. The
Sub-Advisory Agreement provides that Eagle may, subject to the policies of the
Portfolio's Board of Trustees and consistent with applicable law, pay a broker a
higher commission than another broker might have charged for effecting a
securities transaction if Eagle determines, in good faith, that the higher
commission was reasonable in relation to the value of the brokerage and research
services provided by the broker. The Sub-Advisory Agreement further provides
that Eagle may allocate orders it places on behalf of the Portfolio to an
affiliated broker or to brokers who provide research materials or other services
to the Portfolio, Eagle or an affiliate of Eagle.
The Sub-Advisory Agreement provides that BMR is responsible for supervising
Eagle, including its compliance responsibilities. Eagle will be liable for any
act or omission arising out of any services it provides under the Sub-Advisory
Agreement due to its willful misfeasance, bad faith, or negligence in its
performance, and for any breach of its obligations or duties under the
Agreement. However, the Sub-Advisory Agreement also provides that BMR will
indemnify and hold Eagle harmless for any loss or litigation Eagle becomes
liable for based on (a) BMR's gross negligence, willful misfeasance, or bad
faith in the performance of its duties or by reason of disregard of its
obligations and duties under the Sub-Advisory Agreement or (b) any untrue
statement of material fact or failure to state a material fact in the
Portfolio's Registration Statement.
Under the Sub-Advisory Agreement, Eagle is responsible for voting all
proxies the Portfolio is entitled to vote, subject to the review of the
Portfolio's Board of Trustees and BMR. Eagle will vote all proxies in accordance
with policies approved by the Portfolio's Board of Trustees. Eagle's proxy
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voting policies are designed to promote accountability of a company's management
to its shareholders and to align the interests of management with those
shareholders. The proxy voting policies include guidelines for voting on various
matters that are frequently put before shareholders.
If approved by the vote of the holders of a "majority of the outstanding
voting securities" (as such term is defined below) of the Portfolio, the
Sub-Advisory Agreement will become effective immediately and will continue in
effect through April 2005. The Sub-Advisory Agreement will continue, subject to
approval annually in accordance with the Investment Company Act. The
Sub-Advisory Agreement may be terminated at any time without the payment of any
penalty by the Board of Trustees of the Portfolio, by the vote of a "majority of
the outstanding voting securities" of the Portfolio or by BMR on 60 days prior
notice to Eagle. The Sub-Advisory Agreement also may be terminated by Eagle on
three months notice unless the Portfolio or Adviser requests Eagle continue to
serve the Portfolio for up to three additional months while a replacement
sub-adviser is found. Under certain circumstances, such as Eagle becoming
legally incapable of providing investment management services to the Portfolio,
Eagle may terminate the Sub-Advisory Agreement at any time without the payment
of any penalty. The Sub-Advisory Agreement will terminate automatically in the
event of its "assignment" (as defined in the Investment Company Act).
SUB-ADVISORY FEES
Under the Sub-Advisory Agreement, BMR (not the Portfolio) pays Eagle for
its services on the basis of the following annual fee schedule:
Eagle's
Average Daily Net Assets Annual Fee
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Up to $500 million 0.50000%
$500 million but less than $1 billion 0.46875%
$1 billion but less than $2.5 billion 0.43750%
$2.5 billion but less than $5 billion 0.40625%
$5 billion and over 0.37500%
Fees are paid monthly in arrears on the last business day of each month.
Approval of the Sub-Advisory Agreement would have no effect upon the amount
of advisory fees paid by the Portfolio to BMR.
The fee that would have been payable to Eagle for services provided
pursuant to the Sub-Advisory Agreement for the period from November 1, 2002 to
October 31, 2003 had the Agreement been in effect for such period is $485,498.
The advisory fee payable by the Portfolio to BMR under the Advisory Agreement
for the same period is set forth in Proposal 2. See "Advisory Fee."
Refer to Exhibit B attached hereto for the complete terms of the
Sub-Advisory Agreement. The description of the Sub-Advisory Agreement and
sub-advisory fees set forth herein is qualified in its entirety by the
provisions of the form of the Sub-Advisory Agreement in Exhibit B.
For the Portfolio's fiscal year ended October 31, 2003, no commissions were
paid to any broker that is an affiliate of the Portfolio, BMR, or Eagle.
MANAGEMENT AND GOVERNANCE.
Listed below are the names, positions and principal occupations of the
partners and the principal executive officers of Eagle. The principal address of
each individual as it relates to his or her duties at Eagle is the same as that
of Eagle.
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Name Principal Occupation
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Edward R. Allen III Partner
Thomas N. Hunt III Partner
Steven S. Russo Partner
John F. Gualy Vice President
Malcom S. Day Vice President
Messrs. Allen, Hunt and Russo each own 25% or more of Eagle. No officer or
Trustee of the Portfolio currently is a director, officer or employee of Eagle,
provided that, if the Sub-Advisory Agreement is approved, the Board of Trustees
of the Portfolio intends to appoint Messrs. Allen and Hunt as Vice Presidents of
the Portfolio. Messrs. Allen and Hunt would receive no compensation for serving
as officers of the Portfolio. No officer or Trustee of the Portfolio owns the
securities of or has any other material direct or indirect interest in Eagle or
any other person controlling, controlled by or under common control with Eagle.
Since January 1, 2003, none of the Trustees of the Portfolio has had any
material interest, direct or indirect, in any material transactions, or in any
material proposed transactions, to which Eagle was or is to be a party.
EVALUATION OF THE BOARD OF TRUSTEES
At a meeting held on February 9, 2004, the Board of Trustees of the
Portfolio approved the Eagle Sub-Advisory Agreement following presentations by
BMR and representatives of Eagle and consideration of the factors discussed
below by the Board's Special Committee.
The Special Committee noted that BMR had, with the assistance of an
independent consulting firm, identified and considered several potential
sub-advisers. The Special Committee considered information with respect to Eagle
and whether the Sub-Advisory Agreement was in the best interests of the
Portfolio and its interestholders. As part of its deliberations, the Special
Committee took into account the nature and quality of the anticipated services
to be provided by Eagle and reviewed and discussed information regarding Eagle's
fees and performance. In evaluating Eagle's ability to provide services to the
Portfolio, the Special Committee also reviewed information relating to the
education, experience and number of investment professionals and other personnel
of Eagle who would provide services under the Sub-Advisory Agreement. The
Special Committee took into account the resources available to Eagle in
fulfilling its duties under the Sub-Advisory Agreement and noted Eagle's
experience in managing international equity portfolios.
Based upon its review and the representations made to it, the Special
Committee concluded that the Sub-Advisory Agreement, including the fee
structure, is in the interests of shareholders. Accordingly, after consideration
of the above factors, and such other factors and information as it deemed
relevant, the Board of Trustees, including all of the Noninterested Trustees,
approved the Sub-Advisory Agreement with Eagle.
VOTE REQUIRED TO APPROVE PROPOSAL 1
Approval of the Sub-Advisory Agreement requires the affirmative vote of a
"majority of the outstanding voting securities" of the Portfolio which term as
used in the Proxy Statement means the vote of the lesser of (a) more than 50% of
the outstanding voting securities of the Portfolio, or (b) 67% or more of the
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voting securities of the Portfolio present at a meeting or represented by proxy
if holders of more than 50% of the outstanding voting securities of the
Portfolio are present or represented by proxy. The Fund will cast its votes with
respect to the Sub-Advisory Agreement in the same proportion as the votes of the
Fund shareholders cast at the meeting.
If Eagle is not approved by the requisite shareholders of the Fund, the
Portfolio will continue to be managed by BMR.
The Board of Trustees of the Trust unanimously recommends that shareholders
of the Fund vote FOR the approval of the Sub-Advisory Agreement between BMR and
Eagle.
PROPOSAL 2. APPROVAL OF AN AMENDED
INVESTMENT ADVISORY AGREEMENT
As noted above, BMR manages the assets of the Portfolio pursuant to an
Advisory Agreement. A description of the Advisory Agreement appears below under
the heading "Advisory Agreement." At the meeting of the Board of Trustees of the
Portfolio on February 9, 2004, the Trustees approved an amendment (the
"Amendment") to the Advisory Agreement, subject to approval by a "majority of
the outstanding voting securities" of the Portfolio. The Amendment affects two
provisions of the Advisory Agreement: the provision allowing BMR to hire
sub-advisers and the provision governing amendments to the Agreement.
Sub-advisers. The Amendment would allow BMR to enter into an investment
sub-advisory agreement with a new sub-adviser or replace an existing sub-adviser
with the approval of the Board of Trustees of the Portfolio but without
interestholder approval to the extent permitted by the Investment Company Act
and the rules thereunder.
This change is being proposed in connection with a recently proposed new
rule under the Investment Company Act that, if adopted as proposed by the
Securities and Exchange Commission (the "Commission"), would allow mutual fund
investment advisers to hire sub-advisers or replace existing sub-advisers
without obtaining approval of interestholders. Under the proposed rule, any
sub-advisory agreement entered into with a sub-adviser would still require the
approval of the Board of Trustees. In addition, the proposed rule would require
that BMR's Advisory Agreement obligate BMR to supervise the sub-adviser. To
comply with this condition, the Amendment provides for BMR to supervise any
sub-adviser employed by BMR. The terms of the proposed rule are discussed in
more detail in Proposal 3 below.
Please note that if the Commission adopts the proposed rule, the terms of
the rule as adopted may differ from those of the proposed rule described above.
BMR intends to comply with the terms of the rule as adopted. However, it is also
possible that the Commission may not adopt the proposed rule at all. If the rule
is not adopted, the Portfolio will nevertheless amend the Advisory Agreement as
described in this Proposal. In any event, BMR and the Portfolio intend to comply
with the requirements of applicable law when appointing investment sub-advisers.
AMENDMENTS TO THE ADVISORY AGREEMENT. The Amendment would also allow the
Board of Trustees of the Portfolio to amend the Advisory Agreement without
obtaining interestholder approval when permitted by applicable law. In
interpretations of the Investment Company Act and the rules thereunder, the
staff of the Commission has stated that under certain limited circumstances
amendments to an investment advisory agreement may be made without obtaining
shareholder approval. For example, the staff of the Commission has stated that a
fund may amend its investment advisory agreement to decrease the advisory fee
payable to the investment adviser without first obtaining shareholder approval.
The Amendment would allow the Board of Trustees of the Portfolio to amend the
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Advisory Agreement without approval of its interestholders in such
circumstances. The Board of Trustees of the Portfolio does not have any current
intention of amending the Advisory Agreement other than as described in this
Proposal 2.
Refer to Exhibit C attached hereto for the complete terms of the form of
Amendment to the Advisory Agreement for the Portfolio. The description of the
Amendment set forth herein is qualified in its entirety by the provisions of the
Amendment in Exhibit C.
ADVISORY AGREEMENT
Under the Advisory Agreement, BMR is responsible for managing the
investments and affairs of the Portfolio and providing related office facilities
and personnel subject to the supervision of the Portfolio's Board of Trustees.
BMR furnishes investment research, advice and supervision, furnishes an
investment program and determines what securities will be purchased, held or
sold by the Portfolio and what portion, if any, of the Portfolio's assets will
be held uninvested. The Advisory Agreement requires BMR to pay the salaries and
fees of all officers and Trustees of the Portfolio who are members of BMR's
organization and all personnel of the investment adviser performing services
relating to research and investment activities.
The Advisory Agreement continues in effect from year to year so long as
such continuance is approved at least annually (i) by the vote of a majority of
the noninterested Trustees of the Portfolio cast in person at a meeting
specifically called for the purpose of voting on such approval and (ii) by the
Board of Trustees of the Portfolio or by vote of a majority of the outstanding
voting securities of the Portfolio. The Advisory Agreement may be terminated at
any time without penalty on 60 days written notice by the Board of Trustees of
the Portfolio or by BMR, or by vote of the majority of the outstanding voting
securities of the Portfolio. The Advisory Agreement will terminate automatically
in the event of its assignment.
The Advisory Agreement provides that BMR may render services to others. The
Advisory Agreement also provides that BMR shall not be liable for any loss
incurred in connection with the performance of its duties, or action taken or
omitted under the Agreement, in the absence of willful misfeasance, bad faith,
gross negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties thereunder, or for any losses sustained
in the acquisition, holding or disposition of any security or other investment.
Under the Advisory Agreement, BMR selects the brokers with which portfolio
securities transactions are executed. BMR is obligated to use its best efforts
to obtain execution at advantageous prices and reasonably competitive commission
rates. Furthermore, the Advisory Agreement provides that BMR may pay a broker a
higher commission than another broker might have charged for effecting a
securities transaction if BMR determines, in good faith, that the higher
commission was reasonable in relation to the value any brokerage and research
services provided by the broker.
ADVISORY FEES
Under the Advisory Agreement, the Portfolio pays BMR an advisory fee in an
amount equal to the following of the average daily net assets of the Portfolio
throughout each month:
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Average Daily Net Assets for the Month Annual Fee Rate
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Up to $500 million 1.0000%
$500 million but less than $1 billion 0.9375%
$1 billion but less than $2.5 billion 0.8750%
$2.5 billion but less than $5 billion 0.8125%
$5 billion and over 0.7500%
Fees are paid monthly in arrears on the last business day of each month.
The fees payable to BMR for services provided pursuant to the Advisory
Agreement for the period from November 1, 2002 to October 31, 2003 were
$970,995.
As of October 31, 2003, the Portfolio had net assets of $108,454,023. No
commissions were paid by the Portfolio during its last fiscal year to any
affiliated brokers.
Refer to Exhibit D attached hereto for the complete terms of the Advisory
Agreement for the Portfolio. The description of the Advisory Agreement and the
advisory fees set forth herein is qualified in its entirety by the provisions of
the Advisory Agreement in Exhibit D.
EVALUATION BY THE BOARD
At the meeting held on February 9, 2004, the Board of Trustees of the
Portfolio authorized the Amendment to the Advisory Agreement after the Board's
Special Committee considered the factors described below. The Special Committee
considered the substantial costs entailed in holding the interestholder meetings
required to approve amendments to the Advisory Agreement and to adopt investment
sub-advisory agreements. The Special Committee noted that these costs must be
weighed against the benefits of interestholder scrutiny of such matters. In the
case of entering into new or replacement investment sub-advisory contracts
without interestholder approval, the Special Committee noted that BMR will be
constrained by the requirements and conditions set forth in the proposed rule,
when adopted by the Commission. In addition, even in the absence of
interestholder approval, any proposal to amend the Advisory Agreement or to
enter into an investment sub-advisory agreement with a new or replacement
sub-adviser would be subject to the careful review by the Board of Trustees of
the Portfolio. In the case of amendments to the Advisory Agreement without
interestholder approval unless required by applicable law, the Special Committee
noted that the ability to amend the Agreement without shareholder approval would
only be available in limited circumstances.
The Trust's Board of Trustees believe that the proposed authority for the
Portfolio's Board of Trustees to enter into investment sub-advisory agreements
with new or replacement sub-advisers without interestholder approval when
permitted by the Investment Company Act and to amend the Advisory Agreement
without obtaining approval of the interestholders unless required by the
Investment Company Act is in the best interests of shareholders of the Fund.
VOTE REQUIRED TO APPROVE PROPOSAL 2
Approval of the Amendment requires the affirmative vote of a "majority of
the outstanding voting securities" of the Portfolio, as that term is defined in
Proposal 1. The Fund will cast its votes with respect to the Amendment in the
same proportion as the votes of the Fund shareholders at the Meeting on Proposal
2.
If the Proposal is not approved, the Portfolio's present Advisory Agreement
will remain in effect and a shareholder vote would be required before BMR could
appoint a new sub-adviser.
8
The Board of Trustees of the Trust recommends that the shareholders of the
Fund vote FOR the amendment of the Portfolio's Advisory Agreement as described
in this Proposal 2.
PROPOSAL 3. TO AUTHORIZE THE BOARD OF TRUSTEES TO SELECT
INVESTMENT SUB-ADVISERS AND ENTER INTO INVESTMENT SUB-ADVISORY
AGREEMENTS WITHOUT OBTAINING SHAREHOLDER APPROVAL
TO THE EXTENT PERMITTED BY APPLICABLE LAW.
The Investment Company Act requires that all contracts pursuant to which
persons serve as investment advisers to investment companies be approved by
holders of a majority of the outstanding voting securities of that investment
company. This requirement currently applies to the appointment of any new
sub-adviser to the Portfolio. However, the Commission has recently proposed a
new rule that, if adopted, would allow BMR to hire a sub-adviser or replace an
existing sub-adviser for the Portfolio without obtaining interestholder
approval, subject to certain conditions. The proposed rule would require BMR to
supervise and oversee the Portfolio's sub-adviser(s). The proposed rule would
also require that the hiring of a new or different sub-adviser not increase the
fees charged to the Portfolio and that the Trustees approve the sub-advisory
agreement. However, before the Portfolio could rely on the proposed rule (if
adopted), the Portfolio must receive approval of its interestholders to do so.
The Fund is seeking shareholder approval of the Portfolio's operation under
the new rule if it is adopted by the Commission. As noted in Proposal 2 above,
if the Commission adopts the proposed rule, the terms of the rule as adopted may
differ from those of the proposed rule described here. BMR intends to comply
with the terms of the rule as adopted. However, it is possible that the
Commission will not adopt the proposed rule at all. If the Commission does not
adopt the proposed rule, the Portfolio would be required to seek the approval of
its interestholders before entering into any new sub-advisory agreement.
This Proposal 3 is intended to facilitate the efficient supervision and
management of the sub-adviser by BMR and the Board of Trustees of the Portfolio.
BMR will monitor the performance of the sub-adviser and may from time to time
recommend that the Portfolio's Board of Trustees replace the sub-adviser or
appoint additional sub-advisers, depending on BMR's assessment of which
sub-adviser or combination of sub-advisers it believes will optimize the
Portfolio's chances of achieving its investment objective. If Fund shareholders
approve this proposal and the Commission adopts the proposed rule, the Fund
would no longer be required to call a shareholder meeting each time a new or
replacement sub-adviser is appointed by the Portfolio, and shareholders of the
Fund would not be asked to vote on the new sub-adviser.
Shareholder meetings entail substantial costs that could diminish the
benefits of any sub-advisory arrangements. These costs must be weighed against
the benefits of shareholder scrutiny of proposed contracts with additional or
replacement sub-advisers. However, even in the absence of shareholder approval,
any proposal to add or replace sub-advisers would receive careful review. First,
BMR would assess the Portfolio's needs and, if it believed additional or
replacement sub-advisers could benefit the Portfolio, would search for available
investment sub-advisers. Second, any recommendations made by BMR would have to
be approved by a majority of the Portfolio's Trustees, including a majority of
the Noninterested Trustees. In selecting any new or replacement sub-advisers,
the Trustees are required to determine that an investment sub-advisory agreement
with the sub-adviser, including the fee structure, is in the interests of the
Portfolio and its shareholders.
9
The Trust's Board of Trustees believe that the proposed authority for the
Portfolio's Board of Trustees to select and change investment sub-advisers and
enter into investment sub-advisory agreements without obtaining the approval of
shareholders, subject to the Commission's adoption of the new rule is in the
best interests of the shareholders of the Fund.
REQUIRED VOTE
Approval to authorize the Trustees to select investment sub-advisers and
enter into investment sub-advisory agreements without obtaining shareholder
approval requires the affirmative vote of a "majority of the outstanding voting
securities" of the Portfolio, as that term is defined in Proposal 1 above. The
Fund will cast its votes with respect to this matter in the same proportion as
the votes of the Fund shareholders cast at the Meeting on Proposal 3.
If the Proposal is not approved, the Portfolio will continue to be required
to seek the approval of its interestholders to hire new sub-advisers or replace
an existing sub-adviser.
The Board of Trustees of the Trust unanimously recommends that shareholders
of the Fund vote FOR authorizing the Portfolio's Trustees to select investment
sub-advisers and enter into investment sub-advisory agreements without obtaining
shareholder approval.
NOTICE TO BANKS AND BROKER/DEALERS
The Fund has previously solicited all Nominee and Broker/Dealer accounts as
to the number of additional proxy statements required to supply owners of
shares. Should additional proxy material be required for beneficial owners,
please forward such requests to Eaton Vance Management, The Eaton Vance
Building, 255 State Street, Boston, MA 02109, Attn: Proxy Coordinator.
ADDITIONAL INFORMATION
INVESTMENT ADVISER, ADMINISTRATOR AND UNDERWRITER
BMR serves as investment adviser to the Portfolio, as well as many of the
other funds in the Eaton Vance Group of Funds. BMR is a subsidiary of Eaton
Vance Management ("Eaton Vance"). BMR and Eaton Vance are indirect, wholly owned
subsidiaries of Eaton Vance Corporation ("EVC"), a Maryland Corporation and
publicly held holding company. Eaton Vance serves as administrator to the Fund,
but receives no compensation. EVD acts as the principal underwriter for the Fund
and as placement agent for the Portfolio. The Fund accrued and/or paid EVD
$349,181 for its distribution services for the year ended October 31, 2003. EVD
receives no compensation for acting as placement agent for the Portfolio. The
business address of Eaton Vance, BMR and EVD is The Eaton Vance Building, 255
State Street, Boston, MA 02109.
OFFICERS OF THE TRUST AND PORTFOLIO
The officers of the Trust and Portfolio and their length of service are set
forth below. Because of their positions with Eaton Vance and their ownership of
EVC stock, the officers of the Trust and the Portfolio benefit from the advisory
fees paid by the Portfolio to BMR. Unless otherwise indicated, the positions
listed under "Position(s) Held with the Trust and/or Portfolio" are held with
both the Trust and the Portfolio.
10
Position(s)
Held with the
Trust and/or Term of Office and
Name, Address and Age(1) Portfolio Length of Time Served Principal Occupations During Past Five Years(2)
- ------------------------------------------------------------------------------------------------------------------------------------
THOMAS E. FAUST JR. President of Since 2002 Executive Vice President of EVM, BMR, EVC and EV;
DOB: 5/31/58 the Trust Chief Investment Officer of EVM and BMR and Director
of EVC. Chief Executive Officer of Belair Capital
Fund LLC, Belcrest Capital Fund LLC, Belmar Capital
Fund LLC, Belport Capital Fund LLC and Belrose
Capital Fund LLC (private investment companies
sponsored by EMV). Officer of 54 registered
investment companies managed by EVM or BMR.
WILLIAM H. AHERN, JR. Vice President Since 1995 Vice President of EVM and BMR. Officer of 35
DOB: 7/28/59 of the Trust registered investment companies managed by EVM or
BMR.
KIERSTEN CHRISTENSEN Vice President Since 2002 Vice President of EVM and BMR since August 2000.
DOB: 10/21/65 of the Portfolio Previously, a portfolio manager and equity analyst
at Lloyd George Investment Management (Bermuda)
Limited. Officer of 1 registered investment company
managed by EVM or BMR.
THOMAS J. FETTER Vice President Since 1997 Vice President of EVM and BMR. Trustee and
DOB: 8/20/43 of the Trust President of The Massachusetts Health & Education
Tax-Exempt Trust. Officer of 128 registered
investment companies managed by EVM or BMR.
ROBERT B. MACINTOSH Vice President Since 1998 Vice President of EVM and BMR. Officer of 128
DOB: 1/22/57 of the Trust registered investment companies managed by EVM or
BMR.
11
Position(s)
Held with the
Trust and/or Term of Office and
Name, Address and Age(1) Portfolio Length of Time Served Principal Occupations During Past Five Years(2)
- ------------------------------------------------------------------------------------------------------------------------------------
MICHAEL R. MACH Vice President Since 1999 Vice President of EVM and BMR. Previously, Managing
DOB: 7/15/47 of the Trust Director and Senior Analyst for Robertson Stephens
(1998-1999). Officer of 24 registered investment
companies managed by EVM or BMR.
DUNCAN W. RICHARDSON Vice President Vice President of the Senior Vice President and Chief Equity Investment
DOB: 10/26/57 of the Trust; Trust since 2001; Officer of EVM and BMR. Officer of 42 registered
President of President of the investment companies managed by EVM or BMR.
the Portfolio Portfolio since 2002
WALTER A. ROW, III Vice President Since 2001 Director of Equity Research and a Vice President of
DOB: 7/20/57 of the Trust EVM and BMR. Officer of 22 registered investment
companies managed by EVM or BMR.
JUDITH A. SARYAN Vice President Since 2003 Vice President of EVM and BMR. Previously,
DOB: 8/21/54 of the Trust Portfolio Manager and Equity Analyst for State
Street Global Advisers (1980-1999). Officer of 23
registered investment companies managed by EVM or
BMR.
SUSAN SCHIFF Vice President Since 2002 Vice President of EVM and BMR. Officer of 26
DOB: 3/13/61 of the Trust registered investment companies managed by EVM or
BMR.
JAMES L. O'CONNOR Treasurer of Since 1989 Vice President of BMR, EVM, and EVD. Officer of 117
DOB: 4/1/45 the Trust registered investment companies managed by EVM or
BMR.
KRISTIN S. ANAGNOST Treasurer of Since 2002(2) Vice President of EVM and BMR. Officer of 109
DOB: 6/12/65 the Portfolio registered investment companies managed by EVM or
BMR.
12
Position(s)
Held with the
Trust and/or Term of Office and
Name, Address and Age(1) Portfolio Length of Time Served Principal Occupations During Past Five Years(2)
- ------------------------------------------------------------------------------------------------------------------------------------
ALAN R. DYNNER Secretary Secretary of the Vice President, Secretary and Chief Legal Officer of
DOB: 10/10/40 Trust since 1997; of BMR, EVM, EVD, Eaton Vance, Inc. and EVC. Officer
the Portfolio since of 195 registered investment companies managed by
1998 EVM or BMR.
(1) The business address of each officer is The Eaton Vance Building, 255 State
Street, Boston, MA 02109.
(2) Includes both master and feeder funds in master-feeder structure.
(3) Prior to 2002, Ms. Anagnost served as Assistant Treasurer since 1998.
PROXY SOLICITATION AND TABULATION
The expense of preparing, printing and mailing this Proxy Statement and
enclosures and the costs of soliciting proxies on behalf of the Trust's Board of
Trustees will be borne by the Fund and BMR. Proxies will be solicited by mail
and may be solicited in person or by telephone, telegraph, facsimile or other
electronic means by officers of the Trust, by personnel of Eaton Vance, by the
Fund's transfer agent, PFPC Inc., by broker-dealer firms or by a professional
solicitation organization. The Fund has retained D.F. King & Co., Inc. of New
York, NY ("DF King") to assist in the solicitation of proxies, for which the
Fund will pay an estimated fee of approximately $16,000, including out-of-pocket
expenses. The expenses connected with the solicitation of these proxies and with
any further proxies which may be solicited by the Fund's officers, by Eaton
Vance personnel, by the transfer agent, PFPC Inc., by broker-dealer firms or by
DF King, in person, or by telephone, by telegraph, by facsimile or other
electronic means will be borne by the Fund and BMR. A written proxy may be
delivered to the Fund or its transfer agent prior to the meeting by facsimile
machine, graphic communication equipment or other electronic transmission. The
Fund will reimburse banks, broker-dealer firms, and other persons holding shares
registered in their names or in the names of their nominees, for their expenses
incurred in sending proxy material to and obtaining proxies from the beneficial
owners of such shares. Total estimated costs are $36,000.
Shareholders may also choose to give their proxy votes by telephone using
an automated telephonic voting system or through the Internet rather than return
their proxy cards. Please see the proxy card for details. The Fund may arrange
for Eaton Vance, its affiliates or agents to contact shareholders who have not
returned their proxy cards and offer to have votes recorded by telephone. If the
Fund records votes by telephone or over the Internet, it will use procedures
designed to authenticate shareholders' identities, to allow shareholders to
authorize the voting of their shares in accordance with their instructions, and
to confirm that their instructions have been properly recorded. If the enclosed
proxy card is executed and returned, or an Internet or telephonic vote is
delivered, that vote may nevertheless be revoked at any time prior to its use by
written notification received by the Fund, by the execution of a later-dated
proxy card, by the Fund's receipt of a subsequent valid Internet or telephonic
vote, or by attending the meeting and voting in person.
13
All proxy cards solicited by the Trust's Board of Trustees that are
properly executed and telephone and Internet votes that are properly delivered
and received by the Secretary prior to the meeting, and which are not revoked,
will be voted at the meeting. Shares represented by such proxies will be voted
in accordance with the instructions thereon. If no specification is made on the
proxy card with respect to a Proposal, it will be voted FOR the matters
specified on the proxy card. For purposes of determining the presence or absence
of a quorum and for determining whether sufficient votes have been received for
approval of any matter to be acted upon at the meeting, abstentions and broker
non-votes (i.e., proxies from brokers or nominees indicating that such persons
have not received instructions from the beneficial owner or other person
entitled to vote shares on a particular matter with respect to which the brokers
or nominees do not have discretionary power) will be treated as shares that are
present at the meeting, but which have not been voted. Accordingly, abstentions
and broker non-votes will assist the Fund in obtaining a quorum, but will have
no effect on the outcome of the Proposals.
If a quorum is not present at the meeting or if the quorum is present at
the meeting, but sufficient votes by the shareholders of the Fund in favor of
any Proposal set forth in the Notice of this meeting are not received by the
meeting date, the persons named as attorneys in the enclosed proxy may propose
one or more adjournments of the meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of the holders
of a majority of the shares of the Fund present in person or by proxy at the
session of the meeting to be adjourned. The persons named as attorneys in the
enclosed proxy will vote in favor of such adjournment those proxies that they
are entitled to vote in favor of the Proposal for which further solicitation of
proxies is to be made. They will vote against any such adjournment those proxies
required to be voted against such Proposal. Abstentions and broker non-votes
will not be treated as shares voted on any such adjournment. The costs of any
such additional solicitation and of any adjourned session will be borne by BMR
and the Fund as described above.
SHAREHOLDER PROPOSALS
Shareholders wishing to submit proposals for consideration at a subsequent
shareholders' meeting should send their written proposals to: Secretary, Eaton
Vance Group of Funds, The Eaton Vance Building, 255 State Street, Boston, MA
02109. Proposals must be received in advance of a proxy solicitation to be
considered and the mere submission of a proposal does not guarantee inclusion in
the proxy statement or consideration at the meeting. The Fund does not conduct
annual meetings.
February 25, 2004
14
EXHIBIT A
As of February 2, 2004, the following record owner(s) of each class of the
Fund held the share percentages indicated below, which were owned either (i)
beneficially by such person(s) or (ii) of record by such person(s) on behalf of
customers who are the beneficial owners of such shares and as to which such
record owner(s) may exercise voting rights under certain limited circumstances.
Amount of
Shares and %
Address Owned
------- ------------
Class A Shares
Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 5.4%
Class B Shares
Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 10.2%
Class C Shares
Merrill Lynch, Pierce, Fenner & Smith, Inc. Jacksonville, FL 19.1%
Class D Shares
US Clearing Corp. New York, NY 19.3%
FBO 463-12035-20
US Clearing Corp. New York, NY 11.1%
FBO 463-12038-27
A-1
EXHIBIT B
TAX-MANAGED INTERNATIONAL EQUITY PORTFOLIO
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT effective this ____ day of ________, 2004 between Boston
Management and Research, a Massachusetts business trust (the "Adviser"), and
Eagle Global Advisors, L.L.C., a Texas limited liability company (the
"Sub-Adviser").
WHEREAS, Tax-Managed International Equity Portfolio (the "Trust") is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end, management investment company; and
WHEREAS, the Trust is a master fund in a master feeder structure whereby,
among other potential investors, one or more investment companies registered
with the Securities and Exchange Commission ("SEC") may invest its assets in the
Trust (each a "Fund"); and
WHEREAS, pursuant to an Investment Advisory Agreement, dated February 13,
2001 (the "Advisory Agreement"), a copy of which has been provided to the
Sub-Adviser, the Trust has retained the Adviser to render advisory and
management services to the Trust; and
WHEREAS, pursuant to authority granted to the Adviser in the Advisory
Agreement, the Adviser wishes to retain the Sub-Adviser to furnish investment
advisory services to the Trust, and the Sub-Adviser is willing to furnish such
services to the Trust and the Adviser.
NOW, THEREFORE, in consideration of the premises and the promises and
mutual covenants herein contained, it is agreed between the Adviser and the
Sub-Adviser as follows:
1. Appointment. The Adviser hereby appoints the Sub-Adviser to act as the
investment adviser for and to manage the investment and reinvestment of the
assets of the Trust and to administer its affairs, subject to the supervision of
the Adviser, for the period and on the terms set forth in this Agreement. The
Sub-Adviser accepts such appointment and agrees to furnish the services herein
set forth herein for the compensation herein provided.
2. Sub-Adviser Duties. Subject to the supervision of the Trust's Board of
Trustees (the "Board") and the Adviser, the Sub-Adviser will provide a
continuous investment program for the Trust's portfolio and determine in its
discretion the composition of the assets of the Trust's portfolio, including
determination of the purchase, retention, or sale of the securities, cash, and
other investments contained in the portfolio. The Sub-Adviser will provide
investment research and conduct a continuous program of evaluation, investment,
sales, and reinvestment of the Trust's assets by determining the securities and
other investments that shall be purchased, entered into, sold, closed, or
exchanged for the Trust, when these transactions should be executed, and what
portion of the assets of the Trust should be held in the various securities and
other investments in which it may invest. To the extent permitted by the
B-1
investment policies of the Trust, the Sub-Adviser shall make decisions for the
Trust as to foreign currency matters and make determinations as to and execute
and perform foreign currency exchange contracts on behalf of the Trust. The
Sub-Adviser will provide the services under this Agreement in accordance with
the Trust's investment objective or objectives, policies, and restrictions as
stated in the Trust's Registration Statement filed with the SEC, as amended (the
"Registration Statement"), copies of which shall be sent to the Sub-Adviser by
the Adviser prior to the commencement of this Agreement and promptly following
any such amendment. The Sub-Adviser further agrees as follows:
a. The Sub-Adviser will conform with the 1940 Act and all rules and
regulations thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the Trust's Board of
which the Sub-Adviser has been sent a copy, and the provisions of the
Registration Statement, of which the Sub-Adviser has received a copy and with
the Sub-Adviser's portfolio manager operating policies and procedures as are
approved by the Adviser. The Sub-Adviser shall exercise reasonable care in the
performance of its duties under the Agreement.
b. The Sub-Adviser will manage the Trust so that it meets the income
and asset diversification requirements of Section 851 of the Internal Revenue
Code.
c. The Sub-Adviser shall exercise voting authority with respect to
proxies that the Trust is entitled to vote with regard to securities in the
Trust's portfolio, provided that such authority may be revoked in whole or in
part by the Adviser at any time upon notice to the Sub-Adviser and provided
further that the exercise of such authority shall be subject to review by the
Adviser and the Board. The Sub-Adviser shall exercise its proxy voting authority
hereunder in accordance with such proxy voting policies and procedures of the
Sub-Adviser as are approved by the Adviser. The Sub-Adviser shall provide such
information relating to its exercise of proxy voting authority hereunder
(including the manner in which it has voted proxies and its resolution of
conflicts of interest) as reasonably requested by the Adviser from time to time.
d. In connection with the purchase and sale of securities for the
Trust, the Sub-Adviser will arrange for the transmission to the custodian for
the Trust (the "Custodian") on a daily basis such confirmation, trade tickets,
and other documents and information, including, but not limited to, Cusip,
Cedel, or other numbers that identify securities to be purchased or sold on
behalf of the Trust, as may be reasonably necessary to enable the Custodian to
perform its administrative and recordkeeping responsibilities with respect to
the Trust. With respect to portfolio securities to be settled through the
Trust's transfer agent, the Sub-Adviser will arrange for the prompt transmission
of the confirmation of such trades to the Trust's Custodian.
e. The Sub-Adviser will assist the Custodian in determining or
confirming, consistent with the procedures and policies stated in the
Registration Statement or adopted by the Board, the value of any portfolio
securities or other assets of the Trust for which the Custodian seeks assistance
from or identifies for review by the Sub-Adviser; provided that the Sub-Adviser
shall be responsible for determining in good faith, consistent with the
procedures and policies stated in the Registration Statement or adopted by the
Board, the fair value of the Trust's portfolio of securities and shall obtain
the services, at its own expense, of any pricing service required by the Board
or the Adviser. The parties acknowledge that the Sub-Adviser is not a custodian
of the Trust's assets and will not take possession or custody of such assets.
B-2
f. Following the end of the Trust's semi-annual period and fiscal
year, the Sub-Adviser will assist the Adviser in preparing a letter to
shareholders containing a discussion of those factors referred to in Item 5(a)
of 1940 Act Form N-1A in respect of both the prior quarter and the fiscal year
to date.
g. The Sub-Adviser will complete and deliver to the Adviser for each
quarter by the 5th business day of the following quarter a written compliance
checklist in a form provided by the Adviser.
h. The Sub-Adviser will make available to the Trust and the Adviser,
promptly upon request, any of the Trust's investment records and ledgers
maintained by the Sub-Adviser (which shall not include the records and ledgers
maintained by the Custodian or portfolio accounting agent for the Trust) as are
necessary to assist the Trust and the Adviser to comply with requirements of the
1940 Act and the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and the rules under each, as well as other applicable laws. The
Sub-Adviser will furnish to regulatory authorities having the requisite
authority any information or reports in connection with such services in respect
to the Trust which may be requested in order to ascertain whether the operations
of the Trust are being conducted in a manner consistent with applicable laws and
regulations.
i. The Sub-Adviser will provide reports to the Board for consideration
at meetings of the Board on the investment program for the Trust and the issuers
and securities represented in the Trust's portfolio, and will furnish the Board
with such periodic and special reports as the Board and the Adviser may
reasonably request.
3. Broker-Dealer Selection. The Sub-Adviser is authorized to make decisions
to buy and sell securities and other investments for the Trust's portfolio, and
to select broker-dealers and to negotiate brokerage commission rates in
effecting a security transaction. The Sub-Adviser's primary consideration in
effecting a security transaction will be to obtain the best execution for the
Trust, taking into account the factors specified in the prospectus and/or
statement of additional information for the Trust, and determined in
consultation with the Adviser, which include price (including the applicable
brokerage commission or dollar spread), the size of the order, the nature of the
market for the security, the timing of the transaction, the reputation,
experience and financial stability of the broker-dealer involved, the quality of
the service, the difficulty of execution, and the execution capabilities and
operational facilities of the firm involved, and the firm's risk in positioning
a block of securities. Accordingly, the price to the Trust in any transaction
may be less favorable than that available from another broker-dealer if the
difference is reasonably justified, in the judgment of the Sub-Adviser in the
exercise of its fiduciary obligations to the Trust, by other aspects of the
portfolio execution services offered. Subject to such policies as the Trust's
Board or Adviser may determine and consistent with Section 28(e) of the
Securities Exchange Act of 1934, the Sub-Adviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Trust to pay a broker-dealer
for effecting a portfolio investment transaction in excess of the amount of
commission another broker-dealer would have charged for effecting that
transaction, if the Sub-Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of either that
particular transaction or the Sub-Adviser's or the Adviser's overall
responsibilities with respect to the Trust and to their respective other clients
as to which they exercise investment discretion. The Sub-Adviser will consult
with the Adviser to ensure that portfolio transactions on behalf of the Trust
B-3
are directed to broker-dealers on the basis of criteria reasonably considered
appropriate by the Adviser. To the extent consistent with these standards, the
Sub-Adviser is further authorized to allocate the orders placed by it on behalf
of the Trust to an affiliated broker-dealer, or to such brokers and dealers who
also provide research or statistical material, or other services to the Trust,
the Sub-Adviser, or an affiliate of the Sub-Adviser. Such allocation shall be in
such amounts and proportions as the Sub-Adviser shall determine consistent with
the above standards, and the Sub-Adviser will report on said allocation
regularly to the Trust's Board indicating the broker-dealers to which such
allocations have been made and the basis therefore.
4. Disclosure about Sub-Adviser. The Sub-Adviser has reviewed the most
recent Amendment to the Registration Statement for the Trust and the
registration statement of any Fund filed with the SEC (the Registration
Statement and the Funds' registration statements referred to herein as the
"Registration Statements") that contain disclosure about the Sub-Adviser, and
represents and warrants that, with respect to the disclosure about the
Sub-Adviser or information relating directly or indirectly to the Sub-Adviser,
such Registration Statements contain, as of the date hereof, no untrue statement
of any material fact and do not omit any statement of a material fact which was
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. The Sub-Adviser further represents and warrants that it is a duly
registered investment adviser under the Advisers Act and will maintain such
registration so long as this Agreement remains in effect. The Adviser hereby
acknowledges that it has received a copy of the Sub-Adviser's Form ADV, Part II
at least 48 hours prior to entering into this Agreement.
5. Expenses. During the term of this Agreement, the Sub-Adviser will pay
all expenses incurred by it and its staff and for their activities in connection
with its duties under this Agreement. The Adviser or the Trust shall be
responsible for all the expenses of the Trust's operations.
6. Compensation. For the services provided to the Trust, the Adviser will
pay the Sub-Adviser an annual fee equal to the amount specified in Schedule A
hereto, payable monthly in arrears on the last business day of each month. The
fee will be appropriately prorated to reflect any portion of a calendar month
that this Agreement is not in effect among the parties. The Adviser is solely
responsible for the payment of fees to the Sub-Adviser, and the Sub-Adviser
agrees to seek payment of its fees solely from the Adviser. The Trust shall have
no liability for Sub-Adviser's fee hereunder.
7. Materials. During the term of this Agreement, the Adviser agrees to
furnish the Sub-Adviser at its principal office all prospectuses, proxy
statements, and reports to shareholders prepared for distribution to
shareholders of the Trust or any Fund that refer to the Sub-Adviser in any way,
prior to the use thereof, and the Adviser shall not use any such materials if
the Sub-Adviser reasonably objects in writing within 2 business days (or such
other period as may be mutually agreed) after receipt thereof. The Sub-Adviser's
right to object to such materials is limited to the portions of such materials
that expressly relate to the Sub-Adviser, its services and its clients, and such
objection may only be on the grounds of the accuracy or completeness of the
references to the aforesaid. The Adviser agrees to use its reasonable best
efforts to ensure that materials prepared by its employees or agents or its
B-4
affiliates that refer to the Sub-Adviser or its clients in any way are
consistent with those materials previously approved by the Sub-Adviser as
referenced in the first sentence of this paragraph.
8. Compliance.
a. The Sub-Adviser agrees to use reasonable compliance techniques as
the Adviser or the Board may adopt or approve, including written compliance
procedures. In addition, the Sub-Adviser shall retain, at its own expense, the
services of the Custodian or any other party as requested by the Board to
monitor the compliance of the Trust's portfolio of holdings with the investment
objective, policies and restrictions set forth in the Registration Statement.
b. The Sub-Adviser agrees that it shall promptly notify, if legally
permitted, the Adviser and the Trust (1) in the event that the SEC has censured
the Sub-Adviser; placed limitations upon its activities, functions or
operations; suspended or revoked its registration as an investment adviser;
commenced proceedings or an investigation (formally or informally) that may
result in any of these actions; or corresponded with the Sub-Adviser, including
sending a deficiency letter or raising issues about the business, operations, or
practices of the Sub-Adviser, (2) in the event of any notice of investigation,
examination, inquiry, audit or subpoena of the Sub-Adviser or any of its
officers or employees by any federal, state, municipal or other governmental
department, commission, bureau, board, agency or instrumentality, or (3) upon
having a reasonable basis for believing that the Trust has ceased to qualify or
might not qualify as a regulated investment company under Subchapter M of the
Internal Revenue Code. If legally permitted, the Sub-Adviser will furnish the
Adviser, upon request, copies of any and all documents relating to the
foregoing. The Sub-Adviser further agrees to notify the Adviser and the Trust
promptly of any material fact known to the Sub-Adviser respecting or relating to
the Sub-Adviser that is not contained in the Registration Statement or
prospectus for the Trust or any Fund, or any amendment or supplement thereto, or
if any statement contained therein that becomes untrue in any material respect.
c. The Adviser agrees that it shall promptly notify, if legally
permitted, the Sub-Adviser (1) in the event that the SEC has censured the
Adviser or the Trust; placed limitations upon either of their activities,
functions, or operations; suspended or revoked the Adviser's registration as an
investment adviser; or has commenced proceedings or an investigation that may
result in any of these actions, or (2) upon having a reasonable basis for
believing that the Trust has ceased to qualify or might not qualify as a
regulated investment company under Subchapter M of the Internal Revenue Code.
d. The Sub-Adviser will provide the Adviser with such reports,
presentations, certifications and other information as the Adviser may request
from time to time concerning the business and operations of the Sub-Adviser in
performing services hereunder or generally concerning the Sub-Adviser's
investment advisory services, the Sub-Adviser's compliance with applicable
federal, state and local law and regulations, and changes in the Sub-Adviser's
key personnel, investment strategies, policies and procedures, and other matters
that are likely to have a material impact on the Sub-Advisers duties hereunder.
B-5
9. Books and Records. The Sub-Adviser hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's or the
Adviser's request in compliance with the requirements of Rule 31a-3 under the
1940 Act, although the Sub-Adviser may, at its own expense, make and retain a
copy of such records. The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-l under the 1940 Act.
10. Cooperation; Confidentiality. Each party to this Agreement agrees to
cooperate with the other party and with all appropriate governmental authorities
having the requisite jurisdiction (including, but not limited to, the SEC) in
connection with any investigation or inquiry relating to this Agreement or the
Trust. Subject to the foregoing, the Sub-Adviser shall treat as confidential all
information pertaining to the Trust and actions of the Trust, the Adviser and
the Sub-Adviser, and the Adviser shall treat as confidential and use only in
connection with the Trust all information furnished to the Trust or the Adviser
by the Sub-Adviser, in connection with its duties under this Agreement except
that the aforesaid information need not be treated as confidential if required
to be disclosed under applicable law, if generally available to the public
through means other than by disclosure by the Sub-Adviser or the Adviser, or if
available from a source other than the Adviser, Sub-Adviser or the Trust.
11. Control. Notwithstanding any other provision of the Agreement, it is
understood and agreed that the Trust shall at all times retain the ultimate
responsibility for and control of all functions performed pursuant to this
Agreement and has reserved the right to reasonably direct any action hereunder
taken on its behalf by the Sub-Adviser.
12. Liability.
a. Except as may otherwise be required by the 1940 Act or the rules
thereunder or other applicable law, the Adviser agrees that the Sub-Adviser, any
affiliated person of the Sub-Adviser, and each person, if any, who, within the
meaning of Section 15 of the Securities Act of 1933, as amended ("the 1933 Act")
controls the Sub-Adviser shall not be liable for, or subject to any damages,
expenses, or losses in connection with, any act or omission connected with or
arising out of any services rendered under this Agreement, except by reason of
willful misfeasance, bad faith, or negligence in the performance of the
Sub-Adviser's duties, or any breach by the Sub-Adviser of its obligations or
duties under this Agreement.
b. The Sub-Adviser agrees that neither the Trust nor any Fund shall
bear any responsibility or shall be subject to any liability for any damages,
expenses, or losses of Sub-Adviser connected with or arising out of its services
under this Agreement.
13. Indemnification.
a. The Adviser agrees to indemnify and hold harmless the Sub-Adviser,
any affiliated person of the Sub-Adviser, and each person, if any, who, within
the meaning of Section 15 of the 1933 Act controls ("controlling person") the
Sub-Adviser (all of such persons being referred to as "Sub-Adviser Indemnified
Persons") against any and all losses, claims, damages, liabilities, or
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litigation (including legal and other expenses) to which a Sub-Adviser
Indemnified Person may become subject under the 1933 Act, the 1940 Act, the
Advisers Act, under any other statute, at common law or otherwise, arising out
of the Adviser's responsibilities to the Sub-Adviser which (1) may be based upon
the Adviser's gross negligence, willful misfeasance, or bad faith in the
performance of its duties, or by reason of the Adviser's disregard of its
obligations and duties under this Agreement and to the Trust, or (2) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statements or prospectuses covering shares of the
Trust or any Fund, or any amendment thereof or any supplement thereto, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
unless such statement or omission was made in reliance upon information
furnished to the Adviser or the Trust or to any affiliated person of the Adviser
by a Sub-Adviser Indemnified Person; provided however, that in no case shall the
indemnity in favor of the Sub-Adviser Indemnified Person be deemed to protect
such person against any liability to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, or negligence in the
performance of its duties, or by reason of its breach or reckless disregard of
its obligations or duties under this Agreement.
b. Notwithstanding Section 12 of this Agreement, the Sub-Adviser
agrees to indemnify and hold harmless the Adviser, any affiliated person of the
Adviser, and any controlling person of the Adviser (all of such persons being
referred to as "Adviser Indemnified Persons") against any and all losses,
claims, damages, liabilities, or litigation (including legal and other expenses)
to which an Adviser Indemnified Person may become subject under the 1933 Act,
1940 Act, the Advisers Act, under any other statute, at common law or otherwise,
arising out of the Sub-Adviser's responsibilities as Sub-Adviser of the Trust
which (1) may be based upon the Sub-Adviser's negligence, willful misfeasance,
or bad faith in the performance of its duties, or by reason of the Sub-Adviser's
disregard of its obligations or duties under this Agreement, or (2) may be based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statements or prospectuses covering the shares of
the Trust or any Fund, or any amendment or supplement thereto, or the omission
or alleged omission to state therein a material fact known or which should have
been known to the Sub-Adviser and was required to be stated therein or necessary
to make the statements therein not misleading, if such a statement or omission
was made in reliance upon information furnished to the Adviser, the Trust, or
any affiliated person of the Adviser or Trust by the Sub-Adviser or any
affiliated person of the Sub-Adviser; provided, however, that in no case shall
the indemnity in favor of an Adviser Indemnified Person be deemed to protect
such person against any liability to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence in the
performance of its duties, or by reason of its breach or reckless disregard of
its obligations and duties under this Agreement.
c. The Adviser shall not be liable under Paragraph (a) of this Section
13 with respect to any claim made against a Sub-Adviser Indemnified Person
unless such Sub-Adviser Indemnified Person shall have notified the Adviser in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Sub-Adviser Indemnified Person (or after such Sub-Adviser Indemnified Person
shall have received notice of such service on any designated agent), but failure
to notify the Adviser of any such claim shall not relieve the Adviser from any
liability which it may have to the Sub-Adviser Indemnified Person against whom
such action is brought except to the extent the Adviser is prejudiced by the
failure or delay in giving such notice. In case any such action is brought
against the Sub-Adviser Indemnified Person, the Adviser will be entitled to
B-7
participate, at its own expense, in the defense thereof or, after notice to the
Sub-Adviser Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Sub-Adviser Indemnified Person. If the Adviser assumes the
defense of any such action and the selection of counsel by the Adviser to
represent the Adviser and the Sub-Adviser Indemnified Person would result in a
conflict of interests and therefore, would not, in the reasonable judgment of
the Sub-Adviser Indemnified Person, adequately represent the interests of the
Sub-Adviser Indemnified Person, the Adviser will, at its own expense, assume the
defense with counsel to the Adviser and, also at its own expense, with separate
counsel to the Sub-Adviser Indemnified Person, which counsel shall be
satisfactory to the Adviser and to the Sub-Adviser Indemnified Person. The
Sub-Adviser Indemnified Person shall bear the fees and expenses of any
additional counsel retained by it, and the Adviser shall not be liable to the
Sub-Adviser Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Sub-Adviser Indemnified Person
independently in connection with the defense thereof other than reasonable costs
of investigation; provided however, the Adviser shall be responsible for the
additional counsel of Sub-Adviser in the event the Adviser is determined to have
made the fraudulent representations, by the final decision of a court of
competent jurisdiction (that is not subject to appeal or as to which the time
for appeal has elapsed), and such representations are the basis for which
Sub-Adviser's liability is based. The Adviser shall not have the right to
compromise on or settle the litigation without the prior written consent of the
Sub-Adviser Indemnified Person if the compromise or settlement results, or may
result in a finding of wrongdoing on the part of the Sub-Adviser Indemnified
Person.
d. The Sub-Adviser shall not be liable under Paragraph (b) of this
Section 13 with respect to any claim made against an Adviser Indemnified Person
unless such Adviser Indemnified Person shall have notified the Sub-Adviser in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Adviser Indemnified Person (or after such Adviser Indemnified Person shall have
received notice of such service on any designated agent), but failure to notify
the Sub-Adviser of any such claim shall not relieve the Sub-Adviser from any
liability which it may have to the Adviser Indemnified Person against whom such
action is brought except to the extent the Sub-Adviser is prejudiced by the
failure or delay in giving such notice. In case any such action is brought
against the Adviser Indemnified Person, the Sub-Adviser will be entitled to
participate, at its own expense, in the defense thereof or, after notice to the
Adviser Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Adviser Indemnified Person. If the Sub-Adviser assumes the
defense of any such action and the selection of counsel by the Sub-Adviser to
represent both the Sub-Adviser and the Adviser Indemnified Person would result
in a conflict of interests and therefore, would not, in the reasonable judgment
of the Adviser Indemnified Person, adequately represent the interests of the
Adviser Indemnified Person, the Sub-Adviser will, at its own expense, assume the
defense with counsel to the Sub-Adviser and, also at its own expense, with
separate counsel to the Adviser Indemnified Person, which counsel shall be
satisfactory to the Sub-Adviser and to the Adviser Indemnified Person. The
Adviser Indemnified Person shall bear the fees and expenses of any additional
counsel retained by it, and the Sub-Adviser shall not be liable to the Adviser
Indemnified Person under this Agreement for any legal or other expenses
subsequently incurred by the Adviser Indemnified Person independently in
connection with the defense thereof other than reasonable costs of
investigation. The Sub-Adviser shall not have the right to compromise on or
settle the litigation without the prior written consent of the Adviser
Indemnified Person if the compromise or settlement results, or may result in a
finding of wrongdoing on the part of the Adviser Indemnified Person.
B-8
14. Duration and Termination.
a. This Agreement shall become effective on the date first indicated
above, subject to the condition that the Trust's Board, including a majority of
those Trustees who are not interested persons (as such term is defined in the
1940 Act) of the Adviser or the Sub-Adviser, and the Holders of Interests in the
Trust, shall have approved this Agreement in the manner required by the 1940
Act. Unless terminated as provided herein, this Agreement shall remain in full
force and effect through and including April 30, 2005 and shall continue in full
force and affect indefinitely thereafter, but only so long as such continuance
is specifically approved at least annually by (a) the Board, or by the vote of a
majority of the outstanding voting securities (as defined in the 1940 Act) of
the Trust, and (b) the vote of a majority of those Trustees who are not
interested persons (as such term is defined in the 1940 Act) of any such party
to this Agreement cast in person at a meeting called for the purpose of voting
on such approval.
b. Notwithstanding the foregoing, this Agreement may be terminated:
(a) by the Adviser at any time without payment of any penalty, upon 60 days'
prior written notice to the Sub-Adviser and the Trust; (b) at any time without
payment of any penalty by the Trust, by the Trust's Board or a majority of the
outstanding voting securities of the Trust, upon 60 days' prior written notice
to the Adviser and the Sub-Adviser, or (c) by the Sub-Adviser upon 3 months'
prior written notice unless the Trust or the Adviser requests additional time to
find a replacement for the Sub-Adviser, in which case the Sub-Adviser shall
allow the additional time requested by the Trust or Adviser not to exceed 3
additional months beyond the initial three-month notice period; provided,
however, that the Sub-Adviser may terminate this Agreement at any time without
penalty, effective upon written notice to the Adviser and the Trust, in the
event either the Sub-Adviser (acting in good faith) or the Adviser ceases to be
registered as an investment adviser under the Advisers Act or otherwise becomes
legally incapable of providing investment management services pursuant to its
respective contract with the Trust.
c. In the event of termination for any reason, all records of the
Trust shall promptly be returned to the Adviser or the Trust, free from any
claim or retention of rights in such record by the Sub-Adviser, although the
Sub-Adviser may, at its own expense, make and retain a copy of such records.
This Agreement shall automatically terminate in the event of its assignment (as
such term is described in the 1940 Act). In the event this Agreement is
terminated or is not approved in the manner described above, the Sections or
Paragraphs numbered 9, 10, 11, 12, and 13 of this Agreement shall remain in
effect, as well as any applicable provision of this Section 14 and, to the
extent that only amounts are owed to the Sub-Adviser as compensation for
services rendered while the agreement was in effect, Section 6.
15. Notices. Any notice must be in writing and shall be sufficiently given
(1) when delivered in person, (2) when dispatched by electronic mail or
electronic facsimile transfer (confirmed in writing by postage prepaid first
class air mail simultaneously dispatched), (3) when sent by internationally
recognized overnight courier service (with receipt confirmed by such overnight
courier service), or (4) when sent by registered or certified mail, to the other
party at the address of such party set forth below or at such other address as
such party may from time to time specify in writing to the other party.
B-9
If to the Trust:
Tax-Managed International Equity Portfolio
The Eaton Vance Building
255 State Street
Boston, MA 02109
Attn: Chief Legal Officer
If to the Adviser:
Boston Management and Research
The Eaton Vance Building
255 State Street
Boston, MA 02109
Attn: Chief Legal Officer
If to the Sub-Adviser:
Eagle Global Advisors, L.L.C
5847 San Felipe, Suite 930
Houston, Texas 77057
Attn:______________________
16. Amendments. No provision of this Agreement 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 Agreement shall be effective
until approved as required by applicable law.
17. Miscellaneous.
a. This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
thereunder, and without regard for the conflicts of laws principle thereof. The
term "affiliate" or "affiliated person" as used in this Agreement shall mean
"affiliated person" as defined in Section 2(a)(3) of the 1940 Act.
b. The Adviser and the Sub-Adviser acknowledge that the Trust enjoys the
rights of a third-party beneficiary under this Agreement, and the Adviser
acknowledges that the Sub-Adviser enjoys the rights of a third party beneficiary
under the Advisory Agreement.
c. The Sub-Adviser expressly acknowledges the provision in the Declaration
of Trust of the Adviser limiting the personal liability of the Trustee and
officers of the Adviser, and the Sub-Adviser hereby agrees that it shall have
recourse to the Adviser for payment of claims or obligations as between the
Adviser and the Sub-Adviser arising out of this Agreement and shall not seek
satisfaction from the Trustee or any officer of the Adviser.
B-10
d. The captions of this Agreement are included for convenience only and in
no way define or limit any of the provisions hereof or otherwise affect their
construction or effect.
e. To the extent permitted under Section 14 of this Agreement, this
Agreement may only be assigned by any party with the prior written consent of
the other party.
f. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby, and to this extent, the provisions of this
Agreement shall be deemed to be severable.
g. Nothing herein shall be construed as constituting the Sub-Adviser as an
agent or co-partner of the Adviser, or constituting the Adviser as an agent or
co-partner of the Sub-Adviser.
h. This Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
BOSTON MANAGEMENT AND RESEARCH
By:________________________________
Name:___________________________
Title:__________________________
EAGLE GLOBAL ADVISORS, L.L.C.
By:________________________________
Name:___________________________
Title:__________________________
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SCHEDULE A
ANNUAL INVESTMENT SUB-ADVISORY FEE
Average Daily Net Assets for the Month Annual Fee Rate
- -------------------------------------- ---------------
Up to $500 million 0.50000%
$500 million but less than $1 billion 0.46875%
$1 billion but less than $2.5 billion 0.43750%
$2.5 billion but less than $5 billion 0.40625%
$5 billion and over 0.37500%
The Trust's daily net assets shall be computed in accordance with the
Declaration of Trust of the Trust and any applicable votes and determinations of
the Board of the Trust.
B-12
EXHIBIT C
TAX-MANAGED INTERNATIONAL EQUITY PORTFOLIO
FORM OF AMENDMENT TO INVESTMENT ADVISORY AGREEMENT
This AMENDMENT dated , 2004 (the "Amendment"), is by and between
Tax-Managed International Equity Portfolio, a New York trust (formerly
Tax-Managed International Growth Portfolio) (the "Trust"), and Boston Management
and Research, a Massachusetts business trust (the "Adviser").
WHEREAS, the Trust and the Adviser are parties to that certain Investment
Advisory Agreement dated February 13, 2001 (the "Advisory
Agreement"); and
WHEREAS, the Trust and the Adviser wish to amend the Advisory Agreement;
NOW THEREFORE, in consideration of the premises and the promises contained
herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is agreed between
the Trust and the Adviser as follows:
1. Section 6 of the Advisory Agreement is hereby amended by deleting such
Section in its entirety and substituting therefore:
6. Sub-Investment Advisers. The Adviser may employ one or more
sub-investment advisers from time to time to perform such of the acts
and services of the Adviser, including the selection of brokers or
dealers to execute the Trust's portfolio security transactions, and
upon such terms and conditions as may be agreed upon under an
agreement between the Adviser and such investment adviser that is
approved by the Trustees of the Trust, all as permitted by the
Investment Company Act of 1940. Each such sub-investment adviser's
performance of its obligation under any such agreement shall be
supervised by the Adviser. Further, the Adviser may, with the approval
of the Trustees of the Trust and without the vote of any Interests in
the Trust, terminate any agreement with any sub-investment adviser
and/or enter into an agreement with one or more other sub-investment
advisers, all as permitted by the Investment Company Act of 1940 and
the rules hereunder.
2. Section 8 of the Advisory Agreement is hereby amended by hereby amended
by deleting such Section in its entirety and substituting therefore:
8. Amendments of the Agreement. This Agreement may be amended by a
writing signed by both parties hereto, provided that no amendment to
this Agreement shall be effective until approved (i) by the vote of a
majority of those Trustees of the Trust who are not interested persons
C-1
of the Adviser or the Trust cast in person at a meeting called for the
purpose of voting on such approval, and (ii) if required by the
Investment Company Act of 1940 or the rules hereunder, by vote of a
majority of the outstanding voting securities of the Trust.
3. Except as specifically amended by this Amendment, the terms of the
Advisory Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on the day and year first above written.
TAX-MANAGED INTERNATIONAL
EQUITY PORTFOLIO
By: ________________________
President
BOSTON MANAGEMENT AND RESEARCH
By: _______________________
Vice President
C-2
EXHIBIT D
TAX-MANAGED INTERNATIONAL GROWTH PORTFOLIO
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 13th day of February, 2001, between Tax-Managed
International Growth Portfolio, a New York trust (the "Trust"), and Boston
Management and Research, a Massachusetts business trust (the "Adviser").
1. DUTIES OF THE ADVISER. The Trust hereby employs the Adviser to act as
investment adviser for and to manage the investment and reinvestment of the
assets of the Trust and to administer its affairs, subject to the supervision of
the Trustees of the Trust, for the period and on the terms set forth in this
Agreement.
The Adviser hereby accepts such employment, and undertakes to afford to the
Trust the advice and assistance of the Adviser's organization in the choice of
investments and in the purchase and sale of securities for the Trust and to
furnish for the use of the Trust office space and all necessary office
facilities, equipment and personnel for servicing the investments of the Trust
and for administering its affairs and to pay the salaries and fees of all
officers and Trustees of the Trust who are members of the Adviser's organization
and all personnel of the Adviser performing services relating to research and
investment activities. The Adviser shall for all purposes herein be deemed to be
an independent contractor and shall, except as otherwise expressly provided or
authorized, have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust.
The Adviser shall provide the Trust with such investment management and
supervision as the Trust may from time to time consider necessary for the proper
supervision of the Trust's investments. As investment adviser to the Trust, the
Adviser shall furnish continuously an investment program and shall determine
from time to time what securities and other investments shall be acquired,
disposed of or exchanged and what portion of the Trust's assets shall be held
uninvested, subject always to the applicable restrictions of the Declaration of
Trust, By-Laws and registration statement of the Trust under the Investment
Company Act of 1940, all as from time to time amended. Should the Trustees of
the Trust at any time, however, make any specific determination as to investment
policy for the Trust and notify the Adviser thereof in writing, the Adviser
shall be bound by such determination for the period, if any, specified in such
notice or until similarly notified that such determination has been revoked. The
Adviser shall take, on behalf of the Trust, all actions which it deems necessary
or desirable to implement the investment policies of the Trust.
The Adviser shall place all orders for the purchase or sale of portfolio
securities for the account of the Trust either directly with the issuer or with
brokers or dealers selected by the Adviser, and to that end the Adviser is
authorized as the agent of the Trust to give instructions to the custodian of
the Trust as to deliveries of securities and payments of cash for the account of
the Trust. In connection with the selection of such brokers or dealers and the
D-1
placing of such orders, the Adviser shall use its best efforts to seek to
execute security transactions at prices which are advantageous to the Trust and
(when a disclosed commission is being charged) at reasonably competitive
commission rates. In selecting brokers or dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Adviser and the Adviser is expressly
authorized to pay any broker or dealer who provides such brokerage and research
services a commission for executing a security transaction which is in excess of
the amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or the overall responsibilities which the Adviser
and its affiliates have with respect to accounts over which they exercise
investment discretion. Subject to the requirement set forth in the second
sentence of this paragraph, the Adviser is authorized to consider, as a factor
in the selection of any broker or dealer with whom purchase or sale orders may
be placed, the fact that such broker or dealer has sold or is selling shares of
any one or more investment companies sponsored by the Adviser or its affiliates
or shares of any other investment company or series thereof that invests
substantially all of its assets in the Trust.
2. COMPENSATION OF THE ADVISER. For the services, payments and facilities
to be furnished hereunder by the Adviser, the Adviser shall be entitled to
receive from the Trust compensation in an amount equal to the following of the
average daily net assets of the Trust throughout each month:
Average Daily Net Assets for the Month Annual Fee Rate
- -------------------------------------- ---------------
Up to $500 million 1.00%
$500 million but less than $1 billion 0.9375%
$1 billion but less than $2.5 billion 0.875%
$2.5 billion but less than $5 billion 0.8125%
$5 billion and over 0.75%
Such compensation shall be paid monthly in arrears on the last business day of
each month. The Trust's daily net assets shall be computed in accordance with
the Declaration of Trust of the Trust and any applicable votes and
determinations of the Trustees of the Trust. In case of initiation or
termination of the Agreement during any month with respect to the Trust, the fee
for that month shall be based on the number of calendar days during which it is
in effect.
The Adviser may, from time to time, waive all or a part of the above
compensation.
3. ALLOCATION OF CHARGES AND EXPENSES. It is understood that the Trust will
pay all expenses other than those expressly stated to be payable by the Adviser
hereunder, which expenses payable by the Trust shall include, without implied
limitation, (i) expenses of maintaining the Trust and continuing its existence,
(ii) registration of the Trust under the Investment Company Act of 1940, (iii)
commissions, fees and other expenses connected with the acquisition, holding and
disposition of securities and other investments, (iv) auditing, accounting and
D-2
legal expenses, (v) taxes and interest, (vi) governmental fees, (vii) expenses
of issue, sale, and redemption of Interests in the Trust, (viii) expenses of
registering and qualifying the Trust and Interests in the Trust under federal
and state securities laws and of preparing and printing registration statements
or other offering statements or memoranda for such purposes and for distributing
the same to Holders and investors, and fees and expenses of registering and
maintaining registrations of the Trust and of the Trust's placement agent as
broker-dealer or agent under state securities laws, (ix) expenses of reports and
notices to Holders and of meetings of Holders and proxy solicitations therefore,
(x) expenses of reports to governmental officers and commissions, (xi) insurance
expenses, (xii) association membership dues, (xiii) fees, expenses and
disbursements of custodians and subcustodians for all services to the Trust
(including without limitation safekeeping of funds, securities and other
investments, keeping of books, accounts and records, and determination of net
asset values, book capital account balances and tax capital account balances),
(xiv) fees, expenses and disbursements of transfer agents, dividend disbursing
agents, Holder servicing agents and registrars for all services to the Trust,
(xv) expenses for servicing the account of Holders, (xvi) any direct charges to
Holders approved by the Trustees of the Trust, (xvii) compensation and expenses
of Trustees of the Trust who are not members of the Adviser's organization, and
(xviii) such non-recurring items as may arise, including expenses incurred in
connection with litigation, proceedings and claims and the obligation of the
Trust to indemnify its Trustees, officers and Holders with respect thereto.
4. OTHER INTERESTS. It is understood that Trustees and officers of the
Trust and Holders of Interests in the Trust are or may be or become interested
in the Adviser as trustees, officers, employees, shareholders or otherwise and
that trustees, officers, employees and shareholders of the Adviser are or may be
or become similarly interested in the Trust, and that the Adviser may be or
become interested in the Trust as a Holder or otherwise. It is also understood
that trustees, officers, employees and shareholders of the Adviser may be or
become interested (as directors, trustees, officers, employees, shareholders or
otherwise) in other companies or entities (including, without limitation, other
investment companies) which the Adviser may organize, sponsor or acquire, or
with which it may merge or consolidate, and which may include the words "Eaton
Vance" or "Boston Management and Research" or any combination thereof as part of
their name, and that the Adviser or its subsidiaries or affiliates may enter
into advisory or management agreements or other contracts or relationships with
such other companies or entities.
5. LIMITATION OF LIABILITY OF THE ADVISER. The services of the Adviser to
the Trust are not to be deemed to be exclusive, the Adviser being free to render
services to others and engage in other business activities. In the absence of
willful misfeasance, bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the Adviser, the Adviser shall
not be subject to liability to the Trust or to any Holder of Interests in the
Trust for any act or omission in the course of, or connected with, rendering
services hereunder or for any losses which may be sustained in the acquisition,
holding or disposition of any security or other investment.
6. SUB-INVESTMENT ADVISERS. The Adviser may employ one or more
sub-investment advisers from time to time to perform such of the acts and
services of the Adviser, including the selection of brokers or dealers to
execute the Trust's portfolio security transactions, and upon such terms and
conditions as may be agreed upon between the Adviser and such investment adviser
and approved by the Trustees of the Trust, all as permitted by the Investment
Company Act of 1940.
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7. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall become
effective upon the date of its execution, and, unless terminated as herein
provided, shall remain in full force and effect through and including March 31,
2002 and shall continue in full force and effect indefinitely thereafter, but
only so long as such continuance after March 31, 2002 is specifically approved
at least annually (i) by the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Trust and (ii) by the vote
of a majority of those Trustees of the Trust who are not interested persons of
the Adviser or the Trust cast in person at a meeting called for the purpose of
voting on such approval.
Either party hereto may, at any time on sixty (60) days' prior written notice to
the other, terminate this Agreement without the payment of any penalty, by
action of Trustees of the Trust or the trustees of the Adviser, as the case may
be, and the Trust may, at any time upon such written notice to the Adviser,
terminate this Agreement by vote of a majority of the outstanding voting
securities of the Trust. This Agreement shall terminate automatically in the
event of its assignment.
8. AMENDMENTS OF THE AGREEMENT. This Agreement may be amended by a writing
signed by both parties hereto, provided that no amendment to this Agreement
shall be effective until approved (i) by the vote of a majority of those
Trustees of the Trust who are not interested persons of the Adviser or the Trust
cast in person at a meeting called for the purpose of voting on such approval,
and (ii) by vote of a majority of the outstanding voting securities of the
Trust.
9. LIMITATION OF LIABILITY. The Adviser expressly acknowledges the
provision in the Declaration of Trust of the Trust (Section 5.2 and 5.6)
limiting the personal liability of the Trustees and officers of the Trust, and
the Adviser hereby agrees that it shall have recourse to the Trust for payment
of claims or obligations as between the Trust and the Adviser arising out of
this Agreement and shall not seek satisfaction from any Trustee or officer of
the Trust.
10. CERTAIN DEFINITIONS. The terms "assignment" and "interested persons"
when used herein shall have the respective meanings specified in the Investment
Company Act of 1940 as now in effect or as hereafter amended subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
by any rule, regulation or order. The term "vote of a majority of the
outstanding voting securities" shall mean the vote, at a meeting of Holders, of
the lesser of (a) 67 per centum or more of the Interests in the Trust present or
represented by proxy at the meeting if the Holders of more than 50 per centum of
the outstanding Interests in the Trust are present or represented by proxy at
the meeting, or (b) more than 50 per centum of the outstanding Interests in the
Trust. The terms "Holders" and "Interests" when used herein shall have the
respective meanings specified in the Declaration of Trust of the Trust.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
TAX-MANAGED INTERNATIONAL
EQUITY PORTFOLIO
By: /s/ James B. Hawkes
---------------------
President
BOSTON MANAGEMENT AND RESEARCH
By: /s/ Alan R. Dynner
--------------------
Vice President
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PROXY TABULATOR
P.O. BOX 9132
HINGHAM, MA 02043-9132
EVERY SHAREHOLDER'S VOTE IS IMPORTANT
*** 3 EASY WAYS TO VOTE YOUR PROXIES ***
VOTE BY TELEPHONE VOTE ON THE INTERNET VOTE BY MAIL
1) Read the Proxy Statement and have this 1) Read the Proxy Statement and have this 1) Read the Proxy Statement
card at hand card at hand 2) If you want to vote use the Proxy
2) Call 1-800-690-6903 2) Go to www.proxyweb.com/proxy Card on reverse
3) Enter control number shown at left and 3) Enter control number shown at left and 3) Return the card in the postage-paid
follow the simple instructions follow the simple instructions envelope provided
4) Keep this card for your records 4) Keep this card for your records
*** 999 999 999 999 99 ***
Eaton Vance Tax-Managed International Growth Fund
SPECIAL MEETING OF SHAREHOLDERS
April 16, 2004
PROXY SOLICITED ON BEHALF OF BOARD OF TRUSTEES
The undersigned holder of shares of beneficial interest of the above-referenced
Fund (the "Fund"), hereby appoints JAMES B. HAWKES, ALAN R. DYNNER and THOMAS E.
FAUST JR., and each of them, with full power of substitution and revocation, as
proxies to represent the undersigned at the Special Meeting of Shareholders of
the Fund to be held at the principal office of the Fund, The Eaton Vance
Building, 255 State Street, Boston, Massachusetts 02109, on Friday, April 16,
2004 at 1:30 P.M., Eastern Standard Time, and at any and all adjournments
thereof, and to vote all shares of beneficial interest of the Fund which the
undersigned would be entitled to vote, with all powers the undersigned would
possess if personally present, in accordance with the instructions on this
proxy.
Dated:__________________
PLEASE VOTE, DATE, SIGN AND PROMPTLY RETURN
IN THE ACCOMPANYING ENVELOPE.
NO POSTAGE REQUIRED IF MAILED IN THE U.S.
____________________________________________________________
Signature(s): (Sign in the Box)
Note: Please sign this proxy as your name appears on the
books of the Fund. Joint owners should each sign personally.
Trustees and other fiduciaries should indicate the capacity
in which they sign, and where more than one name appears, a
majority must sign. If a corporation, this signature should
be that of an authorized officer who should state his or her
title.
EATON VANCE PROXY/NMF
WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE
VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR
THE PROPOSALS SET FORTH BELOW AND IN THE DISCRETION OF THE PROXIES WITH RESPECT
TO ALL OTHER MATTERS WHICH MAY PROPERLY COME BEFORE THE SPECIAL MEETING AND ANY
ADJOURNMENTS THEREOF. THE UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE ACCOMPANYING
NOTICE OF SPECIAL MEETING AND PROXY STATEMENT.
Please fill in box(es) as shown using black or blue ink or number 2 pencil.
PLEASE DO NOT USE FINE POINT PENS. [X]
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
FOR AGAINST ABSTAIN
1. To approve an Investment Sub-Advisory Agreement between Boston Management [ ] [ ] [ ]
and Research and Eagle Global Advisors L.L.C. for Tax-Managed International
Growth Portfolio
2. To amend the Investment Advisory Agreement for Tax-Managed International [ ] [ ] [ ]
Growth Portfolio
3. To authorize the Board of Trustees to select investment sub-advisers and [ ] [ ] [ ]
enter into investment sub-advisory agreements without obtaining shareholder
approval
NOTE ADDRESS CHANGE: _______________________________
_______________________________
_______________________________
PLEASE SIGN ON REVERSE SIDE
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