INVESTMENT SUB-ADVISORY AGREEMENT
between
EATON
VANCE MANAGEMENT
and
MORGAN
STANLEY INVESTMENT MANAGEMENT LIMITED
for
EATON
VANCE LIMITED DURATION INCOME FUND
AGREEMENT made as of April 18, 2024 (“Effective
Date”), by and between EATON VANCE MANAGEMENT, a Massachusetts business
trust (hereinafter referred to as the “Investment Adviser”), and MORGAN
STANLEY INVESTMENT MANAGEMENT LIMITED, a company incorporated under the laws of
England (hereinafter referred to as the “Local Manager”).
W I T N E S S E T
H :
WHEREAS, Eaton Vance Limited Duration Income
Fund (the “Fund”) is a Massachusetts business trust engaged in business
as a closed‑end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the “Investment
Company Act”); and
WHEREAS, the Investment Adviser and the Local
Manager are engaged principally in rendering investment advisory services and
are registered as investment advisers under the Investment Advisers Act of
1940, as amended (the “Advisers Act”); and
WHEREAS, the Local Manager is regulated by the
Financial Conduct Authority in the United Kingdom (“FCA”); and
WHEREAS, the Investment Adviser has entered
into an investment advisory agreement (the “Advisory Agreement”) with
the Fund, dated April 14, 2003, as amended from time to time, pursuant to which
the Investment Adviser provides management and investment and advisory services
to the Fund; and
WHEREAS, the Investment Adviser desires to
enter into an investment sub-advisory agreement with the Local Manager to
render portfolio management services to the Fund in the manner and on the terms
set forth in this Sub-Advisory Agreement with respect to all or a portion of
the assets of the Fund, effective as of the Effective
Date (this “Sub-Advisory Agreement”); and
WHEREAS, the Local Manager is willing to
provide investment advisory services to the Investment Adviser in connection
with the Fund’s investment operations on the terms and conditions hereinafter
set forth and including the terms and conditions contained in the Annex to this
Agreement; provided however, that nothing in the Annex to this Agreement shall
authorize conduct prohibited under the Investment Company Act, the Advisers
Act, or other laws or regulations applicable to the Local Manager;
NOW THEREFORE, in consideration of the premises
and the covenants hereinafter contained, the Local Manager and the Investment
Adviser hereby agree as follows:
ARTICLE I
Duties of the Local Manager
The Investment Adviser hereby employs the Local
Manager to act as discretionary investment manager to the Investment Adviser
and to furnish the investment management services described below with respect
to the Fund, subject to the broad supervision of the Investment Adviser and the
Board of Trustees of the Fund, for the period and on the terms and conditions
set forth in this Sub-Advisory Agreement.
The Local Manager hereby accepts such
employment and agrees during such period, at its own expense, to render, or
arrange for the rendering of, such services and to assume the obligations
herein set forth for the compensation provided for herein. The Investment
Adviser and its affiliates shall for all purposes herein be deemed a Professional
Client as defined under the rules and guidance promulgated by the FCA in the
FCA Handbook (hereinafter referred to as the “FCA Rules”). The
Investment Adviser has the right to request to be treated as a retail client.
Classification as a retail client requires the Local Manager to exercise a
higher level of protective care under the regulatory system. However, the
Local Manager is not obliged to accept any such request. The Investment
Adviser should be aware that professional clients will not be entitled to
certain protections afforded by the FCA Rules to retail clients. For the
avoidance of doubt, the Local Manager will, for purposes of the FCA Rules, only
treat the Investment Adviser (but not the Fund) as its customer from both a
regulatory and a contractual perspective. The Local Manager and its affiliates
shall for all purposes herein each be deemed to be an independent contractor
and shall, unless otherwise expressly provided or authorized, have no authority
to act for or represent the Fund in any way or otherwise be deemed an agent of
the Fund.
The Local Manager shall have full discretion,
power and authority on the Fund’s behalf to buy, sell, retain, exchange or
otherwise deal in investments and other assets, make deposits, subscribe to
issues and offers for sale and accept placings of any investments, enter into
foreign currency transactions on a spot or forward basis, effect transactions
on any markets, take all day to day decisions and otherwise act as the Local
Manager judges appropriate in relation to the investment and reinvestment of
the portfolio of assets of the Fund. This includes performing all acts and
executing all documents which the Local Manager reasonably considers incidental
thereto, including (without limitation) power to execute and deliver all
applications, requests, or claims for refund, reduction, repayment or credit
of, or exemption or relief from, any withholding tax or similar taxes in any
jurisdiction in which such applications, requests or claims may be made. In connection
with the selection of brokers, dealers, futures commission merchants, or other
market participants and the placing of orders on behalf of the Fund, the Local
Manager shall use its best efforts to seek to execute security transactions at
prices that are advantageous to the Fund and (when a disclosed commission is
being charged) at commission rates that are reasonable in relation to the
benefits received in accordance with the FCA Rules set forth in the Annex to
this Sub-Advisory Agreement. Subject to guidelines adopted by the Fund, the
Local Manager shall also make recommendations or take action as to the manner
in which voting rights, rights to consent to corporate action and any other
rights pertaining to the portfolio of assets of the Fund shall be exercised.
All of the foregoing is subject always to the restrictions of the Declaration
of Trust and By‑Laws of the Fund, as they may be amended and/or restated
from time to time and as provided to the Local Manager by the Investment
Adviser, the provisions of the Investment Company Act and the statements
relating to the Fund’s investment objective(s), investment policies and
investment restrictions as the same are set forth in the currently effective
prospectus and statement of additional information relating to the registration
statement of the Fund under the Investment Company Act and the Securities Act
of 1933, as amended, as may be supplemented and amended in the most recent
annual and semi-annual shareholder reports of the Fund (collectively, the “Disclosure
Documents”), as well as to the ongoing oversight and supervision of the
Local Manager by the Investment Adviser and the Board of Trustees of the Fund.
The Local Manager has
reviewed the most recent Disclosure Documents, as applicable, that contain
disclosure about the Local Manager, and represents and warrants that, with
respect to the disclosure about the Local Manager or information relating
directly or indirectly to the Local Manager, such Disclosure Document, as
applicable, contains, as of the date hereof, no untrue statement of any
material fact and does 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 Local Manager 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 Sub-Advisory Agreement remains in effect.
The Local Manager shall furnish such reports,
evaluations, information or analyses to the Fund and the Investment Adviser as
the Fund’s Board of Trustees or the Investment Adviser may reasonably request
from time to time, or as the Local Manager may deem to be desirable.
Subject to approval of the Fund’s Board and
notice to the Local Manager, the Investment Adviser retains complete authority
immediately to assume direct responsibility for any function delegated to the
Sub-Adviser under this Sub-Advisory Agreement. Should the Trustees of the Fund
or the Investment Adviser at any time, however, make any specific determination
as to investment policy for the Fund and notify the Local Manager thereof in
writing, the Local Manager 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 Local Manager will not hold money on behalf
of the Investment Adviser or the Fund, nor will the Local Manager be the
registered holder of the registered investments of the Investment Adviser or
the Fund or be the custodian of Fund assets or hold evidence of title.
The Local Manager may, where reasonable, employ
agents (including affiliates) to perform any administrative, dealing or
ancillary services required to enable the Local Manager to perform its services
under this Sub-Advisory Agreement.
ARTICLE II
Allocation of Charges and Expenses
The Local Manager assumes and shall pay for
maintaining the staff and personnel necessary to perform its obligations under
this Sub-Advisory Agreement and shall at its own expense provide the office
space, equipment and facilities which it is obligated to provide under
Article I hereof.
ARTICLE III
Compensation of the Local Manager
For the services rendered, the facilities furnished
and expenses assumed by the Local Manager, the Investment Adviser shall pay to
the Local Manager a fee with respect to the Fund in an amount to be determined
from time to time by the Investment Adviser and the Local Manager but in no
event in excess of the amount that the Investment Adviser actually received for
providing services to the Fund pursuant to the Advisory Agreement. The fee
currently paid by the Investment Adviser to the Local Manager in respect to the
Fund is set forth on Schedule A, as may be amended from time to time.
ARTICLE IV
Limitation of Liability of the Local
Manager
No warranty is given by the Local Manager as to
the performance or profitability of the Fund or any part thereof.
If a percentage restriction contained in the
Fund’s investment objective(s) or investment restrictions (as the same are set
forth in the Fund’s then-current Disclosure Documents) is adhered to at the
time of investment, a later change in percentage resulting from a change in
values or assets will not constitute a violation of such restriction.
The Local Manager will not be responsible to
the Investment Adviser or the Fund for the solvency, actions or omissions of
any counterparty, broker, dealer, market‑maker, bank, custodian or sub‑custodian,
with whom it transacts business on the Investment Adviser’s behalf, other than
affiliates of the Local Manager.
Nothing in this Agreement will exclude or
restrict any liability which the Local Manager has under the Financial Services
and Markets Act 2000 or the FCA Rules in relation to the Investment Adviser and
which may not be excluded or restricted thereunder.
The Local Manager shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission in the performance of investment advisory
services rendered with respect to the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties hereunder. The exception in
the previous sentence shall apply to each limitation of the Local Manager’s
liability contained in this Article IV. As used in this Article IV,
the Local Manager shall include any affiliates of the Local Manager performing
services for the Local Manager contemplated hereby and directors, officers and
employees of the Local Manager and such affiliates.
It is understood and agreed that in furnishing
the investment advice and other services as herein provided, the Local Manager
shall use its best professional judgment to perform its obligations hereunder
which will provide favorable results for the Fund. The Local Manager shall not
be liable to the Fund or to any shareholder of the Fund to any greater degree
than the Investment Adviser, and the Investment Adviser shall indemnify and
hold the Local Manager harmless against any loss, liability or cost incurred by
the Local Manager towards the Fund or to any shareholder of the Fund except to
the extent that such loss, liability or cost arises from the Local Manager’s
fraud, willful misfeasance, bad faith or gross negligence in the performance of
the Local Manager’s duties hereunder.
The Fund shall be severally (and not jointly)
liable for its own fees, costs, expenses and other liabilities attributable to
such Fund.
ARTICLE V
Activities of the Local Manager
The services of the Local Manager to the
Investment Adviser in connection with the operations of the Fund are not to be
deemed to be exclusive, the Local Manager and any person controlled by or under
common control with the Local Manager (for purposes of this Article V
referred to as “affiliates”) being free to render services to others. It is
understood that the Trustees and any officers, employees and shareholders of
the Fund are or may become interested in the Local Manager and its affiliates,
as directors, officers, employees and shareholders or
otherwise and that directors, officers, employees and shareholders of the Local
Manager and its affiliates are or may become similarly interested in the Fund,
and that the Local Manager and directors, officers, employees, partners and
shareholders of its affiliates may become interested in the Fund as
shareholders or otherwise.
ARTICLE VI
Duration and Termination of this Agreement
This Agreement shall become effective with respect
to the Fund for an initial period of up to two years from the Effective Date,
and thereafter, but only so long as such continuance is specifically approved
at least annually by (i) the Trustees of the Fund or by the vote of a
majority of the outstanding voting securities of the Fund and (ii) a
majority of those Trustees who are not parties to this Sub-Advisory Agreement
or interested persons of any such party cast in person at a meeting called for
the purpose of voting on such approval.
This Agreement may be terminated at any time
with respect to the Fund, without the payment of any penalty, by the Investment
Adviser (subject to the approval of the Trustees of the Fund), by the Board of
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Fund at any meeting, or by the Local Manager, on sixty days’
written notice to the other party. This Agreement shall automatically
terminate with respect to the Fund in the event of its assignment or in the
event of the termination of the Advisory Agreement of the Fund. Any
termination shall be without prejudice to the completion of transactions
already initiated. In the event of termination for any reason, all records of
the Fund held by the Local Manager shall promptly be returned to the Investment
Adviser or the Fund, free from any claim or retention of rights in such record
by the Local Manager, although the Local Manager may, at its own expense, make
and retain a copy of such records.
ARTICLE VII
Amendments to this 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 in a manner consistent with the requirements
of the Investment Company Act.
Definitions of Certain Terms
The terms “vote of a majority of the
outstanding voting securities,” “assignment,” “affiliated person” and
“interested person” used in this Agreement, shall have the respective meanings
specified in the Investment Company Act and the rules and regulations thereunder,
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under said Act. In addition, where the effect of a
requirement of the Investment Company Act reflected in any provision of this
Agreement is modified or interpreted by any applicable order or orders of the
SEC, any rules or regulations adopted by, or interpretative releases of, the
SEC, or any applicable guidance issued by the staff of the SEC, such provision
will be deemed to incorporate the effect of such order, rule, regulation,
interpretative release, or guidance.
ARTICLE VIII
Miscellaneous
Books and Records. The Local Manager
hereby agrees that all records that it maintains for the Fund are the property
of the Fund and further agrees to surrender promptly to the Fund any of such
records upon the Fund’s or the Investment Adviser's request in compliance with
the requirements of Rule 31a-3 under the Investment Company Act, although the
Local Manager may, at its own expense, make and retain a copy of such records.
The Local Manager further agrees to preserve for the periods prescribed by Rule
31a-2 under the Investment Company Act the records required to be maintained by
Rules 31a-1 and 31a-2 under the Investment Company Act.
Limitation of Liability of Trustees,
Officers, and Shareholders. A copy of the Declaration of Trust for the Fund
and the Investment Adviser is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Sub-Advisory Agreement is
executed on behalf of the Investment Adviser by an officer of the Investment
Adviser, in his or her capacity as an officer and not individually. The Local
Manager expressly acknowledges the provisions in the Declarations of Trust of
the Fund and of the Investment Adviser limiting the personal liability of
Trustees, officers, and the shareholders of the Fund and the Investment
Adviser, respectively, and the Local Manager hereby agrees that it shall have
recourse to the Fund or the Investment Adviser, respectively, for payment of
claims or obligations as between the Fund or the Investment Adviser,
respectively, and the Local Manager arising out of this Sub-Advisory Agreement
and shall not seek satisfaction from the Trustees or officers of the Fund or
the Investment Adviser or the shareholders of the Fund or the Investment
Adviser.
Third Party Beneficiaries. The Fund is a
third-party beneficiary to this Agreement. Aside from the Fund, nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
not a party hereto (including, but not limited to Shareholders of the Fund) any
right, benefit, or remedy of any nature whatsoever under or by reason of the
Agreement.
Governing Law. This Sub-Advisory
Agreement shall be construed in accordance with the laws of The Commonwealth of
Massachusetts and the applicable provisions of the Investment Company Act. To
the extent that the applicable laws of The Commonwealth of Massachusetts, or
any of the provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
Severance. If any term or provision of
this Sub-Advisory Agreement or the application thereof to any person or
circumstance is held to be invalid or unenforceable to any extent, the
remainder of this Sub-Advisory Agreement or the application of such provision
to other persons or circumstances shall not be affected thereby and shall be
enforced to the fullest extent permitted by law.
Execution. This Sub-Advisory Agreement
may be executed by the parties hereto in any number of counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. This Sub-Advisory Agreement may be executed in written form or
using electronic or digital technology, whether it is a computer-generated
signature, an electronic copy of the party’s true ink signature, DocuSign,
facsimile or otherwise. Delivery of an executed counterpart of the Agreement by
facsimile, e-mail transmission via portable document format (.pdf), DocuSign,
or other electronic means will be equally as effective and binding as delivery
of a manually executed counterpart.
IN WITNESS WHEREOF, the
parties hereto have executed and delivered this Sub-Advisory Agreement as of
the date first above written.
EATON VANCE MANAGEMENT
By:
|
/s/ Andrew Szczurowski
|
Name:
|
Andrew Szczurowski
|
Title:
|
Vice President and not individually
|
MORGAN STANLEY INVESTMENT
MANAGEMENT LIMITED
By:
|
/s/ Ruairi O'Healai
|
Name:
|
Ruairi O'Healai
|
Title:
|
Director, Managing Director and not individually
|
Acknowledged and agreed to as of the day
and year first above written:
EATON VANCE LIMITED DURATION INCOME FUND
By:
|
/s/ James F. Kirchner
|
Name:
|
James F. Kirchner
|
Title:
|
Treasurer and not individually
|
SCHEDULE
A
Annual Investment
Sub-Advisory Fee
For the services, payments and facilities furnished by the Sub-Adviser
under this Agreement, the Sub-Adviser is entitled to receive from the Adviser
the compensation set forth below:
A fee in an amount equal to 0.04% annually of the average weekly gross
assets of the Fund. Gross assets shall be calculated by deducting accrued
liabilities of the Fund, except the principal amount of any indebtedness for
money borrowed, including debt securities issued by the Fund, and the amount of
any outstanding preferred shares issued by the Fund. Accrued liabilities are
expenses incurred in the normal course of operations.
In case of initiation or termination of the Agreement during any month
with respect to the Fund, the fee for that month shall be reduced
proportionately on the basis of the number of calendar days during which the
Agreement is in effect.
Such compensation shall be paid monthly in arrears. The Sub-Adviser may,
from time to time, waive all or a part of the above compensation.
SUB‑ADVISORY AGREEMENT
ANNEX
REGULATORY STATUS
The Local Manager is authorised and
regulated by the Financial Conduct Authority (the “FCA”), the
UK supervisory authority whose registered office is
at 25 The North Colonnade, Canary Wharf, London, United Kingdom E14 5HS.
2. ORDER
EXECUTION
The Local Manager acknowledges its
duty under the FCA Rules to take all reasonable steps to obtain the best
possible result for the Investment Adviser (taking into account the factors
prescribed in the FCA Rules) when executing orders resulting from decisions to
deal in designated investments (as defined in the FCA Rules) and to act in
accordance with the Investment Adviser’s best interests when placing orders in
respect of designated investments with other persons for execution or when
receiving and transmitting orders to other persons for execution. Information
concerning the Local Manager’s policy for meeting those obligations (the “Order
Execution Policy Disclosure Statement”) is included as Schedule 1. The
Investment Adviser acknowledges receipt of the Order Execution Policy
Disclosure Statement and confirms its consent to the matters described in it.
For the avoidance of doubt and as set out in the Order Execution Policy
Disclosure Statement, the Investment Adviser acknowledges that specific
instructions from the Investment Adviser in relation to the execution of orders
may prevent the Local Manager from following its execution policy in relation
to such orders in respect of the elements of
execution covered by the instructions.
The Local Manager will act in good
faith and with due diligence in its choice and use of brokers or dealers (“Broker”)
to place client orders or execute client transactions. Subject thereto and to
the FCA Rules, the Local Manager may execute or arrange for the execution of
transactions for the Investment Adviser on such markets or exchanges (including
markets or exchanges that are not Regulated Markets or MTFs) and with or
through such Brokers (but excluding any Affiliate) as it thinks fit. All
transactions will be effected in accordance with the rules and regulations of
the relevant market or exchange, and the Local Manager may take all such steps
as may be required or permitted by such rules and regulations and/or by
appropriate market practice. For purposes of this Agreement, “Multilateral
Trading Facility” (also “MTF”) has the meaning given in the FCA Rules
(in summary, an investment exchange or multilateral trading platform other than
a Regulated Market); and “Regulated Market” has the meaning given in the
FCA Rules (in summary, an investment exchange or multilateral trading platform
which, in either case, is regulated within the EEA as a “regulated market” under
the Markets in Financial Instruments Directive).
The Investment Adviser expressly
instructs the Local Manager not to make public immediately any limit order
relating to transactions in respect of the Fund which is not immediately
executed under prevailing market conditions where the Local Manager believes it
is in the Investment Adviser’s interests not to do so.
The Local Manager may aggregate
transactions for the Fund with transactions of other clients of the Local
Manager and of its employees and of clients of its affiliate and its employees and will promptly allocate such aggregated
transactions among the participating accounts on a fair and equitable basis in
accordance its order allocation policy established in compliance with the
requirements of the FCA Rules. The Investment Adviser recognises that the Local
Manager will aggregate transactions only where it reasonably believes that it
is likely that the aggregation will operate overall to the advantage of the
Fund. However, on occasion the aggregation may operate to the disadvantage of
the Fund in relation to a particular order. The Local Manager will provide a
copy of its order allocation policy to the Investment Adviser upon request.
3. DEALING
ARRANGEMENTS
The Local Manager’s policy
regarding its Dealing Arrangements, including details of the goods and services
that relate to the execution of trades and those that relate to the provision
of research are set out in Schedule 2. The Local Manager shall provide the
Investment Adviser with details of its Dealing Arrangements with the frequency
required by the FCA Rules. For purposes of this Agreement, “Dealing
Arrangements” means arrangements entered into by the Local Manager as permitted
by the FCA Rules for the receipt or payment of money, goods or services that
relate to the execution of trades or the provision of research under which the
Local Manager executes or arranges for the execution of orders in designated
investments.
4. MATERIAL
INTERESTS
The Local Manager and any of its
affiliates (an “Affiliate”) may, subject to the limitations of the U.S.
Investment Company Act of 1940, as amended, and to the overriding principles of
suitability and best execution and without prior reference to the Investment
Adviser, effect transactions in which the Local Manager or Affiliate has,
directly or indirectly, a material interest or a relationship of any
description with another party, which may involve a potential conflict with the
Local Manager’s duty to the Investment Adviser. For example, such potential
conflicting interests or duties may arise because:
· any of the Local Manager’s or
Affiliate’s directors or employees is a director of, holds or deals in
securities of, or is otherwise interested in any company whose securities are
held or dealt in on behalf of the Investment Adviser;
· the transaction is in the securities
of a company for which an Affiliate has provided corporate finance advice,
underwritten, managed or arranged an issue or offer for sale;
· the Local Manager may act as agent
for the Investment Adviser in relation to transactions in which it is also
acting as agent for the account of other clients and/or an Affiliate;
· the transaction is in units or
shares of a collective investment scheme (regulated or unregulated) of which
the Local Manager or any Affiliate is the manager, operator, banker, adviser,
custodian or trustee; or
·
The Local Manager may act as
agent for a counterparty and also act as agent on behalf of the Investment
Adviser and in the course of so acting may charge a commission to either the
counterparty or the Investment Adviser.
Nothing in
the Agreement shall oblige the Local Manager or any Affiliate to accept
responsibilities more extensive than those set out in the Agreement or shall
give rise to any fiduciary or equitable duties which would prevent or hinder
either: (i) the Local Manager or any Affiliate performing investment management
or other services for any person or entity other than the Investment Adviser or
from making investments on their own behalf and the performance of such
services for others or investment on their own behalf will not be deemed to
violate or give rise to any duty or obligation to the Investment Adviser; or
(ii) the Local Manager effecting any transaction with or for the Investment
Adviser with an Affiliate; or (iii) such Affiliate acting both as market-maker
and broker, principal or agent, dealing with other Affiliates and other clients
and generally effecting transactions as provided above nor from retaining any
remuneration received in respect thereof.
5. RECORDS AND REPORTS
5.1 The
Local Manager shall, not later than 10 working days following the end of each
calendar month, furnish to the Investment Adviser a statement showing all
transactions that have occurred in the Fund and a monthly listing of all
investments and cash balances held as of the end of such month.
5.2 The
monthly statement will show the cost or amount realised (in the case of any
relevant new purchase or sale) and, where available, the current value (where
applicable) of each investment held in the Fund and any income arising on the
Fund’s account during the relevant calendar month, and will also include a
statement showing the measure of the performance of the assets of the Fund.
The basis of all valuations will be as stated in the first monthly statement,
unless otherwise agreed.
5.3 The
Local Manager will not provide the Investment Adviser with an individual trade
confirmation of each portfolio transaction unless the Investment Adviser has
specifically requested the Local Manager to do so.
6. FORCE MAJEURE
The
Local Manager shall not be responsible
or liable to the Investment Adviser or the Fund for any failure or delay in the performance of its
obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control, including, without
limitation, acts of God; earthquakes; fires; floods; wars; civil or military
disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions
of utilities; computer (hardware or software) or communications services;
accidents; labor disputes; acts of civil or military authority or governmental
actions; it being understood that the Local Manager shall use reasonable
efforts which are consistent with accepted practices in the investment
management industry to resume performance as soon as practicable under the
circumstances.
7. COMPLAINTS
The
Local Manager maintains procedures in accordance with FCA Rules for the
effective consideration and handling of client complaints. Complaints will be
considered promptly by the appropriate supervisory manager who is not
personally involved in the subject matter of the complaint. Where appropriate,
the complaint will be passed to the Compliance Officer.
8. RECORDING
OF TELEPHONE INSTRUCTIONS
All instructions received from the
Investment Adviser by telephone will be binding as if received in writing. The
Local Manager may record telephone conversations with the Investment Adviser
and produce such recordings in evidence if the Local Manager sees fit to do
so. In some circumstances, when the Investment Adviser is dealing with the
Local Manager, data may be collected about the Investment Adviser and the
Investment Adviser’s officers or employees indirectly from monitoring devices
or other means (for example, telephone logs and recordings). In these
circumstances, the data are not accessed on a routine basis but access is
possible. Access could occur, for instance, in situations where the data are
needed to clarify or confirm instructions provided by the Investment Adviser,
for compliance or billing purposes.
9. CONFIDENTIALITY
AND DISCLOSURE
The Local Manager and the Investment Adviser
undertake to keep private and confidential all information acquired in
connection with this Agreement, and not to disclose such information to any
person except to the extent that:
(a) the
other party gives prior consent; or
(b) disclosure
is required by applicable law, rule, or regulation; or
(c) the
Local Manager is required to disclose the information by the FCA, the Bank of
England, the London Stock Exchange or any other recognised investment exchange,
the City Panel on Takeovers and Mergers or any other regulatory authority
having jurisdiction over the Local Manager or the performance by it of its
obligations under this Agreement or by English Law; or
(d) the parties
may disclose such information to their legal counsel, accountants, or other
professional advisors; or
(e) disclosure
to a counterparty to a transaction effected for the Fund is required as a
condition to such transaction; or
(f) disclosure
is necessary to enable the Investment Adviser or Local Manager to perform its
obligations under this Agreement.
10. DATA PROTECTION
10.1 The
Local Manager will, in connection with the Sub-Advisory Agreement, comply
(where applicable) with the UK Data Protection Act 1998 and other applicable
data protection laws and regulations (together, the “Data Protection Laws”).
10.2
The Investment Adviser will comply (where applicable) with the Data
Protection Laws and (where applicable) take all reasonable steps to ensure that
it has obtained all necessary consents for the Local Manager to process any
personal data for the purposes of the Agreement.
Schedule 1
ORDER EXECUTION
POLICY DISCLOSURE STATEMENT
Transaction Execution Arrangements
Morgan Stanley Investment Management
Limited ( the “Local Manager”) has established and implemented
transaction execution arrangements that are designed to allow the Local Manager
to take all reasonable steps to obtain the best possible result when executing
or placing orders as portfolio manager on behalf of its clients in relation to
financial instruments that form part, or may become part, of one or more
investment portfolios managed by the Local Manager for that or those clients
(each a “Transaction”). For the purposes of this document: any reference
to the Local Manager “executing an order” is a reference to the Local Manager,
as agent, entering into a Transaction on behalf of a client with another person
that acts as principal to that Transaction, any reference to the Local Manager
“placing an order” is a reference to the Local Manager, as agent, arranging for
a Transaction to be entered into by another person that acts as agent on behalf
of a client when entering into that Transaction, and any reference to the Local
Manager “effecting a Transaction” is a reference to the Local Manager either
placing or executing an order.
As part of its transaction execution
arrangements, the Local Manager has an order execution policy in place that is
designed to ensure that the Local Manager complies with its duty to obtain the
best possible result when effecting a Transaction for one or more clients (the
“Order Execution Policy”).
This document is intended to provide the
Local Manager’s clients with a summary of the Local Manager’s Order Execution
Policy. Nothing herein is intended to place upon the Local Manager fiduciary or
other duties or responsibilities over and above the specific obligations
provided for in the investment management agreement between the Local Manager
and a client.
The quality of execution
Where the Local Manager effects a
Transaction for its professional clients, subject to any specific instructions
received from a client, the Local Manager will determine the best possible
result taking the following factors into account: (a) price; (b) costs; (c)
speed; (d) likelihood of execution or settlement; (e) size of the Transaction;
(f) nature of the Transaction; and (g) any other consideration relevant to the
Transaction, including availability of liquidity, the impact on the market of the
Transaction and the Local Manager’s operational costs.
Price is normally judged with reference to
normal market size for the relevant financial instrument. Where trades
are outside of normal market size and in sizeable volume or made on an over the
counter basis, it is not generally possible to source a quote for price
from Brokers because a declaration of intention to deal could result in
market/security price sensitivity. As a result, the Local Manager must
then determine what is likely to be the best execution venue without being able
to get firm quotes, but there can be no guarantee that it will be.
In certain circumstances, the relevant
execution venue may not be able to provide sufficient immediately available
liquidity to carry the contemplated Transaction out in full at the time
required. In addition, other circumstances may dictate that the best
immediately available price for a Transaction may not be the best possible
result for that Transaction. Where, in the Local Manager’s opinion, those
circumstances occur the Local Manager may need to split the Transaction up into
multiple Transactions with a view to obtaining the best possible result in
relation to the original Transaction by completing that Transaction over a
period of time using a variety of execution venues.
The Local Manager will determine the
relative importance of each factor using the following criteria: (a) the
characteristics of the Fund; (b) the characteristics and nature of the
Transaction, including whether any specific instructions are given by the
Investment Adviser or the Fund; (c) the characteristics of the financial
instruments that are the subject of the Transaction; and (d) the
characteristics of the execution venues to which the Transaction can be
directed.
While the Local Manager will take all
reasonable steps, based on the resources available to it, to satisfy itself
that it has processes in place that can reasonably be expected to lead to the
delivery of the best possible result, the Local Manager does not guarantee that
it will always be able to obtain the best possible result in relation to each
Transaction.
Specific Instructions
Where a client provides the Local Manager
with a specific instruction in relation to a proposed Transaction or any
particular aspect of that Transaction (including, but not limited to, a direction
to execute on a particular venue) the Local Manager will effect that
Transaction in accordance with those instructions. Specific instructions may
prevent the Local Manager from following some or all of the steps provided for
in the Order Execution Policy which are designed to obtain the best possible
result in respect of the elements covered by those instructions.
In following such instructions, the Local
Manager will be deemed to have taken all reasonable steps to provide the best
possible result in respect of the relevant Transaction or aspect of that
Transaction covered by the specific instructions. To the extent that specific
instructions are not comprehensive, the Local Manager will determine any
non-specified components in accordance with its Order Execution Policy.
Selection of Execution Venues
The Local Manager includes in its Order
Execution Policy those execution venues (sources of liquidity) that enable the
Local Manager to obtain on a consistent basis the best possible result in
relation to the Transactions. The Local Manager may use one or more of the
following venue types: (a) Regulated Markets; (b) Multilateral Trading
Facilities; (c) Systematic Internalisers; (d) third party investment firms;
and/or (e) non-EU entities performing similar functions. In this document, the
terms “Regulated Market”, “Multilateral Trading Facility” and “Systematic
Internaliser” have the meaning given to them in the Markets in Financial
Instruments Directive.
Certain Transactions may be effected
outside a Regulated Market or a Multilateral Trading Facility where the Local
Manager believes it can achieve the best possible result by doing so.
The Local Manager assesses
product-by-product which venues are likely to provide the best possible result,
it also monitors the execution of all Transactions on that venue if an
order has been placed with another person and keeps informed of relevant market
information. For certain financial instruments, there may be
only one execution venue available and in such circumstances, the Local Manager
will presume that it has obtained the best possible result if it effects a
Transaction in that venue.
If a Transaction is effected by placing an
order with another person for execution, the Local Manager will either
determine the ultimate execution venue itself and instruct the other person
accordingly, or the Local Manager will use all reasonable efforts to satisfy
itself that the other person has arrangements in place to enable the Local
Manager to comply with the Local Manager’s obligation to obtain the best
possible result in relation to the relevant Transaction.
Approval of brokers, monitoring and review
The Local Manager’s Order Execution
Policy provides for a broker approval procedure. Apart from a broker’s
commission/commission equivalent rates, the Local Manager
will consider the following matters when selecting and approving a broker: (a)
reliability, integrity and reputation in the industry; (b) execution
capabilities, including block positioning, speed of execution and quality and
responsiveness of its trading desk; (c) knowledge of, and access to, the
markets for the securities being traded; (d) ability to obtain price
improvement; (e) ability to maintain confidentiality; (f) ability to handle
non-traditional trades; (g) technology infrastructure; and (h) clearance and
settlement capabilities.
In addition, in certain circumstances and in some markets, a
broker’s research capabilities may be considered relevant factors in connection
with the selection and approval of a broker. This may include a broker’s
coverage of certain industries in which the Local Manager
may seek to invest on behalf of its clients, the quality of the broker’s
research, as well as the reputation and standing of the broker’s analysts,
their investment strategies, timing, accuracy of statistical information and
idea generation.
The Local Manager monitors
the quality of the execution services provided by approved
brokers and reviews each broker’s performance on a regular basis, taking the
above factors into account. The Local Manager meets with the most
significant brokers periodically to review the service and performance levels
provided.
Commission Rates
The Local Manager effects
Transactions on the basis of standard commission rates for specific markets.
The rates are negotiated from time to time with each broker to ensure
competitiveness, taking into account market trends whilst seeking a commercial
balance so as to ensure the quality of services provided by the brokers.
Schedule
2
INFORMATION ABOUT
MORGAN STANLEY INVESTMENT MANAGEMENT LIMITED’S USE OF DEALING COMMISSIONS AND
ACCEPTANCE OF NON-MONETARY BENEFITS FROM BROKERS
Morgan Stanley Investment
Management Limited’s use of dealing commissions and non-monetary benefits
Morgan Stanley Investment Management
Limited (the “Local Manager”) will from time to time execute or place orders
with selected brokers as portfolio manager on behalf of its professional
clients in relation to financial instruments that form part, or may become
part, of one or more investment portfolios managed by the Local Manager for its
clients (each so executed or placed order a “Transaction”).
Although the Local Manager’s
investment decisions and the corresponding Transactions are primarily based
upon fundamental analysis and a variety of primary and secondary information
sources, external research and market intelligence from analysts employed by
the brokers the Local Manager may engage to effect Transactions is valuable in
helping to make informed investment decisions and in those circumstances, will
enhance the quality of the Fund management service provided by the Local
Manager to its clients. The available research covers sectors and
markets in detail and may generate and stimulate new ideas and discussions.
Some research services will be produced for all clients of
the relevant broker, but the analysts may also provide research that has
been tailored to the Local Manager’s specific request, including the ability to
discuss corporate developments in the immediate aftermath of their announcement
(together “Research Services”).
This document is intended to provide the
Local Manager’s professional clients with information about the manner in which
the Local Manager, when effecting Transactions, may make payments on behalf of
its client to certain providers of Research Services and about certain
non-monetary benefits that the Local Manager may receive from certain brokers
in the course of its dealings with such brokers.
The conditions upon which dealing
commissions will be paid to providers of Research Services
The Local Manager will only make
payments to a broker in consideration of the provision of Research Services
when it is satisfied using its reasonable judgement that the
Research Services received in return for the payments will reasonably
assist the Local Manager in the provision of its portfolio management services
to the investment advisers on whose behalf the relevant Transactions are being
effected and do not, and are not likely to, impair compliance with the duty of
the Local Manager to act in the best interests of its clients (including,
without limitation, its obligation to take all reasonable steps to obtain the
best possible result when effecting a Transaction).
The manner in which dealing
commissions are paid to providers of research services
If the conditions for payment have been
satisfied, the eligible providers of Research Services may be remunerated for
the provision of Research Services as part of the Local Manager’s commission
sharing arrangements. Under the commission sharing arrangements, the Local
Manager will instruct participating brokers to record a certain portion of
dealing commission that is received pursuant to the completion of a
Transaction, based upon a previously agreed allocation, as research credits
(each a “Pool”). Each of the participating brokers has undertaken to the
Local Manager, periodically, subject to an instruction from the Local
Manager, to make payments from their Pool to providers of Research Services
(including the administering broker itself) as the Local Manager may specify in
the instruction(s). Any balance that may remain after allocation instructions
have been carried out will be carried forward to the next period.
The Local Manager allocates the Pools based
on a periodic assessment of the quality of the Research Services provided to
the Local Manager by the participating brokers during that period. The Local
Manager tends to consider, without limitation, the
quality of the analyst service, the sales service, and the company meetings
that have been arranged with senior management of companies in which the Local
Manager invests for its clients. Decisions are being taken based on
a voting system in which the Local Manager equity portfolio managers
participate. As part of a relationship management effort, the Local Manager
will meet periodically with those providers of Research Services that the
Local Manager deems most significant.
The conditions upon which the Local Manager employees
may accept non-monetary benefits from brokers
The Local Manager’s employees that interact
with brokers may from time to time receive certain non-monetary benefits in the
form of gifts. The Local Manager has detailed compliance procedures relating to
the standard of conduct expected from employees in these circumstances which
are designed to achieve that receipt of such gifts does not, and is not likely
to, impair compliance with the duty of the Local Manager and its employees to
act in the best interests of its clients. Most gifts are received during the
holiday season and depending on the number received gifts are either put into a
raffle or allocated between employees. Employees are allowed to accept
invitations to attend sporting, artistic or entertainment events from suppliers
and counterparties in accordance with guidelines and limits that are detailed
in the policy.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and
Shareholders of Eaton Vance Limited Duration Income Fund:
In planning and
performing our audit of the financial statements of Eaton Vance Limited Duration
Income Fund (the "Fund") as of and for the year ended March 31, 2024,
in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), we considered the Fund's internal control over financial
reporting, including controls over safeguarding securities, as a basis for designing
our auditing procedures for the purpose of expressing our opinion on the financial
statements and to comply with the requirements of Form N-CEN, but not for the
purpose of expressing an opinion on the effectiveness of the Fund's internal
control over financial reporting. Accordingly, we express no such opinion.
The management of the Fund
is responsible for establishing and maintaining effective internal control over
financial reporting. In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits and related costs of
controls. A fund's internal control over financial reporting is a process designed
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A fund's internal control over
financial reporting includes those policies and procedures that (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the fund; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the fund are being made only
in accordance with authorizations of management and trustees of the fund; and
(3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of a fund's assets that could have a material
effect on the financial statements.
Because of its inherent
limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
A deficiency in
internal control over financial reporting exists when the design or operation
of a control does not allow management or employees, in the normal course of
performing their assigned functions, to prevent or detect misstatements on a
timely basis. A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that there is
a reasonable possibility that a material misstatement of the fund's annual or
interim financial statements will not be prevented or detected on a timely basis.
Our consideration of
the Fund's internal control over financial reporting was for the limited
purpose described in the first paragraph and would not necessarily disclose all
deficiencies in internal control that might be material weaknesses under standards
established by the PCAOB. However, we noted no deficiencies in the Fund's
internal control over financial reporting and its operation, including controls
for safeguarding securities, that we consider to be a material weakness, as
defined above, as of March 31, 2024.
This report is intended
solely for the information and use of management and the Trustees of Eaton Vance
Limited Duration Income Fund and the Securities and Exchange Commission and is
not intended to be and should not be used by anyone other than these specified
parties.
/s/ Deloitte &
Touche LLP
Boston, Massachusetts
May 17, 2024
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