EXHIBIT NO. 99.5
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made this 20th day of May, 1982, by and between Massachusetts
Investors Trust, a voluntary association having transferable shares, organized
and existing under the laws of the Commonwealth of Massachusetts (the "Trust"),
and Massachusetts Financial Services Company, a Delaware corporation (the
"Adviser"):
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end investment company
registered under the Investment Company Act of 1940;
WHEREAS, the Adviser is willing to provide business management services to the
Trust on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereto as herein set forth, the parties covenant and agree as follows:
ARTICLE 1: Duties of the Adviser. The Adviser shall provide the Trust with such
investment advice and supervision as the latter may from time to time consider
necessary for the proper management of its funds. The Adviser shall act as
Adviser to the Trust and as such shall furnish continuously an investment
program and shall determine from time to time what securities shall be
purchased, sold or exchanged and what portion of the assets of the Trust shall
be held uninvested, subject always to the restrictions of its Indenture of Trust
dated March 21, 1924, as amended from time to time, and to the provisions of the
Investment Company Act of 1940. The Adviser shall also make recommendations as
to the manner in which voting rights, rights to consent to corporate action and
any other rights pertaining to the Trust's portfolio securities shall be
exercised. Should the Trustees at any time, however, make any definite
determination as to investment policy 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been revoked.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 to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
portfolio securities for the Trust's account with brokers or dealers selected by
it, and to that end the Adviser is authorized as the agent of the Trust to give
instructions to the Custodian of the 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 placing of such orders, the Adviser is
directed to seek for the Trust execution at the most favorable price by
responsible brokerage firms at reasonably competitive commission rates. In
fulfilling this requirement the 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 or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker or dealer would have charged for effecting
that transaction, if the Adviser determined 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 or dealer, viewed in terms of either that
particular transaction or the Adviser's overall responsibilities with respect to
the Trust and to other clients of the Adviser as to which the Adviser exercises
investment discretion.
ARTICLE 2: Allocation of Charges and Expenses. The Adviser shall furnish at its
own expense all necessary administrative services, office space, equipment and
clerical personnel, and investment advisory facilities and executive and
supervisory personnel for managing the investments, effecting the portfolio
transactions and in general administering the affairs of the Trust. The Adviser
shall arrange, if desired by the Trust, for officers and employees of the
Adviser to serve as Trustees, officers or agents of the Trust if duly elected or
appointed to such positions and subject to their individual consent and to any
limitations imposed by law. It is understood that the Trust will pay all of its
own expenses including, without limitation, compensation of Trustees not
affiliated with the Adviser, governmental fees, interest charges, taxes,
membership dues in the Investment Company Institute allocable to the Trust, fees
and expenses of independent auditors, of legal counsel and of any transfer
agent, registrar and dividend disbursing agent of the Trust, expenses of
repurchasing and redeeming shares, expenses of preparing, printing and mailing
stock certificates, prospectuses, shareholders' reports, notices, proxy
statements and reports to governmental officers and commissions, brokerage and
other expenses connected with the execution of portfolio security transactions,
insurance premiums, fees and expenses of the custodian for all services to the
Trust, including safekeeping of funds and securities, keeping of books and
accounts and calculation of the net asset value of shares of the Trust, expenses
of solicitation of shareholders assents, and expenses relating to the issuance,
registration and qualification of shares of the Trust.
ARTICLE 3: Compensation of the Adviser. For the services to be rendered and for
the facilities to be furnished as provided in Articles 1 and 2 above, the Trust
shall pay to the Adviser a fee computed and paid monthly at the annual rate of
.3% of the Trust's average daily net assets and 6.67% of the Trust's gross
income for the Trust's current fiscal year, provided that such computation shall
commence on the effective date of this Agreement and shall be based on the
average daily net assets and gross income of the Trust on and after such date;
and further provided that:
(a) The annual rate applicable to average daily net assets in
excess of $200 million but not more than $500 million shall be
.24%, and the annual rate applicable to average daily net assets
in excess of $500 million shall be .12%;
(b) The annual rate applicable to gross income in excess of $6
million but not more than $15 million shall be 5.33% and the
annual rate applicable to gross income in excess of $15 million
shall be 2.67%; and
(c) The annual fee shall further be reduced by 76%* of
the fair value of the use for one year of the office
furniture, furnishings and equipment beneficially owned by the
Trust and Massachusetts Investors Growth Stock Fund, Inc. (the
"Fund") and used by the Adviser in the conduct of its affairs.
Such reduction shall be computed monthly on the basis of 1/12 of
76% of such fair value and be deducted from the monthly payments
of the fee provided for in the preceding paragraphs.
The fair value of one year's use of said office furniture,
furnishings and equipment has been appraised as of May 9, 1969
at $39,208 by Xxxxxx Corp., an independent supplier of office
equipment on the basis of independent appraisals by others of
its fair market value, depreciated, in the case of depreciating
property according to Internal Revenue Service guidelines and
including a factor for current return on invested capital. The
Adviser shall purchase any new equipment needed, and the Trust
shall receive 76% of the proceeds of any turn-in or salvage
value of obsolete or unneeded furniture or equipment. The use
values so determined shall be adjusted annually and reviewed and
approved by a majority of the Trustees of the Trust not
affiliated with the Adviser. The Adviser shall maintain and
insure the property.
If the Adviser shall serve for less than the whole of any period specified in
this Article 3, the compensation to the Adviser shall be prorated.
ARTICLE 4: Brokerage Offset Account. The Adviser hereby assumes the
responsibility of Massachusetts Financial Services, Inc. ("MFS") for carrying
out the terms of Article 4 of the Investment Advisory Agreement dated December
10, 1971 between the Trust and MFS to the extent set forth below. Pursuant
thereto, MFS agreed that prior to or promptly following December 10, 1971, it
would apply, through a subsidiary or affiliate (the "affiliate"), for membership
on the Philadelphia Stock Exchange and/or for the status of approved non-member
on the Pacific Coast Stock Exchange. Said agreement shall continue in full force
and effect.
(a) In the event that any such application is granted, the
Adviser, to the extent permitted by the rules of such exchange
or exchanges, shall credit against the management fees of the
Trust a portion of the "net profits" of the affiliate computed
in the manner described below. Such "net profits" of the
affiliate shall be offset in the appropriate amount against the
management fee owed to the Adviser by the Trust at any time or
from time to time in the three months immediately succeeding the
end of the affiliate's fiscal year.
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*This percentage represents the average of the annual percentages of office
expenses shared with Massachusetts Investors Growth Stock Fund, Inc. over the
ten years ended December 31, 1968 and borne by the Trust.
(b) During each fiscal year of the affiliate, gross
revenues of the affiliate from brokerage transactions** for
the portfolios of the Trust and the Fund, or attributable
thereto, will be credited to an Offset Account for the Trust
and the Fund. The Offset Account will be charged with all of
the direct expenses of each such transaction, including
applicable clearing fees, transfer taxes, exchange fees, or
other fees and a share of the expenses of the affiliate's
operations prorated on the basis of the affiliate's gross
brokerage revenues from brokerage transactions for the
portfolios of the Trust and the Fund, compared to the
affiliate's gross revenues from all sources. The expenses
to be so prorated will include rent, depreciation of
depreciable capital assets over their useful lives, interest
attributable to the affiliate's operations, salaries for
personnel to the extent they are engaged in the operations of
the affiliate including its recordkeeping and accounting and
other direct expenses and costs incurred in connection with the
affiliate's operations. In addition, in lieu
of the affiliate's indirect expenses, such as general overhead,
executive supervision and general administration, there will be
charged to the Offset Account an amount equal to twenty per cent
of the gross revenues credited to the Offset Account. Other
adjustments customary to a brokerage operation may be made to
the Offset Account. After deducting expenses as set forth above
from the gross commissions attributed to the Offset Account,
there shall be deducted an amount attributed to State and
Federal income taxes, the sum to be deducted for this purpose to
be computed as if the Offset Account were a Massachusetts
business corporation required to file separate Massachusetts and
Federal income tax returns. The balance in the account after the
above deductions will be considered "net profits" of the Offset
Account.
(c) The net profits of the Offset Account shall be divided
between the Trust and the Fund in proportion to the total dollar
amount of all portfolio transactions, other than transactions in
government securities and short-term corporate notes, of the
Trust and the Fund during the period for which the net profits
are computed.
(d) With respect to each fiscal year of the affiliate, all net
profits of the Offset Account shall be offset against the
management fees of the Trust and the Fund to the extent earned.
(e) Following the end of the affiliate's fiscal year, the
Adviser and the affiliate shall furnish to the Trust a financial
statement for the Offset Account and an opinion with respect
thereto by an independent public accountant.
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** As used in this Article, the term "brokerage transaction" shall mean
any purchase or sale of securities in connection with which a commission is
paid to a broker-dealer acting as broker or agent and the terms
"brokerage commissions" and "brokerage revenues" shall mean those
commissions and revenues which are attributable to brokerage transactions.
(f) The Adviser is hereby expressly authorized, subject to the
primary requirement of obtaining for the Trust the most
favorable execution and price, to direct to itself or its
affiliate such brokerage transactions of the Trust as it shall
in its sole discretion determine appropriate, except that in no
event shall the Adviser or its affiliate execute portfolio
transactions with the Trust on a principal basis, except as
permitted by the Investment Company Act of 1940 and the Rules,
Regulations or orders thereunder.
ARTICLE 5. Shareholder Approval. The Adviser agrees that, while this Agreement
is in effect, it will not permit (i) attribution of any value to this Agreement
in computing the value of the Adviser's stock, or (ii) sales of stock by the
Adviser or its shareholders at prices in excess of value (excluding attribution
of any value to the Agreement), without, in either case, first obtaining the
favorable vote of a majority of the outstanding voting securities of the Trust.
The Trust agrees that upon notification by the Adviser that it intends to engage
in attribution of value or sales as described above, which would require
approval by shareholders of the Trust under this Agreement, it will submit the
question of approval or disapproval of such action to its shareholders as
promptly as practicable after receipt of such notice.
ARTICLE 6: Covenants of the Adviser. The Adviser agrees that it will not deal
with itself, or with the Trustees of the Trust or the Underwriter as principals
in making purchases or sales of securities or other property for the account of
the Trust, except as permitted by the Investment Company Act of 1940 and the
Rules, Regulations or orders thereunder, will not take a long or short position
in the shares of the Trust except as provided by the Indenture of Trust and will
comply with all other provisions of the Indenture of Trust relative to the
Adviser and its officers and directors.
ARTICLE 7: Limitation of Liability of the Adviser. The Adviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution and management of
the Trust, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Article 7, the term "Adviser" shall
include directors, officers and employees of the Adviser as well as the
corporation itself.
ARTICLE 8: Activities 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. It is understood that Trustees, officers, and shareholders of the
Trust are or may be or become interested in the Adviser as directors, officers,
employees or otherwise, and that directors, officers and employees 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 shareholder or otherwise.
ARTICLE 9: Duration and Termination of this Agreement. This Agreement shall
become effective upon its execution and shall govern the relationship between
the parties hereto thereafter, and shall remain in force until August 1, 1983 on
which date it will terminate unless its continuance after August 1, 1983 is
specifically approved at least annually (i) by the vote of a
majority of the Board of Trustees of the Trust who are not interested
persons of the Trust or of the Adviser at a meeting specifically called for the
purpose of voting on such approval, and (ii) by the Trustees or by vote of a
majority of the outstanding voting securities of the Trust. The aforesaid
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the Investment
Company Act of 1940 and the Rules and Regulations thereunder.
This Agreement may be terminated at any time without the payment of any penalty
by the Trustees or by vote of a majority of the outstanding voting securities of
the Trust, or by the Adviser, on not more than sixty days' nor less than thirty
days' written notice to the other party. This Agreement shall automatically
terminate in the event of its assignment.
The terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act of 1940 and the Rules and Regulations thereunder, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act, and the term "brokerage and research services" shall have the
meaning given in the Securities Exchange Act of 1934 and Rules and Regulations
thereunder.
ARTICLE 10: Amendment of This Agreement. This Agreement may be amended only
by vote of a majority of the outstanding voting securities of the Trust.
IN WITNESS WHEREOF, Massachusetts Investors Trust has caused this Agreement to
be executed and delivered in its name and on its behalf by a Managing Trustee in
his capacity as Trustee, and Massachusetts Financial Services Company has caused
this Agreement to be executed and delivered in its name and on its behalf by its
President, as of the day and year first above written.
MASSACHUSETTS INVESTORS TRUST
By XXXX XXXXXXX, JR.
Xxxx Xxxxxxx, Jr.
Managing Trustee
MASSACHUSETTS FINANCIAL SERVICES
COMPANY
By XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
President
