EXHIBIT NO. 99.5
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made this 19th day of July, 1985 by and between MASSACHUSETTS
INVESTORS GROWTH STOCK FUND, a Massachusetts business trust (the "Fund") and
MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation (the
"Adviser").
WITNESSETH:
WHEREAS, the Fund 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
Fund 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 Fund 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 Fund 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 Fund shall be held
uninvested, subject always to the restrictions of the Declaration of Trust,
dated March 4, 1985, and By-Laws, each as amended from time to time
(respectively, the "Declaration" and the "By-Laws"), 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 Funds' portfolio securities shall be
exercised. Should the Trustees at any time, however, make any definite
determination as to the 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determination has been revoked.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 Fund,
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 Funds' account with brokers or
dealers selected by it, and to that end the Adviser is authorized as the agent
of the Fund to give instructions to the Custodian of the Fund as to deliveries
of securities and payments of cash for the account of the Fund. In connection
with the selection of such brokers or dealers and the placing of such orders,
the Adviser is directed to seek for the Fund 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 Fund 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 Fund 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 Fund. The Adviser
shall arrange, if desired by the Fund, for officers and employees of the Adviser
to serve as Trustees, officers or agents of the Fund 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 Fund 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 Fund, fees
and expenses of independent auditors, of legal counsel and of any transfer
agent, registrar or dividend disbursing agent of the Fund, expenses of
repurchasing and redeeming shares, expenses of preparing, printing and mailing
share 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
Fund, including safekeeping of funds and securities, keeping of books and
accounts and calculation of the net asset value of shares of the Fund, expenses
of shareholders' meetings, and expenses relating to the issuance, registration
and qualification of shares of the Fund.
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 Fund
shall pay to the Adviser a fee computed and paid monthly at the annual rate
equivalent to 1/2 of 1% of the first $200 million of average daily net assets
for the Fund's current fiscal year, 4/10 of 1% of the next $300 million of
average daily net assets for the Fund's current fiscal year and 2/10 of 1% of
the average daily net assets for the Fund's current fiscal year in excess of
$500 million, provided that such computation shall commence on the effective
date of this Agreement and shall be based on the average daily net assets of the
Fund, on and after such date.
The annual fee shall be reduced by 24%* of the fair value of the use for one
year of the office furniture, furnishings and equipment beneficially owned by
the Fund and Massachusetts Investors Trust (the "Trust") and used by the Adviser
in the conduct of its affairs. Such reduction shall be computed monthly on the
basis of 1/12 of 24% of such fair value and be deducted from the monthly
payments of the fee provided for in the proceeding paragraph.
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 Fund shall receive 24% of the proceeds of any turn-in
or salvage value of the 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 Fund 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 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
Massachusetts Investors Growth Stock Fund, Inc. (the "Predecessor Fund") 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 with respect to
the Adviser and the Fund, as successor to the Predecessor Fund.
(a) In the event that any such application is grated, the Adviser, to the extent
permitted by the rules of such exchange or exchanges, shall credit against the
management fees of the Fund 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 Fund at any time or from time to time in the three months
immediately succeeding the end of the affiliate's fiscal year.
(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
________________________________
* This percentage represents the aveerage of the annual percentages of office
expenses shares with Massachusetts Investors Trust over the ten years ended
December 31, 1968 and borne by the Fund.
* 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.
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 Fund a financial statement for the Offset Account
and an opinion with respect thereto by an independent public accountant.
(f) The Adviser is hereby expressly authorized, subject to the primary
requirement of obtaining for the Fund the most favorable execution and price, to
direct to itself or its affiliate such brokerage transactions of the Fund 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 Fund
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 Fund.
The Fund 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 Fund 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 Fund or the Underwriter as principals
in making purchases or sales of securities or other property for the account of
the Fund, 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 Fund except as provided by the Declaration, and will comply
with all other provisions of the Declaration and By-Laws 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 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. 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 Fund
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
Fund may be or become interested in the Adviser, as directors, officers,
employees, or otherwise and that directors, officers and employees of the
Adviser may be or become similarly interested in the Fund, and that the Adviser
may be or become interested in the Fund as shareholder or otherwise.
ARTICLE 9: Duration, Termination and Amendment of this Agreement. This Agreement
shall become effective on the date of its execution and shall govern the
relationship between the parties hereto thereafter, and shall remain in force
until August 1, 1986 on which date it will terminate unless its continuance
after August 1, 1986 is specifically approved at least annually (i) by the vote
of a majority of the Trustees of the Fund who are not interested persons of the
Fund or of the Adviser at a meeting specifically called for the purpose of
voting on such approval, and (ii) by the Trustees of the Fund, or by vote of a
majority of the outstanding voting securities of the Fund. 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 Fund, 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.
This Agreement may be amended only if such amendment is approved by vote of a
majority of the outstanding voting securities of the Fund.
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 the Rules and
Regulations thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered in their names and on their behalf by the undersigned officers
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first above written. The undersigned Trustee of the Fund
has executed this Agreement not individually, but as Trustee under the
Declaration and the obligations of this Agreement are not binding upon any of
the Trustees or shareholders of the Fund, individually, but bind only the trust
estate.
MASSACHUSETTS INVESTORS GROWTH STOCK FUND
[SEAL]
By: XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
[SEAL]
By: H. XXXXX XXXXXXX, XX.
H. Xxxxx Xxxxxxx, Xx.
President
