SUB ITEM 77Q1(e)
INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT, dated this 29th day of June, 2007, by
and between MFS HIGH YIELD MUNICIPAL TRUST, a Massachusetts business trust
(the Trust), and MASSACHUSETTS FINANCIAL SERVICES COMPANY, a
Delaware corporation (the "Adviser").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an investment company
registered under the Investment Company Act of 1940; and
WHEREAS, the Adviser is willing to provide 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. (a) 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 supervision of its assets. The Adviser
shall act as investment adviser to the Trust and as such shall furnish
continuously an investment program and shall determine from time to time what
securities or other instruments 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 the Trusts Declaration of Trust, dated January 22, 1987,
and By-Laws, each as amended from time to time (respectively, the Declaration
and the By-Laws), to the provisions of the Investment Company Act of 1940 and
the Rules, Regulations and orders thereunder and to the Trusts then-current
Prospectus and Statement of Additional Information. The Adviser also shall
exercise voting rights, rights to consent to corporate actions and any other
rights pertaining to the Trusts portfolio securities in accordance with the
Advisers policies and procedures as presented to the Trustees of the Trust from
time to time. 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 shall be revoked.
(b) 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 or other instruments 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 the
deliveries of securities or other instruments 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 the best overall price and execution available from responsible brokerage
firms, taking account of all factors it deems relevant, including by way of
illustration: price; the size of the transaction; the nature of the market for
the security; the amount of the commission; the timing and impact of the
transaction taking into account market prices and trends; the reputation,
experience and financial stability of the broker or dealer involved; and the
quality of services rendered by the broker or dealer in other transactions. 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.
(c) Subject to the general supervision and control of the Trustees of
the Trust and under the terms and conditions set forth in this Agreement, the
Trust acknowledges and agrees that it is contemplated that Adviser may, at its
own expense, select and contract with one or more investment advisers
(Sub-Advisers) to manage the investment operations and composition of the
Trust and render investment advice for the Trust, including the purchase,
retention, and disposition of the investments, securities and cash contained in
the Trust, subject always to the restrictions of the Trusts Declaration and the
By-Laws, to the provisions of the Investment Company Act of 1940 and the Rules,
Regulations and orders thereunder and to the Trust's then-current Prospectus and
Statement of Additional Information; provided, that any contract with an
Sub-Adviser (a Sub-Advisory Agreement) shall be in compliance with and
approved as required by the Investment Company Act of 1940 and the Rules,
Regulations and orders thereunder or in accordance with exemptive relief granted
by the Securities and Exchange Commission (SEC) under the Investment Company
Act of 1940.
(d) Subject always to the direction and control of the Trustees of the Trust,
Adviser will have (i) overall supervisory responsibility for the general
management and investment of the Trusts assets; (ii) full discretion to select
new or additional Sub-Advisers for the Trust; (iii) full discretion to enter
into and materially modify existing Sub-Advisory Agreements with Sub-Advisers;
(iv) full discretion to terminate and replace any Sub-Adviser; and (v) full
investment discretion to make all determinations with respect to the investment
of the Trusts assets not then managed by an Sub-Adviser. In connection with
Adviser's responsibilities herein, Adviser will assess the Trust's investment
focus and will seek to implement decisions with respect to the allocation and
reallocation of the Trusts assets among one or more current or additional
Sub-Advisers from time to time, as Adviser deems appropriate, to implement the
Trusts investment policies determined as provided above. In addition, Adviser
(in conjunction with the Trusts Independent Chief Compliance Officer) will
oversee (or, in the event that the Adviser does not require a Sub-Advisor to
assume responsibility therefore under the Sub-Advisory Agreement, shall be
responsible for) compliance of each Sub-Adviser with the investment objectives,
policies and restrictions of the Trust (or portions of the Trust) under the
management of such Sub-Adviser, and review and report to the Trustees of the
Trust on the performance of each Sub-Adviser. Adviser will furnish, or cause the
appropriate Sub-Adviser(s) to furnish, to the Trust such statistical
information, with respect to the investments that the Trust (or portions of the
Trust) may hold or contemplate purchasing, as the Trust may reasonably request.
Further, Adviser (in conjunction with the Trust's Independent Chief Compliance
Officer) will oversee compliance of each Sub-Adviser with the compliance program
of the Trust (or portions of the Trust) under the management of such
Sub-Adviser, as well as the compliance program of the Sub-Adviser as such
program relates to the Sub-Adviser's management of the Trust. On Adviser's own
initiative, Adviser will apprise, or cause the appropriate Sub-Adviser(s) to
apprise, the Trust of important developments materially affecting the Trust (or
any portion of the Trust that they advise) and will furnish the Trust, from time
to time, with such information as may be appropriate for this purpose. Further,
Adviser agrees to furnish, or cause the appropriate Sub-Adviser(s) to furnish,
to the Trustees of the Trust such periodic and special reports as the Trustees
of the Trust may reasonably request. In addition, Adviser agrees to cause the
appropriate Sub-Adviser(s) to furnish to third-party data reporting services all
currently available standardized performance information and other customary
data as may be appropriate.
(e) Subject to the provisions of Article 6, the Adviser shall not be liable for
any error of judgment or mistake of law by any Sub-adviser or for any loss
arising out of any investment made by any Sub-adviser or for any act or omission
in the execution and management of the Trust by any Sub-adviser.
Article 2. Allocation of Charges and Expenses. (a) The Adviser shall
furnish at its own expense investment advisory and administrative services,
office space, equipment and clerical personnel necessary for servicing the
investments of the Trust and maintaining its organization, and investment
advisory facilities and executive and supervisory personnel for managing the
investments and effecting the portfolio transactions of the Trust. The Adviser
shall arrange, if desired by the Trust, for directors, 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.
(b) It is understood that the Trust will pay all of its own expenses
incurred in its operations and the offering of the Trust's shares, unless
specifically provided otherwise in this Agreement or except to the extent that
the Adviser agrees in a written instrument executed by the Adviser
(specifically referring to this Article 2(b)) to assume or otherwise pay for
specified expenses of the Trust, 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 or dividend disbursing agent of the Trust;
expenses of repurchasing and redeeming shares and servicing shareholder
accounts; expenses of preparing, printing and mailing stock certificates,
shareholder reports, notices, proxy statements and reports to governmental
officers and commissions; brokerage and other expenses connected with the
execution, recording and settlement of portfolio security transactions;
insurance premiums; fees and expenses of the custodian for all services to the
Trust, including safekeeping of funds and securities and maintaining required
books and accounts; expenses of calculating the net asset value of shares of
the Trust; organizational and start up costs; such non-recurring or
extraordinary expenses as may arise, including those relating to actions,
suits or proceedings to which the Trust is a party or otherwise may have an
exposure, and the legal obligation which the Trust may have to indemnify the
Trust's Trustees and officers with respect thereto; and expenses relating to
the issuance, registration and qualification of shares of the Trust and the
preparation, printing and mailing of prospectuses for such purposes (except to
the extent that any Distribution Agreement to which the Trust is a party
provides that another party is to pay some or all of such expenses).
(c) The payment or assumption by the Adviser of any expenses of the
Trust that the Adviser is not obligated by this Agreement or otherwise to pay or
assume shall not obligate the Adviser to pay or assume the same or any similar
expenses of the Trust on any subsequent occasion.
Article 3. Compensation of the Adviser. For the services to be rendered
and the facilities provided, the Trust shall pay to the Adviser an investment
advisory fee computed and paid monthly as set forth in Appendix A attached
hereto. If the Adviser shall serve for less than the whole of any period
specified in this Article 3, the compensation paid to the Adviser will be
prorated.
Article 4. Additional Services. Should the Trust have occasion to
request the Adviser or its affiliates to perform administrative or other
additional services not herein contemplated or to request the Adviser or its
affiliates to arrange for the services of others, the Adviser or its affiliates
will act for the Trust upon request to the best of its ability, with
compensation for the services to be agreed upon with respect to each such
occasion as it arises. No such agreement for additional services shall expand,
reduce or otherwise alter the obligations of the Adviser, or the compensation
that the Adviser is due, under this Agreement.
Article 5. Covenants of the Adviser. The Adviser agrees that it will
not deal with itself, or with the Trustees of the Trust or the Trust's
distributor, if any, 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 any rules, regulations or orders of the
Securities and Exchange Commission thereunder, will not take a long or short
position in the shares of the Trust except as permitted by the applicable law,
and will comply with all other provisions of the Declaration and the By-Laws and
the then-current Prospectus and Statement of Additional Information of the Trust
relative to the Adviser and its directors and officers.
Article 6. 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, gross
negligence or reckless disregard of its duties and obligations hereunder. As
used in this Article 6, the term "Adviser" shall include directors, officers and
employees of the Adviser as well as that corporation itself.
Article 7. Activities of the Adviser. (a) The Trust acknowledges that
the services of the Adviser to the Trust are not exclusive, the Adviser being
free to render investment advisory and/or other services to others. The Trust
further acknowledges that it is possible that, based on their investment
objectives and policies, certain funds or accounts managed by the Adviser or its
affiliates may at times take investment positions or engage in investment
techniques which are contrary to positions taken or techniques engaged in on
behalf of the Trust. Notwithstanding the foregoing, the Adviser will at all
times endeavor to treat all of its clients in a fair and equitable manner.
(b) The Trust acknowledges that whenever the Trust and one or more
other funds or accounts advised by the Adviser have available monies for
investment, investments suitable and appropriate for each shall be allocated in
a manner believed by the Adviser to be fair and equitable to each entity.
Similarly, opportunities to sell securities or other investments shall be
allocated in a manner believed by the Adviser to be fair and equitable to each
entity. The Trust acknowledges that in some instances this may adversely affect
the size of the position that may be acquired or disposed of for the Trust.
(c) It is understood that the 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 become similarly interested in the Trust, and that the
Adviser may be or become interested in the Trust as a shareholder or otherwise.
Article 8. MFS Name. The Trust acknowledges that the names
"Massachusetts Financial Services," "MFS" or any derivatives thereof or logos
associated with those names (collectively, the "MFS Marks") are the valuable
property of the Adviser and its affiliates. The Adviser grants the Trust a
non-exclusive and non-transferable right and sub-license to use the MFS Marks
only so long as the Adviser serves as investment adviser to the Trust. The Trust
agrees that if the Adviser for any reason no longer serves as investment adviser
to the Trust, and the Adviser so requests, that the Trust promptly shall cease
to use the MFS Marks and promptly shall amend its registration statement to
delete any references to the MFS Marks. Likewise, the Trust agrees that if the
Adviser for any reason no longer serves as investment adviser to the Trust, and
the Adviser so requests, the Trust promptly shall cease to use the MFS Marks and
promptly shall amend its Declaration of Trust to delete any references to the
MFS Marks. The Trust acknowledges that the Adviser may permit other clients to
use the MFS Marks in their names or other material. For purposes of this
Article, the Trust shall be deemed to have taken the required action "promptly"
if such action is taken within 90 days of the Adviser no longer serving as the
investment adviser to the Trust, or from the date of the Adviser's request, as
the case may be.
Article 9. Duration, Termination and Amendment of this Agreement. (a)
This Agreement shall become effective with respect to the Trust on the date
first written above if approved by the shareholders of the Trust, on the
Effective Date for the Trust, as set forth in Appendix A attached hereto.
Thereafter, this Agreement will remain in effect with respect to the Trust for a
period of two years from the Trust's Effective Date as set forth in Appendix A,
on which date it will terminate for the Trust unless its continuance is
"specifically approved at least annually" (i) by the vote of a majority of the
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 Board of Trustees of the Trust, or by "vote of a
majority of the outstanding voting securities" of the applicable Trust.
(b) This Agreement may be terminated as to the Trust 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 applicable Trust, or by the Adviser,
in each case 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".
(c) This Agreement may be amended with respect to the Trust only if
such amendment is in writing signed by or on behalf of the Trust and the Adviser
and is approved by "vote of a majority of the outstanding voting securities" of
the applicable Trust (if such shareholder approval is required by the Investment
Company Act of 1940).
Article 10. Scope of Trust's Obligations. A copy of the Trust's
Declaration of Trust is on file with the Secretary of State of The Commonwealth
of Massachusetts. The Adviser acknowledges that the obligations of or arising
out of this Agreement are not binding upon any of the Trust's Trustees,
officers, employees, agents or shareholders individually, but are binding solely
upon the assets and property of the Trust. If this Agreement is executed by the
Trust, the Adviser further acknowledges that the assets and liabilities of the
Trust are separate and distinct and that the obligations of or arising out of
this Agreement concerning the Trust are binding solely upon the assets or
property of the Trust and not upon the assets or property of any other Trust.
Article 11. Definitions and Interpretations. The terms specifically
approved at least annually, 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, and shall
be construed in a manner consistent with, the Investment Company Act of 1940 and
the rules and regulations promulgated thereunder. Any question of interpretation
of any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the Investment Company Act of 1940, the
Investment Advisers Act of 1940, the Securities Act of 1933, or the Securities
Exchange Act of 1934 (collectively, the Federal Securities Acts) shall be
resolved by reference to such term or provision of the Federal Securities Acts
and to interpretations thereof, if any, by United States federal courts or, in
the absence of any controlling decisions of any such court, by rules or
regulations of the Securities and Exchange Commission. Where the effect of a
requirement of the Federal Securities Acts reflected in any provision of this
Agreement is revised by rule or regulation of the Securities and Exchange
Commission, such provisions shall be deemed to incorporate the effect of such
rule or regulation.
Article 12. Record Keeping. The Adviser will maintain records in a form
acceptable to the Trust and in compliance with the rules and regulations of the
Securities and Exchange Commission, including but not limited to records
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and the rules thereunder, which at all times will be the property of the Trust
and will be available for inspection and use by the Trust.
Article 13. Miscellaneous. (a) This Agreement contains the
entire understanding and
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agreement of the parties with respect to the subject matter hereof.
(b) Headings in this Agreement are for ease of reference only and shall
not constitute a part of the Agreement.
(c) Should any portion of this Agreement for any reason be held void in
law or equity, the remainder of the Agreement shall be construed to the extent
possible as if such voided portion had never been contained herein.
(d) This Agreement shall be governed by the laws of the
placeplaceCommonwealth of placeMassachusetts, without giving effect to the
choice of laws provisions thereof, except that questions of interpretation shall
be resolved in accordance with the provisions of Article 11 above.
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, all as of the day and year first above
written. The undersigned officer of the Trust has executed this Agreement not
individually, but as an officer under the Declaration and the obligations of
this Agreement are not binding upon any of the Trustees, officers or
shareholders of the Trust, individually, but bind only the trust estate.
MFS HIGH YIELD MUNICIPAL TRUST
By: _MARK N. POLEBAUM_______
Name: Xxxx X. Xxxxxxxx
Title: Secretary
MASSACHUSETTS FINANCIAL
SERVICES COMPANY
By:_ROBERT J. MANNING______
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
Appendix A
Compensation to the Adviser
The investment advisory fee payable by the Trust shall be computed and paid
monthly in an amount equal to the sum of 0.65% of the Trusts average daily net
assets including assets applicable to the auction preferred shares (average
daily net assets being computed for this purpose without deducting any liability
for money borrowed for investment in accordance with the Trusts investment
objective and policies).
