EXHIBIT 5(b)
SUB-ADVISORY AGREEMENT
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SUB-ADVISORY AGREEMENT, dated this 16th day of October, 1997, by and
between MASSACHUSETTS FINANCIAL SERVICES COMPANY, a Delaware corporation (the
"Adviser") and FOREIGN & COLONIAL MANAGEMENT LTD., a company incorporated under
the laws of England and Wales (the "Sub-Adviser").
WITNESSETH:
WHEREAS, the Adviser provides MFS/Foreign & Colonial Emerging Markets
Equity Series (the "Fund"), a series of MFS Variable Insurance Trust (the
"Trust"), an open-end investment company registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), business services pursuant to the
terms and conditions of an investment advisory agreement dated October 16, 1997
(the "Advisory Agreement") between the Adviser and the Trust, on behalf of the
Fund; and
WHEREAS, the Sub-Adviser is willing to provide services to the Adviser
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:
1. Duties of the Sub-Adviser. Subject to the supervision of the Trustees
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of the Trust and the Adviser, the Sub-Adviser will: (a) manage such Fund's
assets on behalf of the Fund in accordance with the Fund's investment objective,
policies and limitations as stated in the Fund's then current Prospectus (the
"Prospectus") and Statement of Additional Information (the "Statement"), and the
Trust's Amended and Restated Declaration of Trust dated January 24, 1996 and
Amended and Restated By-Laws, each as from time to time in effect (respectively,
the "Declaration" and the "By-Laws") and in compliance with the 1940 Act and the
rules, regulations and orders thereunder; (b) make investment decisions for the
Fund; (c) place purchase and sale orders for portfolio transactions for the
Fund; (d) manage otherwise uninvested cash assets of the Fund; (e) as the agent
of the Fund, give instructions (including trade tickets) to the custodian and
any sub-custodian of the Fund as to deliveries of securities, transfers of
currencies and payments of cash for the account of the Fund (the Sub-Adviser
shall promptly notify the Adviser of such instructions); (f) employ professional
portfolio managers to provide research services to the Fund; (g) attend periodic
meetings of the Board of Trustees of the Trust and (h) obtain all the
registrations, qualifications and consents, on behalf of the Fund, which are
necessary for the Fund to purchase and sell assets in each jurisdiction (other
than the United States) in which the Fund's assets are to be invested (the Sub-
Adviser shall promptly provide the Adviser with copies of any such
registrations, qualifications and consents). In providing these services, the
Sub-Adviser will furnish continuously an investment program with respect to the
Fund's assets. The Sub-Adviser shall be responsible for monitoring the Fund's
compliance with
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the Prospectus, the Statement, the Declaration, the By-Laws and the 1940 Act and
the rules, regulations and orders thereunder and in monitoring such compliance
the Sub-Adviser shall do so in the functional currency of the Fund. The Adviser
agrees to provide the Sub-Adviser with such assistance as may be reasonably
requested by the Sub-Adviser in connection with its activities under this
Agreement, including, without limitation, information concerning the Fund, its
funds available, or to become available, for investment and generally as to the
conditions of the Fund's affairs. From time to time the Adviser will notify the
Sub-Adviser of the aggregate U.S. Dollar amount of the Fund's assets. The
Adviser will have responsibility for exercising proxy, consent and other rights
pertaining to the Fund's portfolio securities; provided, however, that the
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Sub-Adviser will, as requested, make recommendations to the Adviser as to
the manner in which such proxy, consent and other rights shall be exercised.
Should the Trustees of the Trust or the Adviser at any time make any
determination as to investment policy and notify the Sub-Adviser thereof in
writing, the Sub-Adviser shall be bound by such determination for the period, if
any, specified in such notice or until notified that such determination has been
revoked. Further, the Adviser or the Trustees of the Trust may at any time,
upon written notice to the Sub-Adviser, suspend or restrict the right of the
Sub-Adviser to determine what assets of the Fund shall be purchased or sold and
what portion, if any, of the Fund's assets shall be held uninvested. It is
understood that the Adviser undertakes to discuss with the Sub-Adviser any such
determinations of investment policy and any such suspension or restrictions on
the right of the Sub-Adviser to determine what assets of the Fund shall be
purchased or sold or held uninvested, prior to the implementation thereof.
2. Certain Information to the Sub-Adviser. Copies of the Prospectus, the
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Statement, the Declaration and the By-Laws have been delivered to the Sub-
Adviser. The Adviser agrees to notify the Sub-Adviser of each change in the
investment policies of the Fund and to provide to the Sub-Adviser as promptly as
practicable copies of all amendments and supplements to the Prospectus, the
Statement, the Declaration and the By-Laws. In addition, the Adviser will
promptly provide the Sub-Adviser with any procedures applicable to the Sub-
Adviser adopted from time to time by the Trustees of the Trust and agrees to
provide promptly to the Sub-Adviser copies of all amendments thereto.
3. Execution of Certain Documents. Subject to any other written
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instructions of the Adviser and the Trustees of the Trust, the Sub-Adviser is
hereby appointed the Adviser's and the Trust's agent and attorney-in-fact to
execute account documentation, agreements, contracts and other documents as the
Sub-Adviser shall be requested by brokers, dealers, counterparties and other
persons in connection with its management of the assets of the Fund.
4. Reports. The Sub-Adviser shall furnish to the Trustees of the Trust or
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the Adviser, or both, as may be appropriate, quarterly reports of its activities
on behalf of the Fund, as required by applicable law or as otherwise requested
from time to time by the Trustees of the Trust or the Adviser, and such
additional information, reports, evaluations, analyses and opinions as the
Trustees of the Trust or the Adviser, as appropriate, may request from time to
time.
5. Brokerage. In connection with the selections of brokers, dealers or
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other entities and the placing of orders for the purchase and sale of portfolio
investments for the Fund, the Sub-
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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 Sub-Adviser shall not be deemed to have acted
unlawfully or to have breached any duty, created by this Agreement or otherwise,
solely by reason of its having caused the Fund to pay a broker, dealer or other
entity an amount of commission for effecting a securities transaction in excess
of the amount of commission another broker, dealer or other entity would have
charged for effecting that transaction, if the Sub-Adviser determined in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research services (within the meaning of Section 28(e) of the
Securities Exchange Act of 1934, as amended) provided by such broker, dealer or
other entity, viewed in terms of either that particular transaction or the Sub-
Adviser's overall responsibilities with respect to the Fund and to other clients
of the Sub-Adviser as to which the Sub-Adviser exercises investment discretion.
6. Services to Other Companies or Accounts. On occasions when the Sub-
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Adviser deems the purchase or sale of a security to be in the best interest of
the Fund as well as other clients, the Sub-Adviser, to the extent permitted by
applicable laws and regulations, may, but shall be under no obligation to,
aggregate the securities to be so purchased or sold in order to obtain the most
favorable price or lower brokerage commissions and efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction will be made by the Sub-Adviser in the
manner it considers to be the most equitable. The Sub-Adviser agrees to
allocate similarly opportunities to sell or otherwise dispose of securities
among the Fund and other clients of the Sub-Adviser.
7. Other Sub-Advisers. The Sub-Adviser may from time to time enter into
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investment sub-advisory agreements with one or more investment advisers, (an
"Other Sub-Adviser"), to the Fund to perform some or all of the services for
which the Sub-Adviser is responsible pursuant to this Agreement upon such terms
and conditions as the Adviser and the Sub-Adviser may determine; provided,
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however, that such investment sub-advisory agreements have been approved by a
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majority of the Trustees of the Trust who are not interested persons of the
Trust, or the Sub-Adviser or the Other Sub-Adviser and by vote of a majority of
the outstanding voting securities of the Fund; and, provided, further, that the
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Sub-Adviser shall own a majority of the voting securities of any Other Sub-
Adviser. The Sub-Adviser may terminate the services of any Other Sub-Adviser at
any time in its sole discretion, and shall at such time assume the
responsibilities of such Other Sub-Adviser unless and until a successor Other
Sub-Adviser is selected. The Sub-Adviser shall be liable for any error of
judgment or mistake of law by any Other Sub-Adviser and for any act or omission
in the execution and management of the Fund by any Other Sub-Adviser.
8. Compensation of the Sub-Adviser. For the services to be rendered by
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the Sub-Adviser under this Agreement, the Adviser shall pay to the Sub-Adviser
compensation, computed and paid monthly in arrears in U.S. dollars, at a rate of
1.00% of the average daily net asset value of the Fund's assets on an annualized
basis. If the Sub-Adviser shall serve for less than the whole of any month, the
compensation payable to the Sub-Adviser with respect to the Fund will be
prorated. The Sub-Adviser will pay its expenses incurred in performing its
duties under this Agreement. Neither the Trust nor the Fund shall be liable to
the Sub-Adviser for the compensation of the Sub-Adviser. For the purpose of
determining fees payable to the Sub-
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Adviser, the value of the Fund's net assets shall be computed at the times and
in the manner specified in the Prospectus and/or Statement. In the event that
the Adviser reduces its management fee payable under the Advisory Agreement in
order to comply with the expense limitations of a State securities commission or
otherwise (but not a voluntary reduction), the Sub-Adviser agrees to reduce its
fee payable under this Agreement by a pro rata amount.
9. Limitation of Liability of the Sub-Adviser. The Sub-Adviser shall not
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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 and obligations hereunder. The Trust, on behalf
of the Fund, may enforce any obligations of the Sub-Adviser under this Agreement
and may recover directly from the Sub-Adviser for any liability it may have to
the Fund.
10. Activities of the Sub-Adviser. The services of the Sub-Adviser to the
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Fund are not deemed to be exclusive, the Sub-Adviser being free to render
investment advisory and/or other services to others. The Sub-Adviser may permit
other fund clients to use the words "Foreign & Colonial" in their names. The
Adviser and the Trust agree that if the Sub-Adviser shall for any reason no
longer serve as the Sub-Adviser to the Fund, the Fund will change its name so as
to delete the words "Foreign & Colonial". It is understood that the Trustees,
officers and shareholders of the Trust, the Fund or the Adviser are or may be or
become interested in the Sub-Adviser or any person controlling, controlled by or
under common control with the Sub-Adviser, as trustees, officers, employees or
otherwise and that trustees, officers and employees of the Sub-Adviser or any
person controlling, controlled by or under common control with the Sub-Adviser
may become similarly interested in the Trust, the Fund or the Adviser and that
the Sub-Adviser may be or become interested in the Fund as a shareholder or
otherwise.
11. Covenants of the Sub-Adviser. The Sub-Adviser agrees that it (a) will
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not deal with itself, "affiliated persons" of the Sub-Adviser, the Trustees of
the Trust or the Fund's distributor, as principals, agents, brokers or dealers
in making purchases or sales of securities or other property for the account of
the Fund, except as permitted by the 1940 Act and the rules, regulations and
orders thereunder and subject to the prior written approval of the Adviser, (b)
will not take a long or short position in the shares of the Fund except as
permitted by the Declaration and (c) will comply with all other provisions of
the Declaration and the By-Laws and the then-current Prospectus and Statement
relative to the Sub-Adviser and its trustees, officers, employees and
affiliates.
12. Representations, Warranties and Additional Agreements of the Sub-
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Adviser. The Sub-Adviser represents, warrants and agrees that:
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(a) It: (i) is registered as an investment adviser under the U.S.
Investment Advisers Act of 1940 (the "Advisers Act"), is authorized to
undertake investment business in the United Kingdom by virtue of its
membership in the Investment Management Regulatory Organisation
("IMRO") and is registered under the laws of any jurisdiction in which
the Sub-Adviser is required to be registered as an investment adviser
in order to perform its obligations under this Agreement, and will
continue
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to be so registered for so long as this Agreement remains in effect;
(ii) is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Agreement; (iii) has met,
and will continue to meet for so long as this Agreement remains in
effect, any other applicable Federal or State requirements, or the
applicable requirements of any regulatory or industry self-regulatory
agency, necessary to be met in order to perform the services
contemplated by this Agreement; (iv) has the authority to enter into
and perform the services contemplated by this Agreement; (v) will
immediately notify the Adviser in writing of the occurrence of any
event that would disqualify the Sub-Adviser from serving as an
investment adviser of an investment company pursuant to Section 9(a) of
the 1940 Act or otherwise; and (vi) will immediately notify the Adviser
in writing of any change of control of the Sub-Adviser or any parent of
the Sub-Adviser resulting in an "assignment" of this Agreement.
(b) It will maintain, keep current and preserve on behalf of the Fund, in
the manner and for the periods of time required or permitted by the
1940 Act and the rules, regulations and orders thereunder and the
Advisers Act and the rules, regulations and orders thereunder, records
relating to investment transactions made by the Sub-Adviser for the
Fund as may be reasonably requested by the Adviser or the Fund from
time to time. The Sub-Adviser agrees that such records are the
property of the Fund, and will be surrendered to the Fund promptly upon
request; provided, however, that the Sub-Adviser may retain copies of
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such records for archival purposes as required by IMRO.
(c) The Sub-Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and, if it has not
already done so, will provide the Adviser and the Trust with a copy of
such code of ethics, and upon any amendment to such code of ethics,
promptly provide such amendment. At least annually the Sub-Adviser
will provide the Trust and the Adviser with a certificate signed by the
chief compliance officer (or the person performing such function) of
the Sub-Adviser certifying, to the best of his or her knowledge,
compliance with the code of ethics during the immediately preceding
twelve (12) month period, including any material violations of or
amendments to the code of ethics or the administration thereof.
(d) It has provided the Adviser and the Trust with a copy of its Form ADV
as most recently filed with the Securities and Exchange Commission (the
"SEC") and will, promptly after filing any amendment to its Form ADV
with the SEC, furnish a copy of such amendment to the Adviser and the
Trust.
13. Duration and Termination of this Agreement. This Agreement shall become
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effective on the date first above written and shall govern the relations between
the parties hereto thereafter, and shall remain in force until August 1, 1999
and each year thereafter but only so long as its continuance is "specifically
approved at least annually" (a) by the vote of a majority of the Trustees of the
Trust who are not "interested persons" of the Trust or of the Adviser or of the
Sub-Adviser at a meeting specifically called for the purpose of voting on such
approval, and (b)
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by the Board of Trustees of the Trust, or by "vote of a majority of the
outstanding voting securities" of the Fund. This Agreement may be terminated at
any time without the payment of any penalty by the Trustees of the Trust, 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,
or by the Sub-Adviser on not more than ninety days nor less than sixty days
written notice. This Agreement shall automatically terminate in the event of its
"assignment" or in the event that the Advisory Agreement shall have terminated
for any reason.
14. Amendments to this Agreement. This Agreement may be amended only if
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such amendment is approved by "vote of a majority of the outstanding voting
securities" of the Fund, by the Adviser and by the Sub-Adviser.
15. Certain Definitions. The terms "specifically approved at least
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annually", "vote of a majority of the outstanding voting securities",
"assignment", "control", "affiliated persons" and "interested person", when used
in this Agreement, shall have the respective meanings specified, and shall be
construed in a manner consistent with, the 1940 Act and the rules, regulations
and orders thereunder, subject, however, to such exemptions as may be granted by
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the SEC under the 1940 Act.
16. Survival of Representations and Warranties; Duty to Update
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Information. All representations and warranties made by the Sub-Adviser
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pursuant to Section 12 hereof shall survive for the duration of this Agreement
and the Sub-Adviser shall immediately notify, but in no event later than five
(5) business days, the Adviser in writing upon becoming aware that any of the
foregoing representations and warranties are no longer true.
17. Miscellaneous. This Agreement shall be governed by and construed in
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accordance with the internal laws of The Commonwealth of Massachusetts. All
notices provided for by this Agreement shall be in writing and shall be deemed
given when received, against appropriate receipt, by the Sub-Adviser's Secretary
in the case of the Sub-Adviser, the Adviser's General Counsel in the case of the
Adviser, and the Trust's Secretary in the case of the Fund, or such other person
as a party shall designate by notice to the other parties. This Agreement
constitutes the entire agreement among the parties hereto and supersedes any
prior agreement among the parties relating to the subject matter hereof. The
section headings of this Agreement are for convenience of reference and do not
constitute a part hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, and their respective seals to be hereto affixed, all
as of the day and year first written above.
MASSACHUSETTS FINANCIAL
SERVICES COMPANY
By:
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Xxxxxxx X. Xxxxxx
President
FOREIGN & COLONIAL
MANAGEMENT LTD.
By:
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Xxxxx Xxxxxx
By:
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Xxxxxxxx Xxxxxx
The foregoing is hereby agreed to:
A copy of the Declaration of Trust of the Trust is on file with the
Secretary of State of The Commonwealth of Massachusetts. The parties hereto
acknowledge that the obligations of or arising out of this instrument 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 in accordance with its proportionate interest hereunder. If this
instrument is executed by the Trust on behalf of one or more series of the
Trust, the parties hereto acknowledge that the assets and liabilities of each
series of the Trust are separate and distinct and that the obligations of or
arising out of this instrument are binding solely upon the assets or property of
the series on whose behalf the Trust has executed this instrument. If the Trust
has executed this instrument on behalf of more than one series of the Trust, the
parties hereto also agree that the obligations of each series hereunder shall be
several and not joint, in accordance with its proportionate interest hereunder,
and the parties hereto agree not to proceed against any series for the
obligations of another series.
MFS VARIABLE INSURANCE TRUST
on behalf of MFS/FOREIGN & COLONIAL EMERGING MARKETS EQUITY SERIES
By:
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A. Xxxxx Xxxxxxx
Chairman
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