EXHIBIT NO. 99.5(b)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made this 1st day of September, 1993 by and between MFS SERIES
TRUST III, a Massachusetts business trust (the "Trust"), on behalf of MFS
MUNICIPAL HIGH INCOME FUND, a series of the Trust (the "Fund"), 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
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 supervision 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 Trust's Declaration of Trust, dated
December 15, 1977, and By-Laws, as each may be 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 Fund's then-current Prospectus. 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 Fund's 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determination has been revoked.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 Fund's 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 best available price. Subject to this requirement of
seeking the best available price, securities may be bought from or sold to
broker dealers who have furnished statistical, research and other information or
services to the Adviser.
Article 2: Allocation of Charges and Expenses. 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
Fund and maintaining the its organization and investment advisory facilities and
executive and supervisory personnel for managing the investments, effecting the
portfolio transactions of the Fund. 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. 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 stock certificates,
prospectuses, 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
Fund, including safekeeping of funds and securities and maintaining required
books and accounts; expenses of calculating the net asset value of shares of the
Fund, expenses of shareholder meetings; and expenses relation to the issuance,
registration and qualification of shares of the Fund 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).
ARTICLE 3: COMPENSATION OF THE ADVISER. FOR THE SERVICES TO BE rendered and for
the facilities to be provided, the Fund shall pay to the Adviser an investment
advisory fee computed and paid monthly in an amount equal to the sum of .30% of
the Fund's average daily net assets plus 4.75% of the Fund's gross income (I.E.,
income other than from the sale of securities), in each case on an annualized
basis for the Fund's then current fiscal year. Payment of the foregoing fee is
subject to the provision that within 30 days following the close of any fiscal
year of the Fund, the Adviser will pay to the Fund a sum equal to the amount by
which the aggregate expenses of the Fund, but excluding interest, taxes,
brokerage commissions and extraordinary expenses, incurred during such fiscal
year exceed (a) 1 1/2% of the Fund's average daily net assets during such fiscal
year up to and including $40 million, and (b) 1% of its average daily net assets
such fiscal year in excess of $40 million. The obligation of the Adviser to
reimburse the Fund for expenses incurred during any year may be terminated or
revised at any time by the Adviser without the consent of the Fund by notice in
writing from the Adviser to the Fund. If the Adviser shall serve for less than
the whole of any period specified in this Section 3, the compensation to the
Adviser will be prorated.
Article 4: 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 principal
underwriter, if any, 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 the By-Laws and the then-current
Prospectus of the Fund relative to the Adviser and its Directors and officers.
Article 5: 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 Section 5, the term "Adviser" shall
include Directors, officers and employees of the Adviser as well as the
corporation itself.
Article 6: 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. The Adviser may permit other fund clients to use the initials "MFS"
in their names. The Fund agrees that if the Adviser shall for any reason no
longer serve as the Adviser to the Fund, the Fund will change its name so as to
delete the initials "MFS". 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 Fund as a
shareholder or otherwise.
Article 7: Duration, Termination and Amendments of this Agreement. This
Agreement shall become effective as of the day and year first above written and
shall govern the relations between the parties hereto thereafter, and shall
remain in force until August 1, 1995 on which date it will terminate unless its
continuance after August 1, 1995 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 Fund.
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, in each case on not more than 60 days' nor less
than 30 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 agreement is approved by vote of a
majority of the outstanding voting securities of the Fund. 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 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.
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 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
applicable to the Fund.
MFS SERIES TRUST III on behalf of
MFS MUNICIPAL HIGH INCOME FUND
By: A. XXXXX XXXXXXX
A. Xxxxx Xxxxxxx
Chairman and Trustee
MASSACHUSETTS FINANCIAL
SERVICES COMPANY
By: A. XXXXX XXXXXXX
A. Xxxxx Xxxxxxx
Chairman
