EXHIBIT NO. 99.5(a)
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT, made this 19th day of December, 1985, by and between MGH
GOVERNMENT SECURITIES HIGH YIELD TRUST, 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 its Declaration of Trust,
dated August 29, 1985, and By-Laws, each as amended from time to time
(respectively, the "Declaration" and "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 Fund'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been revoked.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 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 the most favorable execution and price. After
fulfilling this primary requirement of seeking for the Fund the most favorable
execution and price, the Adviser is hereby expressly authorized to consider,
subject to
any applicable laws, rules and regulation, statistical, research and other
information or services furnished to the Adviser or the Fund.
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
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. 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 and servicing shareholder accounts, expenses of preparing, printing and
mailing share certificates, shareholders' 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, expenses of shareholders' meetings, 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 of 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 the
facilities to be provided, the Trust shall pay to the Adviser an investment
advisory fee computed and paid monthly in an amount equal to the sum of .3% of
the Trust's average daily net assets plus 6.1% of the Trust's gross income
(i.e., income other than from the sale of securities, short-term gains from
options and futures transactions and premium income from options written), in
each case on an annualized basis for the Trust'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 Trust, the Adviser will pay to the
Trust a sum equal to the amount by which the aggregate expenses of the Trust,
but excluding interest, taxes, brokerage commissions and extraordinary expenses,
incurred during such fiscal year exceed 1 1\2% of the Trust's average daily net
assets during such fiscal year. The obligation of the Adviser to reimburse the
Trust for expenses incurred during any year may be terminated or revised at any
time by the Adviser without the consent of the Trust by notice in writing from
the Adviser to the Trust. 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: 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 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 permitted
by the Declaration, and will comply with all other provisions of the Declaration
and By-Laws and the then-current Prospectus of the Trust 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 Trust, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its duties and
obligations hereunder. As used in this Article 5, the term "Adviser" shall
include Directors, officers and employees of the Adviser as well as that
corporation itself.
ARTICLE 6: 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
investment advisory and\or other services to others. The Adviser may permit
other fund clients to use the initials "MFS" in their names. The Trust agrees
that if the Adviser shall for any reason no longer serve as the Adviser to the
Trust, the Trust will change its name so as to delete the initials "MFS." 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 7: Duration, Termination and Amendments of this Agreement. This
Agreement shall become 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, 1987 on which date it will terminate unless its
continuance after August 1, 1987 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 Trust.
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, 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."
This Agreement may be amended only if such amendment is approved by "vote of a
majority of the outstanding voting securities" of the Trust.
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, 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 hereto 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 Trust 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 Trust, individually, but bind only the trust estate.
MFS GOVERNMENT SECURITIES HIGH
YIELD TRUST
By: XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Chairman and Trustee
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: H. XXXXX XXXXXXX, XX.
H. Xxxxx Xxxxxxx, Xx.
President
