FORM OF
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 23rd day of August, 2000, in Denver, Colorado,
by and between INVESCO Funds Group, Inc. (the "Adviser"), a Delaware
corporation, and INVESCO Advantage Series Funds, Inc., a Maryland Corporation
(the "Fund").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Fund is a corporation organized under the laws of the State of
Maryland; and
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), a non-diversified, open-end
management investment company and currently has one class of shares which is
divided into series(the "Shares"), which may be divided into additional series,
each representing an interest in a separate Portfolio of investments (the
Advantage Fund); and
WHEREAS, the Fund desires that the Adviser manage its investment operations
and to provide certain other services, and the Adviser desires to manage said
operations and to provide such other services;
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. INVESTMENT MANAGEMENT SERVICES. The Adviser hereby agrees to manage
the investment operations of the Fund's Portfolios, subject to the
terms of this Agreement and to the supervision of the Fund's directors
(the "Directors"). The Adviser agrees to perform, or arrange for the
performance of, the following specific services for the Fund:
(a) to manage the investment and reinvestment of all the assets, now
or hereafter acquired, of the Fund's Portfolios, and to execute
all purchases and sales of portfolio securities;
(b) to maintain a continuous investment program for the Fund's
Portfolios, consistent with (i) the Portfolios' investment
policies as set forth in the Fund's Articles of Incorporation,
Bylaws, and Registration Statement, as from time to time amended,
under the Investment Company Act of 1940, as amended (the "1940
Act"), and in any prospectus and/or statement of additional
information of the Fund, as from time to time amended and in use
under the Securities Act of 1933, as amended, and (ii) the Fund's
status as a regulated investment company under the Internal
Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the
Fund's Portfolios, unless otherwise directed by the Directors of
the Fund, and to execute transactions accordingly;
(d) to provide to the Fund's Portfolios the benefit of all of the
investment analyses and research, the reviews of current economic
conditions and of trends, and the consideration of long-range
investment policy now or hereafter generally available to
investment advisory customers of the Adviser;
(e) to determine what portion of the Fund's Portfolios should be
invested in the various types of securities authorized for
purchase by the Fund; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining
to the Portfolios' securities shall be exercised.
With respect to execution of transactions for the Fund's Portfolios,
the Adviser is authorized to employ such brokers or dealers as may, in
the Adviser's best judgment, implement the policy of the Fund to
obtain prompt and reliable execution at the most favorable price
obtainable. In assigning an execution or negotiating the commission to
be paid therefor, the Adviser is authorized to consider the full range
and quality of a broker's services which benefit the Fund, including
but not limited to research and analytical capabilities, reliability
of performance, and financial soundness and responsibility. Research
services prepared and furnished by brokers through which the Adviser
effects securities transactions on behalf of the Fund may be used by
the Adviser in servicing all of its accounts, and not all such
services may be used by the Adviser in connection with the Fund. In
the selection of a broker or dealer for execution of any negotiated
transaction, the Adviser shall have no duty or obligation to seek
advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely
on the basis of its purported or "posted" commission rate for such
transaction, provided, however, that the Adviser shall consider such
"posted" commission rates, if any, together with any other information
available at the time as to the level of commissions known to be
charged on comparable transactions by other qualified brokerage firms,
as well as all other relevant factors and circumstances, including the
size of any contemporaneous market in such securities, the importance
to the Fund of speed, efficiency, and confidentiality of execution,
the execution capabilities required by the circumstances of the
particular transactions, and the apparent knowledge or familiarity
with sources from or to whom such securities may be purchased or sold.
Where the commission rate reflects services, reliability and other
relevant factors in addition to the cost of execution, the Adviser
shall have the burden of demonstrating that such expenditures were
bona fide and for the benefit of the Fund.
2. OTHER SERVICES AND FACILITIES. The Adviser shall, in addition, supply
at its own expense all supervisory and administrative services and
facilities necessary in connection with the day-to-day operations of
the Fund (except those associated with the preparation and maintenance
of certain required books and records, and recordkeeping and
administrative functions relating to employee benefit and retirement
plans, which services and facilities are provided under a separate
Administrative Services Agreement between the Fund and the Adviser).
These services shall include, but not be limited to: supplying the
Fund with officers, clerical staff and other employees, if any, who
are necessary in connection with the Fund's operations; furnishing
office space, facilities, equipment, and supplies; providing personnel
and facilities required to respond to inquiries related to shareholder
accounts; conducting periodic compliance reviews of the Fund's
operations; preparation and review of required documents, reports and
filings by the Adviser's in-house legal and accounting staff
(including the prospectus, statement of additional information, proxy
statements, shareholder reports, tax returns, reports to the SEC, and
other corporate documents of the Fund), except insofar as the
assistance of independent accountants or attorneys is necessary or
desirable; supplying basic telephone service and other utilities; and
preparing and maintaining the books and records required to be
prepared and maintained by the Fund pursuant to Rule 31a-1(b)(4), (5),
(9), and (10) under the Investment Company Act of 1940. All books and
records prepared and maintained by the Adviser for the Fund under this
Agreement shall be the property of the Fund and, upon request
therefor, the Adviser shall surrender to the Fund such of the books
and records so requested.
3. PAYMENT OF COSTS AND EXPENSES. The Adviser shall bear the costs and
expenses of all personnel, facilities, equipment and supplies
reasonably necessary to provide the services required to be provided
by the Adviser under this Agreement. The Fund shall pay all of the
costs and expenses associated with its operations and activities,
except those expressly assumed by the Adviser under this Agreement,
including but not limited to:
(a) all brokers' commissions, issue and transfer taxes, and other
costs chargeable to the Fund in connection with securities
transactions to which the Fund is a party or in connection with
securities owned by the Fund's Portfolios;
(b) the fees, charges and expenses of any independent public
accountants, custodian, depository, dividend disbursing agent,
dividend reinvestment agent, transfer agent, registrar,
independent pricing services and legal counsel for the Fund;
(c) the interest on indebtedness, if any, incurred by the Fund;
(d) the taxes, including franchise, income, issue, transfer, business
license, and other corporate fees payable by the Fund to federal,
state, county, city, or other governmental agents;
(e) the fees and expenses involved in maintaining the registration
and qualification of the Fund and of its shares under laws
administered by the Securities and Exchange Commission or under
other applicable regulatory requirements;
(f) the compensation and expenses of its independent Directors, and
the compensation of any employees and officers of the Fund who
are not employees of the Adviser or one of its affiliated
companies and compensated as such;
(g) the costs of printing and distributing reports, notices of
shareholders' meetings, proxy statements, dividend notices,
prospectuses, statements of additional information and other
communications to the Fund's shareholders, as well as all
expenses of shareholders' meetings and Directors' meetings;
(h) all costs, fees or other expenses arising in connection with the
organization and filing of the Fund's Articles of Incorporation,
including its initial registration and qualification under the
1940 Act and under the Securities Act of 1933, as amended, the
initial determination of its tax status and any rulings obtained
for this purpose, the initial registration and qualification of
its securities under the laws of any state and the approval of
the Fund's operations by any other federal or state authority;
(i) the expenses of repurchasing and redeeming shares of the Fund's
Portfolios;
(j) insurance premiums;
(k) the costs of designing, printing, and issuing certificates
representing shares of beneficial interest of the Fund's
Portfolios;
(l) extraordinary expenses, including fees and disbursements of Fund
counsel, in connection with litigation by or against the Fund;
(m) premiums for the fidelity bond maintained by the Fund pursuant to
Section 17(g) of the 1940 Act and rules promulgated thereunder
(except for such premiums as may be allocated to third parties,
as insured thereunder);
(n) association and institute dues;
(o) the expenses of distributing shares of the Fund but only if and
to the extent permissible under a plan of distribution adopted by
the Fund pursuant to Rule 12b-1 of the Investment Company Act of
1940; and
(p) all fees paid by the Fund for administrative, recordkeeping, and
sub-accounting services under the Administrative Services
Agreement between the Fund and the Adviser dated August 1, 2000.
4. USE OF AFFILIATED COMPANIES. In connection with the rendering of the
services required to be provided by the Adviser under this Agreement,
the Adviser may, to the extent it deems appropriate and subject to
compliance with the requirements of applicable laws and regulations,
and upon receipt of written approval of the Fund, make use of its
affiliated companies and their employees; provided that the Adviser
shall supervise and remain fully responsible for all such services in
accordance with and to the extent provided by this Agreement and that
all costs and expenses associated with the providing of services by
any such companies or employees and required by this Agreement to be
borne by the Adviser shall be borne by the Adviser or its affiliated
companies.
5. COMPENSATION OF THE ADVISER. For the services to be rendered and the
charges and expenses to be assumed by the Adviser hereunder, the Fund
shall pay to the Adviser an advisory fee which will be computed daily
and paid as of the last day of each month, using for each daily
calculation the most recently determined net asset value of each of
the Fund's Portfolios, as determined by valuations made in accordance
with the Fund's procedures for calculating its net asset value as
described in the Fund's Prospectus and/or Statement of Additional
Information. The advisory fee to the Adviser shall be computed at the
following annual rate of 1.50% of the Fund's daily average net assets
(the "Base Fee"). This Base Fee will be adjusted, on a monthly basis
(i) upward at the rate of 0.20%, on a pro rata basis, for each
percentage point in the investment performance of the Portfolio's of
the Fund exceeds the sum of 2.00% and the investment record of the
Xxxxxxx 3000 Index (the "Index"), or (ii) downward at the rate of
0.20%, on a pro rata basis, for each percentage point the investment
record of the Index less 2.00% exceeds the investment performance of
the Portfolio's of the Fund. The maximum or minimum adjustment, if
any, will be 1.00% annually. Therefore, the maximum annual fee payable
to the Adviser will be 2.50% of average daily net assets and the
minimum annual fee will be 0.50% of average daily net assets. During
any period when the determination of the Fund's net asset value is
suspended by the Directors of the Fund, the net asset value of a share
of the Fund as of the last business day prior to such suspension
shall, for the purpose of this Paragraph 5, be deemed to be the net
asset value at the close of each succeeding business day until it is
again determined.
In determining the Fee Adjustment, if any, applicable during any
month, INVESCO will compare the investment performance of the Class A
Shares of the Fund for the twelve-month period ending on the last day
of the prior month (the "Performance Period") to the investment record
of the Index during the Performance Period. The investment performance
of the Fund will be determined by adding together (i) the change in
the net asset value of the Class A Shares during the Performance
Period, (ii) the value of cash distributions made by the Fund to
holders of Class A Shares to the end of the Performance Period, and
(iii) the value of capital gains per share, if any, paid or payable on
undistributed realized long-term capital gains accumulated to the end
of the Performance Period, and will be expressed as a percentage of
its net asset value per share at the beginning of the Performance
Period. The investment record of the Index will be determined by
adding together (i) the change in the level of the Index during the
Performance Period and (ii) the value, computed consistently with the
Index, of cash distributions made by companies whose securities
comprise the Index accumulated to the end of the Performance Period,
and will be expressed as a percentage of the Index at the beginning of
such Period.
After it determines any Fee Adjustment, INVESCO will determine the
dollar amount of additional fees or fee reductions to be accrued for
each day of a month by multiplying the Fee Adjustment by the average
daily net assets of the Class A Shares of the Fund during the
Performance Period and dividing that number by the number of days in
the Performance Period. The management fee, as adjusted, is accrued
daily and paid monthly.
If the directors determine at some future date that another securities
index is a better representative of the composition of the Fund than
is the Xxxxxxx 3000 Index, the directors may change the securities
index used to compute the Fee Adjustment. If the directors do so, the
new securities index (the "New Index") will be applied prospectively
to determine the amount of the Fee Adjustment. The Index will continue
to be used to determine the amount of the Fee Adjustment for that part
of the Performance Period prior to the effective date of the New
Index. A change in the Index will be submitted to shareholders for
their approval unless the SEC determines that shareholder approval is
not required.
However, no such fee shall be paid to the Adviser with respect to any
assets of the Fund's Portfolios which may be invested in any other
investment company for which the Adviser serves as investment adviser.
The fee provided for hereunder shall be prorated in any month in which
this Agreement is not in effect for the entire month.
Interest, taxes and extraordinary items such as litigation costs are
not deemed expenses for purposes of this paragraph and shall be borne
by that Portfolio in any event. Expenditures, including costs incurred
in connection with the purchase or sale of portfolio securities, which
are capitalized in accordance with generally accepted accounting
principles applicable to investment companies, are accounted for as
capital items and shall not be deemed to be expenses for purposes of
this paragraph.
6. AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH LAWS. In
connection with purchases or sales of securities for the investment
portfolio of the Fund's Portfolios, neither the Adviser nor its
officers or employees will act as a principal or agent for any party
other than the Fund's Portfolios or receive any commissions. The
Adviser will comply with all applicable laws in acting hereunder
including, without limitation, the 1940 Act; the Investment Advisers
Act of 1940, as amended; and all rules and regulations duly
promulgated under the foregoing.
7. DURATION AND TERMINATION. This Agreement shall become effective as of
the date it is approved by a majority of the outstanding voting
securities of the Fund's Portfolios, and unless sooner terminated as
hereinafter provided, shall remain in force for an initial term ending
two years from the date of execution, and from year to year
thereafter, but only as long as such continuance is specifically
approved at least annually (i) by a vote of a majority of the
outstanding voting securities of the Fund's Portfolios or by the
Directors of the Fund, and (ii) by a majority of the Directors of the
Fund who are not interested persons of the Adviser or the Fund by
votes cast in person at a meeting called for the purpose of voting on
such approval.
This Agreement may, on 60 days' prior written notice, be terminated
without the payment of any penalty, by the Directors of the Fund, or
by the vote of a majority of the outstanding voting securities of the
Fund's Portfolios, as the case may be, or by the Adviser. This
Agreement shall immediately terminate in the event of its assignment,
unless an order is issued by the Securities and Exchange Commission
conditionally or unconditionally exempting such assignment from the
provisions of Section 15(a) of the 1940 Act, in which event this
Agreement shall remain in full force and effect subject to the terms
and provisions of said order. In interpreting the provisions of this
paragraph 7, the definitions contained in Section 2(a) of the 1940 Act
and the applicable rules under the 1940 Act (particularly the
definitions of "interested person", "assignment" and "vote of a
majority of the outstanding voting securities") shall be applied.
The Adviser agrees to furnish to the Directors of the Fund such
information on an annual basis as may reasonably be necessary to
evaluate the terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Adviser to receive payments on any unpaid balance of the compensation
described in paragraph 5 earned prior to such termination.
8. NON-EXCLUSIVE SERVICES. The Adviser shall, during the term of this
Agreement, be entitled to render investment advisory services to
others, including, without limitation, other investment companies with
similar objectives to those of the Fund's Portfolios. The Adviser may,
when it deems such to be advisable, aggregate orders for its other
customers together with any securities of the same type to be sold or
purchased for the Fund's Portfolios in order to obtain best execution
and lower brokerage commissions. In such event, the Adviser shall
allocate the shares so purchased or sold, as well as the expenses
incurred in the transaction, in the manner it considers to be most
equitable and consistent with its fiduciary obligations to the Fund's
Portfolios and the Adviser's other customers.
9. MISCELLANEOUS PROVISIONS.
NOTICE. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such
notice.
AMENDMENTS HEREOF. No provision of this Agreement may be orally
changed or discharged, but may only be modified by an instrument in
writing signed by the Fund and the Adviser. In addition, no amendment
to this Agreement shall be effective unless approved by (1) the vote
of a majority of the Directors of the Fund, including a majority of
the Directors who are not parties to this Agreement or interested
persons of any such party cast in person at a meeting called for the
purpose of voting on such amendment, and (2) the vote of a majority of
the outstanding voting securities of any of the Fund's Portfolios as
to which such amendment is applicable (other than an amendment which
can be effective without shareholder approval under applicable law).
SEVERABILITY. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or
made invalid by a court decision, statute, rule or otherwise, such
illegality or invalidity shall not affect the validity or
enforceability of the remainder of this Agreement.
HEADINGS. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe,
interpret, define or limit the size, extent or intent of this
Agreement or any provision hereof.
APPLICABLE LAW. This Agreement shall be construed in accordance with
the laws of the State of Maryland. To the extent that the applicable
laws of the State of Maryland, or any of the provisions herein,
conflict with applicable provisions of the 1940 Act, the latter shall
control.
IN WITNESS WHEREOF, the Adviser and the Fund each has caused this
Agreement to be duly executed on its behalf by an officer thereunto duly
authorized, on the date first above written.
INVESCO ADVANTAGE SERIES FUNDS, INC.
ATTEST:
By:
________________________________
Xxxx X. Xxxxxxxxxx
_________________________________ President & Chairman of the Board
Xxxx X. Xxxxx of Directors
Secretary
INVESCO FUNDS GROUP, INC.
ATTEST:
By:________________________________
Xxxx X. Xxxxxxxxxx
_________________________________ President & Chief Executive Officer
Xxxx X. Xxxxx
Secretary
