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Exhibit 99 - d(1)
FLAG INVESTORS SERIES FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made as of the 29th day of December, 2000 by and
between FLAG INVESTORS SERIES FUNDS, INC., a Maryland corporation (the "Series
Funds"), and INVESTMENT COMPANY CAPITAL CORP., a Maryland corporation (the
"Advisor").
WHEREAS, the Series Funds is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), consisting of several series of shares, each having
its own investment policies;
WHEREAS, the Advisor is registered as an investment advisor under the
Investment Advisers Act of 1940, as amended, and engages in the business of
acting as an investment advisor; and
WHEREAS, the Series Funds and the Advisor desire to enter into an
agreement to provide investment advisory services for the series listed in
Schedule A to this Agreement on the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. Appointment of Investment Advisor. The Series Funds hereby appoints
the Advisor to act as the investment advisor of each series listed in Schedule A
to this Agreement (each such series, together with all other series subsequently
established by the Series Funds and made subject to this Agreement in accordance
with section 11, being herein referred to as "a Series", and collectively as
"the Series"). The Advisor shall manage a Series' affairs and shall supervise
all aspects of a Series' operations (except as otherwise set forth herein),
including the investment and reinvestment of the cash, securities or other
properties comprising a Series' assets, subject at all times to the policies and
control of the Board of Directors. The Advisor shall give a Series the benefit
of its best judgment, efforts and facilities in rendering its services as
Advisor.
2. Delivery of Documents. The Series Funds have furnished the Advisor
with copies properly certified or authenticated of each of the following:
(a) The Series Funds' Articles of Incorporation, filed with the
State of Maryland on March 16, 1993 and all amendments thereto (such
Articles of Incorporation, as presently in effect and as they shall
from time to time be amended, are herein called the "Articles of
Incorporation");
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(b) The Series Funds' By-Laws and all amendments thereto (such
By-Laws, as presently in effect and as they shall from time to time be
amended, are herein called the "By-Laws");
(c) Resolutions of the Series Funds' Board of Directors and
shareholders authorizing the appointment of the Advisor and approving
this Agreement;
(d) The Series Funds' Registration Statement on Form N-1A under
the Securities Act of 1933, as amended (the "1933 Act") (File No.
33-8479) and under the 1940 Act as filed with the Securities and
Exchange Commission ("SEC") relating to the shares of the Series Funds
and its series, and all amendments thereto; and
(e) Each Series' most recent prospectus (such prospectus, as
presently in effect, and all amendments and supplements thereto are
herein called "Prospectus").
The Series Funds will furnish the Advisor from time to time with
copies, properly certified or authenticated, of all amendments or supplements to
the foregoing, if any, and all documents, notices and reports filed with the
SEC.
The Advisor will provide the Series Funds with copies of its Form ADV,
including all amendments thereto, as it is filed with the SEC.
3. Duties of Investment Advisor. In carrying out its obligations under
Section 1 hereof, the Advisor shall:
(a) supervise and manage all aspects of a Series' operations,
except for distribution services;
(b) formulate and implement continuing programs for the
purchases and sales of securities, consistent with the investment
objective and policies of a Series;
(c) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally
or a Series, and whether concerning the individual issuers whose
securities are included in a Series portfolio or the activities in
which they engage, or with respect to securities which the Advisor
considers desirable for inclusion in a Series' portfolio;
(d) determine which issuers and securities shall be
represented in a Series' portfolio and regularly report thereon to the
Series Funds' Board of Directors; and
(e) take all actions necessary to carry into effect a Series'
purchase and sale programs.
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4. Portfolio Transactions. The Advisor is authorized to select the
brokers or dealers that will execute the purchases and sales of portfolio
securities for a Series and is directed to use its best efforts to obtain the
best net results as described from time to time in a Series' prospectus and
statement of additional information. The Advisor will promptly communicate to
the Administrator and to the officers and the Directors of the Series Funds such
information relating to portfolio transactions as they may reasonably request.
It is understood that the Advisor will not be deemed to have acted
unlawfully, or to have breached a fiduciary duty to the Series Fund or be in
breach of any obligation owing to the Series Fund under this Agreement, or
otherwise, solely by reason of its having directed a securities transaction on
behalf of the Series Fund to a broker-dealer in compliance with the provisions
of Section 28(e) of the Securities Exchange Act of 1934 or as otherwise
permitted from time to time by a Series' prospectus and statement of additional
information.
Subject to the policies established by the Board in compliance with
applicable law, the Advisor may direct DB Alex. Brown LLC ("DB Alex. Brown") or
any of its affiliates to execute portfolio transactions for a Series on an
agency basis. The commissions paid to DB Alex. Brown or any of its affiliates
must be, as required by Rule 17e-1 under the 1940 Act, "reasonable and fair
compared to the commission, fee or other remuneration received or to be received
by other brokers in connection with comparable transactions involving similar
securities ... during a comparable period of time." If the purchase or sale
of securities consistent with the investment policies of a Series or one or more
other accounts of the Advisor is considered at or about the same time,
transactions in such securities will be allocated among the accounts in a manner
deemed equitable by the Advisor. DB Alex. Brown or any of its affiliates and the
Advisor may combine such transactions, in accordance with applicable laws and
regulations, in order to obtain the best net price and most favorable execution.
The Series Funds on behalf of a Series will not deal with the Advisor
or DB Alex. Brown or any of its affiliates in any transaction in which the
Advisor or DB Alex. Brown or any of its affiliates acts as a principal with
respect to any part of a Series' order. If DB Alex. Brown or any of its
affiliates is participating in an underwriting or selling group, a Series may
not buy portfolio securities from the group except in accordance with policies
established by the Board in compliance with rules of the SEC.
5. Control by Board of Directors. Any management or supervisory
activities undertaken by the Advisor pursuant to this Agreement, as well as any
other activities undertaken by the Advisor on behalf of a Series pursuant
thereto, shall at all times be subject to any applicable directives of the
Board.
6. Compliance with Applicable Requirements. In carrying out its
obligations under this Agreement, the Advisor shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
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(b) the provisions of the Registration Statement of the Series
Funds on behalf of a Series under the 1933 Act and the 1940 Act;
(c) the provisions of the Articles of Incorporation;
(d) the provisions of the By-Laws; and
(e) any other applicable provisions of state and federal law.
7. Expenses. The expenses connected with the Series Funds on behalf of
a Series shall be allocable between the Series Funds and the Advisor as follows:
(a) The Advisor shall at its expense and without cost to the
Series Funds, the services of one or more officers of the Advisor, to
the extent that such officers may be required by the Series Funds on
behalf of a Series for the proper conduct of its affairs.
(b) The Series Funds assumes and shall pay or cause to be paid
all other expenses of the Series Funds on behalf of a Series,
including, without limitation: payments to the Series Fund's
distributor under the Series Fund's plan of distribution; the charges
and expenses of any registrar, any custodian or depository appointed by
the Series Funds for the safekeeping of a Series' cash, portfolio
securities and other property, and any transfer, dividend or accounting
agent or agents appointed by the Series Funds; brokers' commissions
chargeable to the Series Funds on behalf of a Series in connection with
portfolio securities transactions to which the Series Funds is a party;
all taxes, including securities issuance and transfer taxes, and fees
payable by the Series Funds to Federal, State or other governmental
agencies; the costs and expenses of engraving or printing of
certificates representing shares of the Series Funds; all costs and
expenses in connection with the registration and maintenance of
registration of the Series Funds and its shares with the SEC and
various states and other jurisdictions (including filing fees, legal
fees and disbursements of counsel); the costs and expenses of printing,
including typesetting, and distributing prospectuses and statements of
additional information of the Series Funds and supplements thereto to
the Series Fund's shareholders; all expenses of shareholders' and
Directors' meetings and of preparing, printing and mailing of proxy
statements and reports to shareholders; fees and travel expenses of
Directors or Director members of any advisory board or committee; all
expenses incident to the payment of any dividend, distribution,
withdrawal or redemption, whether in shares or in cash; charges and
expenses of any outside service used for pricing of the Fund's shares;
charges and expenses of legal counsel, including counsel to the
Directors of the Series Funds who are not interested persons (as
defined in the 1940 Act) of the Series Funds and of independent
certified public accountants, in connection with any matter relating to
the Series Funds; membership dues of industry associations; interest
payable on Series Funds borrowings; postage; insurance premiums on
property or personnel (including officers and Directors) of the Series
Funds which inure to its benefit; extraordinary expenses (including but
not limited to, legal claims and liabilities and litigation costs and
any indemnification related thereto); and all other charges and costs
of the Series Fund's operation unless otherwise explicitly provided
herein.
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8. Sub-Advisor. It is understood that the Advisor, on behalf of a
Series, may employ one or more sub-investment Advisors (each a "Sub-Advisor")
under written agreements with each Sub-Advisor, provided that any such
Sub-Advisor and agreement is first approved by the vote of a majority of the
Directors, including a majority of the Directors who are not "interested
persons" (as defined in the 1940 Act) of the Series Funds, the Advisor or any
such Sub-Advisor, at a meeting of Directors called for the purpose of voting on
such approval and, except as may be otherwise permitted by then current law as
modified or interpreted by an applicable order or orders of the Commission or
any rules or regulations adopted by, or interpretive releases of, the
Commission, by a vote of a "majority of the outstanding voting securities" (as
defined in the 1940 Act) of a Series. The authorization given to the Advisor in
this Agreement to perform portfolio management and related services may be
delegated by it under any such agreement to any of the Sub-Advisors, provided
that the Sub-Advisors shall be subject to the same restrictions and limitations
on the investments and brokerage discretion as the Advisor. In the event the
Advisor employs one or more Sub-Advisors, the Advisor shall oversee and
continually evaluate performance of any such Sub-Advisor and shall make such
recommendations to the Series Funds' Directors from time to time concerning the
continuation, termination or modification of any such agreements as the Advisor
deems appropriate. Notwithstanding the foregoing, the Series Funds agrees that
the Advisor shall not be accountable to the Series Funds or a Series for any
loss or liability relating to specific investments directed solely by any
Sub-Advisor.
As used in this Agreement, the terms "interested persons" and a "vote
of a majority of the outstanding voting securities" shall have the respective
meanings set forth in the 1940 Act and the rules and regulations thereunder,
subject to such exemptions as may be granted by the Commission under said Act.
9. Compensation. For the services to be rendered and the expenses
assumed by the Advisor, the Series Funds shall pay to the Advisor monthly
compensation in accordance with Schedule B.
Except as hereinafter set forth, compensation under this Agreement
shall be calculated and accrued daily and the amounts of the daily accruals
shall be paid monthly. If this Agreement becomes effective subsequent to the
first day of a month, compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above.
In the event of termination of this Agreement, the advisory fee shall
be computed on the basis of the period ending on the last business day on which
this Agreement is in effect subject to a pro rata adjustment based on the number
of days elapsed in the current month as a percentage of the total number of days
in such month.
In addition to the foregoing, the Advisor may from time to time agree
not to impose all or a portion of its fee otherwise payable hereunder (in
advance of the time such fee or a portion thereof would otherwise accrue) and/or
undertake to pay or reimburse the Series Funds on behalf of the Series for all
or a portion of its expenses not otherwise required to be borne or reimbursed
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by the Advisor. Any such fee reduction or undertaking may be discontinued or
modified by the Advisor at any time.
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this Agreement. In
addition to the foregoing, the Advisor may from time to time agree not to impose
all or a portion of its fee otherwise payable hereunder (in advance of the time
such fee or a portion thereof would otherwise accrue) and/or undertake to pay or
reimburse a Series for all or a portion of its expenses not otherwise required
to be borne or reimbursed by the Advisor. Any such fee reduction or undertaking
may be discontinued or modified by the Advisor at any time.
10. Non-Exclusivity. The services of the Advisor to the Series Funds on
behalf of each Series are not to be deemed to be exclusive, and the Advisor
shall be free to render investment advisory or other services to others
(including other investment companies) and to engage in other activities, so
long as its services under this Agreement are not impaired thereby. It is
understood and agreed that officers or directors of the Advisor may serve as
officers or Directors of the Series Funds, and that officers or Directors of the
Series Funds may serve as officers or directors of the Advisor to the extent
permitted by law; and that the officers and directors of the Advisor are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, trustees or
directors of any other firm, trust or corporation, including other investment
companies.
11. Additional Series Funds and Classes. In the event that the Series
Funds establishes one or more series of Shares or one or more classes of Shares
after the effectiveness of this Agreement, such series of shares or classes of
shares, as the case may be, shall become Series and Classes under this Agreement
upon approval of this Agreement by the Series Funds with respect to the series
of shares or class of shares and the execution of an amended Appendix A
reflecting the applicable names and terms.
12. Duration and Termination. This Agreement, unless sooner terminated
as provided herein, shall remain in effect with respect to Series Funds on
behalf of a Series until two years from the date first set forth above, and
thereafter, for periods of one year so long as such continuance thereafter is
specifically approved at least annually (a) by the vote of a majority of those
Directors of the Series Funds 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 approval, and (b) by the Directors of the Series Funds
or by vote of a majority of the outstanding voting securities of a Series,
subject to the right of the Series Funds and the Advisor to terminate this
contract as provided in Section 12 hereof; provided, however, that if the
shareholders of a Series fail to approve the Agreement as provided herein, the
Advisor may continue to serve hereunder in the manner and to the extent
permitted by the 1940 Act as modified or interpreted by any applicable order or
orders of the SEC or any rules or regulations adopted by, or interpretative
releases of, the SEC thereunder. The foregoing requirement that continuance of
this Agreement be "specifically approved at least annually" shall be construed
in a manner consistent with the 1940 Act as modified or interpreted by any
applicable order or orders of the SEC or any rules or regulations adopted by, or
interpretative releases of, the SEC thereunder.
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This Agreement may be terminated as to a Series at any time, without
the payment of any penalty by vote of a majority of the Directors of the Series
Funds or by vote of a majority of the outstanding voting securities of a Series
on not less than 30 days nor more than 60 days written notice to the Advisor, or
by the Advisor at any time without the payment of any penalty, on 90 days
written notice to the Series Funds. This Agreement will automatically and
immediately terminate in the event of its assignment. Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed
postpaid, to the other party at any office of such party.
As used in this Section 12, the term "assignment: shall have the
meaning as set forth in the 1940 Act as modified or interpreted by any
applicable order or orders of the SEC or any rules or regulations adopted by, or
interpretative releases of, the SEC.
13. Liability of Advisor. In the performance of its duties hereunder,
the Advisor shall be obligated to exercise care and diligence and to act in good
faith and to use its best efforts within reasonable limits to ensure the
accuracy of all services performed under this Agreement, but the Advisor shall
not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of the Advisor or its
officers, directors or employees, or reckless disregard by the Advisor of its
duties under this Agreement.
14. Notices. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice.
Currently such addresses are as follows: if to the Series Funds and the Advisor,
One South Street, Baltimore, Maryland 21202.
15. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
16. Entire Agreement. This Agreement states the entire agreement of the
parties hereto, and is intended to be the complete and exclusive statement of
the terms hereof. It may not be added to or changed orally, and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act as modified or interpreted by any applicable order
or orders of the SEC or any rules or regulations adopted by, or interpretative
releases of, the SEC, when applicable.
17. Reports. The Series Funds and the Advisor agree to furnish to each
other, if applicable, current prospectuses, proxy statements, reports to
Shareholders, certified copies of their financial statements, and such other
information with regard to their affairs as each may reasonably request.
18. Certain Records. Any records required to be maintained and
preserved pursuant to the provisions of Rule 31a-1 and Rule 31a-2 promulgated
under the 1940 Act which are prepared or maintained by the Advisor on behalf of
the Series Funds are the property of the Series Funds and will be surrendered
promptly to the Series Funds on request.
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19. Questions of Interpretation. 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 1940 Act shall be resolved by reference to such
term or provision of the 1940 Act and to interpretations thereof, if any, by the
United States Courts or in the absence of any controlling decision of any such
court, by rules, regulations or orders of the SEC issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is modified or interpreted by any applicable
order or orders of the SEC or any rules or regulations adopted by, or
interpretative releases of, the SEC thereunder, such provision shall be deemed
to incorporate the effect of such order, rule, regulation or interpretative
release. Otherwise the provisions of this Agreement shall be interpreted in
accordance with the laws of Maryland.
20. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.
[SEAL] FLAG INVESTORS SERIES FUNDS, INC.
Attest: /s/ Savonne Ferguson By: /s/ Amy M. Olmert
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Name: Savonne Ferguson Name: Amy M. Olmert
Title: Secretary
[SEAL] INVESTMENT COMPANY CAPITAL CORP.
Attest: /s/ Savonne Ferguson By: /s/ Richard T. Hale
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Name: Savonne Ferguson Name: Richard T. Hale
Title: President
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Schedule A
Flag Investors Growth Opportunity Fund
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Schedule B
Compensation Table
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Advisory Fee as a % of
Average Daily Net Assets Average Daily Net Assets
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$0 to $250 million 0.85%
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$250 million to $500 million 0.80%
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In excess of $500 million 0.75%
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