Information Regarding Investment Advisory and Sub-Advisory Contracts
The Boards of Trustees (the Board) of the Invesco Funds are required under the Investment Company Act of 1940, as amended, to approve annually the renewal of each fund’s investment advisory agreement with Invesco Advisers, Inc. (Invesco Advisers) and the Master Intergroup Sub-Advisory Contract for Mutual Funds (the sub-advisory contracts) with Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Hong Kong Limited, Invesco Senior Secured Management, Inc., Invesco Canada Ltd. and, where applicable, the sub-advisory contract with Invesco PowerShares Capital Management LLC (collectively, the Affiliated Sub-Advisers). During contract renewal meetings in June 2012 and June 2013, the Board as a whole, and the disinterested or “independent” Trustees, voting separately, approved the continuance of each fund’s investment advisory agreement and the sub-advisory contracts for another year. The Board determined that continuation of each fund’s investment advisory agreement and the sub-advisory contracts are in the best interests of each fund and its shareholders and the compensation payable to Invesco Advisers and the Affiliated Sub-Advisers under the agreements is fair and reasonable.
The Board's Fund Evaluation Process
The Board’s Investments Committee has established three Sub-Committees, each of which is primarily responsible for overseeing the management of a number of the funds advised by Invesco Advisers (the Invesco Funds). The Sub-Committees meet throughout the year to review the performance of their assigned Invesco Funds, including reviewing materials prepared under the direction of the independent Senior Officer, an officer of the Invesco Funds who reports directly to the independent Trustees. Over the course of each year, the Sub-Committees meet with portfolio managers for their assigned Invesco Funds and other members of management to review the performance, investment objective(s), policies, strategies, limitations and investment risks of these funds. The Sub-Committees meet regularly and at designated contract renewal meetings each year to conduct a review of the performance, fees, expenses and other matters related to their assigned Invesco Funds. Each Sub-Committee recommends to the Investments Committee, which in turn recommends to the full Board, whether and on what terms to approve the continuance of each Invesco Fund’s investment advisory agreement and sub-advisory contracts for another year.
During the contract renewal process, the Trustees receive comparative performance and fee data regarding the Invesco Funds prepared by Invesco Advisers and Lipper Inc. (Lipper), an independent provider of investment company data. The Trustees also receive an independent written evaluation from the Senior Officer. The Senior Officer’s evaluation is prepared as part of his responsibility to manage the process by which the Invesco Funds’ proposed management fees are negotiated during the annual contract renewal process to ensure they are negotiated in a manner that is at arms’ length and reasonable. The independent Trustees are assisted in their annual evaluation of each fund’s investment advisory agreement by the Senior Officer and by independent legal counsel. In addition to meetings with Invesco Advisers and fund counsel, the independent Trustees also discuss the continuance of the investment advisory agreement and sub-advisory contracts in separate sessions with the Senior Officer and with independent legal counsel.
In evaluating the fairness and reasonableness of compensation under each fund’s investment advisory agreement and sub-advisory contracts, the Board considered, among other things, the factors discussed below. Where applicable, the Trustees also considered information provided in connection with fund mergers and/or reorganizations approved by the Trustees. The Trustees recognized that the advisory fee rates for the Invesco Funds are, in many cases, the result of years of review and negotiation between the Trustees and Invesco Advisers as well as advisory fees previously approved by different predecessor boards. The Trustees’ deliberations and conclusions in a particular year may be based in part on their deliberations and conclusions regarding these same arrangements throughout the year and in prior years. The Trustees’ review and conclusions are based on the comprehensive consideration of all information presented to them and are not the result of any single determinative factor. Moreover, one Trustee may have weighed a particular piece of information or factor differently than another Trustee.
Please click on the links below to view a discussion by fund of the factors the Board considered in evaluating the fairness and reasonableness of each fund's advisory agreement and sub-advisory contracts. For each fund, the applicable link serves as the Senior Officer's independent written evaluation in 2012 and 2013 with respect to the investment advisory agreement as well as a discussion of the material factors and related conclusions that formed the basis for the Board's approval of the investment advisory agreement and sub-advisory contracts. Unless otherwise stated, this information is current as of June 2012 and June 2013 respectively, and may not reflect consideration of factors that became known to the Board after those respective dates, including, for example, changes to the Fund's performance, advisory fees, expense limitations and/or fee waivers.