INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 28th day of February, 1997, in Denver, Colorado,
by and between INVESCO FUNDS GROUP, INC. (the "Adviser"), a Delaware
corporation, and INVESCO Diversified Funds, Inc., a Maryland corporation (the
"Fund").
WITNESSETH:
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"), as a diversified, open-end management
investment company and has one class of shares (the "Shares"), which is divided
into additional series, each representing an interest in a separate portfolio of
investments, with the first such series being designated as the INVESCO Small
Company Fund (the "Portfolio"); and
WHEREAS, the Fund desires that the Adviser manage its investment operations
and the Adviser desires to manage said operations;
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 and its Portfolio, 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 and the Portfolio of the Fund;
(b) to maintain a continuous investment program for the Fund and each
Portfolio of the Fund, consistent with (i) the Fund's and Portfolio's
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 or any
Portfolio 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
and the Portfolio, unless otherwise directed by the Directors of the Fund,
and to execute transactions accordingly;
(d) to provide to the Fund and the Portfolio of the Fund the benefit of all
of the investment analyses and research, the reviews of current economic
conditions and 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 and each Portfolio of the Fund
should be invested in common stocks, preferred stocks, Government
obligations, commercial paper, certificates of deposit, bankers' acceptances,
variable amount notes, corporate debt obligations, and any other authorized
securities;
(f) to make recommendations as to the manner in which voting rights, rights
to consent to Fund and/or Portfolio action and any other rights pertaining to
the Fund's portfolio securities shall be exercised; and
(g) to calculate the net asset value of the Fund and each Portfolio, as
applicable, as required by the 1940 Act, subject to such procedures as may be
established from time to time by the Fund's Directors, based upon the
information provided to the Adviser by the Fund or by the custodian,
co-custodian or sub-custodian of the Fund's or any of the Portfolio's assets
(the "Custodian") or such other source as designated by the Directors from
time to time.
With respect to execution of transactions for the Fund and for the Portfolio,
the Adviser shall place, or arrange for the placement of, all orders for the
purchase or sale of portfolio securities with brokers or dealers selected by the
Adviser. In connection with the selection of such brokers or dealers and the
placing of such orders, the Adviser is directed at all times to obtain for the
Fund and the Portfolio the most favorable execution and price; after fulfilling
this primary requirement of obtaining the most favorable execution and price,
the Adviser is hereby expressly authorized to consider as a secondary factor in
selecting brokers or dealers with which such orders may be placed whether such
firms furnish statistical, research and other information or services to the
Adviser. Receipt by the Adviser of any such statistical or other information and
services should not be deemed to give rise to any requirement for adjustment of
the advisory fee payable pursuant to paragraph 4 hereof. The Adviser may follow
a policy of considering sales of shares of the Fund as a factor in the selection
of broker/dealers to execute portfolio transactions, subject to the requirements
of best execution discussed above.
The Adviser shall for all purposes herein provided be deemed to be an
independent contractor.
2. Allocation of Costs and Expenses. The Adviser shall reimburse the Fund
monthly for any salaries paid by the Fund to officers, Directors, and full-time
employees of the Fund who also are officers, general partners or employees of
the Adviser or its affiliates. Except for such sub-accounting, recordkeeping,
and administrative services which are to be provided by the Adviser to the Fund
under the Administrative Services Agreement between the Fund and the Adviser
dated April 30, 1993, which was approved on April 21, 1993, by the Fund's board
of directors, including all of the independent directors, at the Fund's request
the Adviser shall also furnish to the Fund, at the expense of the Adviser, such
competent executive, statistical, administrative, internal accounting and
clerical services as may be required in the judgment of the Directors of the
Fund. These services will include, among other things, the maintenance (but not
preparation) of the Fund's accounts and records, and the preparation (apart from
legal and accounting costs) of all requisite corporate documents such as tax
returns and reports to the Securities and Exchange Commission and Fund
shareholders. The Adviser also will furnish, at the Adviser's expense, such
office space, equipment and facilities as may be reasonably requested by the
Fund from time to time.
Except to the extent expressly assumed by the Adviser herein and except to the
extent required by law to be paid by the Adviser, the Fund shall pay all costs
and expenses in connection with the operations and organization of the Fund.
Without limiting the generality of the foregoing, such costs and expenses
payable by the Fund include the following:
(a) all brokers' commissions, issue and transfer taxes, and other costs
chargeable to the Fund and any Portfolio in connection with securities
transactions to which the Fund or any Portfolio is a party or in connection
with securities owned by the Fund or any Portfolio;
(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 or for any Portfolio;
(c) the interest on indebtedness, if any, incurred by the Fund or any
Portfolio;
(d) the taxes, including franchise, income, issue, transfer, business
license, and other corporate fees payable by the Fund or any Portfolio 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, including the preparation and printing of prospectuses and
statements of additional information;
(f) the compensation and expenses of its Directors;
(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;
(j) insurance premiums;
(k) the costs of designing, printing, and issuing certificates representing
shares of beneficial interest of the Fund;
(l) extraordinary expenses, including fees and disbursements of Fund
counsel, in connection with litigation by or against the Fund or any
Portfolio;
(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 the Adviser as an insured thereunder);
and
(n) association and institute dues.
3. 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.
4. 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 on a daily basis and paid
as of the last day of each month, using for each daily calculation the most
recently determined net asset value of the Portfolio of the Fund, as determined
by valuations made in accordance with the Fund's procedure for calculating the
Portfolio's net asset value as described in the Fund's Prospectus and/or
Statement of Additional Information. On an annual basis the advisory fee
applicable to the Portfolio shall be computed at the annual rate of 0.75% of the
Portfolio's average net assets.
During any period when the determination of the Portfolio's net asset value is
suspended by the Directors of the Fund, the net asset value of a share of the
Portfolio as of the last business day prior to such suspension shall, for the
purpose of this paragraph 4, be deemed to be the net asset value at the close of
each succeeding business day until it is again determined. However, no such fee
shall be paid to the Adviser with respect to any assets of the Fund or any
Portfolio thereof 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.
If, in any given year, the sum of the Portfolio's expenses exceeds the most
restrictive state imposed annual expense limitation, the Adviser will be
required to reimburse the Portfolio for such excess expenses promptly. Interest,
taxes and extraordinary items such as litigation costs are not deemed expenses
for purposes of this paragraph and shall be borne by the Fund or 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.
5. Avoidance of Inconsistent Positions and Compliance with Laws. In connection
with purchases or sales of securities for the investment portfolio of the Fund
or any Portfolio, neither the Adviser nor its officers or employees will act as
a principal or agent for any party other than the Fund or Portfolio 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.
6. 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
Portfolio of the Fund, 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 Portfolio of the Fund 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 or Portfolio, 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 6,
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 4 earned prior to such termination.
7. 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 or any Portfolio of the Fund. 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 or any Portfolio 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 or any Portfolio and the Adviser's other customers.
8. Liability. The Adviser shall have no liability to the Fund or any Portfolio
or to the Fund's shareholders or creditors, for any error of judgment, mistake
of law, or for any loss arising out of any investment, nor for any other act or
omission, in the performance of its obligations to the Fund or any Portfolio not
involving willful misfeasance, bad faith, gross negligence or reckless disregard
of its obligations and duties hereunder.
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 changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the Fund and the Adviser, and no material amendment of 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 the Portfolio; provided,
however, that this paragraph shall not prevent any immaterial amendment(s) to
this Agreement, which amendment(s) may be made without shareholder approval, if
such amendment(s) are made with the approval of (1) the Directors and (2) a
majority of the Directors of the Fund who are not interested persons of the
Adviser or the Fund.
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 Colorado and the applicable provisions of the 1940 Act. To the
extent that the applicable laws of the State of Colorado, 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, the day
and year first above written.
INVESCO DIVERSIFIED FUNDS, INC.
By: /s/ Xxx X. Xxxxxx
---------------------------
President
ATTEST:
/s/ Xxxx X. Xxxxx
-----------------
Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Senior Vice President
ATTEST:
/s/ Xxxx X. Xxxxx
-----------------
Secretary
