Exhibit (g)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made as of the ____ day of _______, 2005, by and between
DIVERSIFIED INCOME STRATEGIES PORTFOLIO, INC., a Maryland corporation (the
"Fund"), and FUND ASSET MANAGEMENT, L.P., a Delaware limited partnership (the
"Investment Adviser").
W I T N E S S E T H:
WHEREAS, the Fund is engaged in business as a closed-end, diversified,
management investment company registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"); and
WHEREAS, the Investment Adviser is engaged principally in rendering
management and investment advisory services and is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Fund desires to retain the Investment Adviser to provide
management and investment advisory services to the Fund in the manner and on the
terms hereinafter set forth; and
WHEREAS, the Investment Adviser is willing to provide management and
investment advisory services to the Fund on the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the promises and the covenants
hereinafter contained, the Fund and the Investment Adviser hereby agree as
follows:
ARTICLE I.
Duties of the Investment Adviser
The Fund hereby employs the Investment Adviser to act as a manager and
investment adviser of the Fund and to furnish, or arrange for its affiliates to
furnish, the management and investment advisory services described below,
subject to the policies of, review by and overall control of the Board of
Directors of the Fund, for the period and on the terms and conditions set forth
in this Agreement. The Investment Adviser hereby accepts such employment and
agrees during such period, at its own expense, to render, or arrange for the
rendering of, such services and to assume the obligations herein set forth for
the compensation provided for herein. The Investment Adviser and its affiliates
for all purposes herein shall be deemed to be independent contractors and,
unless otherwise expressly provided or authorized, shall have no authority to
act for or represent the Fund in any way or otherwise be deemed agents of the
Fund.
(a) Management and Administrative Services. The Investment Adviser shall
perform, or arrange for its affiliates to perform, the management and
administrative services necessary for the operation of the Fund, including
administering shareholder accounts and handling shareholder relations. The
Investment Adviser shall provide the Fund with office space, facilities,
equipment and necessary personnel and such other services as the Investment
Adviser, subject to review by the Board of Directors, from time to time shall
determine to be necessary or useful to perform its obligations under this
Agreement. The Investment Adviser, also on behalf of the Fund, shall conduct
relations with custodians, depositories, transfer agents, pricing agents,
dividend disbursing agents, other shareholder servicing agents, accountants,
attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers,
banks and such other persons in any such other capacity deemed to be necessary
or desirable. The Investment Adviser generally shall monitor the Fund's
compliance with investment policies and restrictions as set forth in filings
made by the Fund under the federal securities laws. The Investment Adviser shall
make reports to the Board of Directors of its performance of obligations
hereunder and furnish advice and recommendations with respect to such other
aspects of the business and affairs of the Fund as it shall determine to be
desirable.
(b) Investment Advisory Services. The Investment Adviser shall provide, or
arrange for its affiliates to provide, the Fund with such investment research,
advice and supervision as the latter from time to time may consider necessary
for the proper supervision of the assets of the Fund, shall furnish continuously
an investment program for the Fund and shall determine from time to time which
securities shall be purchased, sold or exchanged and what portion of the assets
of the Fund shall be held in the various securities in which the Fund invests,
options, futures, options on futures or cash, subject always to the restrictions
of the Articles of Incorporation and the By-Laws of the Fund, as amended from
time to time, the provisions of the Investment Company Act and the statements
relating to the Fund's investment objective, investment policies and investment
restrictions as the same are set forth in filings made by the Fund under the
federal securities laws. The Investment Adviser shall make decisions for the
Fund 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 Board of Directors at any time, however, make any
definite determination as to investment policy and notify the Investment Adviser
thereof in writing, the Investment 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 Investment 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 Investment 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 with respect to assets of the Fund, the Investment
Adviser is directed at all times to seek to obtain execution and prices within
the policy guidelines determined by the Board of Directors and set forth in
filings made by the Fund under the federal securities laws. Subject to this
requirement and the provisions of the Investment Company Act, the Securities
Exchange Act of 1934, as amended, and other applicable provisions of law, the
Investment Adviser may select brokers or dealers with which it or the Fund is
affiliated.
(c) Affiliated Sub-Advisers. In carrying out its responsibilities
hereunder, the Investment Adviser may employ, retain or otherwise avail itself
of the services of other persons or entities including without limitation,
affiliates of the Investment Adviser, on such terms as the Investment Adviser
shall determine to be necessary, desirable or appropriate. However, if the
Investment Adviser chooses to retain or avail itself of the services of another
person or entity to
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manage assets of the Fund, such other person or entity must be (i) an affiliate
of the Investment Adviser, (ii) retained at the Investment Adviser's own cost
and expense, and (iii) retained subject to the requirements of Section 15 of the
Investment Company Act. Retention of one or more affiliated sub-advisers, or the
employment or retention of other persons or entities to perform services, shall
in no way reduce the responsibilities or obligations of the Investment Adviser
under this Agreement and the Investment Adviser shall be responsible for all
acts and omissions of such affiliated sub-advisers, or other persons or
entities, in connection with the performance of the Investment Advisers' duties
hereunder.
(d) Notice Upon Change in Partners of the Investment Adviser. The
Investment Adviser is a limited partnership and its limited partner is Xxxxxxx
Xxxxx & Co., Inc. and its general partner is Princeton Services, Inc. The
Investment Adviser will notify the Fund of any change in the membership of the
partnership within a reasonable time after such change.
ARTICLE II.
Allocation of Charges and Expenses
(a) The Investment Adviser. The Investment Adviser shall provide the staff
and personnel necessary to perform its obligations under this Agreement, shall
assume and pay or cause to be paid all expenses incurred in connection with the
maintenance of such staff and personnel, and, at its own expense, shall provide
the office space, facilities, equipment and necessary personnel which it is
obligated to provide under Article I hereof. The Investment Adviser shall pay,
or cause affiliates to pay, compensation of all officers of the Fund and all
Directors of the Fund who are affiliated persons of the Investment Adviser or
any sub-adviser, or an affiliate of the Investment Adviser or any sub-adviser.
(b) The Fund. The Fund assumes, and shall pay or cause to be paid, all
other expenses of the Fund including, without limitation: taxes, expenses for
legal and auditing services, costs of preparing, printing and mailing proxies,
listing fees, stock certificates, shareholder reports and prospectuses, charges
of the custodian, any sub-custodian and transfer agent, dividend disbursing
agent and registrar, charges of any auction agent and broker dealers in
connection with preferred stock of the Fund, expenses of portfolio transactions,
Securities and Exchange Commission fees, expenses of registering the shares of
common stock and preferred stock under federal, state and foreign laws, fees and
actual out-of-pocket expenses of Directors who are not affiliated persons of the
Investment Adviser or any sub-adviser, or of an affiliate of the Investment
Adviser or any sub-adviser, accounting and pricing costs (including the daily
calculation of the net asset value), insurance, interest, brokerage costs,
litigation and other extraordinary or non-recurring expenses, mailing, and other
expenses properly payable by the Fund. It also is understood that if the
Investment Adviser or any of its affiliates provide accounting services to the
Fund, the Fund will reimburse the Investment Adviser and its affiliates for
their costs in providing such accounting services to the Fund.
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ARTICLE III.
Compensation of the Investment Adviser
For the services rendered, the facilities furnished and the expenses
assumed by the Investment Adviser, the Fund shall pay to the Investment Adviser
at the end of each calendar month a fee based upon the average daily value of
the net assets of the Fund at the annual rate of .75 of 1.0% ( .75%) of an
aggregate of (i) the Fund's average daily net assets and (ii) the proceeds of
any outstanding borrowings used for leverage ("average daily net assets" means
the average daily value of the total assets of the Fund, including the amount
obtained from leverage and any proceeds from the issuance of preferred stock,
minus the sum of (i) accrued liabilities of the Fund, (ii) any accrued and
unpaid interest on outstanding borrowing and (iii) accumulated dividends on
shares of outstanding preferred stock), commencing on the day following
effectiveness hereof. For purposes of this calculation, average daily net assets
is determined at the end of each month on the basis of the average net assets of
the Fund for each day during the month. It is understood that the liquidation
preference of any outstanding preferred stock (other than accumulated dividends)
is not considered a liability in determining the Fund's average daily net
assets. If this Agreement becomes effective subsequent to the first day of a
month or shall terminate before the last 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 fee as set forth above. Payment of the
Investment Adviser's compensation for the preceding month shall be made as
promptly as possible after completion of the computations contemplated herein.
During any period when the determination of net asset value is suspended by the
Board of Directors, the average net asset value of a share for the day prior to
such suspension shall for this purpose be deemed to be the net asset value of
each succeeding day until it is again determined.
ARTICLE IV.
Limitation of Liability of the Investment Adviser
The Investment 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 management of the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties hereunder. As used in this
Article IV, the term "Investment Adviser" shall include any affiliates of the
Investment Adviser performing services for the Fund contemplated hereby and
partners, directors, officers and employees of the Investment Adviser and of
such affiliates.
ARTICLE V.
Activities of the Investment Adviser
The services of the Investment Adviser to the Fund are not to be deemed to
be exclusive; the Investment Adviser and any person controlled by or under
common control with the Investment Adviser (for purposes of this Article V
referred to as "affiliates") are free to render services to others. It is
understood that Directors, officers, employees and shareholders of the Fund are
or may become interested in the Investment Adviser and its affiliates, as
directors,
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officers, employees, partners and shareholders or otherwise, and that directors,
officers, employees, partners and shareholders of the Investment Adviser and of
its affiliates are or may become similarly interested in the Fund, and that the
Investment Adviser and directors, officers, employees, partners and shareholders
of its affiliates may become interested in the Fund as shareholders or
otherwise.
ARTICLE VI.
Duration and Termination of this Agreement
This Agreement shall become effective as of the date first above written
and shall remain in force for a period of two years thereafter and thereafter
continue from year to year, but only so long as such continuance specifically is
approved at least annually by (i) the Board of Directors of the Fund, or by the
vote of a majority of the outstanding voting securities of the Fund, and (ii) a
majority of those 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 approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Directors or by vote of a majority of the outstanding
voting securities of the Fund, or by the Investment Adviser, on sixty (60) days'
written notice to the other party. This Agreement shall terminate automatically
in the event of its assignment.
ARTICLE VII.
Amendment of this Agreementr
This Agreement may be amended by the parties only if such amendment is
specifically approved by the vote of the Board of Directors of the Fund,
including a majority of those 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 approval and, where required by the Investment Company
Act, by the vote of a majority of the outstanding voting securities of the Fund.
ARTICLE VIII.
Definitions of Certain Terms
The terms "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 in the Investment
Company Act and the rules and regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act.
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ARTICLE IX.
Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York and the applicable provisions of the Investment
Company Act. To the extent that the applicable laws of the State of New York, or
any of the provisions herein, conflict with the applicable provisions of the
Investment Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
DIVERSIFIED INCOME STRATEGIES PORTFOLIO, INC.
By:
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Name: Xxxxxx X. Xxxxx
Title: Vice President
FUND ASSET MANAGEMENT, L.P.
By: PRINCETON SERVICES, INC.,
General Partner
By:
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Name: Xxxxxx X. Xxxxx
Title: First Vice President
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