AETNA INCOME SHARES
NSAR Annual Filing
12/31/2001
Sub-Item 77Q1 - Exhibits Y
(e) Investment Advisory Agreement for Aetna Income Shares is
attached herewith.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made by and between AELTUS INVESTMENT MANAGEMENT,
INC., a Connecticut corporation (the "Adviser"), and AETNA INCOME
SHARES, a Massachusetts business trust (the "Fund"), as of the date
set forth above the parties' signatures.
W I T N E S S E T H
WHEREAS, the Fund is registered with the Securities and Exchange
Commission (the "Commission") as an open-end, diversified,
management investment company under the Investment Company Act of
1940 (the "1940 Act"); and
WHEREAS, the Adviser is registered with the Commission as an
investment adviser under the Investment Advisers Act of 1940 (the
"Advisers Act"), and is in the business of acting as an investment
adviser; and
WHEREAS, the Fund and the Adviser desire to enter into an
agreement to provide for investment advisory and management
services for the Fund on the terms and conditions hereinafter
set forth;
NOW THEREFORE, the parties agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADVISER
Subject to the terms and conditions of this Agreement and the
policies and control of the Fund's Board of Trustees (the "Board"),
the Fund hereby appoints the Adviser to serve as the investment
adviser to the Fund, to provide the investment advisory services
set forth below in Section II. The Adviser agrees that, except
as required to carry out its duties under this Agreement or
otherwise expressly authorized, it is acting as an independent
contractor and not as an agent of the Fund and has no authority
to act for or represent the Fund in any way.
II. DUTIES OF THE ADVISER
In carrying out the terms of this Agreement, the Adviser shall
do the following:
1. supervise all aspects of the operations of the Fund;
2. select the securities to be purchased, sold or exchanged
by the Fund or otherwise represented in the Fund's investment
portfolio, place trades for all such securities and regularly
report thereon to the Board;
3. formulate and implement continuing programs for the
purchase and sale of securities and regularly report thereon to
the Board;
4. obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy
generally, the Fund, securities held by or under consideration
for the Fund, or the issuers of those securities;
5. provide economic research and securities analyses as the
Adviser considers necessary or advisable in connection with the
Adviser's performance of its duties hereunder;
6. obtain the services of, contract with, and provide
instructions to custodians and/or subcustodians of the Fund's
securities, transfer agents, dividend paying agents, pricing
services and other service providers as are necessary to carry
out the terms of this Agreement; and
7. take any other actions which appear to the Adviser and
the Board necessary to carry into effect the purposes of this
Agreement.
III. REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties of the Adviser
The Adviser hereby represents and warrants to the Fund as
follows:
1. Due Incorporation and Organization. The Adviser is
duly organized and is in good standing under the laws of the
State of Connecticut and is fully authorized to enter into
this Agreement and carry out its duties and obligations hereunder.
2. Registration. The Adviser is registered as an investment
dviser with the Commission under the Advisers Act. The Adviser
shall maintain such registration in effect at all times during
the term of this Agreement.
3. Best Efforts. The Adviser at all times shall provide its
best judgment and effort to the Fund in carrying out its
obligations hereunder.
B. Representations and Warranties of the Fund
The Fund hereby represents and warrants to the Adviser as follows:
1. Due Establishment and Organization. The Fund has been
duly established under the laws of the Commonwealth of
Massachusetts and it is authorized to enter into this Agreement
and carry out its obligations hereunder.
2. Registration. The Fund is registered as an investment
company with the Commission under the 1940 Act and shares of the
Fund are registered or qualified for offer and sale to the public
under the Securities Act of 1933 and all applicable state
securities laws. Such registrations or qualifications will be kept
in effect during the term of this Agreement.
IV. DELEGATION OF RESPONSIBILITIES
Subject to the approval of the Board and the shareholders of the
Fund, the Adviser may enter into a Subadvisory Agreement to engage
a subadviser to the Adviser with respect to the Fund.
V. BROKER-DEALER RELATIONSHIPS
A. Portfolio Trades
The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Fund with brokers or dealers selected
by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek
to execute portfolio transactions at prices that are advantageous
to the Fund and at commission rates that are reasonable in relation
to the benefits received.
B. Selection of Broker-Dealers
In selecting broker-dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage or research services (as those terms are defined in
Section 28(e) of the Securities Exchange Act of 1934) to the Adviser
and/or the other accounts over which the Adviser or its affiliates
exercise investment discretion. The Adviser is authorized to pay a
broker or dealer who provides such brokerage or research services a
commission for executing a portfolio transaction for the Fund that
is in excess of the amount of commission another broker or dealer
would have charged for effecting that transaction if the Adviser
determines in good faith that such amount of commission is reasonable
in relation to the value of the brokerage or research services
provided by such broker or dealer and is paid in compliance with
Section 28(e). This determination may be viewed in terms of either
that particular transaction or the overall responsibilities that
the Adviser and its affiliates have with respect to accounts over
which they exercise investment discretion. The Adviser may consider
the sale of shares of the Fund and of other investment companies
advised by the Adviser as a factor in the selection of brokers or
dealers to effect transactions for the Fund, subject to the
Adviser's duty to seek best execution. The Adviser may also select
brokers or dealers to effect transactions for the Fund that provide
payment for expenses of the Fund. The Board shall periodically
review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable
in relation to the benefits received.
VI. CONTROL BY THE BOARD
Any investment program undertaken by the Adviser pursuant to this
Agreement, as well as any other activities undertaken by the Adviser
on behalf of the Fund pursuant thereto, shall at all times be subject
to any directives of the Board.
VII. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Adviser
shall at all times conform to:
1. all applicable provisions of the 1940 Act;
2. the provisions of the current Registration Statement of the
Fund;
3. the provisions of the Fund's Declaration of Trust, as
amended;
4. the provisions of the Bylaws of the Fund, as amended; and
5. any other applicable provisions of state and federal law.
VIII. COMPENSATION
For the services to be rendered, the facilities furnished and the
expenses assumed by the Adviser, the Fund shall pay to the Adviser
an annual fee, payable monthly, equal to 0.40% of the average daily
net assets of the Fund. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued
daily at the rate of 1/365 (1/366 in the event of a leap year) of
0.40% of the daily net assets of the Fund. If this Agreement
becomes effective subsequent to the first day of a month or
terminates 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 fees set forth
above. Subject to the provisions of Section X hereof, payment of
the Adviser's compensation for the preceding month shall be made
as promptly as possible.
IX. EXPENSES
The expenses in connection with the management of the Fund shall
be allocated between the Fund and the Adviser as follows:
A. Expenses of the Adviser
The Adviser shall pay:
1. the salaries, employment benefits and other related costs
and expenses of those of its personnel engaged in providing
investment advice to the Fund, including without limitation,
office space, office equipment, telephone and postage costs; and
2. all fees and expenses of all directors, officers and
employees, if any, of the Fund who are employees of the Adviser,
including any salaries and employment benefits payable to those
persons.
B. Expenses of the Fund
The Fund shall pay:
1. investment advisory fees pursuant to this Agreement;
2. brokers' commissions, issue and transfer taxes or other
transaction fees payable in connection with any transactions in
the securities in the Fund's investment portfolio or other
investment transactions incurred in managing the Fund's assets,
including portions of commissions that may be paid to reflect
brokerage research services provided to the Adviser;
3. fees and expenses of the Fund's independent accountants
and legal counsel and the independent trustees' legal counsel;
4. fees and expenses of any administrator, transfer agent,
custodian, dividend, accounting, pricing or disbursing agent of
the Fund;
5. interest and taxes;
6. fees and expenses of any membership in the Investment
Company Institute or any similar organization in which the
Board deems it advisable for the Fund to maintain membership;
7. insurance premiums on property or personnel (including
officers and directors) of the Fund;
8. all fees and expenses of the Fund's trustees, who are not
"interested persons" (as defined in the 1940 Act) of the Fund
or the Adviser;
9. expenses of preparing, printing and distributing proxies,
proxy statements, prospectuses and reports to shareholders of
the Fund, except for those expenses paid by third parties in
connection with the distribution of Fund shares and all costs
and expenses of shareholders' meetings;
10. all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares of
the Fund or in cash;
11. costs and expenses (other than those detailed in paragraph
9 above) of promoting the sale of shares in the Fund, including
preparing prospectuses and reports to shareholders of the Fund,
provided, nothing in this Agreement shall prevent the charging
of such costs to third parties involved in the distribution and
sale of Fund shares;
12. fees payable by the Fund to the Commission or to any
state securities regulator or other regulatory authority for
the registration of shares of the Fund in any state or territory
of the United States or of the District of Columbia;
13. all costs attributable to investor services, administering
shareholder accounts and handling shareholder relations,
(including, without limitation, telephone and personnel expenses),
which costs may also be charged to third parties by the Adviser;
and
14. any other ordinary, routine expenses incurred in the
management of the Fund's assets, and any nonrecurring or
extraordinary expenses, including organizational expenses,
litigation affecting the Fund and any indemnification by the
Fund of its officers, trustees or agents.
X. ADDITIONAL SERVICES
Upon the request of the Board, the Adviser may perform certain
accounting, shareholder servicing or other administrative
services on behalf of the Fund that are not required by this
Agreement. Such services will be performed on behalf of the
Fund and the Adviser may receive from the Fund such reimbursement
for costs or reasonable compensation for such services as may be
agreed upon between the Adviser and the Board on a finding by
the Board that the provision of such services by the Adviser is
in the best interests of the Fund and its shareholders. Payment
or assumption by the Adviser of any Fund expense that the Adviser
is not otherwise required to pay or assume under this Agreement
shall not relieve the Adviser of any of its obligations to the
Fund nor obligate the Adviser to pay or assume any similar Fund
expense on any subsequent occasions.
XI. NONEXCLUSIVITY
The services of the Adviser to the Fund are not to be deemed to
be exclusive, and the Adviser 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 and directors of the Adviser
may serve as officers or trustees of the Fund, and that officers
or trustees of the Fund may serve as officers or directors of the
Adviser to the extent permitted by law; and that the officers and
directors of the Adviser are not prohibited from engaging in any
other business activity or from rendering services to any other
person, or from serving as partners, officers, directors or
trustees of any other firm or trust, including other investment
companies.
XII. TERM
This Agreement shall become effective on December 12, 2001, and
shall remain in force and effect through December 31, 2002,
unless earlier terminated under the provisions of Article XIV.
XIII. RENEWAL
Following the expiration of its initial term, the Agreement shall
continue in force and effect from year to year, provided that such
continuance is specifically approved at least annually:
1. a. by the Board, or
b. by the vote of a majority of the Fund's outstanding
voting securities (as defined in Section 2(a)(42) of the 1940
Act), and
2. by the affirmative vote of a majority of the directors
who are not parties to this Agreement or interested persons of
a party to this Agreement (other than as a trustee of the Fund),
by votes cast in person at a meeting specifically called for such
purpose.
XIV. TERMINATION
This Agreement may be terminated at any time, without the payment
of any penalty, by vote of the Board or by vote of a majority of
the Fund's outstanding voting securities (as defined in
Section 2(a)(42) of the 1940 Act), or by the Adviser, on sixty (60)
days' written notice to the other party. The notice provided for
herein may be waived by the party required to be notified. This
Agreement shall automatically terminate in the event of its
"assignment" (as defined in Section 2(a)(4) of the 1940 Act).
XV. LIABILITY
The Adviser shall be liable to the Fund and shall indemnify the
Fund for any losses incurred by the Fund, whether in the purchase,
holding or sale of any security or otherwise, to the extent that
such losses resulted from an act or omission on the part of the
Adviser or its officers, directors or employees, that is found to
involve willful misfeasance, bad faith or negligence, or reckless
disregard by the Adviser of its duties under this Agreement, in
connection with the services rendered by the Adviser hereunder.
XVI. LIMITATION OF LIABILITY FOR CLAIMS
The Fund's Declaration of Trust ("Declaration"), a copy of which,
together with all amendments thereto, is on file in the Office of
the Secretary of the Commonwealth of Massachusetts, provides that
the name of "Aetna Income Shares" refers to the trustees under the
Declaration collectively as trustees and not as individuals or
personally, and that no shareholder of the Fund, or trustee,
officer, employee or agent of the Fund, shall be subject to claims
against or obligations of the Fund to any extent whatsoever, but
that the trust estate only shall be liable.
The Adviser is hereby expressly put on notice of the limitation of
liability as set forth in the Declaration and agrees that the
obligations assumed by the Fund pursuant to this Agreement shall be
limited in all cases to the Fund and its assets, and the Adviser
shall not seek satisfaction of any such obligation from the
shareholders or any shareholder of the Fund, or from any trustee,
officer, employee or agent of the Fund.
XVII. NOTICES
Any notices under this Agreement shall be in writing, addressed
and delivered, mailed postage paid, or sent by other delivery
service, or by facsimile transmission to each party at such address
as each party may designate for the receipt of notice. Until
further notice, such addresses shall be:
if to the Fund:
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Fax number 860/000-0000
Attention: President
if to the Adviser:
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Fax number 860/000-0000
Attention: President or Chief Compliance Officer
XVIII. QUESTIONS OF INTERPRETATION
This Agreement shall be governed by the laws of the State of
Connecticut. 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 or orders of the Commission issued pursuant to the 1940 Act,
or contained in no-action and interpretive positions taken by the
Commission staff. In addition, where the effect of a requirement
of the 1940 Act reflected in the provisions of this Agreement is
revised by rule or order of the Commission, such provisions shall
be deemed to incorporate the effect of such rule or order.
XIX. SERVICE MARK
The service mark of the Fund and the name "Aetna" have been
adopted by the Fund with the permission of Aetna Services, Inc.
(formerly known as Aetna Life and Casualty Company) and their
continued use is subject to the right of Aetna Services, Inc.
to withdraw this permission in the event the Adviser or another
affiliated corporation of Aetna Services, Inc. should not be the
investment adviser of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in duplicate by their respective officers on the
12th day of December, 2001.
Aeltus Investment Management, Inc.
Attest:
By:
/s/ Xxxxxxx Xxxxxxx
By:
/s/ Xxxx Xxxxxx
Name: Xxxxxxx Xxxxxxx Name: Xxxx Xxxxxx
Title: Secretary Title: Executive Vice President
Aetna Income Shares
Attest:
By:
/s/ Xxxxx Xxxxxxx
By:
/s/ X. Xxxxx Xxx
Name: Xxxxx Xxxxxxx Name: X. Xxxxx Xxx
Title: Assistant Secretary Title: President
