FORM OF
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made by and between AETNA LIFE INSURANCE AND ANNUITY COMPANY,
a Connecticut corporation (the "Adviser") and PORTFOLIO PARTNERS, INC., a
Maryland corporation (the "Company"), on behalf of each of its Series as listed
on the attached Schedule A (the "Series"), as of the date set forth below the
parties' signatures.
W I T N E S S E T H
WHEREAS, the Company 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 Company has established the Series; 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 Company, on behalf of the Series, and the Adviser desire to enter
into an agreement to provide for investment advisory and management services for
the Company 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 Company's Board of Directors (the "Board"), the Company, on
behalf of the Series, hereby appoints the Adviser to serve as its investment
adviser, 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 Company and has no authority to act for or
represent the Company 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 Company;
2. select the securities to be purchased, sold or exchanged by the Series
or otherwise represented in the Series' 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
Series, securities held by or under consideration for the Series, 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 Series' securities, transfer
agents, dividend paying agents, pricing services and other service
providers as are necessary to carry out the terms of this Agreement;
7. prepare financial and performance reports, calculate and report daily
net asset values, and prepare any other financial data or reports, as
the Adviser from time to time, deems necessary or as are requested by
the Board; and
8. 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
Adviser hereby represents and warrants to the Company 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 adviser
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 Series in carrying out its obligations
hereunder.
B. Representations and Warranties of the Company
The Company, on behalf of the Series, hereby represents and warrants to the
Adviser as follows:
1. DUE INCORPORATION AND ORGANIZATION. The Company has been duly
incorporated under the laws of the State of Maryland and it is
authorized to enter into this Agreement and carry out its
obligations hereunder.
2. REGISTRATION. The Company is registered as an investment company
with the Commission under the 1940 Act and shares of the Series
are registered or qualified for offer and sale to the public
under the Securities Act of 1933 (the "1933 Act") 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
A. Appointment of Subadviser(s)
Subject to the approval of the Board, the Adviser may enter into a
Subadvisory Agreement to engage one or more Subadvisers (the "Sub-adviser")
to the Adviser with respect to each Series.
B. Duties of Subadviser
Under a Subadvisory Agreement, the Subadviser may be delegated some or all
of the following duties of the Adviser:
1. determine which securities from which issuers shall be purchased,
sold or exchanged by the Series or otherwise represented in the
Series' investment portfolio, place trades for all such
securities, select brokers or dealers for the execution thereof,
and regularly report thereon to the Board;
2. formulate and implement continuing programs for the purchase and
sale of the securities of such issuers and regularly report
thereon to the Board;
3. obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy
generally, the Series, securities held by or under consideration
for the Series, or the issuers of those securities;
4. provide economic research and securities analyses as the Adviser
considers necessary or advisable in connection with the Adviser's
performance of its duties hereunder;
5. give instructions to the custodian and/or sub-custodian of the
Series appointed by the Board, as to deliveries of securities,
transfers of currencies and payments of cash for the Series as
required to carry out the investment activities of the Series, in
relation to the matters contemplated by this Agreement; and
6. provide such financial support, administrative services and other
duties as the Adviser deems necessary and appropriate.
C. Duties of the Adviser
In the event the Adviser delegates certain responsibilities hereunder to
one or more Subadvisers, the Adviser shall, among other things:
1. monitor the investment program maintained by the Subadvisers for
the Series and the Subadvisers' compliance program to ensure that
the Series' assets are invested in compliance with the
Subadvisory Agreement and the Series' investment objectives and
policies as adopted by the Board and described in the most
current effective amendment of the registration statement, as
filed with the Commission under the 1933 Act and the 1940 Act
("Registration Statement");
2. allocate series' assets among such Subadvisers;
3. review all data and financial reports prepared by the Subadviser
to assure that they are in compliance with applicable
requirements and meet the provisions of applicable laws and
regulations;
4. establish and maintain regular communications with the
Subadvisers to share information it obtains with the Subadvisers
concerning the effect of developments and data on the investment
program maintained by the Subadvisers; and
5. oversee all matters relating to the offer and sale of the Series'
shares, the Company's corporate governance, reports to the Board,
contracts with all third parties on behalf of the Company for
services to the Series, reports to regulatory authorities and
compliance with all applicable rules and regulations affecting
the Company's operations.
V. BROKER-DEALER RELATIONSHIPS
A. Portfolio Trades
The Adviser, at its own expense, shall place all orders for the purchase
and sale of portfolio securities 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 Series 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
may also select brokers or dealers to effect transactions for the Series
who provide payment for expenses of the Series. The Adviser is authorized
to pay a broker or dealer who provides such brokerage and research services
or expenses, and that have provided assistance in the distribution of
shares of the Series to the extent permitted by law, a commission for
executing a portfolio transaction for the Series 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 and research services provided by such broker or dealer and is
paid in compliance with Section 28(e) or other rules and regulations of the
Commission. 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 Board shall periodically review the commissions
paid by the Series to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits received.
Any delegation to a Subadviser (as authorized in Section IV above) of the
selection of broker-dealers to execute portfolio transactions will include
instructions consistent with the parameters outlined in this Section.
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 Series
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 Company;
3. the provisions of the Fund's Articles of Incorporation, as amended;
4. the provisions of the Bylaws of the Fund, as amended; and
5. any other applicable provisions of state or federal law.
VIII. COMPENSATION
For the services to be rendered, the facilities furnished and the expenses
assumed by the Adviser, the Company, on behalf of the Series, shall pay to the
Adviser an annual fee, payable monthly, based upon the average daily net assets
of the Series as shown on the attached Schedule B.
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily at the rate of 1/365 of the annual advisory fee
applied to the daily net assets of the Series. 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. For so long as a Subadvisory Agreement is in effect, the Company
acknowledges on behalf of the Series that the Adviser will pay to each
Subadviser, as compensation for acting as a Subadviser to the Series, the fees
specified in the particular Subadvisory Agreement.
IX. EXPENSES
The expenses in connection with the management of the Company shall be allocated
between the Series 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 Series, including without limitation,
office space, office equipment, telephone and postage costs;
2. all fees and expenses of all directors, officers and employees,
if any, of the Company who are employees of the Adviser or an
affiliated entity, including any salaries and employment benefits
payable to those persons;
B. Expenses of the Series
The Series 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 Series' investment portfolio or other
investment transactions incurred in managing the Series' assets,
including portions of commissions that may be paid to reflect
brokerage research services provided to the Adviser;
3. fees and expenses of the Company's independent accountants and
legal counsel and the independent Directors' legal counsel;
4. fees and expenses of any administrator, transfer agent,
custodian, dividend, accounting, pricing or disbursing agent of
the Series;
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 Company to maintain membership;
7. insurance premiums on property or personnel (including officers
and directors) of the Company which benefit the Series;
8. all fees and expenses of the Company's directors, who are not
"interested persons" (as defined in the 0000 Xxx) of the Company
or the Adviser;
9. expenses of preparing, printing and distributing proxies, proxy
statements, prospectuses and reports to shareholders of the
Series, except for those expenses paid by third parties in
connection with the distribution of Series 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
Series or in cash;
11. costs and expenses (other than those detailed in paragraph 9
above) of promoting the sale of shares issued by the Series,
provided that nothing in this Agreement shall prevent the
charging of such costs to third parties involved in the
distribution of shares issued by the Series;
12. fees payable by the Series to the Commission or to any state
securities regulator or other regulatory authority for the
registration of shares of the Series 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 Series' assets, and any nonrecurring or extraordinary
expenses, including organizational expenses, litigation affecting
the Series and any indemnification by the Company of its
officers, directors or agents.
X. NONEXCLUSIVITY
The services of the Adviser to the Company 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 directors of the Company, and that officers or directors of the
Company 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.
XI. TERM
This Agreement shall become effective at the close of business on December 14,
2000, and shall remain in force and effect through December 31, 2001, unless
earlier terminated under the provisions of Article XIII.
XII. 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 Series' 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 director of the Company), by votes cast in
person at a meeting specifically called for such purpose.
XIII. 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 Series'
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 that term is defined in Section 2(a)(4) of the 1940 Act.
XIV. LIABILITY
The Adviser shall be liable to the Company and shall indemnify the Company for
any losses incurred by the Company, 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.
XV. 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 COMPANY, THE SERIES OR THE ADVISER:
Xxxxxx Xxxxxxxxxxx
000 Xxxxxxxxxx Xxxxxx, XX00
Xxxxxxxx, Xxxxxxxxxxx 00000
XVI. 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, releases or orders of
the Commission issued pursuant to the 1940 Act. In addition, where the effect of
a requirement of the 1940 Act reflected in the provisions of this Agreement is
revised
by rule, release or order of the Commission, such provisions shall be deemed to
incorporate the effect of such rule, release or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on __________________________________,
2001.
Aetna Life Insurance and Annuity Company
By: ______________________________
Attest: Name:______________________________
--------------------------
Title:_______________________________
Portfolio Partners, Inc. on behalf
of each of its series as listed
on the attached Schedule A
By: ______________________________
Attest: Name:______________________________
--------------------------
Title:_______________________________
Schedule A
Series of Portfolio Partners, Inc.
SERIES
o PPI MFS Capital Opportunities Portfolio
o PPI MFS Emerging Equities Portfolio
o PPI MFS Research Growth Portfolio
o PPI Xxxxxxx International Growth Portfolio
o PPI X. Xxxx Price Growth Equity Portfolio
o PPI Xxxxx Growth Portfolio
o PPI Xxxxx Aggressive Growth Portfolio
o PPI Xxxxxxx Tactical Allocation Portfolio
o PPI DSI Enhanced Index Portfolio
o PPI Xxxxxxx Xxxxx Capital Growth Portfolio
o PPI OpCap Balanced Value Portfolio
o PPI Salomon Bros. Investors Value Portfolio
o PPI Salomon Bros. Capital Portfolio
Schedule B
Advisory Fees
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Series Fees
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o PPI Capital Opportunities Portfolio 0.65% of average daily net assets
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o PPI MFS Emerging Equities Portfolio 0.70% of the first $500 million of average
daily net assets;
0.65% on assets over $500 million
----------------------------------------------------------------------------------------------
o PPI MFS Research Growth Portfolio 0.70% on the first $500 million of average
daily net assets;
0.65% on assets over $500 million
----------------------------------------------------------------------------------------------
o PPI Xxxxxxx
International
Growth Portfolio
0.70% on the first
$500 million of
average daily net
assets; 0.65% on
assets over $500
million
----------------------------------------------------------------------------------------------
o PPI X. Xxxx Price Growth Equity Portfolio| 0.60% of average daily net assets
----------------------------------------------------------------------------------------------
o PPI Xxxxx Growth Portfolio .40% on the first $150 million
o PPI Xxxxx Aggressive Growth Portfolio .35% on the next $350 million
(assets of both Portfolios will be .30% on the next $500 million
combined) .25% over $1 billion
----------------------------------------------------------------------------------------------
o PPI Xxxxxxx Tactical Allocation Portfolio .50% on the first $100 million
.48% on the next $150 million
.43% on the next $250 million
.38% over $500 milliion
----------------------------------------------------------------------------------------------
o PPI DSI Enhanced Index Portfolio .30% on the first $100 million
.25% on the next $150 million
.20% over $250 million
----------------------------------------------------------------------------------------------
o PPI Xxxxxxx Xxxxx Capital Growth Portfolio .45% on the first $150 million
.40% on the next $200 million
.35% over $350 million
----------------------------------------------------------------------------------------------
o PPI OpCap Balanced Value Portfolio .40% on the first $100 million
.30% thereafter
----------------------------------------------------------------------------------------------
o PPI Salomon Bros. Investors Value Portfolio .43% on the first $100 million
.40% on the next $100 million
.35% on the next $300 million
.32% on the next $250 million
.30% on the next $250 million
.25% over $1 billion
----------------------------------------------------------------------------------------------
o PPI Salomon Bros. Capital Portfolio .50% on the first $100 million
.45% on the next $100 million
.40% on the next $200 million
.35% over $400 million
----------------------------------------------------------------------------------------------
During the past three fiscal years, Aetna paid the Sub-advisers the following
fees on behalf of their respective Portfolios.
