FORM OF
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made by and between AETNA LIFE INSURANCE AND ANNUITY
COMPANY, a Connecticut corporation (the "Adviser") and AETNA SERIES FUNDS,
INC., a Maryland corporation (the "Fund"), on behalf of its series, AETNA
INDEX PLUS FUND (the "Series"), as of the date set forth below 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, as amended (the "1940 Act"); and
WHEREAS, the Fund has established the Series; and
WHEREAS, the Adviser is registered with the Commission as an investment
adviser under the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and is in the business of acting as an investment adviser; and
WHEREAS, the Fund, on behalf of the Series, and the Adviser desire to enter
into an agreement to provide for investment advisory and management services
for the Series 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 Directors (the "Board"), the Fund, on behalf
of the Series, hereby appoints the Adviser to serve as the investment adviser
to the Series, 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 Series and has no
authority to act for or represent the Series 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 Series;
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 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 adviser with
the Securities and Exchange Commission ("the Commission") under the Advisers
Act, and is registered or licensed as an investment adviser under the laws
of all jurisdictions in which its activities require it to be so registered
or licensed. The Adviser shall maintain such registration or license 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 Series and the Fund,
The Fund, on behalf of the Series, hereby represents and warrants to the
Adviser as follows:
1. Due Incorporation and Organization. The Fund 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 Fund 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,
as amended (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
Subject to the approval of the Board and the shareholders of the Series, the
Adviser may enter into a Subadvisory Agreement to engage a subadviser (the
"Subadviser") to the Adviser with respect to the 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 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 a
Subadviser, the Adviser shall, among other things:
1. monitor the investment program maintained by the Subadviser for the
Series and the Subadviser's 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 for the Series, as filed with the Commission under the Securities
Act of 1933, as amended, and the 1940 Act ("Registration Statement");
2. 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;
3. establish and maintain regular communications with the Subadviser to
share information it obtains with the Subadviser concerning the effect of
developments and data on the investment program maintained by the
Subadviser; and
4. oversee all matters relating to the offer and sale of the Series'
shares, the Fund's corporate governance, reports to the Board, contracts
with all third parties on behalf of the Series for services to the Series,
reports to regulatory authorities and compliance with all applicable rules
and regulations affecting the Series' operations.
V. BROKER-DEALER RELATIONSHIPS
A. Series Trades
The Adviser, at its own expense, shall place all orders for the purchase and
sale of portfolio securities for the Series 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 and research
services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to the Series 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 sch brokerage and research services or
expenses, a commission for executing a protfolio 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 cimmissions 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
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 registration statement of the Fund, as the same may be
amended from time to time, under the 1933 Act and the 1940 Act;
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 and federal law.
VIII. COMPENSATION
For the services to be rendered, the facilities furnished and the expenses
assumed by the Adviser, the Fund, on behalf of the Series, shall pay to the
Adviser an annual fee, payable monthly, based upon the following average
daily net assets of the Series:
Rate
Assets
0.45% On first $250 MM
0.45% On next $250 MM
0.425% On next $250 MM
0.40% On next $250 MM
0.40% On next $1 B
0.375% Over $2 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 ling as a Subadvisory Agreement is in effect, the
Series acknowledges on behalf of the Series that the Adviser will pay to the
Subadviser, as compensation for acting as Subadviser to the Series, the fees
specified in the Subadvisory Agreement.
IX. EXPENSES
The expenses in connection with the management of the Series 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 Fund 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
he 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 Series' 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
Fund to maintain membership;
7. insurance premiums on property or personnel (including officers and
directors) of the Fund 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 Fund 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 of promoting the sale of shares in the Series,
including preparing prospectuses and reports to shareholders of the Series,
provided, nothing in this Agreement shall prevent the charging of such
costs to third parties involved in the distribution and sale of Series shares;
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 Fund of its officers, directors or agents.
X. EXPENSE LIMITATION
If, for any fiscal year, the total of all ordinary business expenses payable
by the Series, including all investment advisory fees but excluding brokerage
commissions, distribution fees, taxes, interest and extraordinary expenses
and certain other excludable expenses, would exceed the most restrictive
expense limits imposed by any statute or regulatory authority of any
jurisdiction in which shares of the Series are offered for sale (unless a
waiver is obtained), the Adviser shall reduce its advisory fee to the extent
necessary to meet such expense limit, but the Adviser will not be required to
reimburse the Series for any ordinary business expenses which exceed the amount
of its advisory fee for such fiscal year. The amount of any such reduction
is to be borne by the Adviser and shall be deducted from the monthly advisory
fee otherwise payable to the Adviser during such fiscal year. For the
purposes of this paragraph, the term "fiscal year" shall exclude the portion
of the current fiscal year which shall have elapsed prior to the date hereof
and shall include the portion of the then current fiscal year which shall
have elapsed at the date of termination of this Agreement.
XI. ADDITIONAL SERVICES
Upon the request of the Board, the Adviser may perform certain accounting,
shareholder servicing or other administrative services on behalf of the
Series that are not required by this Agreement. Such services will be
performed on behalf of the Series and the Adviser may receive from the Series
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 Series and its shareholders. Payment or assumption by the
Adviser of any Series 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 Series nor obligate the Xxxxxx to pay or assume any similar
Series expnese on any subsequent occasions. Such services may include, but are
not limited to, (a)the services of a principal financial officer of the Fund
(including applicable office space, facilities and equipment) whose normal
duties consist of maintaining the financial accounts and books and records of
the Fund and the Series and the services (including applicable office space,
facilities and equipment) of any of the personnel operating under the direction
of such principal financial officer;
(b) the services of staff to respond to shareholder inquiries concerning the
status of their accounts, providing assistance to shareholders in exchanges
among the investment companies managed or advised by the Adviser, changing
account designations or changing addresses, assisting in the purchase or
redemption of shares; or otherwise providing services to shareholders of the
Series; and (c) such other administrative services as may be furnished from
time to time by the Adviser to the Fund on the Series at the request of the
Board.
XII. NONEXCLUSIVITY
The services of the Adviser to the Series 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 Fund, and that officers
or directors of the Fund may serve as officers or 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.
XIII. TERM
This Agreement shall become effective at the close of business on September 24,
1996, and shall remain in force and effect through December 31, 1997, unless
earlier terminated under the provisions of Article XI.
XIV. 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
or interested persons of a party to this Agreement (other than as a director
of the Fund), by votes cast in person at a meeting specifically called for
such purpose.
XV. 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 0000 Xxx)
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.
XVI. 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.
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, the Series or the Adviser:
000 Xxxxxxxxxx Xxxxxx, XX0X
Xxxxxxxx, Xxxxxxxxxxx 00000
Fax number: 860/000-0000
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,
regulations 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, regulation or order of the
Commission, such provisions shall be deemed to incorporate the effect of such
rule, regulation or order.
XIX. SERVICE XXXX
The service xxxx of the Fund and the Series and the name "Aetna" have been
adopted by the Fund with the permission of Aetna Life and Casualty Company
and their continued use is subject to the right of Aetna Life and Casualty
Company to withdraw this permission in the event the Adviser or another
subsidiary or affiliated corporation of Aetna Life and Casualty Company
should not be the investment adviser of the Series.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the 25th day of
September, 1996.
Aetna Life Insurance and Annuity Company
By: /s/ Xxxxx X. Xxxxxxxxx
Name: Xxxxx X. Xxxxxxxxx
Attest: /s/ XxXxx X. Xxxxxxxxx Title: Corporate Secretary
Assistant Secretary
Aetna Series Fund, Inc.
on behalf of its series,
Aetna Index Plus Fund
By: /s/ Xxxxx X. Xxxxxxx
Attest: /s/ Xxxxx X. Xxxxxx Name: Xxxxx X.Xxxxxxx
Secretary Title: President
2KXC68.DOC
