INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made by and between AELTUS INVESTMENT MANAGEMENT,
INC., a Connecticut corporation (the "Adviser") and AETNA VARIABLE
FUND, a Massachusetts business trust (the "Fund"), with respect to the
following recital of facts:
R E C I T A L
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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
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 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 Incorporation and Organization. The Fund has
been duly incorporated under the laws of the
Commonwealth of Massachusetts and it is authorized
to enter into this Agreement and carry out its
obligations hereunder.
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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 may also select brokers or dealers to effect
transactions for the Fund that provide payment for expenses of
the Fund. The Adviser is authorized to pay a broker or dealer
who provides such brokerage or research services or expenses,
and that has provided assistance in the distribution of shares
of the Fund to the extent permitted by law, 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 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.
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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 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 shall pay to the Adviser an
annual fee, payable monthly, equal to .50% 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 of .50% 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:
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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 trustees, 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 trustees) of the Fund;
8. all fees and expenses of the Company's trustees,
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 Fund, except for
those expenses
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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. 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
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
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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 Fund; and (c) such
other administrative services as may be furnished from time to time by
the Adviser to the Fund at the request of the Board.
XII. 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.
XIII. TERM
This Agreement shall become effective on May 1, 1998, and shall remain
in force and effect through December 31, 1998, unless earlier
terminated under the provisions of Article XV.
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 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
trustees 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.
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
Fund's outstanding voting securities (as defined in
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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."
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:
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Fax number 860/000-0000
if to the Adviser:
000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
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 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
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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 XXXX
The service xxxx 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 25th day
of March, 1998.
Aeltus Investment Management, Inc.
Attest: /s/ Xxxxx Xxxxxxxxxx By: /s/ Xxxx X. Xxx
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Name: Xxxxx Xxxxxxxxxx Name: Xxxx X. Xxx
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Title: Assistant Secretary Title: President
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Aetna Variable Fund
Attest: /s/ XxXxx X. Xxxxxxxxx By: /s/ J. Xxxxx Xxx
-------------------------- --------------------------
Name: XxXxx X. Xxxxxxxxx Name: J. Xxxxx Xxx
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Title: Assistant Secretary Title: President
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