AETNA VARIABLE ENCORE FUND
NSAR Annual Filing
12/31/2001
Sub-Item 77Q1 - Exhibits Y
(e) Investment Advisory Agreement for Aetna Variable Encore Fund is
attached herewith.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made by and between AELTUS INVESTMENT MANAGEMENT,
INC. a Connecticut corporation (the "Adviser") and AETNA VARIABLE
ENCORE FUND, 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
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 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 0.25% 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
0.25% 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 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 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 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.
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 Variable Encore
Fund" 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 Variable Encore Fund
Attest:
By:
/s/ Xxxxx Xxxxxxx
By:
/s/ X. Xxxxx Xxx
Name:
Xxxxx Xxxxxxx
Name:
X. Xxxxx Xxx
Title:
Assistant Secretary
Title:
President
