AETNA BALANCED VP, INC.
NSAR Annual Filing
12/31/2001
Sub-Item 77Q1 - Exhibits Y
(e) Investment Advisory Agreement for Aetna Balanced VP, Inc.
is attached herewith.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made by and between AELTUS INVESTMENT MANAGEMENT,
INC., a Connecticut corporation (the "Adviser"), and AETNA BALANCED
VP, INC., a Maryland corporation (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 Directors (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 Incorporation and Organization. The Fund has been duly
incorporated under the laws of the State of Maryland and it is a
uthorized 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 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 0.50% 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 (1/366 in the event of a leap year) of
0.50% 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:
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 directors' 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 directors, 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, directors 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 directors of the Fund, and that officers
or directors 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 director 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. 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
XVII. 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.
XVIII. 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 Balanced VP, Inc.
Attest:
By:
/s/ Xxxxx Xxxxxxx
By:
/s/ X. Xxxxx Xxx
Name: Xxxxx Xxxxxxx Name: X. Xxxxx Xxx
Title: Assistant Secretary Title: President
