AETNA SERIES FUND INC
485APOS, EX-99.D.5, 2000-07-18
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                                  Exhibit d.5

                         Investment Advisory Agreement


<PAGE>

                          INVESTMENT ADVISORY AGREEMENT

THIS AGREEMENT is made by and between AELTUS INVESTMENT MANAGEMENT, INC. a
Connecticut corporation (the "Adviser") and AETNA SERIES FUND, INC., a Maryland
corporation (the "Fund"), on behalf of its series, Aetna Principal Protection
Fund IV (the "Series"), 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 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 (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;
<PAGE>

         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; 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 Series in carrying out its
                   obligations hereunder.

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<PAGE>


         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 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
         Series, the Adviser may enter into a Subadvisory Agreement to engage a
         subadviser to the Adviser with respect to the Series.

V.       BROKER-DEALER RELATIONSHIPS

         A.       Series Trades

         The Adviser 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 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 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 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

                                       3
<PAGE>

         shares of the Series and of other investment companies advised by the
         Adviser as a factor in the selection of brokers or dealers to effect
         transactions for the Series, subject to the Adviser's duty to seek best
         execution. The Adviser may also select brokers or dealers to effect
         transactions for the Series that provide payment for expenses of the
         Series. 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.

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 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, on behalf of the Series, shall pay to the
Adviser an annual fee, payable monthly, equal to 0.25% of the average daily net
assets of the Series during the offering period and equal to 0.65% of the
average daily net assets of the Series during the guarantee period. Except as
hereinafter set forth, compensation under this Agreement shall be calculated and
accrued daily at the rate of 1/365 of 0.25% of the daily net assets of the
Series during the offering period and at the rate of 1/365 of 0.65% of the daily
net assets of the Series during the guarantee period. 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.

                                       4
<PAGE>

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; 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 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 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;

                                       5
<PAGE>

             8.       all fees and expenses of the Company'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 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 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.

Notwithstanding the above, the Adviser may waive a portion or all of the fees it
is entitled to receive.

In addition, the Adviser may reimburse the Fund, on behalf of a Series, for
expenses allocated to a Series.

The Adviser has agreed to waive fees and/or reimburse expenses so that the total
annual operating expenses (excluding distribution and shareholder service fees)
do not exceed 1.25% of the average daily net assets.

                                       6
<PAGE>



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 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 Adviser to pay or assume any similar Series expense on any
subsequent occasions.

XI.      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 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 July 1, 2000 and shall remain in force
and effect through December 31, 2001 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 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 Fund), by votes cast in
             person at a meeting specifically called for such purpose.

                                       7
<PAGE>

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 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."

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, on behalf of the Series:

         10 State House Square
         Hartford, Connecticut  06103
         Fax number 860/275-2158

         if to the Adviser:

         10 State House Square
         Hartford, Connecticut  06103
         Fax number 860/275-4440


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
Securities and Exchange Commission

                                       8
<PAGE>

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 Series 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 Series.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the 5th day of July, 2000.

                                              Aeltus Investment Management, Inc.


<TABLE>
<S>        <C>                                              <C>
                                                            By:     /s/ Frank J. Litwin
                                                                    ------------------------------
Attest:    /s/ Daniel E. Burton                             Name:   Frank J. Litwin
           -------------------------------                          ------------------------------
Name:      Daniel E. Burton                                 Title:  Managing Director
           -------------------------------                          ------------------------------
Title:     Assistant Secretary
           -------------------------------
</TABLE>



                                              Aetna Series Fund, Inc.
                                              on behalf of its series,
                                              Aetna Principal Protection Fund IV




<TABLE>
<S>        <C>                                              <C>
                                                            By:     /s/ J. Scott Fox
                                                                    ------------------------------
Attest:    /s/ Michael Gioffre                              Name:   J. Scott Fox
           -------------------------------                          ------------------------------
Name:      Michael Gioffre                                  Title:  President
           -------------------------------                          ------------------------------
Title:     Assistant Secretary
           -------------------------------
</TABLE>

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