SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
the Commission Only
(as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
AETNA VARIABLE PORTFOLIOS, INC.
(Name of Registrant as Specified in Its Charter/Declaration of Trust)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
J. Scott Fox
President
Aetna Variable Portfolios,
Inc.
May 30, 2000
Dear Contract Holder/Participant:
I am writing to let you know that, as stated in the enclosed Proxy
Statement, a special shareholder meeting will be held on July 28, 2000. The
purpose of the meeting is for you to vote on a proposal to: (1) liquidate Aetna
Index Plus Bond VP, a portfolio of Aetna Variable Portfolios, Inc. ("the
Company"); (2) amend the Company's charter to reflect this liquidation; and (3)
substitute assets remaining in the liquidating portfolio as of the liquidation
date with interests in Aetna Money Market VP. (This portfolio was closed to new
investment on May 15.)
On March 1, the Board of Directors for Aetna Variable Portfolios, Inc.
considered and agreed to submit this proposal to shareholders. If approved by
shareholders at the July 28 meeting, the liquidation will occur no later than
September 1, 2000. You may transfer your assets into another fund available
under your retirement plan at any time prior to the liquidation date. If you do
not do so, however, please note that your assets will automatically be
transferred to Aetna Money Market VP.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THE PROPOSAL
DESCRIBED IN THE ENCLOSED PROXY STATEMENT. The Board's recommendation is based
on a number of factors, including the portfolio's inability to sell a sufficient
number of shares to lower operating expenses, and poor sales trends. The reasons
for recommending this course of action are described in detail in the Proxy
Statement, which you should consider carefully before casting your vote.
PLEASE VOTE AND RETURN YOUR PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE AS SOON AS POSSIBLE. Your vote is critical, no matter how large or
small your holdings may be.
If you have any questions before you vote, please call 1-800-677-4636.
We'll help you get the answers you need promptly. Thank you for your
participation in this important matter.
Sincerely,
J. Scott Fox
(enclosures)
<PAGE>
NOTICE OF A SPECIAL MEETING
OF THE SHAREHOLDERS OF
AETNA VARIABLE PORTFOLIOS, INC.
Aetna Index Plus Bond VP
A Special Meeting of the Shareholders (the "Special Meeting") of Aetna
Index Plus Bond VP (the "Fund"), a portfolio of Aetna Variable Portfolios, Inc.
(the "Company"), will be held on July 28, 2000, at 10:00 a.m., Eastern time, at
10 State House Square, Hartford, Connecticut 06103-3602 for the following
purposes:
1. to consider and vote on a Plan of Liquidation and a Plan of Substitution
for the Fund and, in connection with the Plan of Liquidation, proposed
amendments to the Charter of the Company, as set forth in Articles of
Amendment; and
2. to transact such other business as may properly come before the Special
Meeting and any adjournments thereof.
Please read the enclosed proxy statement carefully for information
concerning the proposal to be considered at the Special Meeting.
Shareholders of record at the close of business on May 1, 2000 are entitled
to notice of and to vote at the Special Meeting. You are invited to attend the
Special Meeting. If you cannot do so, however, please complete and sign the
enclosed authorization card, and return it in the accompanying envelope as
promptly as possible. Any shareholder attending the Special Meeting may vote in
person even though an authorization card has already been returned.
By Order of the Board of Directors,
Amy R. Doberman
Secretary
May 30, 2000
<PAGE>
AETNA VARIABLE PORTFOLIOS, INC.
Aetna Index Plus Bond VP
PROXY STATEMENT
May 30, 2000
This Proxy Statement provides information you should review before
voting on the matter listed in the Notice of Special Meeting on the previous
page for Aetna Index Plus Bond VP (the "Fund"), a portfolio of Aetna Variable
Portfolios, Inc. (the "Company"). The Company's Board of Directors (the "Board")
is soliciting your vote for a Special Meeting of Shareholders of the Fund (the
"Special Meeting") to be held at 10 State House Square, Hartford, Connecticut
06103-3602, on July 28, 2000, at 10:00 a.m., Eastern time, and, if the Special
Meeting is adjourned, at any adjournment of that Meeting.
This Proxy Statement describes the matter that will be voted on at the
Special Meeting (the "Proposal"). The solicitation of votes is made by the
mailing of this Proxy Statement and the accompanying authorization card on or
about May 30, 2000. Aeltus Investment Management, Inc. ("Aeltus"), the Fund's
investment adviser, or its affiliates may contact contract holders and
participants with an interest in the Fund, commencing in June 2000, to discuss
the Proposal. The expenses incurred in connection with preparing this Proxy
Statement and of all solicitations will be paid by Aeltus.
A copy of the Company's Annual Report for the fiscal year ended
December 31, 1999, was mailed to annuity contract holders having an interest in
the Fund on or about February 26, 2000. This Proxy Statement should be read in
conjunction with that Annual Report. The Company's Annual Report is also
available upon request. You can obtain a copy of the Company's Annual Report,
without charge, by writing to the Company at 151 Farmington Avenue, Hartford,
Connecticut 06156, or by calling 1-800-525-4225.
Shareholders of record on May 1, 2000 (the "record date") are entitled
to be present and to vote at the Special Meeting or any adjourned meeting. As of
the record date, the Fund had 1,194,202.671 shares issued and outstanding.
Other than shares purchased by Aetna Life Insurance and Annuity
Company's general account in connection with providing seed capital for the
Fund, shares of the Fund are offered only to insurance company separate accounts
that fund both annuity and life insurance contracts. As of the record date,
Aetna Life Insurance and Annuity Company ("Aetna") owned of record all of the
shares of the Fund (100%).* Of this amount, 1,094,488.772 shares of the Fund
(91.65%) were allocated to Aetna's general account.
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* Aetna, as the legal owner of the shares, has sole voting and investment power
with respect to the shares. Aetna's principal office is located at 151
Farmington Avenue, Hartford, Connecticut 06156-8962.
<PAGE>
The remaining 99,713.898 shares of the Fund (8.35%) were held by Aetna
on behalf of Variable Annuity Account C, a separate account that funds variable
annuity contracts (each a "Contract") issued to individual or group Contract
holders ("Contract Holders").
The separate account invests in the Fund. Contract Holders (or
participants under group contracts as applicable) who select the Fund for
investment through a Contract have a beneficial interest in the Fund, but do not
invest directly in or hold shares of the Fund. Aetna, on behalf of the separate
account, is the true shareholder of the Fund, but generally will pass through
any voting rights to Contract Holders. Contract Holders therefore have the right
to instruct Aetna how to vote their interest with respect to the Proposal. Aetna
will vote the shares of the Fund held in Aetna's name for the separate account
as directed by the Contract Holder. The holders of certain group Contracts have
the right to direct the vote for all shares under the respective Contract, for,
against or abstaining, in the same proportions as shares for which instructions
have been given by participants covered by the Contract. This proxy statement is
used to solicit instructions for voting shares of the Fund. All persons entitled
to direct the voting of shares, whether they are Contract Holders, participants
or shareholders, will be described as voting for purposes of this Proxy
Statement.
In the event that Aetna does not receive voting instructions for Fund
shares attributable to all Contract Holders, Aetna will vote those shares
attributable to nonresponsive Contract Holders for, against or abstaining, in
the same proportion as shares for which instructions have been received from
other Contract Holders. If an authorization card is returned by a Contract
Holder, without indicating a voting instruction, Aetna will vote those shares
"for" the Proposal.
To the best of the Company's knowledge, as of the record date, no
person owned beneficially more than 5% of the Fund, except as set forth above.
The presence in person or by proxy of a majority of the Fund's shares
entitled to vote is necessary to constitute a quorum for the transaction of
business. Because Aetna is the legal owner of all Fund shares, there will be a
quorum at the Special Meeting regardless of how Contract Holders direct Aetna to
vote on the Proposal.
If there are insufficient votes to approve the Proposal, the persons
named as proxies may propose one or more adjournments of the Special Meeting to
permit additional time for the solicitation of proxies, in accordance with
applicable law. Adjourned meetings must be held within a reasonable time after
the date originally set for the meeting (but not more than 120 days after the
record date). Solicitation of votes may continue to be made without any
obligation to provide any additional notice of the adjournment. The persons
named as proxies will vote in favor of such adjournment those proxies which they
are entitled to vote in favor of the Proposal and will vote against any such
adjournment those proxies to be voted against the Proposal.
The Proposal requires approval by the affirmative vote of a majority of
the outstanding voting securities of the Fund, which means more than 50% of the
votes entitled to be cast on the Proposal. Abstentions will have the effect of a
"no" vote on the Proposal.
The number of shares that you may vote is the total of the number shown
on the authorization card accompanying this Proxy Statement. The number of
shares that you are entitled to vote is calculated according to the formula
described in the materials relating to your Contract. Shareholders are entitled
to one vote for each full share and a proportionate vote for each fractional
share held. Proxy votes may be revoked by written notice to Aeltus prior to the
Special Meeting or by attending the Meeting in person and indicating that you
want to vote your shares in person.
Shares of the Fund owned by Aetna through the general account will be
voted in the same proportion as shares held by the separate account investing in
the Fund.
The appointed proxies will vote in their discretion on any other
business as may properly come before the Special Meeting or any adjournments or
postponements thereof. Additional matters would only include matters that were
not anticipated as of the date of this Proxy Statement.
MATTER TO BE ACTED UPON
Proposal to Vote On
a Plan of Liquidation and Plan of
Substitution for the
Fund And, in Connection with the Plan of
Liquidation, Proposed Amendments to the
Charter of the Company, as set forth in
Articles of Amendment
The Company's Board, including the Directors who are not "interested
persons" of the Company, as defined by the Investment Company Act of 1940, as
amended (the "Investment Company Act"), has approved and recommends that the
shareholders of the Fund approve a Plan of Liquidation, proposed amendments to
the charter of the Company (the "Charter") in connection with the Plan of
Liquidation, as set forth in Articles of Amendment appended to the Plan of
Liquidation as an exhibit ("Articles of Amendment"), and Plan of Substitution,
which is also appended to the Plan of Liquidation as an exhibit.
BACKGROUND. On March 1, 2000, the Company's Board decided to recommend
to shareholders that they approve a Plan of the Liquidation for the Fund and a
related Plan of Substitution, as discussed below.
Aetna and the Board considered how to best serve the interests of
Contract Holders in connection with the proposed liquidation. Specifically, if
any Contract Holder (or participants) failed to provide alternative investment
instructions prior to Aetna's receipt of the Fund's liquidation proceeds, Aetna
would be required to direct the liquidation proceeds to the Contract Holder,
which could ultimately result in adverse tax consequences for Contract Holders
or participants. To avoid such consequences, Aetna and the Board recommend that
shareholders approve a substitution of the subaccount holding the proceeds of
the liquidated Fund with the subaccount investing in Aetna Variable Encore Fund
d/b/a Aetna Money Market VP ("Aetna Money Market VP"). Contingent upon such
approval, Aetna would then substitute interests of Contract Holders (or
participants) who did not exercise their transfer rights prior to the
liquidation with interests in shares of Aetna Money Market VP, which is an
existing investment option under the Contracts.
To limit the number of Contract Holders affected by the liquidation and
subsequent substitution, Aetna exercised its rights under the Contract to limit
access to the Fund for new Contract Holders effective May 15, 2000. As of that
date, Aetna accepted deposits and continues to accept deposits into the Fund
that are made only pursuant to standing instructions (E.G., payroll deduction
allocations, dollar cost averaging, etc.) in effect as of the close of business
on May 12, 2000.
The attached authorization card seeks the approval of the
above-described Proposal by a majority of the outstanding voting securities of
the Fund.
PLAN OF LIQUIDATION. The Board has approved a Plan of Liquidation for
the Fund, which is set forth in Exhibit 1 to this Proxy Statement and summarized
below.
The Plan will become effective on the date of its adoption and approval
by the affirmative vote of a majority of the outstanding shares of the Fund (the
"Effective Date"). Following this approval, the Fund, in an orderly manner, will
sell all of its portfolio securities in order to convert all the Fund's assets
to cash and cash equivalents. The Fund will then make a cash distribution to
each shareholder based on the shareholder's proportionate share in the net
assets of the Fund, after payment to (or reservation of assets for the payment
to) all creditors of the Fund, in redemption and cancellation of the outstanding
shares of the Fund. This distribution will be made as soon as practicable, but
in any event no later than thirty days after the Effective Date.
The date on which the Fund makes the liquidating distribution of its
assets to shareholders and redeems and cancels its outstanding shares will be
known as its "Liquidation Date". (See Section 2 of the Plan of Liquidation.) As
of the close of business on the Liquidation Date, the Fund will cease its
business as an investment company and will not engage in any business activities
except for the purposes of winding up its business and affairs.
The proportionate interest of each shareholder in the assets of the
Fund will be fixed on the basis of that shareholder's respective holdings as of
the close of business on the Liquidation Date. On such date the books of the
Fund will be closed. (See Section 4 of the Plan of Liquidation.)
Aetna owns of record all of the issued and outstanding shares of the
Fund. Upon receipt by Aetna of the liquidating distribution with respect to the
Fund, other than that portion of the distribution attributable to shares of the
Fund owned by Aetna in a general account, Aetna will apply such liquidating
distribution in accordance with the Plan of Substitution to purchase, for the
benefit of each Contract Holder having an interest in the Fund at the time of
its liquidation, an equivalent interest in Aetna Money Market VP. (See Section 7
of the Plan of Liquidation.)
Aeltus will bear all expenses incurred in connection with carrying out
the Plan of Liquidation that the Fund normally would not incur if it were to
continue in business, including legal and auditing expenses and printing,
mailing, solicitation and miscellaneous expenses arising from the liquidation.
Normal operating expenses of the Fund will be borne by the Fund to the same
extent such expenses would have been incurred absent a liquidation. Any expenses
and liabilities attributed to the Fund subsequent to the mailing of the
liquidating distribution will be borne by Aeltus. (See Section 8 of the Plan of
Liquidation.)
Under the Plan of Liquidation, the outstanding shares of the Fund will
be cancelled and reclassified, as more fully described below. (See the Articles
of Amendment, attached to the Plan of Liquidation as Exhibit B.) The Plan of
Liquidation also provides that the Board shall have the authority to authorize
such variations from or amendments to the provisions of the Plan of Liquidation
as may be necessary or appropriate to marshal the assets of the Fund and to
effect the complete liquidation and termination of the existence of the Fund and
the purposes to be accomplished by the Plan of Liquidation. (See Section 9 of
the Plan of Liquidation.)
PLAN OF SUBSTITUTION. Following the liquidation of the Fund, the Plan
of Substitution (attached as Exhibit A to the Plan of Liquidation and summarized
herein) will be implemented by Aetna as follows. Aetna will purchase with the
proceeds of the liquidating distribution, other than that portion of the
distribution attributable to shares of the Fund held in a general account, for
the benefit of each Contract Holder having an interest in the Fund at the time
of its liquidation, an interest in Aetna Money Market VP at net asset value. As
a result, the substitution will not affect the value of Contract Holders' or
participants' interests transferred from the subaccount investing in the Fund to
the subaccount investing in Aetna Money Market VP. (See Section 4 of the Plan of
Substitution.)
Contract Holders and participants will not incur any fees or charges as
a result of the substitution. Also, neither the rights of Contract Holders and
participants, nor the obligations of Aetna under the Contracts, will be altered
in any way. In addition, the transfer of the Contract Holder's interests from
the subaccount investing in the liquidated Fund as a result of the substitution
will not be counted as one of the free transfers permitted to Contract Holders
and participants under certain Contracts. (See Section 5 of the Plan of
Substitution.)
The expenses incurred in connection with implementing the Plan of
Substitution, including legal, accounting and other fees, will be paid by Aeltus
and/or its affiliates. (See Section 5 of the Plan of Substitution.)
TRANSFER RIGHTS. At any time prior to the Fund's Liquidation Date,
Contract Holders (or participants, as applicable) may transfer their interest in
the Fund to any of the other investment options offered under their Contract
subject to the terms of the relevant separate account prospectus, Contract and
retirement plan, and no transfer fees or other charges will be imposed.
Following the substitution, Contract Holders who had any remaining interest
transferred from the subaccount investing in the liquidated Fund to Aetna Money
Market VP may transfer among any of the remaining investment options in
accordance with the terms of the Contracts, also free of any transfer fees or
other charges.
Contract Holders and participants should refer to their separate
account prospectus or other applicable disclosure documents for a description of
the other investment options available under their Contract prior to and after
the date of the substitution. Contract Holders and participants may obtain a
prospectus or other disclosure documents for the separate account and applicable
investment options free of charge by contacting their local Aetna
representative, by writing to Aetna Financial Services, Annuity Services, 151
Farmington Avenue, Hartford, Connecticut 06156-1277, or by calling
1-800-262-3682. The prospectuses for the separate account and mutual fund
investment options are also posted on the Securities and Exchange Commission's
web site, http://www.sec.gov, and may be obtained by contacting the SEC Public
Reference Room at 1-800-732-0330.
SURRENDER RIGHTS. In lieu of the transfer rights discussed above, if
permitted by applicable tax law, Contract Holders (or participants) may elect to
receive in cash the value of their interest in the Fund prior to the Liquidation
Date or the value of their interest actually transferred from a subaccount
investing in the liquidated Fund to Aetna Money Market VP after the
substitution, by exercising their surrender rights under the Contract (such a
surrender may have adverse tax consequences-see "FEDERAL TAX CONSEQUENCES"
below). If a Contract Holder (or participant, as applicable) elects to make a
surrender within 30 days after the date of the substitution, Aetna has agreed to
waive any Contract early withdrawal charges attributable to the substituted
amounts that would normally be imposed on such surrenders. Aetna's offer to
waive early withdrawal charges will not apply to amounts transferred to the Fund
from other investment options after April 10, 2000.
FEDERAL TAX CONSEQUENCES. The liquidation and subsequent substitution
will not create any tax liability for Contract Holders or participants. Also,
Contract Holders will not incur any tax liability for exercising their transfer
rights. However, if a Contract Holder (or participant) exercises the surrender
right, he or she may incur income tax liability and a tax penalty. Contract
Holders and participants are encouraged to refer to their separate account
prospectus for a discussion of the possible tax consequences resulting from a
surrender. ALSO, CONTRACT HOLDERS AND PARTICIPANTS SHOULD SEEK QUALIFIED TAX
ADVICE BEFORE EXERCISING THEIR SURRENDER RIGHTS.
ARTICLES OF AMENDMENT. In connection with the Plan of Liquidation, and
as described therein, the Company's Charter will be amended as set forth in the
Articles of Amendment, as follows: (1) each unissued share of the Fund will be
reclassified as, and will become, one unissued, unclassified share of capital
stock of the Company; (2) each issued and outstanding share of the Fund will be
cancelled and will be reclassified as one unissued, unclassified share of
capital stock of the Company; and (3) the provisions of the Charter designating
and classifying shares of stock of the Company into shares of the Fund and
setting forth the attributes of such shares will be deleted. The proposed
Articles of Amendment are included as Exhibit B to the Plan of Liquidation. A
vote in favor of the Proposal will constitute a vote in favor of the proposed
amendments to the Company's Charter as well as the Plans of Liquidation and
Substitution.
BOARD'S RATIONALE FOR RECOMMENDING THE PLANS
THE REASONS FOR LIQUIDATING THE FUND. The Fund commenced operations on
December 18, 1997. The Fund's net assets as of December 31, 1999, the date of
the Fund's most recent fiscal year end, were $11,434,000.
The Fund has sought maximum total return, consistent with preservation
of capital, primarily through investment in a diversified portfolio of
fixed-income securities, which are chosen to substantially replicate the
characteristics of the Lehman Brothers Aggregate Bond Index.
The Fund has been slow to attract assets. Since inception of the Fund,
Aeltus has observed, based on an examination of investment allocation, that most
Contract Holders (or participants) have been allocating their purchase payments
to the Contracts' other investment options.
Because the Fund has not been able to sell a sufficient number of
shares to lower its operating expense ratio by spreading expenses over a larger
asset base, it has had to rely on Aeltus' contractual commitment to limit the
Fund's expenses. This contractual expense limitation terminates on December 31,
2000. Aeltus has indicated it may be unwilling to continue the expense
limitation thereafter. Absent the expense limitation, Contract Holders and
participants with an interest in the Fund would eventually have to bear all of
the Fund's operating expenses without the benefit of the expense limitation, at
a time when those expenses are relatively high and the Fund's net asset size is
small.
At a March 1, 2000 meeting, the Board considered a number of factors,
including the amount of the Fund's net assets, its expense ratio (with and
without the waiver and reimbursement of expenses by Aeltus), and the likelihood
that additional sales of Fund shares could enable the Fund to attain an asset
level that would sustain an acceptable expense ratio. The Board also reviewed
the expenses that had been assumed by Aeltus during the life of the Fund, the
efforts and expenses of the Company's principal underwriter to distribute shares
of the Fund, and the effect of the operating expenses on the historic and
anticipated returns of shareholders. The Board considered that Aeltus had not
been able to collect or retain any significant advisory or administrative fees
during the life of the Fund, that there appears to be little prospect that this
would change in the near future, and that Aeltus is not willing to subsidize
indefinitely the Fund's operations.
The Board determined that an increase in Fund expenses attributable to
the likely discontinuance or reduction of the fee waiver and reimbursement of
Fund expenses in the future would adversely affect the Fund's performance. The
Board concluded, therefore, that it would be in the interests of the Fund's
shareholders to liquidate the Fund promptly in accordance with the Plan of
Liquidation.
Aeltus and the Board have regularly reviewed developments and
considered alternatives regarding the Fund, including whether a merger with or
transfer of assets to another mutual fund would be possible, and if it would
produce desirable results for shareholders. After reviewing current market
conditions, the relatively small size of the Fund and the absence of appropriate
merger candidates (I.E., funds with investment objectives similar to those of
the Fund), Aeltus and the Board concluded that liquidation is preferable to a
merger or transfer of assets.
REASONS FOR SUBSTITUTION. The Board and Aetna determined that it would
be in the best interest of Contract Holders (and participants) to liquidate the
Fund in a manner that avoids adverse tax consequences for Contract Holders and
participants. In the absence of transfer instructions or a substitute transfer,
Contract Holders or participants might receive a distribution of cash proceeds
from the liquidation, which could result in tax liability. The Plan of
Substitution avoids this result by providing a mechanism for Aetna to transfer
the interests of Contract Holders (or participants, if applicable) in the Fund
automatically to a designated substitute fund upon liquidation, for Contract
Holders (or participants) who have not otherwise given transfer instructions.
For the foregoing reasons and subject to receipt of a favorable vote of
the Fund's shareholders on the Proposal, the Fund would be eliminated as an
investment option under the Contract after the liquidation is effected, and its
outstanding shares redeemed and cancelled. Additionally, the interests of
Contract Holders in the liquidated Fund would be substituted with equivalent
interests in Aetna Money Market VP.
REASONS FOR RECOMMENDING A SUBSTITUTION INTO AETNA MONEY MARKET VP.
Aetna determined, and the Board agreed, that Aetna Money Market VP would be the
most appropriate vehicle into which to transfer the interests of Contract
Holders who do not exercise their transfer rights prior to the Liquidation Date.
Aetna Money Market VP is available under all the affected Contracts and was
determined to be an appropriate alternative because it is designed to preserve
the value of a shareholder's investment and is often used by investors as a
temporary investment option. Aetna Money Market VP seeks to provide high current
return, consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments. In addition, Aetna Money
Market VP has a lower expense ratio than the other investment options available
under the Contracts. Contract Holders should consider whether reallocation of
their interest in the Fund to another investment option available under their
respective Contracts would be appropriate in light of their investment goals.
See "Transfer Rights" above for more information.
<PAGE>
The following chart compares the advisory fee rates and the expense
ratios of the Fund and Aetna Money Market VP. It also illustrates the impact on
the Fund's expenses if Aeltus had not agreed to limit the Fund's expenses during
the period.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999:
Ratio of Expenses to
Ratio of Average Net Assets
Fund Advisory Net Expenses to Before Reimbursement
Fee Average Net Assets and Waiver
Aetna Money Market VP .25 % .34 % N/A
Index Plus Bond VP .40 % .45 % .63 %
For more information, please refer to the current prospectus or other
disclosure documents for Aetna Money Market VP and the Fund previously furnished
to you. To request a prospectus or other information, please contact Aetna
Financial Services at the address or number provided on page 6.
FAILURE TO APPROVE THE PROPOSAL
If the Fund's shareholders do not approve the Proposal, the Fund will
continue to exist as an investment option under the Contracts and the
substitution of Contract Holder interests will not be implemented. The Board
would then meet to consider what, if any, steps to take in the interests of
shareholders.
For the reasons specified above, Aetna and the Company's Board
recommend that the Proposal be approved. Persons having voting interests in the
Fund are encouraged to carefully consider the information contained in the Proxy
Statement and to complete and return the enclosed voting instruction form.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF THE FUND VOTE FOR
THE PLAN OF LIQUIDATION AND PLAN OF SUBSTITUTION AND, IN CONNECTION WITH THE
PLAN OF LIQUIDATION, PROPOSED AMENDMENTS TO THE CHARTER OF THE COMPANY,
AS SET FORTH IN ARTICLES OF AMENDMENT.
GENERAL INFORMATION
INVESTMENT ADVISER, ADMINISTRATOR AND PRINCIPAL UNDERWRITER
The investment adviser and administrator to the Fund is Aeltus
Investment Management, Inc., 10 State House Square, Hartford, Connecticut
06103-3602. Aeltus is a part of the Aetna organization, and is an indirect
wholly-owned subsidiary of Aetna Inc., a health care and financial services
company with stock listed for trading on the New York Stock Exchange. The
Company's principal underwriter is Aetna Life Insurance and Annuity Company, 151
Farmington Avenue, Hartford, Connecticut 06156.
OTHER BUSINESS
Aeltus knows of no other business to be presented at the Special
Meeting other than the matter set forth in this Proxy Statement. If any other
business properly comes before the Special Meeting, the proxies will exercise
their best judgment in deciding how to vote on such matters.
SHAREHOLDER PROPOSALS
The Company's Charter and the By-laws provide that the Company need not
hold annual shareholder meetings, except as required by the Investment Company
Act. Therefore, in the event that the Proposal is not approved by the Fund's
shareholders, it is probable that no annual meeting of shareholders will be held
in 2000 or in subsequent years until so required. For those years in which
annual or special shareholder meetings are held, proposals which shareholders of
the Fund intend to present for inclusion in the proxy materials with respect to
the meeting of shareholders must be received by the Fund within a reasonable
period of time before the solicitation is made. The timely submission of a
proposal does not guarantee its inclusion.
Please complete the enclosed proxy card, as applicable, and return it
promptly in the enclosed self-addressed, postage-paid envelope. You may revoke
your proxy at any time prior to the Special Meeting by written notice to Aeltus
or by submitting a proxy card bearing a later date.
By Order of the Board of Directors,
Amy R. Doberman
Secretary
<PAGE>
EXHIBIT 1
AETNA VARIABLE PORTFOLIOS, INC.
Aetna Index Plus Bond VP
PLAN OF LIQUIDATION
This Plan of Liquidation ("Plan") is made by Aetna Variable Portfolios,
Inc. (the "Company"), a corporation organized and existing under the laws of the
State of Maryland, with respect to Aetna Index Plus Bond VP (the "Fund"), a
separate portfolio or series of stock, and a segregated portfolio of assets of
the Company. The Fund is a series of an investment company registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act"). The
Plan is intended to accomplish the complete liquidation of the Fund and the
redemption and cancellation of the outstanding shares thereof, in conformity
with all provisions of Maryland law and the Company's Charter and By-laws.
WHEREAS, due to the small size of the Fund, its high expense ratio
absent fee waivers and expense reimbursements, the investment adviser's
unwillingness to maintain indefinitely the Fund's expenses at current levels,
and the relative lack of investor interest in the Fund, the Company's Board of
Directors, on behalf of the Fund, has determined that it is in the best
interests of the Fund and its shareholders to liquidate the Fund and to redeem
and cancel the outstanding shares thereof; and
WHEREAS, Aetna Life Insurance and Annuity Company ("Aetna") is the
record owner of all of the issued and outstanding shares of the Fund and owns
shares either in a general account or on behalf of a separate account that
offers interests in the Fund as an investment option through certain annuity
contracts (the "Contracts") between Aetna and the holders of such Contracts (the
"Contract Holders"); and
WHEREAS, Aetna has advised the Company that, in connection with the
liquidation of the Fund, Aetna has agreed to remove the Fund as an investment
option offered through the Contracts, and desires to substitute for the
interests of Contract Holders in the Fund, shares of Aetna Variable Encore Fund
d/b/a Aetna Money Market VP, an existing investment option under the Contracts,
pursuant to a proposed Plan of Substitution substantially in the form attached
hereto as EXHIBIT A (the "Plan of Substitution"); and
WHEREAS, Aetna has requested that the Company make the liquidation of
the Fund contingent upon approval of the Plan of Substitution by the affirmative
vote of the holders of a majority of the outstanding voting shares of the Fund,
and to comply with the Plan of Substitution in connection with the liquidation
of Fund, and the Company's Board of Directors has determined that it is in the
best interest of the Fund and its shareholders to do so; and
WHEREAS, at a meeting of the Board of Directors of the Company on March
1, 2000, the Board of Directors considered and adopted this Plan and the Plan of
Substitution (collectively the "Plans") as the method of liquidating the Fund
and directed that the Plans be submitted to shareholders of the Fund for
approval in accordance with, among other things, applicable provisions of
Maryland law and the Company's Charter and By-laws, including, but not limited
to, Section 7, Paragraph (v) of the Company's Articles of Incorporation filed
with the State Department of Assessments and Taxation of Maryland on August 4,
1996, and applicable provisions of the Contracts.
NOW THEREFORE, the liquidation of the Fund shall be carried out in the
manner hereinafter set forth:
1. EFFECTIVE DATE OF PLAN OF LIQUIDATION. The Plan of Liquidation shall be and
become effective with respect to the Fund only upon the adoption and approval of
both Plans, at a meeting of shareholders called for the purpose of voting upon
the Plans, by the affirmative vote of the holders of a majority of the
outstanding voting shares of the Fund. The day of such adoption and approval of
both Plans by shareholders of the Fund is hereinafter called the "Effective
Date".
2. LIQUIDATION DATE. The date on which the Fund makes the liquidating
distribution to shareholders described in Section 7 below, and cancels and
redeems its outstanding shares, shall be known as the "Liquidation Date".
3. CESSATION OF BUSINESS. As of the close of business on the Liquidation Date,
the Fund shall cease its business as an investment company and shall not engage
in any business activities except for the purposes of winding up its business
and affairs.
4. RESTRICTION OF TRANSFER AND REDEMPTION OF SHARES. The proportionate interests
of shareholders in the assets of the Fund shall be fixed on the basis of their
respective shareholdings as of the close of business on the Liquidation Date. On
such date, the books of the Fund shall be closed. Thereafter, unless the books
are reopened because the Plans cannot be carried into effect under the laws of
the State of Maryland or otherwise, the shareholders' respective interests in
the Fund's assets shall not be transferable or redeemable.
5. LIQUIDATION OF ASSETS. As soon as is reasonable and practicable after the
Effective Date, all portfolio securities, and other assets, if any, of the Fund
shall be converted to cash and cash equivalents.
6. PAYMENT OF DEBTS. As soon as practicable after the Effective Date, the Fund
shall determine and pay, or set aside in cash equivalents, the amount of all
known or reasonably ascertainable liabilities of the Fund incurred or expected
to be incurred prior to the date of the liquidating distribution provided for in
Section 7 below, subject to Section 8 below.
7. LIQUIDATING DISTRIBUTION. As soon as possible after the Effective Date of the
Plans, and in any event within thirty days thereafter, the Fund shall deliver
the following to each shareholder of record on the Liquidation Date by mail or
other reasonable method, in complete redemption and cancellation of the shares
of the Fund held by such shareholder: (a) a liquidating distribution equal to
the shareholder's proportionate interest in the net assets of the Fund and (b)
information concerning the sources of the liquidating distribution. Aetna owns
of record all of the issued and outstanding shares of the Fund. Upon receipt by
Aetna of the liquidating distribution of the Fund, other than the portion of the
distribution attributable to shares of the Fund owned by Aetna in a general
account, Aetna will apply such liquidating distribution in accordance with the
Plan of Substitution to purchase, for the benefit of each Contract Holder having
an interest in the Fund at the time of its liquidation, an equivalent interest
in Aetna Money Market VP.
8. MANAGEMENT AND EXPENSES OF THE FUND SUBSEQUENT TO THE LIQUIDATING
DISTRIBUTION. The Fund's investment adviser, Aeltus Investment Management, Inc.
("Aeltus"), shall bear all expenses incurred in connection with carrying out the
Plan of Liquidation, including, but not limited to, all printing, legal and
accounting fees and the expenses of any reports to or meeting of shareholders.
Any expenses and liabilities attributed to the Fund subsequent to the mailing of
the liquidating distribution also will be borne by Aeltus.
9. AMENDMENT OF PLAN OF LIQUIDATION. The Board shall have the authority to
authorize such variations from or amendments to the provisions of the Plan as
may be necessary or appropriate to effect the marshaling of Fund assets and the
complete liquidation and termination of the existence of the Fund, and the
distribution of the Fund's net assets to shareholders in redemption and
cancellation of the outstanding shares of the Fund, in accordance with the laws
of the State of Maryland and the purposes to be accomplished by the Plan of
Liquidation.
10. FILINGS WITH THE STATE OF MARYLAND. In connection with the Plan of
Liquidation and in furtherance thereof, the Charter of the Company as currently
in effect will be amended substantially as set forth in Articles of Amendment
attached hereto as EXHIBIT B (the "Articles of Amendment") in order to provide
for, among other things, the liquidation of the assets of the Fund, the
distribution of the proceeds therefrom to the shareholders of the Fund and the
cancellation of the outstanding shares of the Fund. The adoption and approval of
the Plans by the shareholders of the Fund by the affirmative vote of a majority
of the outstanding voting securities of the Fund shall constitute adoption and
approval by such shareholders of the Articles of Amendment. In the event the
shareholders of the Fund do not approve the Plans, the Articles of Amendment
shall not be filed. If approved, the Articles of Amendment shall be filed on, or
as expeditiously as possible after, the Effective Date of the Plans.
AETNA VARIABLE PORTFOLIOS, INC.
On behalf of Aetna Index Plus Bond VP
By: ______________________
J. Scott Fox, President
Accepted:
Aeltus Investment Management, Inc.
By: ______________________
Name:
Title:
<PAGE>
EXHIBIT A
PLAN OF SUBSTITUTION
This Plan of Substitution ("Plan") dated ___________, 2000 is made by
Aetna Life Insurance and Annuity Company ("Aetna"), a stock life insurance
company organized under the insurance laws of the State of Connecticut in 1976
and an indirect wholly-owned subsidiary of Aetna Inc. Aetna is a broker-dealer
registered under the Securities Exchange Act of 1934, as amended, and acts as
principal underwriter with respect to Variable Annuity Account C ("Separate
Account"). The Separate Account is a segregated asset account that funds Aetna's
individual and group deferred fixed or variable annuity contracts (each a
"Contract"). The Separate Account is registered with the Securities and Exchange
Commission as a unit investment trust under the Investment Company Act of 1940,
as amended (the "Investment Company Act"). Aetna is the depositor for the
Separate Account. Payments made to the Separate Account under a Contract are
allocated to one or more subaccounts (each a "Subaccount") of the Separate
Account. Each Subaccount invests in shares of an open-end management investment
company registered under the Investment Company Act. The Plan is intended to
accomplish the substitution of shares of beneficial interest ("shares") of Aetna
Variable Encore Fund d/b/a Aetna Money Market VP ("Aetna Money Market VP") in
which a Subaccount of the Separate Account invests, for shares of Aetna Index
Plus Bond VP ("Fund"). The Fund is a series of Aetna Variable Portfolios, Inc.
(the "Company"), in which a Subaccount of the Separate Account invests.
WHEREAS, the Company's Board of Directors ("Board"), with respect to
the Fund, has determined that it is in the best interests of the Fund and its
shareholders to liquidate the Fund pursuant to a Plan of Liquidation; and
WHEREAS, Aetna has advised the Company's Board that, in connection with
the liquidation of the Fund, Aetna has agreed to remove the Fund as an
investment option offered through the Contracts, and desires to substitute for
the interests of holders of such Contracts (the "Contract Holders") in the Fund,
shares of Aetna Money Market VP pursuant to this Plan and has requested that
liquidation of the Fund be made contingent upon approval of this Plan of
Substitution by the affirmative vote of the holders of a majority of the
outstanding voting shares of the Fund (the Plan of Liquidation and the Plan of
Substitution are collectively referred to as the "Plans"); and
WHEREAS, the Company has advised Aetna that it will make the
liquidation of the Fund contingent upon approval of the Plan of Substitution by
the affirmative vote of the holders of a majority of the outstanding voting
securities of the Fund.
NOW THEREFORE, the substitution of a Contract Holder's interest in the
Fund with an interest in the Aetna Money Market VP shall be carried out in the
manner hereinafter set forth:
1. EFFECTIVE DATE OF PLAN OF SUBSTITUTION. The Plan shall be and become
effective with respect to the Fund only upon the adoption and approval of the
Plans, at a meeting of shareholders called for the purpose of voting upon the
Plans, by the affirmative vote of the holders of a majority of the outstanding
voting securities of the Fund. The date of such adoption and approval of both
Plans by the Fund is hereinafter called the "Effective Date".
2. LIQUIDATION DATE. The date on which the Fund makes a liquidating distribution
to shareholders and redeems and cancels its outstanding shares shall be known as
the "Liquidation Date".
3. SPECIAL MEETING OF SHAREHOLDERS. The Company shall provide to each of the
Contract Holders having an interest in shares of the Fund held by the Separate
Account with proxy materials containing all information necessary to make an
informed judgment about the Plans. Aetna, as the record owner of all of the
issued and outstanding shares of the Fund, shall vote its shares in accordance
with the instructions received from the Contract Holders. Any shares of the Fund
for which Aetna does not receive timely voting instructions, or which are not
attributable to Contract Holders, shall be voted in proportion to the
instructions received from all Contract Holders having an interest in the Fund.
4. SUBSTITUTIONS. As soon as possible after the Effective Date of the Plans, and
in any event within thirty days thereafter, the Fund shall deliver the following
to each shareholder of record on the Liquidation Date, by mail or other
reasonable method, in complete redemption and cancellation of the shares of the
Fund held by such shareholder:
(a) A liquidating distribution equal to the shareholder's
proportionate interest in the net assets of the Fund as of the
close of business on the Liquidation Date, and
(b) Information concerning the source of the liquidating
distribution, all in accordance with the Plan of Liquidation.
Aetna as the record owner of all of the issued and outstanding shares of the
Fund, shall, upon receipt of the liquidating distribution, other than that
portion of the distribution attributable to shares of the Fund held in an Aetna
general account, apply such liquidating distribution in accordance with this
Plan, to purchase, for the benefit of each Contract Holder or participant having
an interest in the Fund at the time of its liquidation, an interest in Aetna
Money Market VP ("Substitution"). The Substitution will take place at relative
net asset value with no change in the accumulated value of any Contract Holder's
investment in the Separate Account.
5. CONDITIONS APPLICABLE TO SUBSTITUTION. The Substitution is subject to the
following conditions:
(a) Contract Holders shall not incur any fees or charges as a result
of the Substitution nor shall their rights or Aetna's obligations
under any Contract be altered.
(b) All expenses incurred in connection with the Substitution shall
be paid by Aeltus Investment Management, Inc. and/or its
affiliates.
(c) The Substitution shall not cause the Contract fees and charges
currently being paid by existing Contract Holders or participants
to be greater after the Substitution than before the
Substitution.
(d) The Substitution shall not impose any tax liability on Contract
Holders or participants.
(e) The prospectus for each of the registration statements affected
by the Substitution will be updated to describe the Plan and
identify the Fund being replaced. Summaries of each prospectus
will also be amended to reflect the same information.
(f) Contract Holders shall be furnished with notice of the
Substitution in the form of a revised prospectus (some retirement
plan participants will be furnished notice in the form of a
separate document which describes material changes affecting
their account which is the method of notice employed by Aetna
pursuant to no-action relief received from the Securities and
Exchange Commission staff ("Notice")). Each prospectus and Notice
will inform Contract Holders and participants that effective May
15, 2000, the Fund Subaccount will no longer be available for new
investment.
The prospectuses (and Notice) shall inform Contract Holders and
participants that they may, at any time prior to the
Substitution, transfer their accumulation values from the
Subaccount of the Separate Account investing in the Fund to any
of the other investment options available under their Contract
without incurring any transfer fees or other charges. Following
the Substitution, Contract Holders who had any remaining interest
transferred from the Subaccount investing in the liquidated Fund
to Aetna Money Market VP may transfer among any of the remaining
investment options in accordance with the terms of their
respective Contract, also free of any transfer fees or other
charges.
Each prospectus and Notice shall also inform Contract Holders and
participants that, if permitted by applicable tax law, they may
surrender amounts transferred to the Aetna Money Market VP as a
result of the Substitution without payment of the associated
early withdrawal charge, if surrender is made within 30 days
after the date of the Substitution. Aetna's offer to waive the
early withdrawal charge shall not apply to amounts transferred to
the Fund Subaccount from the other Subaccounts of the Separate
Account or from the fixed account after April 10, 2000.
(g) As soon as practical after the Substitution, Aetna will notify,
in writing, all Contract Holders and participants who had values
transferred from the Fund Subaccount as a result of the
Substitution of their surrender rights and their right to make
"free transfers".
(h) Upon completion of the Substitution with respect to the Fund,
Aetna shall take all actions necessary to eliminate the
Subaccount of the Separate Account investing in shares of the
Fund.
AETNA LIFE INSURANCE AND ANNUITY COMPANY
By: ___________________________________
Name:
Title:
Accepted:
Aeltus Investment Management, Inc.
By: ______________________
Name:
Title:
<PAGE>
EXHIBIT B
AETNA VARIABLE PORTFOLIOS, INC.
ARTICLES OF AMENDMENT
AETNA VARIABLE PORTFOLIOS, INC., a Maryland corporation registered as
an open-end investment company under the Investment Company Act of 1940 and
having its principal office in the State of Maryland in Baltimore City, Maryland
(hereinafter referred to as the "Corporation") hereby certifies to the State
Department of Assessments and Taxation of Maryland (the "Department") that:
FIRST: In connection with and in furtherance of a plan of liquidation
of Aetna Index Plus Bond VP, a separate fund and Portfolio of stock of the
Corporation (the "Liquidating Portfolio"), the Corporation hereby amends its
Charter as currently in effect (the "Charter") to include the following:
A. As of the Effective Date (as hereinafter defined):
(i) each unissued Share of the Liquidating Portfolio, par value
$0.01 per Share, is hereby reclassified into, and shall become, one
unissued unclassified Share of capital stock of the Corporation; and
(ii) the Corporation shall proceed to sell and liquidate all
assets belonging to the Liquidating Portfolio and to pay from the proceeds
thereof all liabilities belonging to the Liquidating Portfolio. After
payment of the liabilities belonging to the Liquidating Portfolio, the
remaining proceeds from the sale and liquidation of the assets belonging to
the Liquidating Portfolio shall be distributed as a liquidating
distribution, as soon as practicable following the Effective Date, but in
any event within thirty days thereafter, among the holders of the Shares of
the Liquidating Portfolio. The date of payment of such liquidating
distribution shall be the "Liquidation Date". Holders of the shares of the
Liquidating Portfolio shall receive a liquidating distribution in
proportion to the number of such Shares held by them and recorded on the
books of the Corporation as of the close of business on the Liquidation
Date.
B. Upon payment by the Corporation of the liquidating distribution on
the Liquidation Date to the holders of Shares of the Liquidating Portfolio,
each issued and outstanding Share of the Liquidating Portfolio shall be
cancelled and shall cease to be issued and outstanding, and each such
cancelled share shall be reclassified into, and shall become, one unissued,
unclassified share of capital stock of the Corporation.
C. Upon cancellation of the issued and outstanding Shares of the
Liquidating Portfolio, and the reclassification of such cancelled Shares
and all unissued Shares of the Liquidating Portfolio to unissued,
unclassified shares of capital stock of the Corporation, the provisions of
the Charter designating and classifying shares of stock of the Corporation
into Shares of the Liquidating Portfolio, establishing and describing the
preferences, rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption of Shares
of the Liquidating Portfolio and the description, and terms and conditions,
of the Shares of the Liquidating Portfolio shall be deleted from the
Charter of the Corporation. Such deletions from the Charter of the
Corporation shall include only provisions of the Charter as they relate to
Shares of the Liquidating Portfolio, and to the extent which any provisions
of the Charter of the Corporation relate both to Shares of the Liquidating
Portfolio and one or more other Series of Shares of stock of the
Corporation, such provisions shall remain in the Charter but shall be
deemed to apply only to such one or more other Series of stock of the
Corporation.
SECOND: The amendments to the Charter of the Corporation herein set forth were
duly advised by the Board of Directors of the Corporation and approved by the
stockholders entitled to vote thereon, as required by the Charter and Bylaws of
the Corporation and applicable law.
THIRD: The amendments set forth herein do not increase the authorized capital
stock of the Corporation.
FOURTH: The amendments set forth herein shall become effective as of the close
of business on the date (the "Effective Date") which is the later of: (i)
______________, 2000; and (ii) the date on which these Articles of Amendment,
having been duly advised, approved, signed, acknowledged and sealed by the
Corporation as required by the laws of the State of Maryland, and not having
been abandoned prior to the Effective Date by majority vote of the entire Board
of Directors of the Corporation, are filed for record with the Department.
IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment to be
executed in its name and on its behalf by its undersigned President and
witnessed or attested to by its undersigned Secretary as of the ____ day of
_________________, 2000 and its undersigned President acknowledges that these
Articles of Amendment are the act and deed of the Corporation and, under
penalties of perjury, that the matters and facts set forth herein are true in
all material respects to the best of his knowledge, information and belief.
AETNA VARIABLE PORTFOLIOS, INC.
By: _______________________________
J. Scott Fox, President
ATTEST:
By: ______________________________
Amy R. Doberman, Secretary
<PAGE>
AETNA VARIABLE PORTFOLIOS, INC. (THE "COMPANY")
Aetna Index Plus Bond VP
THIS PROXY CARD IS SOLICITED ON BEHALF OF
THE COMPANY'S BOARD OF DIRECTORS
THIS PROXY CARD, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY
CARD WILL BE VOTED FOR APPROVAL OF THE PROPOSAL.
Please sign exactly as name appears on this card. When the account is in the
name of joint tenants, all should sign. When signing as administrator, trustee
or guardian, please give title. If a corporation or partnership,
sign in entity's name and by authorized persons.
X______________________
[Signature of Shareholder]
Dated: __________________, 2000
Please refer to the Proxy Statement for a discussion of these matters. This
proxy card is solicited in connection with the special meeting of the
shareholders of Aetna Index Plus Bond VP (the "Fund") to be held at 10:00 am,
Eastern Time, on July 28, 2000, and at any adjournment thereof. THIS PROXY CARD,
WHEN PROPERLY EXECUTED, DIRECTS J. SCOTT FOX AND AMY R. DOBERMAN TO VOTE THE
SHARES LISTED ON THE FRONT OF THIS CARD AS DIRECTED AND REVOKES ALL PRIOR PROXY
CARDS.
Please vote by filling in the appropriate box below, as shown, using blue or
black ink or dark pencil. Do not use red ink.
[ ] [box is filled in solidly] EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.
Proposal: To approve the proposed Plan of Liquidation and Plan of Substitution
for the Fund and, in connection with the Plan of Liquidation, proposed
amendments to the Charter of the Company, as set forth in Articles of Amendment.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS, INCLUDING ANY ADJOURNMENT OF THE MEETING, AS MAY PROPERLY COME BEFORE
THE MEETING.
<PAGE>
AETNA VARIABLE PORTFOLIOS, INC. (THE "COMPANY")
Aetna Index Plus Bond VP
THIS AUTHORIZATION CARD IS SOLICITED ON BEHALF OF
THE COMPANY'S BOARD OF DIRECTORS
VARIABLE ANNUITY ACCOUNT C
THIS AUTHORIZATION CARD, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED CONTRACT HOLDER UNDER A VARIABLE
ANNUITY CONTRACT FUNDED BY A SEPARATE ACCOUNT OF AETNA LIFE INSURANCE AND
ANNUITY COMPANY ("AETNA"). IF YOU DO NOT RETURN THIS AUTHORIZATION CARD, AETNA
WILL VOTE THE FUND SHARES ATTRIBUTABLE TO YOUR INTEREST IN THE SEPARATE ACCOUNT,
FOR, AGAINST, OR ABSTAINING, IN THE SAME PROPORTION AS THE SHARES FOR WHICH
VOTING INSTRUCTIONS HAVE BEEN RECEIVED FROM OTHER CONTRACT HOLDERS. IF YOU
RETURN THE AUTHORIZATION CARD BUT DO NOT MARK YOUR VOTING INSTRUCTION ON THE
REVERSE SIDE, AETNA IS INSTRUCTED TO VOTE THE INTEREST IN THE SEPARATE ACCOUNT
"FOR" THE PROPOSAL. AUTHORIZATION CARDS MARKED AS ABSTENTIONS WILL HAVE THE
EFFECT OF A "NO" VOTE ON THE PROPOSAL.
Please sign exactly as name appears on this card. When the
account is in the name of joint tenants, all should sign. When
signing as administrator, trustee, plan sponsor
or guardian, please give title. If a corporation or partnership,
sign in entity's name and by authorized persons.
X______________________
X______________________
(Signature of Contract Holder)
Dated: __________________, 2000
Please refer to the Proxy Statement for a discussion of these matters. This
authorization card is solicited in connection with the special meeting of the
shareholders of Aetna Index Plus Bond VP (the "Fund") to be held at 10:00 am,
Eastern Time, on July 28, 2000, and at any adjournment thereof (the "Special
Meeting"). THIS AUTHORIZATION CARD, WHEN PROPERLY EXECUTED, DIRECTS AETNA TO
VOTE THE INTEREST OF THE CONTRACT HOLDER(S) SIGNING ON THE REVERSE SIDE IN THE
SHARES OF THE FUND HELD IN THE SEPARATE ACCOUNT AT THE SPECIAL MEETING AND AT
ANY ADJOURNMENT THEREOF IN THE MANNER DIRECTED BELOW WITH RESPECT TO THE MATTERS
DESCRIBED IN THE NOTICE AND ACCOMPANYING PROXY STATEMENT FOR SAID MEETING AND
REVOKES ALL PRIOR AUTHORIZATION CARDS.
Please vote the shares listed on the front of this card by filling in the
appropriate box below, as shown, using blue or black ink or dark pencil. Do not
use red ink.
[ ] [box is filled in solidly] EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.
Proposal: To approve the proposed Plan of Liquidation and Plan of Substitution
for the Fund and, in connection with the Plan of Liquidation, proposed
amendments to the Charter of the Company, as set forth in the Articles of
Amendment.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS, INCLUDING ANY ADJOURNMENT OF THE MEETING, AS MAY PROPERLY COME BEFORE
THE MEETING.
