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:
X Preliminary Proxy Statement Confidential, for Use of
the Commission Only
(as permitted by
Rule 14a-6(e)(2))
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 identity 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 two
portfolios of Aetna Variable Portfolios, Inc. ("the Company"): Aetna High Yield
VP and Aetna Real Estate Securities VP; (2) amend the Company's charter to
reflect this liquidation; and (3) substitute assets remaining in the liquidating
funds as of the liquidation date with interests in Aetna Money Market VP.
On March 1, the Board of Directors for Aetna Variable Portfolios, Inc.
considered and agreed to submit this proposal to shareholders. (These portfolios
were closed to new investment on May 15.) If approved by shareholders at the
July 28 meeting, the liquidations will occur no later than September 1, 2000.
You may transfer your assets into another fund within your 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 into Aetna Money Market VP.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THE PROPOSAL
DESCRIBED IN THE ENCLOSED PROXY STATEMENT. Their recommendation is based on a
number of factors, including the portfolios' 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 are a shareholder of more than one portfolio, you will receive one
proxy for each account. PLEASE VOTE AND RETURN EACH PROXY CARD THAT YOU RECEIVE.
If you have any questions before you vote, please call 1-800-238-6263,
Option 2. We'll help you get the answers you need promptly. Thank you for your
participation in this important matter.
Sincerely,
/s/ J. Scott Fox
J. Scott Fox
(enclosures)
<PAGE>
NOTICE OF A SPECIAL MEETING
OF THE SHAREHOLDERS OF
AETNA VARIABLE PORTFOLIOS, INC.
Aetna High Yield VP
Aetna Real Estate Securities VP
A Special Meeting of the Shareholders (the "Special Meeting") of Aetna
High Yield VP and Aetna Real Estate Securities VP (each a "Fund"), each a series
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 each 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. The
shareholders of each Fund will vote separately with respect to their Fund.
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>
PRELIMINARY COPIES
AETNA VARIABLE PORTFOLIOS, INC.
Aetna High Yield VP
Aetna Real Estate Securities 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 High Yield VP and Aetna Real Estate Securities VP (each a "Fund"
and, collectively, the "Funds"), each a series 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 each 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 Funds'
investment adviser, or its affiliates may contact Contract Holders and
participants with an interest in the Funds, commencing in June 2000, to discuss
the Proposal. The expenses incurred in connection with preparing this Proxy
Statement and its enclosures 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
either 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 and
any more recent Semi-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, each Fund had the following shares issued and outstanding:
Number of Shares Outstanding
as of May 1, 2000
Aetna High Yield VP
Aetna Real Estate Securities VP
Other than shares purchased by Aetna Life Insurance and Annuity
Company's general account in connection with providing seed capital for Aetna
Real Estate Securities VP, shares of each 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 ("ALIAC") and
its subsidiary, Aetna Insurance Company of America ("AICA") (collectively
referred to herein as "Aetna"), owned of record all of the shares of the Funds
(100%). Of this amount, shares of each Fund were allocated to Aetna's general
account as follows:
Amount of
Ownership* Percent of Fund
--------- ---------------
Aetna High Yield VP %
Aetna Real Estate Securities VP 0 0%
*Aetna, as the legal owner of the shares, has sole voting and investment
power with respect to the shares. ALIAC's principal office is located at 151
Farmington Avenue, Hartford, Connecticut 06156-8962. AICA's principal office is
5100 West Lemon Street, Suite 213, Tampa, Florida 33609.
The remaining shares of each Fund were held by Aetna on behalf of the
following separate accounts that fund variable annuity contracts (each a
"Contract") issued to individual or group Contract Holders ("Contract Holders"):
Aetna High Yield VP
Separate Account Name Number of Shares Percentage
Variable Annuity Account B %
Variable Annuity Account C %
Variable Annuity Account D %
Variable Annuity Account I %
Aetna Real Estate Securities VP
Separate Account Name Number of Shares Percentage
Variable Annuity Account B %
Variable Annuity Account C %
Variable Annuity Account D %
Variable Annuity Account I %
The separate accounts invest in the Funds. Contract Holders (or
participants under group contracts, as applicable) who select a Fund for
investment through a Contract have a beneficial interest in the Funds, but do
not invest directly in or hold shares of the Funds. Aetna, on behalf of the
separate accounts, is the true shareholder of the Funds, 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 each Fund held in Aetna's name for the
separate accounts 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 each 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.
With respect to Fund shares held by Variable Annuity Accounts B, C and
I, if Aetna does not receive voting instructions for any shares held under the
Contracts, Aetna will vote those separate account shares for, against or
abstaining, in the same proportions as the shares for which instructions have
been received. With respect to Fund shares held by Variable Annuity Account D,
Aetna will only vote those separate account shares for which it receives
instructions.
To the best of the Company's knowledge, as of the record date, no
person owned beneficially more than 5% of either Fund, except as set forth
above.
The presence in person or by proxy of a majority of a Fund's shares
entitled to vote is necessary to constitute a quorum for the transaction of
business. For purposes of determining the presence of a quorum for transacting
business at the Special Meeting, all shares voted at the meeting will be counted
as present whether they vote for, against or abstain. 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 a 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.
In addition, due to various provisions of certain annuity contracts
funded by Variable Annuity Account D ("Account D"), the Proposal must be
approved by a majority of the voting interests attributable to Contracts in
Account D, which means more than 50% of the outstanding voting interests in the
Funds attributable to Account D. Any voting instructions received with respect
to Contracts in Account D will be voted identically for the overall Fund vote
and for the Account D vote.
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 Aetna High Yield VP owned by Aetna through the general
account will be voted in the same proportion as shares held by the separate
accounts investing in that 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
EACH 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"), have approved and recommend that the
shareholders of each Fund approve a Plan of Liquidation for the Fund, 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 the Plan of
Substitution, which is also appended to the Plan of Liquidation as an exhibit.
The shareholders of each Fund will vote separately on this Proposal with respect
to their Fund.
Background. Investment in each Fund is currently offered only to the
separate accounts that fund both annuity and life insurance contracts offered by
ALIAC and AICA (for purposes of this discussion, ALIAC and AICA are collectively
referred to herein as "Aetna"). Presently, shares of the Funds are owned only by
Aetna's general account (Aetna High Yield VP only) and Aetna's Variable Annuity
Accounts B, C, D and I on behalf of the owners of group or individual deferred
variable annuity contracts (as defined above, the "Contracts"). On March 1,
2000, the Company's Board decided to recommend to shareholders that they approve
a plan of liquidation for the Funds 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 liquidations. Specifically, if
any Contract Holder (or participant, if applicable) 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 record shareholder which could ultimately result in adverse tax
consequences for Contract Holders (and/or participants if applicable). To avoid
such consequences, Aetna and the Board recommend that shareholders approve a
substitution of subaccounts holding the proceeds of a liquidated Fund with a
subaccount investing in Aetna Variable Encore Fund d/b/a Aetna Money Market VP
("Aetna Money Market VP"). Contingent upon such approval, and approval under the
additional Account D vote, Aetna would then substitute interests of Contract
Holders 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 Funds for new Contract Holders effective May 15, 2000. As of that
date, Aetna accepted deposits and continues to accept deposits into the Funds
that are made only pursuant to standing customer 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 with respect to a Fund by a majority of the outstanding
voting securities of the applicable Fund (and approval by a majority of voting
interests attributable to Account D).
Plan of Liquidation. The Board has approved a Plan of Liquidation for
the Funds, which is set forth in Exhibit 1 to this proxy statement and
summarized below.
The Plan will become effective with respect to a Fund on the date of
its adoption and approval by the affirmative vote of a majority of the
outstanding shares of the Fund (and approval by a majority of voting interests
in such Fund attributable to Account D Contract Holders) (the "Effective Date").
Following this approval, the applicable Fund, in an orderly manner, will sell
all of its portfolio securities in order to convert all the Fund's assets to
cash. 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 a 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
applicable Fund will be closed. (See Section 4 of the Plan of Liquidation.)
Aetna owns of record all of the issued and outstanding shares of each
Fund. Upon receipt by Aetna of the liquidating distributions with respect to
such Fund, other than distributions attributable to shares of such Fund owned by
Aetna in a general account, Aetna will apply such liquidating distributions 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, soliciting and miscellaneous expenses arising from the liquidation.
Normal operating expenses of each Fund will be borne by the respective Fund to
the same extent such expenses would have been incurred absent a liquidation. Any
expenses and liabilities attributed to a 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 each 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 each Fund and to
effect the complete liquidation and termination of the existence of each 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 each Fund, the Plan
of Substitution (attached as Exhibit A to the Plan of Liquidation and summarized
herein) will be implemented by Aetna by purchasing with the proceeds of a
liquidating distribution with respect to a Fund, other than distributions
attributable to shares of such Fund held in the 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 a
liquidated Fund to the investment option 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 Plan of 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 a liquidated Fund as a result of the
Plan of 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 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 a 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
(other than a Fund that is subject to the Plan of Liquidation, as described
herein) 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 a 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. Any such transfer will not be counted as one of the free
transfers permitted per calendar year under certain Contracts, provided that the
transfer occurs prior to, or within 90 days after, the substitution.
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 202-942-8090.
Surrender Rights. In lieu of the transfer rights discussed above, if
permitted by the applicable retirement plan (if any) and applicable tax law,
Contract Holders (or participants, as applicable) may elect to receive in cash
the value of their interest in a Fund prior to the Liquidation Date or the value
of their interest actually transferred from a subaccount investing in a
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 from the other investment options to a
Fund 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, as applicable) 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 each Fund would be
reclassified as, and would become, one unissued, unclassified share of capital
stock of the Company; (2) each issued and outstanding share of each Fund would
be cancelled and would 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 each Fund and
setting forth the attributes of such shares, would 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.
Board's Rationale for Recommending the Plans
The reasons for liquidating the Funds. Aetna High Yield VP ("High Yield
Fund") and Aetna Real Estate Securities VP ("Real Estate Fund") commenced
operations on December 10, 1997 and December 15, 1997, respectively. The
following table sets forth the level of each Fund's net assets as of December
31, 1999, the date of each Fund's most recent fiscal year end.
Net Assets
As of December 31, 1999
High Yield Fund $9,216,000
Real Estate Fund $4,994,000
High Yield Fund has sought high current income and growth of capital
primarily through a diversified portfolio of fixed-income securities rated below
investment grade. Real Estate Fund's objective has been maximum total return
primarily through investment in a diversified portfolio of equity securities of
real estate companies, the majority of which are real estate investment trusts
(REITs).
The Funds have been slow to attract assets. Since inception of the
Funds, Aeltus has observed, based on an examination of investment allocation,
that most Contract Holders have been allocating their purchase payments to the
Contracts' other investment options.
Because the Funds have not been able to sell a sufficient number of
shares to lower their operating expense ratios by spreading expenses over a
larger asset base, they have had to rely on Aeltus' contractual commitment to
limit the Funds' expenses. These contractual expense limitations expire on
December 31, 2000. Aeltus has indicated it may be unwilling to continue such
expense limitations thereafter. Absent the expense limitations, Contract Holders
and participants with an interest in any of the Funds 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 each 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 each 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 each 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 each 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 each Fund's performance. The
Board concluded, therefore, that it would be in the interests of each Fund's
shareholders to liquidate the Fund promptly in accordance with a Plan of
Liquidation.
Aeltus and the Board have regularly reviewed developments and
considered alternatives regarding the Funds, 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 each Fund and the absence of
appropriate merger candidates (i.e., funds with investment objectives similar to
those of the Funds proposed for liquidation), 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 each
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 a 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 applicable Fund's shareholders on the Proposal (and receiving approval under
the additional Account D vote), the Funds would be eliminated as investment
options under each Contract after the liquidations are effected, and their
outstanding shares redeemed and cancelled. Additionally, the interests of
Contract Holders in a 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 Effective Date.
Aetna Money Market VP is available under all 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 as compared to that of other investment
options available under the Contracts. Contract Holders should consider whether
reallocation of their interest in a 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.
The following chart compares the advisory fee rates and the expense
ratios of each Fund and Aetna Money Market VP. It also illustrates the impact on
the Funds' expenses if Aeltus had not agreed to limit the Funds' expenses during
the period.
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999:
Ration of Ratio of Expenses to
Net Expenses Average Net Assets
Advisory to Average Before Reimbursement
Fund Fee Net Assets and Waiver
Aetna Money Market VP .25% .34% .34%
High Yield Fund .65% .80% 1.13%
Real Estate Fund .75% .95% 1.49%
For more information, please refer to the current prospectus or other
disclosure documents for Aetna Money Market VP and the Funds previously
furnished to you. To request a prospectus or other information, please contact
Aetna Financial Services at the address or number provided on page 7.
Failure to Approve the Proposal with Respect to a Fund
If a Fund's shareholders do not approve the Proposal with respect to a
Fund, that Fund will continue to exist as an investment option under the
Contracts and the substitution of Contract Holder interests would not be
implemented. The Board would then meet to consider what, if any, steps to take
in the interests of shareholders. If a majority of a Fund's voting shares
approve the Proposal, but a majority of voting interests in such Fund
attributable to Account D Contract Holders does not approve the Proposal,
neither the Plans nor the proposed amendment to the Company's Charter shall
apply with respect to that Fund.
If the Proposal is not approved by one of the Funds, the Plans and the
proposed amendments to the Company's Charter in connection therewith, as set
forth in Articles of Amendment, will apply only to the Fund that approves the
Proposal, and conforming changes will be made to the Plans and Articles of
Amendment.
For the reasons specified above, Aetna and the Company's Board
recommend that the Proposal be approved for each Fund. Persons having voting
interests in a 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 EACH FUND VOTE FOT
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 each 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 ALIAC, 151 Farmington Avenue, Hartford,
Connecticut 06156.
OTHER BUSINESS
The management of each Fund 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 Funds 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 a 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
a 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 High Yield VP
Aetna Real Estate Securities 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 High Yield VP and Aetna Real Estate
Securities VP (each a "Fund"), each a separate portfolio or series of stock, and
a segregated portfolio of assets of the Company. Each 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 each 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 Funds, their high expense ratios
absent fee waivers and expense reimbursements, the investment adviser's
unwillingness to maintain indefinitely the Funds' expenses at current levels,
and the relative lack of investor interest in the Funds, the Company's Board of
Directors, on behalf of each 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 and its subsidiary,
Aetna Insurance Company of America (collectively "Aetna"), are the record owners
of all of the issued and outstanding shares of the Funds and own shares either
in a general account or on behalf of separate accounts that offer interests in
the Funds as investment options 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 Funds, Aetna has agreed to remove each Fund as an investment
option offered through the Contracts, and desires to substitute for the interest
of Contract Holders in each 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
each 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 such Fund, and a majority of voting interests with respect to such Fund
attributable to Account D Contract Holders, and to comply with the Plan of
Substitution in connection with the liquidation of Funds, and the Company's
Board of Directors has determined that it is in the best interest of each of the
Funds 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 each Fund
and directed that the Plans be submitted to shareholders of each 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 each Fund shall be carried out in the
manner hereinafter set forth:
1. Effective Date of Plans. The Plans shall be and become effective with
respect to a Fund only upon (1) 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; and (2) approval by a majority of voting
interests attributable to Account D Contract Holders. The day of such
adoption and approval of both Plans by shareholders of a Fund is
hereinafter called the "Effective Date" with respect to such Fund.
2. Liquidation Date. The date on which a 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"
with respect to such Fund.
3. Cessation of Business. As of the close of business on the Liquidation Date
with respect to a Fund, 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 a 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 applicable 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 applicable 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 each
Fund shall be converted to cash and cash equivalents.
6. Payment of Debts. As soon as practicable after the Effective Date
applicable to a Fund, 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 applicable to a Fund, 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 each Fund. Upon receipt
by Aetna of the liquidating distributions with respect to such Fund, other
than distributions attributable to shares of such Fund owned by Aetna in a
general account, Aetna will apply such liquidating distributions 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 Plans with respect to each Fund 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 a
Fund subsequent to the mailing of the liquidating distribution will also be
borne by Aeltus.
9. Amendment of Plans. The Board shall have the authority to authorize such
variations from or amendments to the provisions of the Plans as may be
necessary or appropriate to effect the marshaling of Fund assets and the
complete liquidation and termination of the existence of a 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
Plans.
10. Failure to Obtain Approval on Behalf of All the Funds. In the event that
(1) shareholders of a Fund do not approve the Plans with respect to such
Fund, or (2) Account D Contract Holders do not approve the Plans, the Plans
shall not apply to that Fund.
11. Filings with the State of Maryland. In connection with the Plans 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 each 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 a Fund by the affirmative vote
of a majority of the outstanding voting securities of the Fund, and by a
majority of voting interests with respect to the Fund attributable to
Account D Contract Holders, shall constitute adoption and approval by such
shareholders of the Articles of Amendment with respect to the Fund. In the
event the shareholders of, or the Account D Contract Holders with respect
to, a Fund do not approve the Plans with respect to such Fund, the Articles
of Amendment shall not apply to that Fund and the form thereof shall be
adjusted accordingly. The Articles of Amendment pertaining to the Funds
whose shareholders have approved the Plans, shall be filed on, or as
expeditiously as possible after, the Effective Date of the Plans with
respect to such Funds.
AETNA VARIABLE PORTFOLIOS, INC.
On behalf of Aetna High Yield VP,
Aetna Real Estate Securities VP and
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 ("ALIAC"), 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., and Aetna Insurance
Company of America ("AICA"), a stock life insurance company organized under the
insurance laws of the State of Connecticut in 1990 and redomesticated under the
insurance laws of the State of Florida in January 2000 and a subsidiary of ALIAC
(ALIAC and AICA being collectively referred to herein as "Aetna"). ALIAC 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 B,
Variable Annuity Account C, Variable Annuity Account D and Variable Annuity
Account I (each a "Separate Account"). The Separate Accounts are segregated
asset accounts that fund Aetna's individual or group deferred variable annuity
contracts (each a "Contract"). Each Separate Account, except Variable Annuity
Account D, 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"). AICA is the depositor for Variable Annuity Account I,
and ALIAC is the depositor for Variable Annuity Accounts B, C and D. Payments
made to a 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 each
Separate Account invests, for shares of each of Aetna High Yield VP ("High Yield
Fund") and Aetna Real Estate Securities VP ("Real Estate Fund"). The High Yield
Fund and Real Estate Fund are each a series ("Fund" and, collectively the
"Funds") of Aetna Variable Portfolios, Inc. (the "Company"), in which a
Subaccount of each Separate Account invests.
WHEREAS, the Company's Board of Directors ("Board"), with respect to
High Yield Fund and Real Estate Fund, has determined that it is in the best
interests of the Funds and their shareholders to liquidate the Funds pursuant to
a Plan of Liquidation; and
WHEREAS, Aetna has advised the Company's Board that, in connection with
the liquidation of the Funds, Aetna has agreed to remove each 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 each
Fund, shares of Aetna Money Market VP pursuant to this Plan and has requested
that liquidation of the Funds be made contingent (1) upon approval by each Fund,
by the affirmative vote of the holders of a majority of the outstanding voting
shares of such Fund, and (2) upon approval by a majority of voting interests
with respect to each Fund attributable to Aetna Variable Annuity Account D
Contract Holders, of this Plan, as well as the Plan of Liquidation (collectively
with the Plan of Substitution, the "Plans"), and any Articles of Amendment
related thereto; and
WHEREAS, the Company has advised Aetna that it will make the
liquidation of each Fund contingent upon approval by the affirmative vote of the
holders of a majority of the outstanding voting securities of such Fund, and a
majority of voting interests with respect to each Fund attributable to Account D
Contract Holders, of this Plan, as well as the Plan of Liquidation and any
amendments to the Charter of the Company in connection therewith.
NOW THEREFORE, the substitution of a Contract Holder's interest in each
Fund with an interest in the Aetna Money Market VP shall be carried out in the
manner hereinafter set forth:
1. Effective Date of Plans. The Plans shall be and become effective with
respect to a Fund only upon the adoption and approval of the Plans, (1) 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, and (2) by a majority of the voting
interests with respect to the Fund attributable to Contracts funded by
Account D. The date of such adoption and approval of both Plans by a Fund
is hereinafter called the "Effective Date" with respect to such Fund.
2. Liquidation Date. The date on which a Fund makes a liquidating distribution
to shareholders and redeems and cancels its outstanding shares shall be
known as the "Liquidation Date" with respect to such Fund.
3. Special Meeting of Shareholders. The Company shall provide to each of the
Contract Holders having an interest in shares of the Funds held by the
Separate Accounts 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 Funds, shall vote its
shares in accordance with the instructions received from the Contract
Holders. Any shares of a Fund for which Aetna does not receive timely
voting instructions, except for those attributable to Variable Annuity
Account D, 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 applicable Fund. With respect to shares
attributable to Variable Annuity Account D, Aetna will only vote those
separate account shares for which it receives instructions.
4. Substitutions. As soon as possible after the Effective Date of the Plans
applicable to a Fund, 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 each
Fund, shall, upon receipt of the liquidating distributions with respect to such
Fund, other than distributions attributable to shares of such Fund held in an
Aetna general account, apply such liquidating distributions 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 (a "Substitution"). Each Substitution will take place at
relative net asset value with no change in the amount of any Contract Holder's
accumulated value or in the dollar amount of his or her investment in the
applicable Separate Account.
5. Conditions Applicable to Substitutions. The Substitutions are subject to
the following conditions:
(a) Contract Holders shall not incur any fees or charges as a result of
the substitutions nor shall their rights or Aetna's obligations under
any Contract be altered.
(b) All expenses incurred in connection with the Substitutions shall be
paid by Aeltus Investment Management, Inc. and/or its affiliates.
(c) The Substitutions shall not cause the Contract fees and charges
currently being paid by existing Contract Holders or participants to
be greater after the Substitutions than before the Substitutions.
(d) The Substitutions 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 which
Funds are 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 Substitutions
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 ("Notice")). Each prospectus
and Notice will inform Contract Holders and participants that
effective May 15, 2000, the High Yield Fund and Real Estate Fund
Subaccounts 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 Substitutions,
transfer their accumulation values from the Subaccounts of the
relevant Separate Account investing in High Yield Fund and Real Estate
Fund to any of the other investment options available under their
Contract that are not also subject to the Plan without incurring any
transfer fees or other charges. The transfer of investments from the
applicable Fund as a result of the Substitution will not be counted as
one of the free transfers permitted to Contract Holders (or
participants) where applicable, provided the transfer occurs within 90
days of the Substitution.
Each prospectus and Notice shall also inform Contract Holders and
participants that, if permitted by this Plan and applicable tax law,
they may surrender amounts transferred to the Aetna Money Market VP as
a result of the Substitutions 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 High Yield Fund
or Real Estate Fund Subaccounts from the other Subaccounts of the
Separate Accounts or from the fixed account after April 10, 2000.
(g) As soon as practical after the Substitutions, Aetna will notify, in
writing, all Contract Holders and participants who had values
transferred from the High Yield Fund or Real Estate Fund Subaccounts
as a result of the Substitutions of their surrender rights and, as
applicable, their right to make "free transfers" for another 90 days.
(h) Upon completion of the Substitution with respect to a Fund, Aetna
shall take all actions necessary to eliminate the Subaccounts of each
Separate Account investing in shares of the Fund.
6. Failure to Obtain Approval on Behalf of Each Fund. In the event that both
Plans are not approved with respect to a Fund (1) by the shareholders
thereof, or (2) by Account D Contract Holders, this Plan shall not apply to
that Fund.
AETNA INSURANCE COMPANY OF AMERICA
By: __________________________________
Name:
Title:
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 Real Estate Securities VP, and Aetna High Yield VP, each a separate
fund and Series of stock of the Corporation (each a "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 each Liquidating Portfolio
of stock of the Corporation, 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 each Liquidating Portfolio and to pay
from the proceeds thereof all liabilities belonging to such Liquidating
Portfolio. After payment of the liabilities belonging to such
Liquidating Portfolio, the remaining proceeds from the sale and
liquidation of the assets belonging to such Liquidating Portfolio shall
be distributed as a liquidating distribution, as soon as practicable
after the Effective Date, but in any event within thirty days
thereafter, among the holders of the Shares of such Liquidating
Portfolio on the date immediately preceding the Liquidation Date (as
hereinafter defined), in proportion to the number of such Shares held
by them and recorded on the books of the Corporation. The date of
payment of such liquidating distribution shall be the "Liquidation
Date".
B. Upon payment by the Corporation of the liquidating
distribution on the Liquidation Date to the holders of Shares of each
Liquidating Portfolio, each issued and outstanding Share of such
Liquidating Portfolio shall be canceled and shall cease to be issued
and outstanding, and each such canceled 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
each Liquidating Portfolio, and the reclassification of such canceled
Shares and all unissued Shares of each such 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 each 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 each Liquidating Portfolio and
the description, and terms and conditions, of the Shares of each
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 each
Liquidating Portfolio, and to the extent which any provisions of the
Charter of the Corporation relate both to Shares of a 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>
PRELIMINARY COPIES
AETNA VARIABLE PORTFOLIOS, INC. (the "Company")
[Aetna High Yield VP]
[Aetna Real Estate Securities 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 High Yield VP/Aetna Real Estate Securities VP] (the
"Fund") to be held at 10:00 a.m., 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]
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.
Proposal: To approve the proposed Plan of Liquidation and Plan of Substitution
for each 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 High Yield VP]
[Aetna Real Estate Securities VP]
THIS AUTHORIZATION CARD IS SOLICITED ON BEHALF OF
THE COMPANY'S BOARD OF DIRECTORS
VARIABLE ANNUITY ACCOUNTS B, C and I
THIS AUTHORIZATION CARD, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED PARTICIPANT(S) ("CONTRACT HOLDER")
UNDER A VARIABLE ANNUITY CONTRACT FUNDED BY A SEPARATE ACCOUNT OF EITHER AETNA
LIFE INSURANCE AND ANNUITY COMPANY OR AETNA INSURANCE COMPANY OF AMERICA
(COLLECTIVELY, "AETNA"). IF NO INSTRUCTION IS INDICATED REGARDING THE PROPOSAL
TO BE VOTED ON, AETNA IS INSTRUCTED TO VOTE THE INTEREST IN THE SEPARATE ACCOUNT
ON SUCH PROPOSAL PROPORTIONATELY IN ACCORDANCE WITH INSTRUCTIONS RECEIVED FROM
OTHER CONTRACT HOLDERS. IF NO INSTRUCTIONS ARE RECEIVED FROM ANY CONTRACT
HOLDER, AETNA WILL VOTE FOR 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 High Yield VP/Aetna Real Estate Securities VP] (the
"Fund") to be held at 10:00 a.m., 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 ABOVE 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]
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.
Proposal: To approve the proposed Plan of Liquidation and Plan of Substitution
for each 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 High Yield VP]
[Aetna Real Estate Securities VP]
THIS AUTHORIZATION CARD IS SOLICITED ON BEHALF OF
THE COMPANY'S BOARD OF DIRECTORS
VARIABLE ANNUITY ACCOUNT D
THIS AUTHORIZATION CARD, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED PARTICIPANT(S) ("CONTRACT HOLDER")
UNDER A VARIABLE ANNUITY CONTRACT FUNDED BY SEPARATE ACCOUNT D OF AETNA LIFE
INSURANCE AND ANNUITY COMPANY ("ALIAC"). ALIAC WILL ONLY VOTE THOSE SHARES OF
THE FUND ATTRIBUTABLE TO ACCOUNT D FOR WHICH IT RECEIVES INSTRUCTIONS.
Please sign exactly as name appears on this card.
When signing as administrator, trustee, plan sponsor
or other plan fiduciary, 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 High Yield VP/Aetna Real Estate Securities VP] (the
"Fund") to be held at 10:00 a.m., Eastern Time, on July 28, 2000, and at any
adjournment thereof (the "Special Meeting"). THIS AUTHORIZATION CARD, WHEN
PROPERLY EXECUTED, DIRECTS ALIAC TO VOTE THE INTEREST OF THE CONTRACT HOLDER(S)
SIGNING ABOVE IN THE SHARES OF THE FUND HELD IN SEPARATE ACCOUNT D 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]
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.
Proposal: To approve the proposed Plan of Liquidation and Plan of Substitution
for each 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
ANY VOTING INSTRUCTIONS ATTRIBUTABLE TO VARIABLE ACCOUNT D RECEIVED IN
CONNECTION WITH THE PROPOSED SUBSTITUTION WILL BE VOTED IDENTICALLY FOR THE
ADDITIONAL VOTE REQUIRED BY CONTRACTS FUNDED BY VARIABLE ANNUITY ACCOUNT D.
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.
