<PAGE>
As filed with the Securities and Exchange Registration No. 33-75996*
Commission on February 16, 1996 Registration No. 811-2512
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
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POST-EFFECTIVE AMENDMENT NO. 5 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment To
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
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Variable Annuity Account B of Aetna Life Insurance and Annuity Company
(EXACT NAME OF REGISTRANT)
Aetna Life Insurance and Annuity Company
(NAME OF DEPOSITOR)
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Depositor's Telephone Number, including Area Code: (860) 273-7834
Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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It is proposed that this filing will become effective:
X on May 1, 1996 pursuant to paragraph (a)(1) of Rule 485
-----
*Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has
included a combined prospectus under this Registration Statement which includes
all the information which would currently be required in a prospectus relating
to the securities covered by Registration Statement No. 2-52448 and the
individual deferred compensation contracts covered by Registration Statement
No. 33-76000.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
Registrant expects to file a Rule 24f-2 Notice for the fiscal year ended
December 31, 1995 on or before February 29, 1996.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
CROSS REFERENCE SHEET
Form N-4
Item No. Part A (Prospectus) Location
- --------- ------------------- ---------
1 Cover Page . . . . . . . . . . . . . . . . . Cover Page
2 Definitions. . . . . . . . . . . . . . . . . Definitions
3 Synopsis or Highlights . . . . . . . . . . . Prospectus Summary; Fee
Table
4 Condensed Financial Information. . . . . . . Condensed Financial
Information
5 General Description of Registrant, Depositor,
and Portfolio Companies. . . . . . . . . . . The Company; Variable
Annuity Account B; The
Funds
6 Deductions and Expenses. . . . . . . . . . . Charges and Deductions;
Distribution
7 General Description of Variable Annuity
Contracts. . . . . . . . . . . . . . . . . . Purchase; Miscellaneous
8 Annuity Period . . . . . . . . . . . . . . . Annuity Period
9 Death Benefit. . . . . . . . . . . . . . . . Death Benefit During
Accumulation Period;
Death Benefit Payable
During the Annuity
Period
10 Purchases and Contract Value . . . . . . . . Purchase; Contract
Valuation
11 Redemptions. . . . . . . . . . . . . . . . . Right to Cancel;
Withdrawals
12 Taxes. . . . . . . . . . . . . . . . . . . . Tax Status
13 Legal Proceedings. . . . . . . . . . . . . . Miscellaneous - Legal
Matters and Proceedings
14 Table of Contents of the Statement of
Additional Information . . . . . . . . . . . Contents of the
Statement of Additional
Information
<PAGE>
Form N-4
Item No. Part B (Statement of Additional Information) Location
- --------- -------------------------------------------- --------
15 Cover Page . . . . . . . . . . . . . . . . . Cover page
16 Table of Contents. . . . . . . . . . . . . . Table of Contents
17 General Information and History. . . . . . . General Information and
History
18 Services . . . . . . . . . . . . . . . . . . General Information and
History; Independent
Auditors
19 Purchase of Securities Being Offered . . . . Offering and Purchase
of Contracts
20 Underwriters . . . . . . . . . . . . . . . . Offering and Purchase
of Contracts
21 Calculation of Performance Data. . . . . . . Performance Data;
Average Annual Total
Return Quotations
22 Annuity Payments . . . . . . . . . . . . . . Annuity Payments
23 Financial Statements . . . . . . . . . . . . Financial Statements
PART C (OTHER INFORMATION)
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
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- --------------------------------------------------------------------------------
This Prospectus generally describes group deferred variable annuity contracts
("Contracts") issued by Aetna Life Insurance and Annuity Company (the
"Company"). The Contracts are available through participation in (1) employer-
sponsored deferred compensation plans sponsored by tax-exempt organizations for
deferrals not subject to Section 457 of the Internal Revenue Code of 1986, as
amended ("Code") or by taxable organizations for their employees and/or
independent contractors ("Non-Section 457 Plans"); or (2) employer-sponsored
deferred compensation plans sponsored by tax-exempt organizations for deferrals
that are subject to Code Section 457 for their employees and/or independent
contractors ("Section 457 Plans") (collectively referred to as "Plans"). Only
group contracts are currently offered for sale; however, "Contracts" shall also
refer to employer-owned individual Contracts issued in connection with Plans in
the past.
The Contracts provide that contributions may be allocated to one or more of the
Credited Interest Options or to one or more of the Subaccounts of Variable
Annuity Account B, a separate account of the Company. The Subaccounts invest
directly in shares of the following Funds:
- Aetna Variable Fund - Fidelity VIP Growth Portfolio
- Aetna Income Shares - Fidelity VIP Overseas Portfolio
- Aetna Variable Encore Fund - Janus Aspen Aggressive Growth
- Aetna Investment Advisers Fund, Portfolio
Inc. - Janus Aspen Balanced Portfolio
- Aetna Ascent Variable Portfolio - Janus Aspen Flexible Income
- Aetna Crossroads Variable Portfolio Portfolio
- Aetna Legacy Variable Portfolio - Janus Aspen Growth Portfolio
- Alger American Growth Portfolio - Janus Aspen Short-Term Bond
- Alger American Small Cap Portfolio Portfolio
- Calvert Responsibly Invested - Janus Aspen Worldwide Growth
Balanced Portfolio Portfolio
- Fidelity VIP II Contrafund - Lexington Natural Resources Trust
Portfolio - Neuberger & Berman Growth Portfolio
- Fidelity VIP Equity-Income - Scudder International Portfolio
Portfolio - TCI Growth (a Twentieth Century
fund)
The Credited Interest Options currently available under the Contract are the
Guaranteed Accumulation Account, the Fixed Account and the Fixed Plus Account.
Except as specifically mentioned, this Prospectus describes only investments
through the Separate Account. A brief description of each of the Credited
Interest Options is contained in Appendices to this Prospectus. Additional
information concerning the Guaranteed Accumulation Account is contained in a
separate prospectus.
The availability of the Funds and the Credited Interest Options is subject to
applicable regulatory authorization. Not all Funds or Credited Interest Options
may be available in all jurisdictions, under all Contracts, or in all Plans.
Please check with your employer to determine option availability. (See
"Investment Options.")
This Prospectus provides investors with the information that they should know
about the Separate Account before investing in the Contract through the Separate
Account. Additional information about the Separate Account is contained in a
Statement of Additional Information ("SAI") which is available at no charge. The
SAI has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. The Table of Contents for the SAI is printed
on page 17 of this Prospectus. An SAI may be obtained by indicating the request
on the enrollment form or on the prospectus receipt contained in this
Prospectus, or by calling the number listed under the "Inquiries" section of the
Prospectus Summary.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE FUNDS AND GUARANTEED ACCUMULATION ACCOUNT. ALL PROSPECTUSES SHOULD BE READ
AND RETAINED FOR FUTURE REFERENCE.
THE SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION ARE DATED MAY 1,
1996
<PAGE>
TABLE OF CONTENTS
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- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
DEFINITIONS.......................................................................... DEFINITIONS - 1
PROSPECTUS SUMMARY................................................................... SUMMARY - 1
FEE TABLE............................................................................ FEE TABLE - 1
CONDENSED FINANCIAL INFORMATION...................................................... AUV HISTORY - 1
THE COMPANY.......................................................................... 1
VARIABLE ANNUITY ACCOUNT B........................................................... 1
INVESTMENT OPTIONS
The Funds........................................................................ 1
Credited Interest Options........................................................ 4
PURCHASE
Contract Availability............................................................ 4
Contract Purchase................................................................ 4
Purchase Payments................................................................ 4
Right to Cancel.................................................................. 5
Transfer Credits................................................................. 5
CHARGES AND DEDUCTIONS
Daily Deductions from the Separate Account....................................... 5
Maintenance Fee.................................................................. 6
Deferred Sales Charge............................................................ 6
Fund Expenses.................................................................... 7
Premium and Other Taxes.......................................................... 7
CONTRACT VALUATION................................................................... 8
TRANSFERS............................................................................ 8
Dollar Cost Averaging Program.................................................... 8
WITHDRAWALS.......................................................................... 8
ADDITIONAL WITHDRAWAL OPTIONS........................................................ 9
DEATH BENEFIT DURING ACCUMULATION PERIOD............................................. 10
ANNUITY PERIOD
Annuity Period Elections......................................................... 11
Annuity Options.................................................................. 11
Annuity Payments................................................................. 12
Charges Deducted During the Annuity Period....................................... 12
Death Benefit Payable During the Annuity Period.................................. 12
TAX STATUS
Introduction..................................................................... 13
Taxation of the Company.......................................................... 13
Tax Status of the Contract....................................................... 13
Contracts Used With Certain Retirement Plans..................................... 13
Section 457 Plans................................................................ 14
Plans of Non-Section 457 Tax-Exempt Organizations and Taxable Organizations...... 15
MISCELLANEOUS
Voting Rights.................................................................... 16
Modification of the Contract..................................................... 16
Distribution..................................................................... 16
Performance Reporting............................................................ 16
Transfer of Ownership; Assignment................................................ 17
Delay or Suspension of Payments.................................................. 17
Legal Matters and Proceedings.................................................... 17
</TABLE>
<PAGE>
<TABLE>
<S> <C>
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.................................. 18
APPENDIX I--GUARANTEED ACCUMULATION ACCOUNT.......................................... 19
APPENDIX II--FIXED ACCOUNT........................................................... 20
APPENDIX III--FIXED PLUS ACCOUNT..................................................... 21
</TABLE>
NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERS CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
<PAGE>
DEFINITIONS
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- --------------------------------------------------------------------------------
As used in this Prospectus, the following terms have the meanings shown:
ACCOUNT: A record established for each Participant, as directed by the Contract
Holder, to identify contract values during the Accumulation Period.
ACCOUNT YEAR: A period of twelve months measured from the date on which an
Account is established (the effective date) or from an anniversary of such
effective date.
ACCOUNT VALUE: The total dollar value of amounts held in an Account as of any
Valuation Date during the Accumulation Period.
ACCUMULATION PERIOD: The period during which Purchase Payment(s) credited to an
Account are invested to fund future annuity payments.
ACCUMULATION UNIT: A measure of the value of each Subaccount before annuity
payments begin.
AGGREGATE PURCHASE PAYMENT(S): The sum of all Purchase Payment(s) made under a
Contract.
ANNUITANT: The person on whose life or life expectancy the annuity payments are
based.
ANNUITY: A series of payments for life, for a definite period or a combination
of the two.
ANNUITY PERIOD: The period during which annuity payments are made.
ANNUITY UNIT: A measure of the value of each Subaccount selected during the
Annuity Period.
BENEFICIARY: The Contract Holder is the Contract beneficiary.
CODE: The Internal Revenue Code of 1986, as amended.
COMPANY (WE, US): Aetna Life Insurance and Annuity Company.
CONTRACTS: The group and individual deferred, variable annuity contracts
described in this Prospectus.
CONTRACT BENEFICIARY: The Contract Holder is the Contract Beneficiary.
CONTRACT HOLDER: The entity to which the Contract is issued (generally the
employer). The Contract Holder has all right, title and interest in amounts held
under the Contract.
CREDITED INTEREST OPTIONS: The fixed interest options under the Contract. The
Credited Interest Options currently consist of the Guaranteed Accumulation
Account, the Fixed Account and the Fixed Plus Account, each of which is
described in an Appendix to this Prospectus. Amounts allocated to the Credited
Interest Options are included in the Account Value.
FUND(S): An open-end management investment company whose shares are purchased by
the Separate Account to fund the benefits provided by the Contracts.
HOME OFFICE: The Company's principal executive offices located at 151 Farmington
Avenue, Hartford, Connecticut 06156.
NON-SECTION 457 PLAN(S): Employer-sponsored deferred compensation plans
sponsored by tax-exempt organizations for deferrals not subject to Code Section
457 and by taxable organizations for their employees and/or independent
contractors.
PARTICIPANT (YOU): A person participating in a Plan maintained by an eligible
organization. Participants have no rights to the assets accumulated under the
Plan.
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DEFINITIONS - 1
<PAGE>
PLAN(S): Employer-sponsored deferred compensation plans sponsored by tax-exempt
organizations and/or taxable organizations for their employees or independent
contractors (or both).
PLAN ACCOUNT: The record established for a Contract Holder of the Net Purchase
Payments accumulated under a Contract where Accounts are not maintained.
PLAN BENEFICIARY: The person entitled to receive benefits under the Plan in the
event of the Participant's death.
PURCHASE PAYMENT(S): The gross payment(s) made to the Company under a Contract.
PURCHASE PAYMENT PERIOD: For "Installment Purchase Payment Accounts" the period
of time for completion of the agreed upon annual number and amount of Purchase
Payments. For example, if it is determined that the Purchase Payment Period will
consist of 12 payments per year and only 11 payments are made, the Purchase
Payment Period is not completed until the twelfth Purchase Payment is made.
SECTION 457 PLAN(S): Employer-sponsored deferred compensation plans sponsored by
tax-exempt organizations for deferrals that are subject to Code Section 457 for
their employees and/or independent contractors.
SEPARATE ACCOUNT: Variable Annuity Account B, a separate account established by
the Company for the purpose of funding variable annuity contracts issued by the
Company.
SUBACCOUNT(S): The portion of the assets of the Separate Account that is
allocated to a particular Fund. Each Subaccount invests in the shares of only
one corresponding Fund.
VALUATION DATE: The date and time at which the value of a Subaccount is
calculated. Currently, this calculation occurs at the close of business of the
New York Stock Exchange on any normal business day, Monday through Friday, that
the New York Stock Exchange is open.
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DEFINITIONS - 2
<PAGE>
PROSPECTUS SUMMARY
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- --------------------------------------------------------------------------------
CONTRACTS OFFERED
The Contracts offered in this Prospectus are group deferred variable annuity
contracts issued by Aetna Life Insurance and Annuity Company (the "Company").
The purpose of the Contract is to accumulate values and to provide benefits upon
retirement to Participants under:
(1) Employer-sponsored deferred compensation plans sponsored by tax-exempt
organizations for deferrals not subject to Code Section 457 and by
taxable organizations for their employees and/or independent contractors
("Non-Section 457 Plans"), and
(2) Employer-sponsored deferred compensation plans sponsored by tax-exempt
organizations for deferrals that are subject to Code Section 457 for
their employees and/or independent contractors ("Section 457 Plans").
CONTRACT PURCHASE
The Contract may be purchased by eligible organizations on behalf of a group
made up of their employees and/or independent contractors. An Account is
established for eligible employees by completing the enrollment form (and any
other required forms) and submitting them to the Company. Purchase Payments can
be applied to the Contract either through a lump-sum transfer from a
pre-existing plan or through periodic salary reductions or employer
contributions. (See "Purchase.")
FREE LOOK PERIOD
Contract Holders have the right to cancel their Contract within 10 days
after receiving it (or as otherwise allowed by state law) by returning it to us
along with a written notice of cancellation. Unless state law requires
otherwise, the amount received upon cancellation under this provision may
reflect the investment performance of the Purchase Payments deposited in the
Separate Account while invested. In certain cases, this may be less than the
amount of the Purchase Payments. (See "Purchase--Right to Cancel.")
INVESTMENT OPTIONS
The Company has established Variable Annuity Account B, a registered unit
investment trust, for the purpose of funding the variable portion of the
Contracts. The Separate Account is divided into subaccounts which invest
directly in shares of the Funds described herein. The Contract allows investment
in any or all of the Subaccounts, as well as in the Credited Interest Options
described below. For a complete list of the Funds available under the Contracts,
and a description of the investment objectives of each of the Funds and their
investment advisers, see "Investment Options-- The Funds" in this Prospectus, as
well as the prospectuses for each of the Funds.
The Contract also provides for investment in Credited Interest Options,
which earn fixed rates of interest. The fixed options available under the
Contract are the Guaranteed Accumulation Account ("GAA"), the Fixed Account, and
the Fixed Plus Account. (See the Appendices to this Prospectus.)
CHARGES AND DEDUCTIONS
Certain charges are associated with these Contracts. These charges include
daily deductions from the Separate Account (the mortality and expense risk
charge and an administrative charge), any annual maintenance fee, and premium
and other taxes. The Funds also incur certain fees and expenses which are
deducted directly from the Funds. A deferred sales charge may apply upon a full
or partial withdrawal of the Account Value. (See the Fee Table and "Charges and
Deductions.")
TRANSFERS
Prior to the Annuity Date, and subject to certain limitations, Account
Values may be transferred among the Subaccounts and the Credited Interest
Options without charge. Transfers can be requested in writing or by telephone in
accordance with the Company's transfer procedures. (See Appendices I, II and III
for a full description of the restrictions applicable to transfers from the
Credited Interest Options.) (See "Transfers.")
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SUMMARY - 1
<PAGE>
WITHDRAWALS
The Contract Holder may withdraw all or a part of the Account Value prior to
the Annuity Date by properly completing a disbursement form and sending it to
the Company. Limitations apply to withdrawals from the Fixed Plus Account.
Certain charges may be assessed upon withdrawal. The withdrawals may also be
subject to income tax. (See "Withdrawals.")
The Contract also offers certain Additional Withdrawal Options during the
Accumulation Period to persons meeting certain criteria. Additional Withdrawal
Options are not available in all states and may not be suitable in every
situation. (See "Additional Withdrawal Options.")
DEATH BENEFIT
The Contract provides that a Death Benefit is payable to the Contract
Beneficiary upon the death of the Participant before the Annuity Date. The
Contract Holder may direct that we make such payment to the Plan Beneficiary.
The amount of the Death Benefit will be equal to the Account Value. Until the
election of a method of payment, the Account Value will remain invested under
the Contract. The Contract Holder on behalf of a Plan Beneficiary may elect to
receive the proceeds in a lump sum or under any of the payment options available
under the Contract. However, the Code requires that distributions begin within a
certain time period. (See "Death Benefit During Accumulation Period.")
After Annuity Payments have commenced, a death benefit may be payable to the
Contract Beneficiary depending upon the terms of the Contract and the Annuity
Option selected. (See "Annuity Period--Death Benefit Payable During the Annuity
Period.")
THE ANNUITY PERIOD
On the Annuity Date, the Contract Holder, on your behalf, may elect to begin
receiving Annuity Payments on either a fixed, variable or combination of fixed
and variable basis. If a variable payout is selected, the payments will vary
with the investment performance of the Subaccount(s) selected. The Company
reserves the right to limit the number of Subaccounts that may be available
during the Annuity Period. (See "Annuity Period.")
TAXES
Contributions and earnings are not generally taxed until paid or made
available under the employer's Plan. Withholding for income tax may be imposed
on certain withdrawals. (See "Tax Status.")
INQUIRIES
Questions, inquiries or requests for additional information can be directed
to your agent or local representative, or you may contact the Company as
follows:
<TABLE>
<S> <C>
- Write to: Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156-1277
Attention: Customer Service
- Call Customer Service: 1-800-525-4225 (for automated transfers or changes
in the allocation of Account Values, call:
1-800-262-3862)
</TABLE>
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SUMMARY - 2
<PAGE>
FEE TABLE
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- --------------------------------------------------------------------------------
This Fee Table describes the various charges and expenses associated with the
Contract during the Accumulation Period. For amounts deducted during the Annuity
Period, see "Charges Deducted During the Annuity Period". No sales charge is
paid when the Contract is purchased. Some expenses may vary as explained under
"Charges and Deductions." The charges and expenses shown below do not include
premium taxes that may be applicable. For more information regarding expenses
paid out of assets of a particular Fund, see the Fund's prospectus.
DIRECT CHARGES. These charges are deducted daily from the Account Value. They
include:
DEFERRED SALES CHARGE. The deferred sales charge is deducted as a
percentage of the amount withdrawn. The total amount deducted for the
deferred sales charge will not exceed 8.5% of the total Purchase Payments
applied to the Account. The amount of the deferred sales charge is
calculated as follows:
<TABLE>
<CAPTION>
<S> <C>
INSTALLMENT PURCHASE PAYMENT ACCOUNTS
<CAPTION>
PURCHASE PAYMENT
PERIODS COMPLETED DEDUCTION
- ---------------------------------------- ---------
<S> <C>
Less than 5 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or more but less than 10 2%
more than 10 0%
<CAPTION>
SINGLE PURCHASE PAYMENT ACCOUNTS
ACCOUNT YEARS
COMPLETED DEDUCTION
- ---------------------------------------- ---------
<S> <C>
Less than 5 5%
5 or more but less than 6 4%
6 or more but less than 7 3%
7 or more but less than 8 2%
8 or more but less than 9 1%
9 or more 0%
</TABLE>
<TABLE>
<S> <C>
ANNUAL CONTRACT MAINTENANCE FEE--Installment Purchase Payment Accounts.................... $ 20.00
--Single Purchase Payment Accounts.......................... $ 0.00
The maintenance fee will generally be deducted annually from each Account during the
Accumulation Period. The amount of maintenance fee may be reduced or eliminated. See
"Charges and Deductions." The amount shown is the MAXIMUM maintenance fee that can be
deducted under the Contract.
</TABLE>
INDIRECT CHARGES. Each Subaccount pays these expenses out of its assets. The
charges are reflected in the Subaccount's daily Accumulation Unit Value and are
not charged directly to an Account. They include:
<TABLE>
<S> <C>
MORTALITY AND EXPENSE RISK FEES........................................................... 1.25%
ADMINISTRATIVE EXPENSE CHARGE. We currently do not impose an Administrative............... 0.00%
Expense Charge. However, we reserve the right to deduct a daily charge from the
Subaccounts, equivalent on an annual basis to not more than 0.25%.
---------
TOTAL SEPARATE ACCOUNT CHARGES............................................................ 1.25%
</TABLE>
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FEE TABLE - 1
<PAGE>
ANNUAL EXPENSES OF THE FUNDS
The following table illustrates the advisory fees and other expenses applicable
to the Funds. Except as noted, the following figures are a percentage of average
net assets and, except where otherwise indicated, are based on figures for the
year ended December 31, 1995. A Fund's "Other Expenses" include operating costs
of the Fund. These expenses are reflected in the Fund's net asset value and are
not deducted from the Account Value under the Contract.
<TABLE>
<CAPTION>
INVESTMENT
ADVISORY
FEES(1) OTHER EXPENSES TOTAL FUND
(AFTER EXPENSE (AFTER EXPENSE ANNUAL
REIMBURSEMENT) REIMBURSEMENT) EXPENSES
-------------- -------------- -----------
<S> <C> <C> <C>
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio(2)
Aetna Crossroads Variable Portfolio(2)
Aetna Legacy Variable Portfolio(2)
Alger American Growth Portfolio
Alger American Small Cap Portfolio
Calvert Responsibly Invested Balanced
Portfolio
Fidelity VIP II Contrafund
Portfolio(2)
Fidelity VIP Equity-Income
Portfolio(3)
Fidelity VIP Growth Portfolio(3)
Fidelity VIP Overseas Portfolio
Janus Aspen Aggressive Growth
Portfolio(4)
Janus Aspen Balanced Portfolio(4)
Janus Aspen Flexible Income
Portfolio(4)
Janus Aspen Growth Portfolio(4)
Janus Aspen Short-Term Bond
Portfolio(4)
Janus Aspen Worldwide Growth
Portfolio(4)
Lexington Natural Resources Trust
Neuberger & Berman Growth Portfolio
Scudder International Portfolio
TCI Growth(5)
</TABLE>
- --------------------------
(1) Certain of the unaffiliated Fund advisers reimburse the Company for
administrative costs incurred in connection with administering the Funds as
variable funding options under the Contract. These reimbursements are paid
out of the investment advisory fees and are not charged to investors.
(2)These Funds have only limited operating history; therefore the expenses are
estimated for the current fiscal year.
(3) A portion of the brokerage commission the Fund paid was used to reduce its
expenses. Without this reduction, total operating expenses would have been
___% for the Equity-Income Portfolio and ___% for the Growth Portfolio.
(4) The expense figures shown are net of certain expense waivers from Janus
Capital Corporation. Without such waivers, the Investment Advisory Fees,
Other Expenses and Total Mutual Fund Annual Expenses for the Portfolios for
the fiscal year ended December 31, 1995 would have been: ___%, ___% and
___%, respectively, for Janus Aspen Aggressive Growth Portfolio; ___%, ___%
and ___%, respectively, for Janus Aspen Balanced Portfolio; ___%, ___% and
___%, respectively, for Janus Aspen Flexible Income Portfolio; ___%, ___%
and ___%, respectively, for Janus Aspen Growth Portfolio; ___%, ___% and
___%, respectively, for Janus Aspen Short-Term Bond Portfolio; and ___%,
___% and ___%, respectively, for Janus Aspen Worldwide Growth Portfolio.
(5) The Portfolio's investment adviser pays all expenses of the Portfolio except
brokerage commissions, taxes, interest, fees and expenses of the
non-interested directors (including counsel fees) and extraordinary
expenses.
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FEE TABLE - 2
<PAGE>
HYPOTHETICAL ILLUSTRATION (EXAMPLE)
THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.
The following Examples illustrate the expenses that would have been paid
assuming a $1,000 investment in the Contract and a 5% return on assets. For the
purposes of these Examples, the maximum maintenance fee of $20.00 that can be
deducted under the Contract has been converted to a percentage of assets equal
to %.
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
------------------------------------- -------------------------------------
IF YOU WITHDRAW YOUR ENTIRE ACCOUNT IF YOU DO NOT WITHDRAW YOUR ACCOUNT
VALUE AT THE END OF THE PERIODS VALUE, OR IF YOU ANNUITIZE AT THE END
SHOWN, YOU WOULD PAY THE FOLLOWING OF THE PERIODS SHOWN, YOU WOULD PAY
EXPENSES, INCLUDING ANY APPLICABLE THE FOLLOWING EXPENSES (NO DEFERRED
DEFERRED SALES CHARGE: SALES CHARGE IS REFLECTED):*
1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
Alger American Growth Portfolio
Alger American Small Cap Portfolio
Calvert Responsibly Invested Balanced
Portfolio
Fidelity VIP II Contrafund Portfolio
Fidelity VIP Equity-Income Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP Overseas Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Flexible Income Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Short-Term Bond Portfolio
Janus Aspen Worldwide Growth Portfolio
Lexington Natural Resources Trust
Neuberger & Berman Growth Portfolio
Scudder International Portfolio
TCI Growth
</TABLE>
- --------------------------
*This Example would not apply if a nonlifetime variable annuity option is
selected, and a lump-sum settlement is requested within three years after
annuity payments start since the lump-sum payment will be treated as a
withdrawal during the Accumulation Period and will be subject to any deferred
sales charge that would then apply. (Refer to Example A.)
- --------------------------------------------------------------------------------
FEE TABLE - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION
(SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR EACH OF THE YEARS IN THE
TEN-YEAR PERIOD ENDED DECEMBER 31, 1995 (AS APPLICABLE), IS DERIVED FROM THE
FINANCIAL STATEMENTS OF THE SEPARATE ACCOUNT, WHICH FINANCIAL STATEMENTS HAVE
BEEN AUDITED BY KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS. THE FINANCIAL
STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE INDEPENDENT
AUDITORS' REPORT THEREON, ARE INCLUDED IN THE STATEMENT OF ADDITIONAL
INFORMATION.
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $10.940 $10.378 $84.249 $67.496
Value at end of period $10.698 $10.940 $10.378(2) $84.249
Increase (decrease) in value of
accumulation unit(1) (2.21)% 5.41% (2) 24.82%
Number of accumulation units outstanding
at end of period 11,117,383 879,670 3,107 908,777
AETNA INCOME SHARES
Value at beginning of period $11.006 $10.160 $37.815 $32.066
Value at end of period $10.457 $11.006 $10.160(3) $37.815
Increase (decrease) in value of
accumulation unit(1) (4.99)% 8.33% (3) 17.93%
Number of accumulation units outstanding
at end of period 1,988,960 166,913 4,196 427,893
AETNA VARIABLE ENCORE FUND
Value at beginning of period $10.223 $10.031 $34.122 $32.431
Value at end of period $10.509 $10.223 $10.031(4) $34.122
Increase (decrease) in value of
accumulation unit(1) 2.79 % 1.91% (4) 5.21%
Number of accumulation units outstanding
at end of period 1,822,449 90,782 2,808 548,425
AETNA INVESTMENT ADVISERS
FUND, INC.
Value at beginning of period $11.164 $10.286 $12.717 $10.882
Value at end of period $10.971 $11.164 $10.286(6) $12.717
Increase (decrease) in value of
accumulation unit(1) (1.73)% 8.54% (6) 16.86%
Number of accumulation units outstanding
at end of period 3,541,703 318,711 6,537 1,324,822
ALGER AMERICAN SMALL CAP
PORTFOLIO
Value at beginning of period $10.307 $10.000(7)
Value at end of period $ 9.622 $10.307
Increase (decrease) in value of
accumulation unit(1) (6.64)% 3.07%
Number of accumulation units outstanding
at end of period 441,809 31,855
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO*
Value at beginning of period $11.010 $10.296 $10.000(8)
Value at end of period $10.518 $11.010 $10.296
Increase (decrease) in value of
accumulation unit(1) (4.47)% 6.93% 2.96%
Number of accumulation units outstanding
at end of period 752 1,383 82
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.000 (9)
Value at end of period $10.319
Increase (decrease) in value of
accumulation unit(1) 3.19 %
Number of accumulation units outstanding
at end period 131,702
<CAPTION>
1990 1989 1988 1987 1986
--------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $66.174 $51.900 $45.839 $43.994 $37.445
Value at end of period $67.496 $66.174 $51.900 $45.839 $43,994
Increase (decrease) in value of
accumulation unit(1) 2.00% 27.50% 13.22% 4.19% 17.49%
Number of accumulation units outstanding
at end of period 810,126 831,547 887,039 1,020,744 1,273,920
AETNA INCOME SHARES
Value at beginning of period $29.752 $26.291 $24.734 $23.888 $21.203
Value at end of period $32.066 $29,752 $26.291 $24.734 $23.888
Increase (decrease) in value of
accumulation unit(1) 7.78% 13.16% 6.29% 3.54% 12.66%
Number of accumulation units outstanding
at end of period 358,454 366,176 383,856 377,078 565,148
AETNA VARIABLE ENCORE FUND
Value at beginning of period $30.285 $28.029 $26.401 $25.028 $23.660
Value at end of period $32.431 $30.285 $28.029 $26.401 $25.028
Increase (decrease) in value of
accumulation unit(1) 7.09% 8.05% 6.17% 5.49% 5.78%
Number of accumulation units outstanding
at end of period 722,438 653,619 720,726 898,557 881,853
AETNA INVESTMENT ADVISERS
FUND, INC.
Value at beginning of period $10.423 $10.000(5)
Value at end of period $10.882 $10.423
Increase (decrease) in value of
accumulation unit(1) 4.40% 4.23%
Number of accumulation units outstanding
at end of period 984,798 639,219
ALGER AMERICAN SMALL CAP
PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units outstanding
at end of period
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO*
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units outstanding
at end of period
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units outstanding
at end period
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 1
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1995 1994 1993 1992
---------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $10.000(9)
Value at end of period $ 9.886
Increase (decrease) in value of
accumulation unit(1) (1.14)%
Number of accumulation units outstanding
at end of period 15,893
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $ 9.716 $10.000(10)
Value at end of period $ 9.079 $ 9.716
Increase (decrease) in value of
accumulation unit(1) (6.56)% (2.84)%
Number of accumulation units outstanding
at end of period 141,076 27,908
NEUBERGER & BERMAN GROWTH PORTFOLIO
Value at beginning of period $12.990 $10.123 $10.000(8)
Value at end of period $12.199 $12.990 $10.123
Increase (decrease) in value of
accumulation unit(1) (6.09)% 28.32% 1.23%
Number of accumulation units outstanding
at end of period 228,370 71,556 2,275
SCUDDER INTERNATIONAL PORTFOLIO
Value at beginning of period $13.654 $10.051 $10.000(8)
Value at end of period $13.372 $13.654 $10.051
Increase (decrease) in value of
accumulation unit(1) (2.07)% 35.85% 0.51%
Number of accumulation units outstanding
at end of period 652,630 144,303 324
TCI GROWTH
Value at beginning of period $11.159 $10.232 $10.000(11)
Value at end of period $10.883 $11.159 $10.232
Increase (decrease) in value of
accumulation unit(1) (2.48)% 9.06% 2.32%
Number of accumulation units outstanding
at end of period 1,123,366 261,107 4,284
</TABLE>
(1) The above figures are calculated by subtracting the beginning Accumulation
Unit value from the ending Accumulation Unit value during a calendar year,
and dividing the result by the beginning Accumulation Unit value. These
figures do not reflect the deferred sales charges or the fixed dollar
annual maintenance fee, if any. Inclusion of these charges would reduce the
investment results shown.
(2) The Accumulation Unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the Accumulation Unit value of the Fund was $85.546. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion. The percentage change in the
Accumulation Unit value from the beginning of the year to the date of
conversion was 1.54%; the percentage change in the Accumulation Unit value
from the date of conversion to the end of the year was 3.78%.
(3) The Accumulation Unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the Accumulation Unit value of the Fund was $39.496. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion. The percentage change in the
Accumulation Unit value from the beginning of the year to the date of
conversion was 4.45%; the percentage change in the Accumulation Unit value
from the date of conversion to the end of the year was 1.60%.
(4) The Accumulation Unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the Accumulation Unit value of the Fund was $34.828. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion. The percentage change in the
Accumulation Unit value from the beginning of the year to the date of
conversion was 2.07%; the percentage change in the Accumulation Unit value
from the date of conversion to the end of the year was 0.31%.
(5) The initial Accumulation Unit value was established at $10.000 on June 23,
1989, the date on which the Fund commenced operations.
(6) The Accumulation Unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the Accumulation Unit value of the Fund was $12.991. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion. The percentage change in the
Accumulation Unit value from the beginning of the year to the date of
conversion was 2.15%; the percentage change in the Accumulation Unit value
from the date of conversion to the end of the year was 2.86%.
(7) The initial Accumulation Unit value was established at $10.000 on September
17, 1993, the date on which the Portfolio became available under the
Contract.
(8) The initial Accumulation Unit value was established at $10.000 on November
2, 1992, the date on which the Fund/Portfolio became available under the
Contract.
(9) The initial Accumulation Unit value was established at $10.000 during
October 1994, when the funds were first received in this option.
(10) The initial Accumulation Unit value was established at $10.000 on May 26,
1993, the date on which the Fund became available under the Contract.
(11) The initial Accumulation Unit value was established at $10.000 on August
21, 1992, the date on which the Fund became available under the Contract.
* Formerly Calvert Socially Responsible Series
- --------------------------------------------------------------------------------
AUV HISTORY - 2
<PAGE>
THE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Aetna Life Insurance and Annuity Company (the "Company") is the issuer of
the Contract, and as such, it is responsible for providing the insurance and
annuity benefits under the Contract. The Company is a stock life insurance
company organized under the insurance laws of the State of Connecticut in 1976.
Through a merger, it succeeded to the business of Aetna Variable Annuity Life
Insurance Company (formerly Participating Annuity Life Insurance Company), an
Arkansas life insurance company organized in 1954. The Company is engaged in the
business of issuing life insurance policies and variable annuity contracts in
all states of the United States. The Company's principal executive offices are
located at 151 Farmington Avenue, Hartford, Connecticut 06156.
The Company is a wholly owned subsidiary of Aetna Retirement Services, Inc.,
which is in turn a wholly owned subsidiary of Aetna Life and Casualty Company, a
diversified financial services company.
VARIABLE ANNUITY ACCOUNT B
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Company established Variable Annuity Account B (the "Separate Account")
in 1976 as a segregated asset account for the purpose of funding its variable
annuity contracts. The Separate Account is registered as a unit investment trust
under the Investment Company Act of 1940 (the "1940 Act"), and meets the
definition of "separate account" under federal securities laws. The Separate
Account is divided into "subaccounts" which do not invest directly in stocks,
bonds or other investments. Instead, each Subaccount buys and sells shares of a
corresponding Fund.
Although the Company holds title to the assets of the Separate Account, such
assets are not chargeable with liabilities arising out of any other business
conducted by the Company. Income, gains or losses of the Separate Account are
credited to or charged against the assets of the Separate Account without regard
to other income, gains, or losses of the Company. All obligations arising under
the Contracts are general corporate obligations of the Company.
INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE FUNDS
Purchase Payments may be allocated to one or more of the Subaccounts as
designated on the Application. In turn, the Subaccounts invest in the
corresponding Funds at net asset value.
The Contract Holder may decide to offer only a select number of Funds under
its Plan, or it may decide to substitute shares of one Fund for shares of
another Fund currently held by the Separate Account. In addition, the
availability of Funds may be subject to regulatory authorization. Funds may be
added or withdrawn by the Company as permitted by applicable law. Therefore, not
all Funds may be available in all jurisdictions, under all Contracts, or in all
Plans.
The investment results of the Funds described below are likely to differ
significantly and there is no assurance that any of the Funds will achieve their
respective investment objectives. Except where otherwise noted, all of the Funds
are diversified, as defined in the 1940 Act.
- -AETNA VARIABLE FUND seeks to maximize total return through investments in a
diversified portfolio of common stocks and securities convertible into common
stock.(1)
- -AETNA INCOME SHARES seeks to maximize total return, consistent with reasonable
risk, through investments in a diversified portfolio consisting primarily of
debt securities.(1)
- -AETNA VARIABLE ENCORE FUND seeks to provide high current return, consistent
with preservation of capital and liquidity, through investment in high quality
"money market" instruments. An investment in the Fund is neither insured nor
guaranteed by the U.S. Government.
- --------------------------------------------------------------------------------
1
<PAGE>
- -AETNA INVESTMENT ADVISERS FUND, INC. is a managed fund which seeks to maximize
investment return consistent with reasonable safety of principal by investing
in one or more of the following asset classes: stocks, bonds and cash
equivalents, based on the Company's judgment of which of those sectors or mix
thereof offers the best investment prospects.(1)
- -AETNA GENERATION PORTFOLIOS INC.--AETNA ASCENT VARIABLE PORTFOLIO seeks to
provide capital appreciation by allocating its investments among equities and
fixed income securities. The Portfolio is managed for investors who generally
have an investment horizon exceeding 15 years, and who have a high level of
risk tolerance.(1)
- -AETNA GENERATION PORTFOLIOS, INC.--AETNA CROSSROADS VARIABLE PORTFOLIO seeks to
provide total return (i.e., income and capital appreciation, both realized and
unrealized) by allocating its investments among equities and fixed income
securities. The Portfolio is managed for investors who generally have an
investment horizon exceeding 10 years and who have a moderate level of risk
tolerance.(1)
- -AETNA GENERATION PORTFOLIOS, INC.--AETNA LEGACY VARIABLE PORTFOLIO seeks to
provide total return consistent with preservation of capital by allocating its
investments among equities and fixed income securities. The Portfolio is
managed for investors who generally have an investment horizon exceeding five
years and who have a low level of risk tolerance.(1)
- -ALGER AMERICAN FUND--ALGER AMERICAN GROWTH PORTFOLIO seeks long-term capital
appreciation by investing in a diversified, actively managed portfolio of
equity securities. The Portfolio primarily invests in equity securities which
have a market capitalization of $1 billion or greater.(2)
- -ALGER AMERICAN FUND--ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO seeks
capital return through investment in the common stock of smaller companies
offering the potential for significant price gain. The Portfolio invests at
least 65% of its net assets in equity securities of companies that have total
market capitalization of less than $1 billion at the time of purchase.(2)
- -CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO is a non-diversified portfolio
that seeks growth of capital through investment in enterprises that make a
significant contribution to society through their products and services and
through the way they do business.(3)
- -FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II--CONTRAFUND PORTFOLIO
seeks maximum total return over the long term by investing in securities of
companies that are undervalued or out-of-favor.(4)
- -FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND--EQUITY-INCOME PORTFOLIO
seeks reasonable income by investing primarily in income-producing equity
securities. In selecting investments, the Fund also considers the potential for
capital appreciation.(4)
- -FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND--GROWTH PORTFOLIO seeks
capital appreciation by investing mainly in common stocks, although its
investments are not restricted to any one type of security.(4)
- -FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND--OVERSEAS PORTFOLIO
seeks long-term growth by investing mainly in foreign securities (at least 65%
of the Fund's total assets in securities of issuers from at least three
countries outside of North America).(4)
- -JANUS ASPEN SERIES--AGGRESSIVE GROWTH PORTFOLIO is a non-diversified portfolio
that seeks long-term growth of capital in a manner consistent with the
preservation of capital. The Portfolio pursues its investment objective by
normally investing at least 50% of its equity assets in securities issued by
medium-sized companies. Medium-sized companies are those whose market
capitalizations fall within the range of companies in the S&P MidCap 400 Index,
which as of ______ included companies with capitalizations between
approximately ______ and ______, but which is expected to change on a regular
basis.(5)
- -JANUS ASPEN SERIES--BALANCED PORTFOLIO seeks both long-term growth of capital
and current income. The Portfolio is designed for investors who want to
participate in the equity markets through a more moderate investment than a
pure growth fund. Investments in income-producing securities are intended to
result in a portfolio that provides a more consistent total return than may be
attainable through investing solely in growth stocks. The Portfolio is not
designed for investors who desire a consistent level of income.(5)
- --------------------------------------------------------------------------------
2
<PAGE>
- -JANUS ASPEN SERIES--FLEXIBLE INCOME PORTFOLIO seeks long-term capital growth,
consistent with preservation of capital and balanced by current income. The
Portfolio pursues its investment objective by investing 40%-60% of its assets
in equity securities selected primarily for their growth potential and 40%-60%
of its assets in fixed-income securities. Flexible Income Series may have
substantial holdings of debt securities rated below investment grade ("high
yield, high risk securities" also commonly known as "junk bonds.") High yield,
high risk securities involve certain risks. See the Fund's prospectus for a
discussion of these risks.(5)
- -JANUS ASPEN SERIES--GROWTH PORTFOLIO seeks long-term growth of capital in a
manner consistent with the preservation of capital. The Portfolio pursues its
investment objective by investing in common stocks of companies of any size.(5)
- -JANUS ASPEN SERIES--SHORT-TERM BOND PORTFOLIO seeks as high a level of current
income as is consistent with preservation of capital by investing primarily in
short- and intermediate-term fixed income securities.(5)
- -JANUS ASPEN SERIES--WORLDWIDE GROWTH PORTFOLIO seeks long-term growth of
capital in a manner consistent with preservation of capital. The Portfolio
pursues its investment objective primarily through investments in common stocks
of foreign and domestic issuers.(5)
- -LEXINGTON NATURAL RESOURCES TRUST is a non-diversified portfolio that seeks
long-term growth of capital through investment primarily in common stocks of
companies which own or develop natural resources and other basic commodities or
supply goods and services to such companies.(6)
- -NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST-- GROWTH PORTFOLIO seek capital
appreciation without regard to income. The Portfolio pursues its investment
objective by investing in common stocks, often of companies that may be
temporarily out of favor in the market.(7)
- -SCUDDER VARIABLE LIFE INVESTMENT FUND-- INTERNATIONAL PORTFOLIO seeks long-term
growth of capital primarily through diversified holdings of marketable foreign
equity investments.(8)
- -TCI PORTFOLIOS, INC.--TCI GROWTH (A TWENTIETH CENTURY FUND) seeks capital
growth. The Fund seeks to achieve its objective by investing in common stocks
(including securities convertible into common stocks) and other securities that
meet certain fundamental and technical standards of selection and, in the
opinion of the Fund's investment manager, have better than average potential
for appreciation.(9)
Investment Advisers for each of the Funds:
(1) Aetna Life Insurance and Annuity Company
(2) Fred Alger Management, Inc.
(3) Calvert Asset Management Company, Inc.
(4) Fidelity Management & Research Company
(5) Janus Capital Corporation
(6) Lexington Management Corporation (adviser);
Market Systems Research Advisors, Inc. (subadviser)
(7) Neuberger & Berman Management Incorporated
(8) Scudder, Stevens & Clark, Inc.
(9) Investors Research Corporation
RISKS ASSOCIATED WITH INVESTMENT IN THE FUNDS. Some of the Funds may use
instruments known as derivatives as part of their investment strategies. The use
of certain derivatives may involve high risk of volatility to a Fund, and the
use of leverage in connection with such derivatives can also increase risk of
losses. Some of the Funds may also invest in foreign or international securities
which involve greater risks than U.S. investments.
More comprehensive information, including a discussion of potential risks,
is found in the respective Fund prospectuses which accompany this Prospectus.
You should read the Fund prospectuses and consider carefully, and on a
continuing basis, which Fund or combination of Funds is best suited to your
long-term investment objectives.
CONFLICTS OF INTEREST (MIXED AND SHARED FUNDING). Shares of the Funds are
sold to each of the Subaccounts for funding the variable annuity contracts
issued by the Company. Shares of the Funds may also be sold to other insurance
companies for the same purpose. This is referred to as "shared funding." Shares
of the Funds may also be used for funding variable life insurance contracts
issued by the Company or by third parties. This is referred to as "mixed
funding."
Because the Funds available under the Contract are sold to fund variable
annuity contracts and variable life insurance policies issued by us or by other
companies, certain conflicts of interest could arise. If a conflict of interest
were to occur, one of the separate accounts might withdraw its investment in a
Fund, which might force that Fund to sell portfolio securities at
disadvantageous prices, causing its per share value to decrease. Each Fund's
Board
- --------------------------------------------------------------------------------
3
<PAGE>
of Directors or Trustees has agreed to monitor events in order to identify any
material irreconcilable conflicts which might arise and to determine what
action, if any, should be taken to address such conflict.
CREDITED INTEREST OPTIONS
Purchase Payments may be allocated to one or more of the Credited Interest
Options available under the Contract, as described below. The Contract Holder
may elect not to offer all Credited Interest Options under its Plan.
- - The Guaranteed Accumulation Account (GAA) is a credited interest option
through which we guarantee stipulated rates of interest for stated periods of
time. Amounts must remain in the GAA for the full guaranteed term to received
the quoted interest rates, or a market value adjustment (which may be positive
or negative) will be applied. (See Appendix I.)
- - The Fixed Account is a part of the Company's general account. The Fixed
Account guarantees a minimum interest rate, as specified in the Contract. The
Company may credit higher interest rates from time to time. Transfers from the
Fixed Account are limited. (See Appendix II.)
- - The Fixed Plus Account is also a part of the Company's general account and
guarantees a minimum interest rate, as specified in the Contract. The Company
may credit higher interest rates in its discretion. Withdrawals and transfers
from the Fixed Plus Account are limited. (See Appendix III.)
PURCHASE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONTRACT AVAILABILITY
The Contracts are designed for (1) employer-sponsored deferred compensation
plans sponsored by tax-exempt organizations for deferrals not subject to Section
457 of the Internal Revenue Code of 1986, as amended ("Code") or by taxable
organizations for their employees and/or independent contractors ("Non-Section
457 Plans"); or (2) employer-sponsored deferred compensation plans sponsored by
tax-exempt organizations for deferrals that are subject to Code Section 457 for
their employees and/or independent contractors ("Section 457 Plans"). The
Contract is generally owned by the employer, and an Account is established for
each Participant, as directed by the Contract Holder, to identify contract
values during the Accumulation Period. A Participant's record under the Contract
is known as his or her "Account."
Under Section 457 Plans and Non-Section 457 Plans, the employer has all
right, title and interest in the amounts held under the Contract or in the
Account. The Contract will be part of the employer's general assets, subject to
the claims of its general creditors. Benefits available to you are governed
exclusively by the provisions of the Plan and are backed only by the general
assets of the employer. Some of the options and elections available under the
Contract may not be available to you under the provisions of your Plan. Contact
your employer for information regarding your Plan.
CONTRACT PURCHASE
Eligible organizations may acquire a Contract by submitting an application
to the Company. Once we approve the forms, a Contract is issued to the employer
as the Contract Holder. You may participate in the Plan by submitting an
enrollment form to the Company.
The Company must accept or reject the application or enrollment form within
two business days of receipt. If the application or enrollment form is
incomplete, the Company may hold any forms and accompanying Purchase Payments
for five days. Purchase Payments may be held for longer periods only with the
consent of the Contract Holder or Participant, pending acceptance of the forms.
Initial payments held for longer than the five business days will be deposited
in the Aetna Variable Encore Fund Subaccount until the forms are completed.
PURCHASE PAYMENTS
Generally, two types of Purchase Payments may be made under the Contract,
and depending upon which type of payment is made, different Accounts may be
established for each payment type. Continuing, periodic payments will be placed
in "Installment Purchase Payment Accounts." Installment Purchase Payments must
be at least $100 per month ($1,200 annually) per Participant. No payment may be
less than $25. Lump-sum transfers of amounts accumulated under a pre-existing
plan may be placed in
- --------------------------------------------------------------------------------
4
<PAGE>
"Single Purchase Payment Accounts" in accordance with the Company's procedures
in effect at the time of purchase.
The Code imposes a maximum limit on annual Purchase Payments which may be
excluded from a Participant's gross income for Section 457 Plan Participants.
Such limit is generally the lesser of $7,500 or 33 1/3% of your includible
compensation (25% of gross compensation).
For Contracts sold to taxable organizations, this Contract may be aggregated
with other Annuity Contracts purchased by the Contract Holder from us (and our
affiliates) on or after October 21, 1988 for purposes of determining the taxable
portion of payments from this Contract. (See "Tax Status.")
ALLOCATION OF PURCHASE PAYMENTS. Purchase Payments will initially be
allocated to the Subaccounts or Credited Interest Options as specified by the
Contract Holder (or you, if authorized by the Contract Holder) on the enrollment
form. Changes in such allocation may be made in writing or by telephone
transfer. Allocations must be in whole percentages, and there may be limitations
on the number of investment options that can be selected during the Accumulation
Period. (See "Transfers.")
RIGHT TO CANCEL
The Contract Holder may cancel participation under the Contract without
penalty by returning it to the Company with a written notice of cancellation. In
most states, Contract Holders have ten days to exercise this right; some states
allow a longer free-look period. When we receive the request for cancellation,
we will return the Account Value, unless the laws of the state in which the
Contract was issued require that we return the initial Purchase Payment (if
greater than the Account Value). In states that do not require a return of
Purchase Payments, the purchaser bears the entire investment risk for amounts
allocated among the Subaccounts during the free look period. Account Values will
be determined as of the Valuation Date on which we receive the request for
cancellation at our Home Office.
TRANSFER CREDITS
The Company may provide a transfer credit on "transferred assets," subject
to certain conditions and state approvals. Transferred assets are the value of
contributions made on your behalf under this Plan or a prior plan before such
amounts are applied to this Contract. The transfer credit equals a percentage of
the transferred assets remaining in the Contract after a specified period of
time. Once a transfer credit is applied to your Contract, all provisions of the
Contract apply. This benefit is provided on a nondiscriminatory basis. If a
transfer credit is due under the Contract, you will be provided with additional
information specific to the Contract.
CHARGES AND DEDUCTIONS
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- --------------------------------------------------------------------------------
DAILY DEDUCTIONS FROM THE SEPARATE ACCOUNT
MORTALITY AND EXPENSE RISK CHARGE. The Company makes a daily deduction from
each of the Subaccounts for the mortality and expense risk charge. The charge is
equal, on an annual basis, to 1.25% of the daily net assets of the Subaccounts
and compensates the Company for the assumption of mortality and expense risks
under the Contract. The mortality risks are those assumed for our promise to
make lifetime payments according to annuity rates specified in the Contract. The
expense risk is the risk that the actual expenses for costs incurred under the
Contract will exceed the maximum costs that can be charged under the Contract.
If the amount deducted for mortality and expense risks is not sufficient to
cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess may be used to
recover distribution expense relating to the Contracts and as a source of profit
for the Company. The Company expects to make a profit from the mortality and
expense risk charge.
ADMINISTRATIVE CHARGE. The Company reserves the right to make a deduction
from each of the Subaccounts for an administrative charge. The administrative
charge compensates the Company for administrative expenses that exceed revenues
from the maintenance fee described below. The charge is set at a level which
does not exceed the average expected cost of the administrative services to be
provided while the Contract is in force. The Company does not expect to make a
profit from this charge.
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5
<PAGE>
Under the Contract, the amount of the administrative charge may be of an
amount equal, on an annual basis, to a maximum of 0.25% of the daily net assets
of the Subaccounts. There is currently no administrative charge during the
Accumulation Period or Annuity Period. Once an Annuity Option is elected, the
charge will be established and will be effective during the entire Annuity
Period.
MAINTENANCE FEE
During the Accumulation Period, the Company will deduct an annual
maintenance fee from each Installment Purchase Payment Account on its
anniversary date. The maintenance fee is to reimburse the Company for some of
its administrative expenses relating to the establishment and maintenance of the
Accounts.
The maximum maintenance fee that can be deducted under the Contract is $20.
However, the maintenance fee may be reduced or eliminated depending upon certain
criteria described below. The maintenance fee will be deducted on a pro rata
basis from each Subaccount and Credited Interest Option in which the Account is
invested. If the Account Value is withdrawn, the full Maintenance Fee will be
deducted at the time of withdrawal.
REDUCTION OR ELIMINATION OF THE MAINTENANCE FEE. The annual maintenance fee
may be reduced or eliminated under various conditions as agreed to by us and the
Contract Holder in writing. Any reduction or elimination of the annual
maintenance fee will reflect differences in administrative costs and services
after taking into consideration factors such as the following:
- - the size, characteristics, and nature of the group to which a Contract is
issued;
- - the level of our anticipated expenses in administering the Contract, such as
billing for Purchase Payments, producing periodic reports, providing for the
direct payment of Contract charges rather than having them deducted from
Contract Values, and any other factors pertaining to the level and expense of
administrative services which will be provided under the Contract.
Any reduction or elimination of maintenance fees will not be unfairly
discriminatory against any person. We will make any reduction in annual
maintenance fees according to our own rules in effect at the time an Application
for a Contract is approved. We reserve the right to change these rules from time
to time.
DEFERRED SALES CHARGE
Full and partial withdrawals of Account Values may be subject to a Deferred
Sales Charge. The Deferred Sales Charge is a percentage of the amount withdrawn
from the Subaccounts, the Fixed Account or the Guaranteed Accumulation Account
and is based on the number of completed Purchase Payment Periods for Installment
Purchase Payment Accounts or Account Years for Single Purchase Payment Accounts
which have elapsed since the Purchase Payments were made. No Deferred Sales
Charge is deducted from amounts withdrawn from the Fixed Plus Account. The
amount of the Deferred Sales Charge is determined in accordance with the
schedule set forth in the following tables:
<TABLE>
<CAPTION>
INSTALLMENT PURCHASE PAYMENT ACCOUNTS
DEFERRED
SALES
PURCHASE PAYMENT CHARGE
PERIODS COMPLETED DEDUCTION
---------------------------------------- ---------
<C> <C>
Less than 5 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or more but less than 10 2%
more than 10 0%
<CAPTION>
SINGLE PURCHASE PAYMENT ACCOUNTS
DEFERRED
SALES
ACCOUNT YEARS CHARGE
COMPLETED DEDUCTION
---------------------------------------- ---------
<C> <C>
Less than 5 5%
5 or more but less than 6 4%
6 or more but less than 7 3%
7 or more but less than 8 2%
8 or more but less than 9 1%
9 or more 0%
</TABLE>
If you transfer the total account value under another deferred compensation
annuity contract issued by the Company to an Account under this Contract, the
effective date of the new Account will be the same effective date as your former
contract for purposes of calculating the applicable deferred sales charge under
this Contract.
A deferred sales charge will not be deducted from any portion of the Account
Value which is:
- - applied to provide Annuity benefits;
- - withdrawn on or after the tenth anniversary of the effective date of the
Account or Plan Account;
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6
<PAGE>
- - paid due to the death of the Participant;
- - withdrawn due to the election of an Additional Withdrawal Option (see
"Additional Withdrawal Options");
- - paid where the Account Value is $3,500 or less and no amount has been
withdrawn or used to purchase Annuity benefits during the prior 12 months. If
more than one Account is being fully withdrawn on behalf of a Participant, all
Account Values will be added together to determine eligibility for the $3,500
exemption. This provision is not available under Plan Accounts (where Accounts
are not maintained by the Company) or applicable to the withdrawal of all
Accounts under one Contract established with the Company.
- - withdrawn from an Installment Purchase Payment Account by a Participant who is
at least age 59 1/2 and who has completed nine Purchase Payment Periods.
- - for Section 457 Plans only, withdrawn due to a hardship resulting from an
unforeseeable emergency, as specified in the Code;
The deduction for the deferred sales charge will not exceed 8.5% of the
total Purchase Payments actually made to the Account. The Company does not
anticipate that the deferred sales charge will cover all sales and
administrative expenses which it incurs in connection with the Contract; the
difference will be covered by the general assets of the Company which are
attributable, in part, to the mortality and expense risk charge described above.
REDUCTION OR ELIMINATION OF THE DEFERRED SALES CHARGE. For a particular
Plan, we may reduce, waive or eliminate the deferred sales charge. Any
reduction, waiver or elimination of such charges will reflect differences or
expected differences in the amounts of unrecovered distribution costs or
services of the types that the charge is intended to defray. When considering
whether to reduce or eliminate such charges or to grant such a waiver, we will
take into account factors which may include the following:
- - the number of participants under the Plan;
- - the expected level of assets or cash flow under the Plan;
- - the level of agent involvement in sales activities;
- - the level of our sales-related expenses;
- - the specific distribution provisions under the Plan;
- - the Plan's purchase of one or more other variable annuity contracts from us
and the features of those contracts;
- - the level of employer involvement in determining eligibility for distributions
under the Contract; and
- - our assessment of financial risk to the Company relating to surrenders.
Any reduction, waiver or elimination of deferred sales charges will not be
unfairly discriminatory against any person.
We may also negotiate provisions regarding the deferred sales charge with
respect to Contracts issued to certain employer groups or associations which
have negotiated on behalf of its employees. All variations in, or elimination
of, provisions regarding the deferred sales charge resulting from such
negotiations will be offered uniformly to all employees within the group. For
specific information on fees applicable to your Account please call the number
listed under the "Inquiries" section.
We will make any reduction in deferred sales charge according to our own
rules in effect at the time an Application for a Contract is approved. We
reserve the right to change these rules from time to time.
FUND EXPENSES
Each Fund incurs certain expenses which are paid out of its net assets.
These expenses include, among other things, the investment advisory or
"management" fee. The expenses of the Funds are illustrated in the Fee Table in
this Prospectus and described more fully in the accompanying Fund prospectuses.
PREMIUM AND OTHER TAXES
Several states and municipalities impose a premium tax on Annuities. These
taxes currently range from 0% to 4%. The Company reserves the right to deduct
premium tax against Purchase Payments or Account Values at any time, but no
earlier than when we have a tax liability under state law. The Company's current
practice is to deduct for premium taxes at the time of complete
withdrawal or annuitization. In addition to the premium tax, the Company
reserves the right to assess a charge for
any state or federal taxes due against the Contract or the Separate Account
assets.
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7
<PAGE>
CONTRACT VALUATION
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ACCOUNT VALUE
Until the Annuity Date, the Account Value is the total dollar value of
amounts held in the Account as of any Valuation Date. The Account Value at any
given time is based on the value of the units held in each Subaccount, plus the
value of amounts held in any of the Credited Interest Options.
ACCUMULATION UNITS
The value of your interests in a Subaccount is expressed as the number of
"Accumulation Units" that you hold multiplied by an "Accumulation Unit Value"
(or "AUV") for each unit. The AUV on any Valuation Date is determined by
multiplying the value on the immediately preceding Valuation Date by the net
investment factor of that Subaccount for the period between the immediately
preceding Valuation Date and the current Valuation Date. (See "Net Investment
Factor" below.) The Accumulation Unit Value will be affected by the investment
performance, expenses and charges of the applicable Fund and is reduced each day
by a percentage that accounts for the daily assessment of mortality and expense
risk charges and the administrative charge (if any).
Initial Purchase Payments will be credited to your Account as described
under "Contract Purchase." Each subsequent Purchase Payment (or amount
transferred) will be credited to your Account at the AUV computed on the next
Valuation Date following our receipt of your payment or transfer request. The
value of an Accumulation Unit may increase or decrease.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment performance of a
Subaccount from one Valuation Date to the next. The net investment factor for a
Subaccount for any valuation period is equal to the sum of 1.0000 plus the net
investment rate. The net investment rate equals:
(a) the net assets of the Fund held by the Subaccount on the current
Valuation Date, minus
(b) the net assets of the Fund held by the Subaccount on the preceding
Valuation Date, plus or minus
(c) taxes or provisions for taxes, if any, attributable to the operation of
the Subaccount, divided by
(d) the AUV of the Subaccount on the preceding Valuation Date, minus
(e) a daily charge at the annual effective rate of 1.25% for mortality and
expense risks and up to 0.25% as an administrative expense charge
(currently 0%).
The net investment rate may be either positive or negative.
TRANSFERS
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- --------------------------------------------------------------------------------
At any time prior to the Annuity Date, the Contract Holder, or you (if
permitted by the Contract Holder), can transfer amounts held under the Contract
from one Subaccount to another. Transfers between the Credited Interest Options
and the Subaccounts are subject to certain restrictions. (See Appendices I, II
and III.) A request for transfer can be made either in writing or by telephone.
The telephone transfer privilege is available automatically; no special election
is necessary. All transfers must be in accordance with the terms of the Contract
and your Plan, as applicable.
The Company currently allows unlimited transfers of accumulated amounts to
available investment options without charge, provided that the transfer amount
is not less than $500. However, the total number of investment options that may
be selected during the Accumulation Period may be limited, as set forth on your
enrollment materials. Any transfer will be based on the Accumulation Unit Value
next determined after the Company receives a valid transfer request at its Home
Office. Transfers are currently not available during the Annuity Period;
however, they may be available beginning later in 1996. (See "Annuity
Period--Annuity Options.")
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8
<PAGE>
DOLLAR COST AVERAGING PROGRAM
You may establish automated transfers of Account Values on a monthly or
quarterly basis through the Company's Dollar Cost Averaging Program, if
available under your Plan. Dollar Cost Averaging is a system for investing a
fixed amount of money at regular intervals over a period of time. Dollar Cost
Averaging does not ensure a profit nor guarantee against loss in a declining
market. You should consider your financial ability to continue purchases through
periods of low price levels. For additional information, please refer to the
Inquiries Section of the Prospectus Summary which describes how you can obtain
further information.
WITHDRAWALS
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- --------------------------------------------------------------------------------
Subject to the limitations on withdrawals from the Fixed Plus Account, the
Contract Holder may withdraw all or a portion of the Account Value at any time
during the Accumulation Period. To request a withdrawal, the Contract Holder, on
your behalf, must property complete a disbursement form and send it to our Home
Office. Payments for withdrawal requests will be made in accordance with SEC
requirements, but normally not later than seven calendar days following our
receipt of a disbursement form.
Withdrawals may be requested in one of the following forms:
- -FULL WITHDRAWAL OF THE CONTRACT OR AN ACCOUNT: The amount paid for a full
withdrawal will be the Account Value(s) allocated to the Subaccounts, the
Guaranteed Accumulation Account (plus or minus a market value adjustment) (see
Appendix I), and the Fixed Account, minus any applicable deferred sales charge
and maintenance fee due, plus the amount available for withdrawal from the
Fixed Plus Account (see Appendix III).
- -PARTIAL WITHDRAWALS (Percentage): The amount paid will be the percentage of the
Account Value(s) requested minus any applicable deferred sales charge; however,
the amount available for withdrawal from the Fixed Plus Account is limited (see
Appendix III).
- -PARTIAL WITHDRAWAL (Specified Dollar Amount): The amount paid will be the
dollar amount requested. However, the amount withdrawn from the Account will
equal the amount requested plus any applicable deferred sales charge. The
amount available for withdrawal from the Fixed Plus Account is limited (see
Appendix III).
For any partial withdrawal, the value of the Accumulation Units canceled
will be withdrawn proportionately from the Subaccounts or Credited Interest
Options in which Purchase Payments are allocated, unless otherwise requested in
writing by the Contract Holder. All amounts paid will be based on Account Values
as of the next Valuation Date after we receive a request for withdrawal at our
Home Office, or on such later date as the disbursement form may specify.
ADDITIONAL WITHDRAWAL OPTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Company offers certain withdrawal options under the Contract that are
not considered annuity options ("Additional Withdrawal Options"). To exercise
these options, the Account Value must meet the minimum dollar amounts and age
criteria applicable to that option.
The Additional Withdrawal Options currently available under the Contract
include the following:
- -SWO--SYSTEMATIC WITHDRAWAL OPTION. SWO is a series of partial withdrawals from
the Account based on a payment method you select. It is designed for those who
want a periodic income while retaining investment flexibility for amounts
accumulated under a Contract.
- -ECO--ESTATE CONSERVATION OPTION. ECO is available to Section 457 Plan
Participants only. It offers the same investment flexibility as SWO but is
designed for those who want to receive only the minimum distribution that the
Code requires each year. Under ECO, the Company calculates the minimum
distribution amount required by law at age 70 1/2 (or retirement, if later, for
church plans), and pays you that amount once a year. (See "Tax Status.")
Other Additional Withdrawal Options may be added from time to time.
Additional information relating to any
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9
<PAGE>
of the Additional Withdrawal Options may be obtained from your local
representative or from the Company at its Home Office.
If you select one of the Additional Withdrawal Options, the Account will
retain all of the rights and flexibility permitted under the Contract during the
Accumulation Period. The Account Value will continue to be subject to the
charges and deductions described in this Prospectus.
Once elected, an Additional Withdrawal Option may be revoked by the Contract
Holder at any time by submitting a written request to our Home Office. Any
revocation will apply only to the amount not yet paid. Once an option is
revoked, it may not be elected again, nor may any other Additional Withdrawal
Options be elected. The Company reserves the right to discontinue the
availability of one or all of these Additional Withdrawal Options at any time,
and/or to change the terms of future elections. To determine whether the
Additional Withdrawal Options are available under your Plan, and to assess the
terms and conditions that may apply, you should check with your employer. Any
pay-out election that you make under a deferred compensation plan must be
irrevocable.
DEATH BENEFIT DURING ACCUMULATION PERIOD
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Contract provides that a death benefit is payable to the Contract
Beneficiary(ies) upon the death of the Participant before the Annuity Date. The
Contract Holder may direct that we make such payment to the Plan Beneficiary.
The amount of the death benefit will be equal to the Account Value. Death
benefit proceeds may be paid to the beneficiary:
- - in a lump sum;
- - in accordance with any of the Annuity Options available under the Contract; or
- - under any Additional Withdrawal Options available under the Contract (if the
Plan Beneficiary is your spouse).
The Contract Holder on behalf of a Plan Beneficiary may instead elect to
leave the Account Value invested in the Contract. However, the Code limits how
long the death benefit proceeds may be left in this option (see below).
When paying the Contract Beneficiary, we will determine the Account Value on
the Valuation Date following the date on which we receive proof of death
acceptable to the Company. Interest, if any, will be paid from the date of death
at a rate no less than required by law. We will mail payment to the Contract
Beneficiary within seven days after we receive proof of death.
The Code requires that distribution of death proceeds begin within a certain
period of time. For NON-SECTION 457 PLANS, if required by the Code, the entire
value must be distributed within five years after the date of death unless an
Annuity option is elected within one year.
For SECTION 457 PLANS, generally, either payments must begin by December 31
of the year following the year of your death, or the entire value of your
benefits must be distributed by December 31 of the fifth year following the year
of your death. If your Plan Beneficiary is your spouse, he or she is not
required to begin distributions until the year you would have attained age
70 1/2. In no event may payments extend beyond the life expectancy of the Plan
Beneficiary or any period certain greater than the Plan Beneficiary's life
expectancy.
If no elections are made, no distributions will be made. Failure to commence
distributions within the above time periods can result in tax penalties.
Regardless of the method of payment, death benefit proceeds will generally be
taxed to the beneficiary in the same manner as if you had received those
payments. (See "Tax Status.")
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10
<PAGE>
ANNUITY PERIOD
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUITY PERIOD ELECTIONS
For Section 457 Plans, the Code generally requires that minimum annual
distributions of the Account Value must begin by April 1st of the calendar year
following the calendar year in which a Participant attains age 70 1/2. In
addition, distributions must be in a form and amount sufficient to satisfy the
Code requirements. These requirements may be satisfied by the election of
certain Annuity Options or Additional Withdrawal Options. (See "Tax Status.")
At least 30 days prior to the Annuity Date, the Contract Holder must notify
us in writing of the following:
- - the date on which you would like to start receiving annuity payments;
- - the Annuity Option under which you want your payments to be calculated and
paid;
- - whether the payments are to be made monthly, quarterly, semi-annually or
annually; and
- - the investment option(s) used to provide annuity payments (i.e., a fixed
annuity using the general account or any of the Subaccounts available at the
time of annuitization). As of the date of this Prospectus, Aetna Variable
Fund, Aetna Income Shares and Aetna Investment Advisers Fund, Inc. are the
only Subaccounts available; however, additional Subaccounts may be available
under some Annuity Options in the future (See "Annuity Options").
Annuity payments will not begin until an Annuity Option has been selected. Until
a date and option are elected, the Account or Plan Account will continue in the
Accumulation Period. Once annuity payments begin, the Annuity Option may not be
changed, nor may transfers be made among the investment options(s) selected.
(See "Annuity Options" below for more information about transfers during the
Annuity Period.)
ANNUITY OPTIONS
The Contract Holder may choose one of the following Annuity Options:
LIFETIME ANNUITY OPTIONS:
- -OPTION 1--Life Annuity--An annuity with payments ending on the Annuitant's
death.
- -OPTION 2--Life Annuity with Guaranteed Payments-- An annuity with payments
guaranteed for 5, 10, 15 or 20 years, or such other periods as the Company may
offer at the time of annuitization.
- -OPTION 3--Life Income based Upon the Lives of Two Payees--An annuity will be
paid during the lives of the Annuitant and a second Annuitant, with 100%,
66 2/3% or 50% of the payment to continue after the first death, or 100% of the
payment to continue at the death of the second Annuitant and 50% of the payment
to continue at the death of the Annuitant.
- -OPTION 4--Life Income based Upon the Lives of Two Payees--An annuity with
payments for a minimum of 120 months, with 100% of the payment to continue
after the first death.
If Option 1 or 3 is elected, it is possible that only one Annuity Payment
will be made if the Annuitant under Option 1, or the surviving Annuitant under
Option 3, should die prior to the due date of the second Annuity Payment. Once
lifetime Annuity payments begin, the Annuitant cannot elect to receive a
lump-sum settlement.
NONLIFETIME ANNUITY OPTIONS:
- -OPTION 1--Payments for a Specified Period--payments will continue for a
specified period of time, as provided for under your Contract.
Under the nonlifetime option, the type of annuity (fixed or variable) and
the number of years that may be selected are determined by the investment
options used prior to annuitization. For amounts held in the Fixed Plus Account,
the annuity must be paid on a fixed basis and payments may be made for 5-30
years. For amounts held in the Subaccounts, the Guaranteed Accumulation Account
or the Fixed Account, an annuity may be selected on a fixed or variable basis
and payments may be made for 3-30 years. If this option is elected on a variable
basis, the Contract Holder may request at any time during the payment period
that the present value of all or any portion of the remaining variable payments
be paid in one sum. However, any lump-sum elected before three years of payments
have been completed will be treated as a withdrawal during the Accumulation
Period and any applicable deferred sales charge will be assessed. (See "Charges
and Deductions--Deferred Sales Charge.") The
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<PAGE>
nonlifetime options is not available on a variable basis under a Contract which
provides for immediate Annuity benefits.
We may also offer additional Annuity Options under the Contract from time to
time. Beginning in May 1996, the Company expects to offer additional Annuity
Options and enhanced versions of the Annuity Options listed above. These
additional Annuity Options and enhanced versions of the existing options will
have additional Subaccounts available and will allow transfers between
Subaccounts during the Annuity Period. (Additional Subaccounts and transfer
capability are expected during the second half of 1996.) Such additional or
enhanced options will be made available by an endorsement to the Contract, which
will include the guaranteed annuity payout rates and other terms applicable to
such options. (Depending on which guaranteed payout rates apply to the existing
options, the guaranteed payout rates for the new and enhanced options will be
the same or lower.) Please refer to the Contract, or call the number listed in
the "Inquiries" section of the Prospectus Summary, to determine which options
are available and the terms of such options. It is not expected that these
additional or enhanced options will be made available to those who have already
commenced receiving Annuity Payments.
ANNUITY PAYMENTS
DATE PAYOUTS START. When payments start, the age of the Annuitant plus the
number of years for which payments are guaranteed must not exceed 95. Annuity
payments may not extend beyond (a) the life of the Annuitant, (b) the joint
lives of the Annuitant and beneficiary, (c) a period certain greater than the
Annuitant's life expectancy, or (d) a period certain greater than the joint life
expectancies of the Annuitant and beneficiary.
AMOUNT OF EACH ANNUITY PAYMENT. The amount of each payment depends on the
size of the Account Value, how you allocate it between fixed and variable
payouts, and the annuity option chosen. No election may be made that would
result in the first Annuity payment of less than $20, or total yearly Annuity
payments of less than $100. If the Account or Plan Account Value on the Annuity
Date is insufficient to elect an option for the minimum amount specified, a
lump-sum payment must be elected.
If Annuity Payments are to be made on a variable basis, the first and
subsequent payments will vary depending on the assumed net investment rate
selected (3 1/2% or 5% per annum). Selection of a 5% rate causes a higher first
payment, but Annuity Payments will increase thereafter only to the extent that
the net investment rate exceeds 5% on an annualized basis. Annuity Payments
would decline if the rate were below 5%. Use of the 3 1/2% assumed rate causes a
lower first payment, but subsequent payments would increase more rapidly or
decline more slowly as changes occur in the net investment rate. (See the
Statement of Additional Information for further discussion on the impact of
selecting an assumed net investment rate.)
CHARGES DEDUCTED DURING THE ANNUITY PERIOD
We make a daily deduction for mortality and expense risks from any amounts
held on a variable basis. Therefore, electing the nonlifetime option on a
variable basis will result in a deduction being made even though we assume no
mortality risk. We may also deduct a daily administrative charge from amounts
held under the variable options. (See "Charges and Deductions.")
DEATH BENEFIT PAYABLE DURING THE
ANNUITY PERIOD
If an Annuitant dies after Annuity Payments have begun, any death benefit
payable will depend on the terms of the Contract and the Annuity Option
selected. If Option 1 or Option 3 was elected, Annuity Payments will cease on
the death of the Annuitant under Option 1 or the death of the surviving
Annuitant under Option 3.
If Lifetime Option 2 or Option 4 was elected and the death of the Annuitant
under Option 2, or the surviving Annuitant under Option 4, occurs prior to the
end of the guaranteed minimum payment period, we will pay to the beneficiary in
a lump sum, unless otherwise requested, the present value of the guaranteed
annuity payments remaining.
If the nonlifetime option was elected, and the Annuitant dies before all
payments are made, the value of any remaining payments may be paid in a lump-sum
to the Plan beneficiary (unless otherwise requested), and no deferred sales
charge will be imposed.
For Non-Section 457 Plans, if required by the Code, and there is a death
benefit payable under the Annuity Option elected, the remaining values must be
distributed at least as rapidly as under the original method of distribution.
For Section 457 Plans, if there is a death benefit payable under the Annuity
Option elected, Annuity
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12
<PAGE>
Payments must be distributed to your beneficiary at least as rapidly as under
the original method of distribution and in substantially nonincreasing amounts.
Any lump-sum payment paid under the applicable lifetime or nonlifetime
Annuity options will be made within seven calendar days after proof of death
acceptable to us, and a request for payment are received at our Home Office.
The value of any death benefit proceeds will be determined as of the next
Valuation Date after we receive acceptable proof of death and a request for
payment. Under Options 2 and 4, such value will be reduced by any payments made
after the date of death.
TAX STATUS
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INTRODUCTION
The following provides a general discussion and is not intended as tax
advice. This discussion reflects the Company's understanding of current federal
income tax law. Such laws may change in the future, and it is possible that any
change could be retroactive (i.e., effective prior to the date of the change).
The Company makes no guarantee regarding the tax treatment of any Contract or
transaction involving a Contract. The ultimate effect of federal income taxes on
the amounts held under a Contract, on Annuity Payments, and on the economic
benefit to the Contract Holder, Participant or Beneficiary may depend upon the
tax status of the individual concerned. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under the Code. Since the
Separate Account is not an entity separate from the Company, it will not be
taxed separately as a "regulated investment company" under the Code. Investment
income and realized capital gains are automatically applied to increase reserves
under the Contracts. Under existing federal income tax law, the Company believes
that the Separate Accounts investment income and realized net capital gains will
not be taxed to the extent that such income and gains are applied to increase
the reserves under the Contracts.
The Company does not anticipate that it will incur any federal income tax
liability attributable to the Separate Account and, therefore, the Company does
not intend to make provisions for any such taxes. However, if changes in the
federal tax laws or interpretations thereof result in the Company being taxed on
income or gains attributable to the Separate Account, then the Company may
impose a charge against the Separate Account (with respect to some or all
Contracts) in order to set aside provisions to pay such taxes.
TAX STATUS OF THE CONTRACT
With respect to contracts sold to taxable organizations, Section 817(h) of
the Code requires that the investments of the Funds be "adequately diversified"
in accordance with Treasury Regulations in order for the Contracts to qualify as
annuity contracts with federal tax law. The Separate Account, through the Funds,
intends to comply with the diversification requirements prescribed by the
Treasury in Reg. Sec. 1.817-5, which affect how the Fund's assets may be
invested.
In certain circumstances, owners of variable annuity contracts that are
taxable organizations may be considered the owners, for federal income tax
purposes, of the assets of the separate accounts used to support their
contracts. In these circumstances, income and gains from the separate account
assets would be includible in the variable contract owner's gross income. One of
the circumstances that has raised this issue is the number of funding options
available under the Contract. The Company reserves the right to modify the
Contract as necessary to attempt to prevent a Contract Holder from being
considered the owner of a pro rata share of the assets of the Separate Account.
CONTRACTS USED WITH CERTAIN RETIREMENT PLANS
IN GENERAL: The Contract may be purchased and used in connection with:
(1) Employer-sponsored deferred compensation plans sponsored by tax-exempt
organizations for deferrals not subject to Code Section 457 and by
taxable organizations for their employees and/or independent
contractors; and
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(2) Employer-sponsored deferred compensation plans sponsored by tax-exempt
organizations for deferrals that are subject to Code Section 457 for
their employees and/or independent contractors.
The Company makes no attempt to provide more than general information about
use of the Contracts with the various types of retirement plans. Participants as
well as beneficiaries are cautioned that the rights of any person to any
benefits under the Contracts may be subject to the terms and conditions of the
plans themselves, in addition to the terms and conditions of the Contract issued
in connection with such plans. Some retirement plans are subject to distribution
and other requirements that are not incorporated in the provisions of the
Contracts. Purchasers are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts satisfy
applicable laws and should consult their legal counsel and tax adviser regarding
the suitability of the Contract.
SECTION 457 PLANS
Section 457 provides for certain deferred compensation plans. These plans
may be offered with respect to service for state governments, local governments,
political subdivisions, agencies, instrumentalities and certain affiliates of
such entities, and tax exempt organizations. These plans are subject to various
restrictions on contributions and distributions. The plans may permit
participants to specify the form of investment for their deferred compensation
account. In general, all investments are owned by the sponsoring employer and
are subject to the claims of the general creditors of the employer. Depending on
the terms of the particular plan, the employer may be entitled to draw on
deferred amounts for purposes unrelated to its Section 457 plan obligations. In
general, all amounts received under a Section 457 plan are taxable and
reportable to the IRS as taxable income. This includes payments for death
benefits, periodic and nonperiodic distribution. Also, all amounts except death
benefit proceeds are subject to federal income tax withholding as wages. If we
make payments directly to a Participant on behalf of the employer as Contract
Holder, we will withhold federal taxes (state taxes, if applicable).
The Code imposes a maximum limit on annual Purchase Payments which may be
excluded from your gross income. For Section 457 Plan Participants, such limit
is generally the lesser of $7,500 or 33 1/3% of your includible compensation
(25% of gross compensation).
MINIMUM DISTRIBUTION REQUIREMENTS: The Code has required distribution rules
for Section 457 Plans. Distributions must generally begin by April 1 of the
calendar year following the calendar year in which you attain age 70 1/2. For
governmental or church plans, distributions must begin by April 1 of the
calendar year following the calendar year in which you attain age 70 1/2 or
retire, whichever occurs later.
In general, annuity payments must be distributed over your life or the joint
lives of you and your beneficiary, or over a period not greater than your life
expectancy or the joint life expectancies of you and your Plan Beneficiary.
Also, any distribution payable over a period of more than one year must be made
in substantially non-increasing amounts.
If you die after the required minimum distribution has commenced,
distributions to your Plan Beneficiary must be made at least as rapidly as under
the method of distribution in effect at the time of your death. However, if the
minimum required distribution is calculated each year based on your single life
expectancy or the joint life expectancies of you and your Plan Beneficiary, the
regulations for Code Section 401(a)(9) provide specific rules for calculating
the minimum required distributions at your death. For example, if you have
elected ECO with the calculation based on your single life expectancy, and the
life expectancy is recalculated each year, your recalculated life expectancy
becomes zero in the calendar year following your death and the entire remaining
interest must be distributed to your beneficiary by December 31 of the year
following your death. The rules are complex and you should consult your tax
adviser before electing the method of calculation to satisfy the minimum
distribution requirements.
If you die before the required minimum distribution has commenced, your
entire interest must be distributed by December 31 of the calendar year
containing the fifth anniversary of the date of your death. Alternatively,
payments may be made over the life of the Plan Beneficiary or over a period not
extending beyond the life expectancy of the Plan Beneficiary (not to exceed 15
years for a non-spousal beneficiary) provided the distribution begins by
December 31 of the calendar year following the calendar year of your death, or
December 31 of the calendar year in which you would have attained age 70 1/2.
If you fail to receive the minimum required distribution for any tax year, a
50% excise tax is imposed on the required amount that was not distributed.
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PLANS OF NON-SECTION 457 TAX-EXEMPT ORGANIZATIONS AND TAXABLE ORGANIZATIONS
Effective January 1, 1987, rules applicable to deferred compensation plans
of state and local governments (Section 457 of the Code) were extended to
deferred compensation plans sponsored by tax-exempt employers. While no
limitation is imposed on deferrals under deferred compensation plans of taxable
employers, each Participant in a plan subject to Section 457 has a maximum
allowable annual deferral of $7,500 or 33 1/3% of the Participant's includible
compensation (25% of gross compensation). However, the Code does allow the
following "grandfathering" provisions for those who were Participants in
tax-exempt employer deferred compensation plans, as of August 16, 1986.
(1) Section 457 shall not apply to amounts deferred from taxable years beginning
before January 1, 1987.
(2) Section 457 shall not apply to amounts deferred from taxable years beginning
after December 31, 1986 provided (a) a deferral agreement was in writing on
August 16, 1986, and (b) as of August 16, 1986, the agreement provided for a
deferral of a fixed amount or of an amount determined pursuant to a fixed
formula, and (c) the agreement has not been modified as to amount or formula
after August 16, 1986.
Only individuals may participate under a Section 457 Plan subject to the
Section 457 rules. Therefore, corporations may not participate in tax-exempt
employer deferred compensation plans unless they qualify under the
"grandfathering" provisions.
Any reference in this prospectus to Section 457 Plans relates only to
contributions subject to Section 457 of the Code and these references do not
apply to "grandfathered" contributions.
In general, all amounts received under these Plans are taxable and, except
for death benefit payments, are subject to federal income tax withholding as
wages. This includes payments for periodic and nonperiodic distributions. Under
Plans sponsored by taxable organizations, such payments made to a Participant
are generally deductible by the Contract Holder as compensation paid to the
Participant. If we make payments directly to a Participant or beneficiary on
behalf of the employer as Contract Holder, we will report to the IRS the taxable
income and we will withhold federal taxes (and state taxes, if applicable) for
payments to Participants.
The owner of a Contract who is not a natural person must generally include
in income any increase in the excess of the Account Value over the "investment
in the contract" during the taxable year. There are some exceptions to this rule
and prospective owners that are not natural persons may wish to discuss this
with a competent tax advisor.
For contracts sold to taxable organizations, Section 72(e)(11) of the Code
provides that Annuity Contracts issued by the same insurer (and its affiliates)
to the same Contract Holder during a calendar year shall be treated as a single
Annuity Contract. This means that any amount received under this Contract, or
any other Contract subject to this provision, prior to the Contract's Annuity
starting date will be taxable (and possibly subject to the 10% penalty tax) to
the extent of the combined income in all such Contracts. For purposes of this
section, immediate Annuity Contracts, and Contracts used to fund qualified
pension and profit-sharing plans under Section 401(a) of the Code, Annuity plans
under Sections 403(a) or 403(b) of the Code, and individual retirement annuities
and accounts under Section 408 of the Code are not aggregated.
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MISCELLANEOUS
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VOTING RIGHTS
Each Contract Holder may direct us in the voting of shares at meetings of
shareholders of the appropriate Fund(s). The number of votes to which each
Contract Holder may give direction will be determined as of the record date.
The number of votes each Contract Holder is entitled to direct with respect
to a particular Fund during the Accumulation Period is equal to the portion of
the current value of the Contract attributable to that Fund, divided by the net
asset value of one share of that Fund. During the Annuity Period, the number of
votes is equal to the valuation reserve applicable to the portion of the
Contract attributable to that Fund, divided by the net asset value of one share
of that Fund. In determining the number of votes, fractional votes will be
recognized. Where the value of the Contract or valuation reserve relates to more
than one Fund, the calculation of votes will be performed separately for each
Fund.
Each Contract Holder will receive a notice of each meeting of shareholders
of that Fund, together with any proxy solicitation materials, and a statement of
the number of votes attributable to the Contract. Votes attributable to Contract
Holders who do not direct us will be cast by us in the same proportion as the
votes for which we have received directions.
MODIFICATION OF THE CONTRACT
The Company may change the Contract as required by federal or state law. In
addition, the Company may, upon 30 days written notice to the Contract Holder,
make other changes to group Contracts that would apply only to individuals who
become Participants under that Contract after the effective date of such
changes. If the Contract Holder does not agree to a change, no new Participants
will be covered under the Contract. Certain changes will require the approval of
appropriate state or federal regulatory authorities.
DISTRIBUTION
The Company will serve as Underwriter for the securities sold by this
Prospectus. The Company is registered as a broker-dealer with the Securities and
Exchange Commission and is a member of the National Association of Securities
Dealers, Inc. (NASD). As Underwriter, the Company will contract with one or more
registered broker-dealers ("Distributors"), including at least one affiliate of
the Company, to offer and sell the Contracts. All persons offering and selling
the Contracts must be registered representatives of the Distributors and must
also be licensed as insurance agents to sell Variable Annuity Contracts. These
registered representatives may also provide services to Participants in
connection with establishing their Accounts under the Contract.
Persons offering and selling the Contracts may receive commissions in
connection with the sale of the Contracts. The maximum percentage amount that
the Company will ever pay as commission with respect to any given Purchase
Payment is with respect to those made during the first year of Purchase Payments
under an Account. That percentage amount will range from 1% to 6% of those
Purchase Payments. The Company may also pay renewal commissions on Purchase
Payments made after the first year and, under group contracts, asset-based
service fees. The average of all payments made by the Company is estimated to
equal approximately 3% of the total Purchase Payments made over the life of an
average Contract. The Company may also reimburse the Distributor for certain
actual expenses. The name of the Distributor and the registered representative
responsible for your Account are set forth on your enrollment form. Commissions
and sales related expenses are paid by the Company and are not deducted from
Purchase Payments. See "Charges and Deductions--Deferred Sales Charge."
Occasionally, we may pay commissions and fees to Distributors which are
affiliated or associated with the Contract Holder or the Participants. We may
also enter into agreements with some entities associated with the Contract
Holder or Participants in which we would agree to pay the entity for certain
services in connection with administering the Contracts. In both these
circumstances there may be an understanding that the Distributor or entity would
endorse the Company as a provider of the Contract. You will be notified if you
are purchasing a Contract that is subject to these arrangements.
PERFORMANCE REPORTING
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account. The Company may
advertise the "standardized average annual total returns" of the Subaccounts,
calculated in a manner prescribed by
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the SEC, as well as the "non-standardized returns." "Standardized average annual
total returns" are computed according to a formula in which a hypothetical
investment of $1,000 is applied to the Subaccount and then related to the ending
redeemable values over the most recent one, five and ten-year periods (or since
inception, if less than ten years). Standardized returns will reflect the
reduction of all recurring charges during each period (e.g., mortality and
expense risk charges, annual maintenance fees, administrative expense charge (if
any) and any applicable deferred sales charge). "Non-standardized returns" will
be calculated in a similar manner, except that non-standardized figures will not
reflect the deduction of any applicable deferred sales charge (which would
decrease the level of performance shown if reflected in these calculations). The
non-standardized figures may also include monthly, quarterly, year to date and
three-year periods.
The Company may also advertise certain ratings, rankings or other
information related to the Company, the Subaccounts or the Funds. Further
details regarding performance reporting and advertising are described in the
Statement of Additional Information.
TRANSFER OF OWNERSHIP; ASSIGNMENT
No assignment of a Contract will be binding on us unless made in writing and
sent to us at our Home Office. The Company will use reasonable procedures to
confirm that the assignment is authentic, including verification of signature.
If the Company fails to follow its procedures, it would be liable for any losses
to you directly resulting from the failure. Otherwise, we are not responsible
for the validity of any assignment. The rights of the Owner and the interest of
the Annuitant and any Beneficiary will be subject to the rights of any assignee
of record.
DELAY OR SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of payment
for any benefit or values (a) on any Valuation Date on which the New York Stock
Exchange ("Exchange") is closed (other than customary weekend and holiday
closings) or when trading on the Exchange is restricted; (b) when an emergency
exists, as determined by the SEC, so that disposal of securities held in the
Subaccounts is not reasonably practicable or is not reasonably practicable for
the value of the Subaccount's assets; or (c) during such other periods as the
SEC may by order permit for the protection of investors The conditions under
which restricted trading or an emergency exists shall be determined by the rules
and regulations of the SEC.
LEGAL MATTERS AND PROCEEDINGS
The Company knows of no material legal proceedings pending to which the
Separate Account or the Company is a party or which would materially affect the
Separate Account. The validity of the securities offered by this Prospectus has
been passed upon by Susan E. Bryant, Esq., Counsel to the Company.
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CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
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The Statement of Additional Information contains more specific information on
the Separate Account and the Contract, as well as the financial statements of
the Separate Account and the Company. A list of the contents of the SAI is set
forth below:
General Information and History
Variable Annuity Account B
Offering and Purchase of Contracts
Performance Data
General
Average Annual Total Return Quotations
Annuity Payments
Dollar Cost Averaging
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of the Company
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APPENDIX I
GUARANTEED ACCUMULATION ACCOUNT
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THE GUARANTEED ACCUMULATION ACCOUNT ("GAA") IS A CREDITED INTEREST OPTION
AVAILABLE DURING THE ACCUMULATION PERIOD UNDER THE CONTRACTS OFFERED BY THIS
PROSPECTUS. AMOUNTS ALLOCATED TO GAA ARE HELD IN A NONINSULATED, NONUNITIZED
SEPARATE ACCOUNT. THIS APPENDIX IS A SUMMARY OF GAA AND IS NOT INTENDED TO
REPLACE THE GAA PROSPECTUS. YOU SHOULD READ THE ACCOMPANYING GAA PROSPECTUS
CAREFULLY BEFORE INVESTING.
GAA is a credited interest option in which we guarantee stipulated rates of
interest for stated periods of time on amounts directed to GAA. The interest
rate stipulated is an annual effective yield; that is, it reflects a full year's
interest. Interest is credited daily at a rate that will provide the guaranteed
annual effective yield over the period of one year. This option guarantees the
minimum interest rate specified in the Contract.
During a specified period of time (the "deposit period"), amounts may be
applied to any or all available Guaranteed Terms within the Short-Term and
Long-Term Classifications. Short-Term GAA has Guaranteed Terms from one to three
years, and Long-Term GAA has Guaranteed Terms from three to ten years.
Purchase Payments must remain in GAA for the full Guaranteed Term to receive
the quoted interest rates. Withdrawals or transfers from a Guaranteed Term
before the end of that Guaranteed Term may be subject to a market value
adjustment ("MVA"). An MVA reflects the change in the value of the investment
due to changes in interest rates since the date of deposit. When interest rates
increase after the date of deposit, the value of the investment decreases, and
the MVA is negative. Conversely, when interest rates decrease after the date of
deposit, the value of the investment increases, and the MVA is positive. It is
possible that a negative MVA could result in you receiving an amount that is
less than the amount paid into GAA.
As a Guaranteed Term matures, assets accumulating under GAA may be (a)
transferred to a new Guaranteed Term, (b) transferred to the other available
investment options, or (c) withdrawn. Amounts withdrawn may be subject to a
deferred sales charge and/or federal tax liabilities.
By notifying us at our Home Office at least 30 days prior to the Annuity
Date, you may elect a variable annuity and have amounts that have been
accumulating under GAA transferred to one or more of the Subaccounts available
during the Annuity Period. GAA cannot be used as an investment option during the
Annuity Period.
MORTALITY AND EXPENSE RISK CHARGES
We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited rate.
TRANSFERS
Amounts applied to a Guaranteed Term during a deposit period may not be
transferred to any other funding option or to another Guaranteed Term during
that deposit period or for 90 days after the close of that deposit period.
Transfers are permitted from Guaranteed Terms of one Classification to available
Guaranteed Terms of another Classification. We will apply an MVA to GAA
transfers made before the end of a Guaranteed Term. Transfers of GAA values due
to a maturity are not subject to an MVA.
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APPENDIX II
FIXED ACCOUNT
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THE FOLLOWING SUMMARIZES MATERIAL INFORMATION CONCERNING THE FIXED ACCOUNT.
AMOUNTS ALLOCATED TO THE FIXED ACCOUNT ARE HELD IN THE COMPANY'S GENERAL ACCOUNT
THAT SUPPORTS GENERAL INSURANCE AND ANNUITY OBLIGATIONS. INTERESTS IN THE FIXED
ACCOUNT HAVE NOT BEEN REGISTERED WITH THE SEC IN RELIANCE ON EXEMPTIONS UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. DISCLOSURE IN THE PROSPECTUS REGARDING
THE FIXED ACCOUNT, MAY, HOWEVER, BE SUBJECT TO CERTAIN GENERALLY APPLICABLE
PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY AND
COMPLETENESS OF SUCH STATEMENTS. DISCLOSURE IN THIS APPENDIX REGARDING THE FIXED
ACCOUNT HAS NOT BEEN REVIEWED BY THE SEC.
The Fixed Account guarantees the minimum interest rate specified in the
Contract. The Company may credit a higher interest rate from time to time. The
current rate is subject to change at any time, but will never fall below the
guaranteed minimum. The Company's determination of interest rates reflects the
investment income earned on invested assets and the amortization of any capital
gains and/or losses realized on the sale of invested assets. Under the Fixed
Account, the Company assumes the risk of investment gain or loss by guaranteeing
Account Values and promising a minimum interest rate and Annuity Payment.
Under certain emergency conditions, we may defer payment of a Fixed Account
withdrawal value (a) for a period of up to six months, or (b) as provided by
federal law.
In addition, if allowed by state law, the Company may pay any Fixed Account
withdrawal value in equal payments, with interest, over a period not to exceed
60 months, when:
(a) the Fixed Account withdrawal value for the Contract or for the total of the
Accounts under the Contract exceeds $250,000 on the day prior to the
withdrawal; and
(b) the sum of the current Fixed Account withdrawal and the total of all Fixed
Account withdrawals from the Contract or any Account under the Contract
within the past 12 calendar months exceeds 20% of the amount in the Fixed
Account on the day prior to the current withdrawal.
Interest, as used above, will not be more than two percentage points below
any rate determined prospectively by the Board of Directors for this class of
Contract. In no event will the interest rate be less than the minimum stated in
the Contract.
Amounts applied to the Fixed Account will earn the interest rate in effect
when actually applied to the Fixed Account.
The Fixed Account will reflect a compound interest rate credited by us. The
interest rate quoted is an annual effective yield. We make no deductions from
the credited interest rate for mortality and expense risks; these risks are
considered in determining the credited rate.
If a withdrawal is made from the Fixed Account, a deferred sales charge may
apply. See "Charges and Deductions-- Deferred Sales Charge."
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers from the Fixed Account to any other available investment option(s)
are allowed in each calendar year during the Accumulations Period. There is no
limit to the number of transfers that you can make out of the Fixed Account in a
calendar year; however the amount you are allowed to transfer from the Fixed
Account is the current value of your Fixed Account multiplied by the current
maximum percentage of the transfer allowed (the "window") minus any previous
transfers made during the calendar year. Transfers to the Fixed Plus Account (if
available under the Contract) will be permitted without regard to this
limitation.
By notifying us at our Home Office at least 30 days before Annuity payments
begin, you may elect to have amounts which have been accumulating under the
Fixed Account transferred to one or more of the Subaccounts available during the
Annuity Period to provide variable Annuity Payments.
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APPENDIX III
FIXED PLUS ACCOUNT
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THE FOLLOWING SUMMARIZES MATERIAL INFORMATION CONCERNING THE FIXED PLUS ACCOUNT.
AMOUNTS ALLOCATED TO THE FIXED PLUS ACCOUNT ARE HELD IN THE COMPANY'S GENERAL
ACCOUNT THAT SUPPORTS INSURANCE AND ANNUITY OBLIGATIONS. INTERESTS IN THE FIXED
PLUS ACCOUNT HAVE NOT BEEN REGISTERED WITH THE SEC IN RELIANCE ON EXEMPTIONS
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. DISCLOSURE IN THIS PROSPECTUS
REGARDING THE FIXED PLUS ACCOUNT MAY, HOWEVER, BE SUBJECT TO CERTAIN GENERALLY
APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS RELATING TO THE ACCURACY
AND COMPLETENESS OF THE STATEMENTS. DISCLOSURE IN THIS APPENDIX REGARDING THE
FIXED PLUS ACCOUNT HAS NOT BEEN REVIEWED BY THE SEC.
FIXED PLUS ACCOUNT
The Fixed Plus Account guarantees that amounts allocated to this option will
earn the minimum Fixed Plus interest rate specified in the Contract. We may
credit a higher interest rate from time to time. Our determination of interest
rates reflects the investment income earned on invested assets and the
amortization of any capital gains and/or losses realized on the sale of invested
assets. Under this option, we assume the risk of investment gain or loss by
guaranteeing Net Purchase Payment values and promising a minimum interest rate
and Annuity payment.
The Fixed Plus Account will reflect a compound interest rate credited by us.
The interest rate quoted is an annual effective yield. Amounts applied to the
Fixed Plus Account will earn the Fixed Plus interest rate in effect when
actually applied to the Fixed Plus Account. We make no deductions from the
credited interest rate for mortality and expense risks; these risks are
considered in determining the credited rate.
Beginning on the tenth Account Year, we will credit amounts held in the
Fixed Plus Account with an interest rate that is at least 0.25% higher than the
then-declared interest rate for the Fixed Plus Accounts for Accounts that have
not reached their tenth anniversary.
We reserve the right to limit Net Purchase Payment(s) and/or transfers to
the Fixed Plus Account.
FIXED PLUS ACCOUNT WITHDRAWALS
The amount eligible for partial withdrawal is 20% of the amount held in the
Fixed Plus Account on the day we receive a written request in our Home Office,
reduced by any Fixed Plus Account withdrawals, transfers or annuitizations made
in the prior 12 months. In calculating the 20% limit, we reserve the right to
include payments made due to the election of any Additional Withdrawal Option.
The 20% limit is waived if the partial withdrawal is due to annuitization or
death. The waiver upon death will only be exercised once and must occur within
six months after the Participant's date of death. For this waiver to apply, any
such partial withdrawal must also be made pro rata from all funding options used
under the Account.
If a full withdrawal is requested, we will pay any amounts held in the Fixed
Plus Account, with interest, in five annual payments that will be equal to:
1. One-fifth of the Fixed Plus Account value on the day the request is
received, reduced by any Fixed Plus Account withdrawals, transfers or
annuitizations made in the prior 12 months;
2. One-fourth of the remaining Fixed Plus Account value twelve months later;
3. One-third of the remaining Fixed Plus Account value twelve months later;
4. One-half of the remaining Fixed Plus Account value twelve months later; and
5. The balance of the Fixed Plus Account value twelve months later.
Once we receive a request for a full withdrawal from an Account, no further
withdrawals or transfers will be permitted from the Fixed Plus Account.
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A full withdrawal from the Fixed Plus Account may be cancelled at any time
before the end of the five-payment period.
We will waive the Fixed Plus Account full withdrawal provision, if the
withdrawal is made:
(a) due to your death, before Annuity payments begin, within 6 months of the
date of death;
(b) due to the election of an Annuity option;
(c) when the Fixed Plus Account value is $3,500 or less (and no withdrawals,
transfers or annuitizations have been made from the Account within the prior
12 months).
TRANSFERS AMONG INVESTMENT OPTIONS
The amount eligible for transfer from the Fixed Plus Account is 20% of the
amount held in the Fixed Plus Account on the day we receive a written request in
our Home Office, reduced by any Fixed Plus Account withdrawals, transfers or
annuitizations made in the prior 12 months. In calculating the 20% limit, we
reserve the right to include payments made due to the election of an Additional
Withdrawal Option. We will waive the 20% transfer limit when the value in the
Fixed Plus Account is $1,000 or less.
By notifying us at our Home Office at least 30 days before Annuity payments
begin, the Contract Holder may elect to have amounts which have been
accumulating under the Fixed Plus Account transferred to one or more of the
Subaccounts available during the Annuity Period, to provide lifetime variable
Annuity payments.
SWO
The Systematic Withdrawal Option may not be elected if you have requested a
Fixed Plus Account transfer or withdrawal within the prior 12-month period.
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FOR MASTER APPLICATIONS ONLY
I HEREBY ACKNOWLEDGE RECEIPT OF AN ACCOUNT B GROUP DEFERRED VARIABLE ANNUITY
PROSPECTUS DATED MAY 1, 1996 FOR SECTION 457 EMPLOYER-SPONSORED DEFERRED
COMPENSATION PLANS, AS WELL AS ALL CURRENT PROSPECTUSES PERTAINING TO THE
VARIABLE INVESTMENT OPTIONS AVAILABLE UNDER THE CONTRACTS.
- ---- PLEASE SEND AN ACCOUNT B STATEMENT OF ADDITIONAL INFORMATION (FORM NO.
75996(S)) DATED MAY 1, 1996.
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CONTRACT HOLDER'S SIGNATURE
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DATE
75996-2 (5/96)
<PAGE>
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VARIABLE ANNUITY ACCOUNT B
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
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STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996
AetnaPlus Contracts
Group and Individual Variable Annuity Contracts Available under
Section 457 and 401(a)
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Variable Annuity Account B (the
"Separate Account") dated May 1, 1996.
A free prospectus is available upon request from the local Aetna Life Insurance
and Annuity Company office or by writing to or calling:
Aetna Life Insurance and Annuity Company
Customer Service
151 Farmington Avenue
Hartford, Connecticut 06156
1-800-525-4225
Read the prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the Prospectus.
TABLE OF CONTENTS
Page
----
General Information and History. . . . . . . . . . . . . . . . . . . . 1
Variable Annuity Account B . . . . . . . . . . . . . . . . . . . . . . 1
Offering and Purchase of Contracts . . . . . . . . . . . . . . . . . . 2
Performance Data . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Average Annual Total Return Quotations. . . . . . . . . . . . . . . 3
Annuity Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Sales Material and Advertising . . . . . . . . . . . . . . . . . . . . 8
Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . 8
Financial Statements of the Separate Account . . . . . . . . . . . . . S-1
Financial Statements of Aetna Life Insurance and Annuity Company . . . F-1
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Life Insurance and Annuity Company (the "Company") is a stock life
insurance company which was organized under the insurance laws of the State of
Connecticut in 1976. Through a merger, it succeeded to the business of Aetna
Variable Annuity Life Insurance Company (formerly Participating Annuity Life
Insurance Company organized in 1954). As of December 31, 1995, the Company
managed over $___ billion of assets, and as of December 31, 1994, it ranked
among the top 2% of all U.S. life insurance companies by size. The Company is a
wholly owned subsidiary of Aetna Retirement Services, Inc., which is in turn a
wholly owned subsidiary of Aetna Life and Casualty Company. The Company is
engaged in the business of issuing life insurance policies and annuity contracts
in all states of the United States. The Company's Home Office is located at 151
Farmington Avenue, Hartford, Connecticut 06156.
In addition to serving as the principal underwriter and the depositor for the
Separate Account, the Company is also a registered investment adviser under the
Investment Advisers Act of 1940, and a registered broker-dealer under the
Securities Exchange Act of 1934. The Company provides investment advice to
several of the registered management investment companies offered as variable
investment options under the Contracts funded by the Separate Account (see
"Variable Annuity Account B" below).
Other than the mortality and expense risk charges and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the Separate Account are borne by the Company. See "Charges and Deductions" in
the prospectus. The Company receives reimbursement for certain administrative
costs from some unaffiliated sponsors of the Funds used as funding options under
the Contract. These fees generally range up to 0.25%.
The assets of the Separate Account are held by the Company. The Separate
Account has no custodian. However, the Funds in whose shares the assets of the
Separate Account are invested each have custodians, as discussed in their
respective prospectuses.
VARIABLE ANNUITY ACCOUNT B
Variable Annuity Account B (the "Separate Account") is a separate account
established by the Company for the purpose of funding variable annuity contracts
issued by the Company. 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 assets of each of the Subaccounts of the Separate
Account will be invested exclusively in shares of the mutual funds described in
the Prospectus. Purchase Payments made under the Contract may be allocated to
one or more of the Subaccounts. The Company may make additions to or deletions
from available investment options as permitted by law. The availability of the
Funds is subject to applicable regulatory authorization. Not all Funds are
available in all jurisdictions, under all Contracts, or under all Plans. The
Funds currently available under the Contract are as follows:
1
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Aetna Variable Fund Fidelity VIP Growth Portfolio
Aetna Income Shares Fidelity VIP Overseas Portfolio
Aetna Variable Encore Fund Janus Aspen Aggressive Growth Portfolio
Aetna Investment Advisers Fund, Inc. Janus Aspen Balanced Portfolio
Aetna Ascent Variable Portfolio Janus Aspen Flexible Income Portfolio
Aetna Crossroads Variable Portfolio Janus Aspen Growth Portfolio
Aetna Legacy Variable Portfolio Janus Aspen Short-Term Bond Portfolio
Alger American Growth Portfolio Janus Aspen Worldwide Growth Portfolio
Alger American Small Cap Portfolio Lexington Natural Resources Trust
Calvert Responsibly Invested Balanced Portfolio Neuberger & Berman Growth Portfolio
Fidelity VIP II Contrafund Portfolio Scudder International Portfolio
Fidelity VIP Equity-Income Portfolio TCI Growth
</TABLE>
Complete descriptions of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, are contained in the
prospectuses and statements of additional information for each of the Funds.
OFFERING AND PURCHASE OF CONTRACTS
The Company is both the Depositor and the principal underwriter for the
securities sold by the prospectus. The Company offers the Contracts through
life insurance agents licensed to sell variable annuities who are registered
representatives of the Company or of other registered broker-dealers who have
sales agreements with the Company. The offering of the Contracts is continuous.
A description of the manner in which Contracts are purchased may be found in the
prospectus under the sections titled "Purchase" and "Contract Valuation."
PERFORMANCE DATA
GENERAL
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account available under the
Contracts issued by the Company in connection with Plans described in the
Prospectus. The Company may advertise the "standardized average annual total
returns," calculated in a manner prescribed by the Securities and Exchange
Commission (the "standardized return"), as well as "non-standardized returns,"
both of which are described below.
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial Purchase Payment of
$1,000 is applied to the various Subaccounts under the Contract, and then
related to the ending redeemable values over one, three, five and ten year
periods (or fractional periods thereof). The standardized figures reflect the
deduction of all recurring charges during each period (e.g., mortality and
expense risk charges, maintenance fees, administrative expense charges, and
deferred sales charges). These charges will be deducted on a pro rata basis in
the case of fractional periods. The maintenance fee is converted to a
percentage of assets based on the average account size under the Contracts
described in the Prospectus.
The non-standardized figures will be calculated in a similar manner, except that
they will not reflect the deduction of any applicable deferred sales charge
(which would decrease the level of performance
2
<PAGE>
shown if reflected in these calculations). The non-standardized figures may
also include monthly, quarterly, year-to-date and three year periods.
If a Fund was in existence prior to the date it became available under the
Contract, standardized and non-standardized total returns may include periods
prior to the date on which such Fund became available under the Contract. These
figures are calculated by adjusting the actual returns of the Fund to reflect
the charges that would have been assessed under the Contract had that Fund been
available under the Contract during that period.
Investment results of the Funds will fluctuate over time, and any presentation
of the Subaccounts' total return quotations for any prior period should not be
considered as a representation of how the Subaccounts will perform in any future
period. Additionally, the Account Value upon redemption may be more or less
than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - STANDARDIZED AND NON-STANDARDIZED
Each set of tables shown below represents the variations in contract payment
type and in the maintenance fees assessed under different plans. Table A
reflects the average annual standardized and non-standardized total return
quotation figures for the periods ended December 31, 1995 for the Subaccounts
under Single Payment Accounts issued by the Company. Tables B and C reflect the
average annual standardized and non-standardized total return quotation figures
for the periods ended December 31, 1995 for the Subaccounts under Installment
Payment Accounts with a $20 annual maintenance fee and a $15 annual maintenance
fee, respectively. In both sets of tables, for those Subaccounts where results
are not available for the full calendar period indicated, the percentage shown
is an average annual return since inception (denoted with an *).
<TABLE>
<CAPTION>
TABLE A
----------------------------------------------------------------------------------------
SINGLE PAYMENT ACCOUNT: FUND
($0 MAINTENANCE FEE) STANDARDIZED NON-STANDARDIZED INCEPTION DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Fund 04/30/75
Aetna Income Shares 06/01/78
Aetna Variable Encore Fund 09/01/75
Aetna Investment Advisers Fund, Inc. 06/23/89
Alger American Growth Portfolio 01/08/89
Alger American Small Cap Portfolio 09/21/88
Calvert Responsibly Invested Balanced Portfolio 09/30/86
Fidelity Equity-Income Portfolio 10/22/86
Fidelity Growth Portfolio 11/07/86
Fidelity Overseas Portfolio 02/13/87
3
<PAGE>
Janus Aspen Aggressive Growth Portfolio 9/13/93
Janus Aspen Balanced Portfolio 09/13/93
Janus Aspen Flexible Income Portfolio 09/13/93
Janus Aspen Growth Portfolio 09/13/93
Janus Aspen Short-Term Bond Portfolio 09/13/93
Janus Aspen Worldwide Growth Portfolio 09/13/9 3
Lexington Natural Resources Trust 05/31/89
Neuberger & Berman Growth Portfolio 12/31/85
Scudder International Portfolio 04/30/87
TCI Growth 11/20/87
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
TABLE B
----------------------------------------------------------------------------------------
INSTALLMENT PAYMENT ACCOUNT: FUND
($20 MAINTENANCE FEE) STANDARDIZED NON-STANDARDIZED INCEPTION DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Fund 04/30/75
Aetna Income Shares 06/01/78
Aetna Variable Encore Fund 09/01/75
Aetna Investment Advisers Fund, Inc. 06/23/89
Alger American Growth Portfolio 01/08/89
Alger American Small Cap Portfolio 09/21/88
Calvert Responsibly Invested Balanced Portfolio 09/30/86
Fidelity Equity-Income Portfolio 10/22/86
Fidelity Growth Portfolio 11/07/86
Fidelity Overseas Portfolio 02/13/87
Janus Aspen Aggressive Growth Portfolio 09/13/93
Janus Aspen Balanced Portfolio 09/13/93
Janus Aspen Flexible Income Portfolio 09/13/93
Janus Aspen Growth Portfolio 09/13/93
Janus Aspen Short-Term Bond Portfolio 09/13/93
Janus Aspen Worldwide Growth Portfolio 09/13/93
Lexington Natural Resources Trust 05/31/89
Neuberger & Berman Growth Portfolio 12/31/85
Scudder International Portfolio 04/30/87
TCI Growth 11/20/87
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
TABLE C
----------------------------------------------------------------------------------------
INSTALLMENT PAYMENT ACCOUNT: FUND
($15 MAINTENANCE FEE) STANDARDIZED NON-STANDARDIZED INCEPTION DATE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Fund 04/30/75
Aetna Income Shares 06/01/78
Aetna Variable Encore Fund 09/01/75
Aetna Investment Advisers Fund, Inc. 06/23/89
Alger American Growth Portfolio 01/08/89
Alger American Small Cap Portfolio 09/21/88
Calvert Responsibly Invested Balanced Portfolio 09/30/86
Fidelity Equity-Income Portfolio 10/22/86
Fidelity Growth Portfolio 11/07/86
Fidelity Overseas Portfolio 02/13/87
Janus Aspen Aggressive Growth Portfolio 09/13/93
Janus Aspen Balanced Portfolio 09/13/93
Janus Aspen Flexible Income Portfolio 09/13/93
Janus Aspen Growth Portfolio 09/13/93
Janus Aspen Short-Term Bond Portfolio 09/13/93
Janus Aspen Worldwide Growth Portfolio 09/13/93
Lexington Natural Resources Trust 05/31/89
Neuberger & Berman Growth Portfolio 12/31/85
Scudder International Portfolio 04/30/87
TCI Growth 11/20/87
</TABLE>
6
<PAGE>
ANNUITY PAYMENTS
When Annuity payments are to begin, the value of the Account is determined using
Accumulation Unit values as of the tenth Valuation Period before the first
Annuity payment is due. Such value (less any applicable premium tax) is applied
to provide an Annuity in accordance with the Annuity and investment options
elected.
The Annuity option tables found in the Contract show, for each form of Annuity,
the amount of the first Annuity payment for each $1,000 of value applied.
Thereafter, variable Annuity payments fluctuate as the Annuity Unit value(s)
fluctuates with the investment experience of the selected investment option(s).
The first payment and subsequent payments also vary depending on the assumed net
investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a
higher first payment, but Annuity payments will increase thereafter only to the
extent that the net investment rate increases by more than 5% on an annual
basis. Annuity payments would decline if the rate failed to increase by 5%. Use
of the 3.5% assumed rate causes a lower first payment, but subsequent payments
would increase more rapidly or decline more slowly as changes occur in the net
investment rate.
When the Annuity Period begins, the Annuitant is credited with a fixed number of
Annuity Units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where (a)
is the amount of the first Annuity payment based on a particular investment
option, and (b) is the then current Annuity Unit value for that investment
option. As noted, Annuity Unit values fluctuate from one Valuation Period to the
next; such fluctuations reflect changes in the net investment factor for the
appropriate Fund(s) (with a ten Valuation Period lag which gives the Company
time to process Annuity payments) and a mathematical adjustment which offsets
the assumed net investment rate of 3.5% or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the Annuity Period.
EXAMPLE:
Assume that, at the date Annuity payments are to begin, there are 3,000
Accumulation Units credited under a particular Account and that the value of an
Accumulation Unit for the tenth Valuation Period prior to retirement was
$13.650000. This produces a total value of $40,950.
Assume also that no premium tax is payable and that the Annuity table in the
Contract provides, for the option elected, a first monthly variable Annuity
payment of $6.68 per $1000 of value applied; the Annuitant's first monthly
payment would thus be 40.950 multiplied by $6.68, or $273.55.
Assume then that the value of an Annuity Unit for the Valuation Period in which
the first payment was due was $13.400000. When this value is divided into the
first monthly payment, the number of Annuity Units is determined to be 20.414.
The value of this number of Annuity Units will be paid in each subsequent month.
If the net investment factor with respect to the appropriate Fund is 1.0015000
as of the tenth Valuation Period preceding the due date of the second monthly
payment, multiplying this factor by .9999058* (to neutralize the assumed net
investment rate of 3.5% per annum built into the number of Annuity Units
determined above) produces a result of 1.0014057. This is then multiplied by the
Annuity Unit value for
7
<PAGE>
the prior Valuation Period (assume such value to be $13.504376) to produce an
Annuity Unit value of $13.523359 for the Valuation Period in which the second
payment is due.
The second monthly payment is then determined by multiplying the number of
Annuity Units by the current Annuity Unit value, or 20.414 times $13.523359,
which produces a payment of $276.07.
*If an assumed net investment rate of 5% is elected, the appropriate factor to
neutralize such assumed rate would be .9998663.
SALES MATERIAL AND ADVERTISING
The Company may include hypothetical illustrations in its sales literature that
explain the mathematical principles of dollar cost averaging, compounded
interest, tax deferred accumulation, and the mechanics of variable annuity
contracts. The Company may also discuss the difference between variable annuity
contracts and other types of savings or investment products, including, but not
limited to, personal savings accounts and Certificates of Deposit.
We may distribute sales literature that compares the percentage change in
Accumulation Unit values for any of the Funds to established market indexes such
as the Standard & Poor's 500 Stock Index and the Dow Jones Industrial Average or
to the percentage change in values of other management investment companies that
have investment objectives similar to the Fund being compared.
We may publish in advertisements and reports, the ratings and other information
assigned to us by one or more independent rating organizations such as A.M. Best
Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors
Services, Inc. The purpose of the ratings is to reflect our financial strength
and/or claims-paying ability. We may also quote ranking services such as
Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable
Insurance Products Performance Analysis Service (VIPPAS), which rank variable
annuity or life Subaccounts or their underlying funds by performance and/or
investment objective. From time to time, we will quote articles from newspapers
and magazines or other publications or reports, including, but not limited to
The Wall Street Journal, Money magazine, USA Today and The VARDS Report.
The Company may provide in advertising, sales literature, periodic publications
or other materials information on various topics of interest to current and
prospective Contract Holders or Participants. These topics may include the
relationship between sectors of the economy and the economy as a whole and its
effect on various securities markets, investment strategies and techniques (such
as value investing, market timing, dollar cost averaging, asset allocation,
constant ratio transfer and account rebalancing), the advantages and
disadvantages of investing in tax-deferred and taxable investments, customer
profiles and hypothetical purchase and investment scenarios, financial
management and tax and retirement planning, and investment alternatives to
certificates of deposit and other financial instruments, including comparison
between the Contracts and the characteristics of and market for such financial
instruments.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the
independent auditors for the Separate Account and for the Company. The services
provided to the Separate Account include primarily the examination of the
Separate Account's financial statements and the review of filings made with the
SEC.
8
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT B
INDEX
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . S-2
Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . . S-3
Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . S-4
Statements of Changes in Net Assets. . . . . . . . . . . . . . . . . . S-5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . S-6
FINANCIAL STATEMENTS TO BE FILED BY SUBSEQUENT POST-EFFECTIVE AMENDMENT.
S-1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY ACCOUNT B
VARIABLE ANNUITY CONTRACTS
ISSUED BY
AETNA LIFE INSURANCE AND ANNUITY COMPANY
<PAGE>
VARIABLE ANNUITY ACCOUNT B
PART C - OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:*
(1) Included in Part A:
Condensed Financial Information
(2) Included in Part B:
Financial Statements of Variable Annuity Account B:
- Independent Auditors' Report
- Statement of Assets and Liabilities as of December 31, 1995
- Statement of Operations for the year ended December 31, 1995
- Statements of Changes in Net Assets for the years ended December
31, 1995 and 1994
- Notes to Financial Statements
Financial Statements of the Depositor:
- Independent Auditors' Report
- Consolidated Statements of Income for the years ended December 31,
1995, 1994 and 1993
- Consolidated Balance Sheets as of December 31, 1995 and 1994
- Consolidated Statements of Changes in Shareholder's Equity for the
years ended December 31, 1995, 1994 and 1993
- Consolidated Statements of Cash Flows for the years ended December
31, 1995, 1994 and 1993
- Notes to Consolidated Financial Statements
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Life Insurance and
Annuity Company establishing Variable Annuity Account B(1)
(2) Not applicable
(3.1) Form of Broker-Dealer Agreement(2)
(3.2) Alternative Form of Wholesaling Agreement and related Selling
Agreement(2)
(4.1) Form of Variable Annuity Contract (G-CDA-HF)(3)
(4.2) Form of Variable Annuity Contract (IA-CDA-IA)(4)
(5.1) Form of Variable Annuity Contract Application (300-GTD-IA)(3)
(5.2) Form of Variable Annuity Contract Application (710.00.141)(5)
(6) Certificate of Incorporation and By-Laws of Depositor(6)
(7) Not applicable
(8.1) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Alger American Fund and Fred Alger Management,
Inc. dated September 1, 1993(2)
<PAGE>
(8.2) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Calvert Asset Management Company (Calvert
Responsibly Invested Balanced Portfolio formerly Calvert Socially
Responsible Series) dated March 13, 1989 and amended December 27,
1993(7)
(8.3) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Fidelity Distributors Corporation dated
February 1, 1994 (Variable Insurance Products Fund)(8)
(8.4) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Fidelity Distribution Corporation dated
February 1, 1994 (Variable Insurance Products Fund II)(8)
(8.5) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Lexington Management Corporation regarding
Natural Resources Trust dated December 1, 1988 and amended February
11, 1991(7)
(8.6) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994 and
amended June 15, 1994(9)
(8.7) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Advisers Management Trust (now Neuberger &
Berman Advisers Management Trust) dated April 14, 1989(2)
(8.8) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Scudder Variable Life Investment Fund dated
April 27, 1992 and amended February 19, 1993 and August 13,
1993(10)
(8.9) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Investors Research Corporation and TCI Portfolios,
Inc. dated July 29, 1992 and amended December 22, 1992 and June 1,
1994(10)
(9) Opinion of Counsel(*)
(10.1) Consent of Independent Auditors(*)
(10.2) Consent of Counsel(*)
(11) Not applicable
(12) Not applicable
(13) Computation of Performance Data(*)
(14) Financial Data Schedule(*)
(15.1) Powers of Attorney(11)
(15.2) Authorization for Signatures(12)
* To be filed by amendment.
1. Incorporated by reference to Registration Statement on Form N-4
(File No.2-52448) filed on February 28, 1986.
2. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75996) filed on April 21, 1994.
3. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-75964) filed on February 24, 1995.
<PAGE>
4. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form-N-4 (File No. 33-75958) filed on April 28, 1995.
5. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-76000) filed on April 28, 1995.
6. Incorporated by reference to Post-Effective Amendment No. 58 to
Registration Statement on Form N-4 (File No. 2-52449) filed on February 28,
1994.
7. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 33-75978) filed on March 24, 1995.
8. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75978) filed on April 25, 1994.
9. Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement on Form N-4 (File No. 33-75960) filed on August 9, 1994.
10. Incorporated by reference to Registration Statement on Form N-4 (File No.
33-88720) filed on January 20, 1995.
11. The Power of Attorney for David E. Bushong, Acting Chief Financial Officer,
is incorporated by reference to Post-Effective Amendment No. 1 to
Registration Statement on Form N-4 (File No. 33-87932), as filed
electronically, on September 18, 1995. The Powers of Attorney for all
other signatories are incorporated by reference to Post-Effective
Amendment No. 5 to Registration Statement on Form N-4 (File No. 33-75982),
as filed electronically, on February 16, 1996.
12. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-91846) as filed electronically on August
16, 1995.
<PAGE>
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
Name and Principal
Business Address* Positions and Offices with Depositor
- ----------------- ------------------------------------
Daniel P. Kearney Director and President
Timothy A. Holt Director
Christopher J. Burns Director and Senior Vice President, Life
Laura R. Estes Director and Senior Vice President, ALIAC
Pensions
Gail P. Johnson Director and Senior Vice President, Annuity
John Y. Kim Director and Senior Vice President, ALIAC
Investments
Shaun P. Mathews Director and Senior Vice President,
Strategic Markets and Products
Glen Salow Director and Vice President, ALIAC IT
Creed R. Terry Director and Vice President Select & Manage
Markets
James C. Hamilton Vice President and Treasurer
David E. Bushong Acting Chief Financial Officer
Eugene M. Trovato Vice President, Chief Accounting Officer and
Corporate Controller
Zoe Baird Senior Vice President and General Counsel
Fred J. Franklin Vice President and Chief Compliance Officer
Susan E. Schechter Corporate Secretary and Counsel
* The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
<PAGE>
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
Incorporated herein by references to Item 26 of Post-Effective Amendment No.
5 to Registration Statement on Form N-4 (File No. 33-75982), as filed
electronically, on February 16, 1996.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of December 31, 1995, there were 33,702 contract owners of variable
annuity contracts funded through Account B.
ITEM 28. INDEMNIFICATION
Reference is hereby made to Section 33-320a of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and officers of
Connecticut corporations. The statute provides in general that Connecticut
corporations shall indemnify their officers, directors, employees, agents, and
certain other defined individuals against judgments, fines, penalties, amounts
paid in settlement and reasonable expenses actually incurred in connection with
proceedings against the corporation. The corporation's obligation to provide
such indemnification does not apply unless (1) the individual is successful on
the merits in the defense of any such proceeding; or (2) a determination is made
(by a majority of the board of directors not a party to the proceeding by
written consent; by independent legal counsel selected by a majority of the
directors not involved in the proceeding; or by a majority of the shareholders
not involved in the proceeding) that the individual acted in good faith and in
the best interests of the corporation; or (3) the court, upon application by the
individual, determines in view of all the circumstances that such person is
reasonably entitled to be indemnified.
C.G.S. Section 33-320a provides an exclusive remedy: a Connecticut
corporation cannot indemnify a director or officer to an extent either greater
or less than that authorized by the statute, e.g., pursuant to its certificate
of incorporation, bylaws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Consistent with the statute, Aetna Life and Casualty Company has procured
insurance from Lloyd's of London and several major United States excess insurers
for its directors and officers and the directors and officers of its
subsidiaries, including the Depositor, which supplements the indemnification
rights provided by C.G.S. Section 33-320a to the extent such coverage does not
violate public policy.
ITEM 29. PRINCIPAL UNDERWRITER
(a) In addition to serving as the principal underwriter for the
Registrant, Aetna Life Insurance and Annuity Company (ALIAC) also acts as
the principal underwriter for Variable Life Account B and Variable Annuity
Accounts C and G (separate accounts of ALIAC
<PAGE>
registered as unit investment trusts), and Variable Annuity Account I (a
separate account of Aetna Insurance Company of America registered as a unit
investment trust). Additionally, ALIAC is the investment adviser for Aetna
Variable Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna
Investment Advisers Fund, Inc., Aetna GET Fund, Aetna Series Fund, Inc. and
Aetna Generation Portfolios, Inc. ALIAC is also the depositor of Variable
Life Account B, Variable Annuity Account C and Variable Annuity Account G.
(b) See Item 25 regarding the Depositor.
(c) Compensation as of December 31, 1995:
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage
Underwriter Commissions or Annuitization Commissions Compensation*
- ----------- ----------- ---------------- ----------- -------------
Aetna Life $ ** $ **
Insurance and
Annuity
Company
* Compensation shown in column 5 includes deductions for mortality and expense
risk guarantees and contract charges assessed to cover costs incurred in the
sales and administration of the contracts issued under Account B.
** To be updated by amendment.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All records concerning contract owners of Variable Annuity Account B are
located at the home office of the Depositor as follows:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
ITEM 31. MANAGEMENT SERVICES
Not applicable
<PAGE>
ITEM 32. UNDERTAKINGS
Registrant hereby undertakes:
(a)to file a post-effective amendment to this registration statement on Form
N-4 as frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than sixteen months
old for as long as payments under the variable annuity contracts may be
accepted;
(b)to include as part of any application to purchase a contract offered by a
prospectus which is part of this registration statement on Form N-4, a
space that an applicant can check to request a Statement of Additional
Information; and
(c)to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly upon
written or oral request.
(d)Insofar as indemnification for liability arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, the Registrant, Variable Annuity Account B of Aetna Life
Insurance and Annuity Company, has caused this Post-Effective Amendment No. 5 to
its Registration Statement on Form N-4 (File No. 33-75996) to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hartford,
State of Connecticut, on the 16th day of February, 1996.
VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE
INSURANCE AND ANNUITY COMPANY
(REGISTRANT)
By: AETNA LIFE INSURANCE AND ANNUITY COMPANY
(DEPOSITOR)
By: Daniel P. Kearney*
-------------------------------------
Daniel P. Kearney
President
As required by the Securities Act of 1933, as amended, this Post-Effective
Amendment No. 5 to the Registration Statement on Form N-4 (File No. 33-75996)
has been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
- --------- ----- ----
Daniel P. Kearney* Director and President )
- ------------------------- (principal executive officer) )
Daniel P. Kearney )
)
Timothy A. Holt* Director )
- ------------------------- )
Timothy A. Holt )February
)16, 1996
)
David E. Bushong* Acting Chief Financial Officer )
- ------------------------- )
David E. Bushong )
)
Eugene M. Trovato* Vice President, Chief )
- ------------------------- Accounting Officer and )
Eugene M. Trovato Corporate Controller )
)
Christopher J. Burns* Director )
- ------------------------- )
Christopher J. Burns )
)
<PAGE>
Laura R. Estes* Director )
- ------------------------- )
Laura R. Estes )
)
Gail P. Johnson* Director )
- ------------------------- )
Gail P. Johnson )
)
John Y. Kim* Director )
- ------------------------- )
John Y. Kim )
)
Shaun P. Mathews* Director )
- ------------------------- )
Shaun P. Mathews )
)
Glen Salow* Director )
- ------------------------- )
Glen Salow )
)
Creed R. Terry* Director )
- ------------------------- )
Creed R. Terry )
By: /s/ Julie E. Rockmore
- -------------------------
Julie E. Rockmore
*Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT B
EXHIBIT INDEX
Exhibit
No. Exhibit Page
- ------- ------- ----
99-B.1 Resolution of the Board of Directors of Aetna Life Insurance and *
Annuity Company establishing Variable Annuity Account B
99-B.3.1 Form of Broker-Dealer Agreement *
99-B.3.2 Alternative Form of Wholesaling Agreement and related Selling *
Agreement
99-B.4.1 Form of Variable Annuity Contract (G-CDA-HF) *
99-B.4.2 Form of Variable Annuity Contract (IA-CDA-IA) *
99-B.5 Form of Variable Annuity Contract Application (300-GTD-IA) *
99-B.6 Certificate of Incorporation and By-Laws of Depositor *
99-B.8.1 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company, Alger American Fund and Fred Alger Management,
Inc. dated September 1, 1993
99-B.8.2 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company and Calvert Asset Management Company (Calvert
Responsibly Invested Balanced Portfolio formerly Calvert Socially
Responsible Series) dated March 13, 1989 and amended December 27,
1993
99-B.8.3 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company and Fidelity Distributors Corporation dated
February 1, 1994 (Variable Insurance Products Fund)
99-B.8.4 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company and Fidelity Distribution Corporation dated
February 1, 1994 (Variable Insurance Products Fund II)
99-B.8.5 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company and Lexington Management Corporation regarding
Natural Resources Trust dated December 1, 1988 and amended
February 11, 1991
<PAGE>
Exhibit
No. Exhibit Page
- ------- ------- ----
99-B.8.6 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company and Janus Aspen Series dated April 19, 1994 and
amended June 15, 1994
99-B.8.7 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company and Advisers Management Trust (now Neuberger &
Berman Advisers Management Trust) dated April 14, 1989
99-B.8.8 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company and Scudder Variable Life Investment Fund dated
April 27, 1992 and amended February 19, 1993 and August 13, 1993
99-B.8.9 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company, Investors Research Corporation and TCI
Portfolios, Inc. dated July 29, 1992 and amended December 22,
1992 and June 1, 1994
99-B.9 Opinion of Counsel **
99-B.10.1 Consent of Independent Auditors **
99-B.10.2 Consent of Counsel **
99-B.13 Computation of Performance Data **
99-B.15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
27 Financial Data Schedule **
*Incorporated by reference
**To be filed by amendment
