As filed with the Securities and Exchange Registration No. 33-75996*
Commission on February 5, 1999 Registration No. 811-2512
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
Post-Effective Amendment No. 16 To
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment to
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Variable Annuity Account B of Aetna Life Insurance and Annuity Company
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RE4A, Hartford, Connecticut 06156
Depositor's Telephone Number, including Area Code: (860) 273-4686
Julie E. Rockmore, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RE4A, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
[X] 80 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on ___________ 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 the following earlier Registration Statements:
33-88722, 2-52448; and the individual deferred compensation contracts covered by
Registration Statement No. 33-76000.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-4
ITEM NO. PART A (PROSPECTUS) LOCATION - PROSPECTUS
<S> <C> <C>
1 Cover Page Cover Page
2 Definitions.................................... Not applicable
3 Synopsis....................................... Contract Overview; Fee Table
4 Condensed Financial Information................ Condensed Financial Information; Appendix V -
Condensed Financial Information
5 General Description of Registrant, Depositor,
and Portfolio Companies........................ Other Topics - The Company, Variable Annuity
Account B; Appendix IV - The Funds
6 Deductions and Expenses........................ Fees
7 General Description of Variable Annuity
Contracts Contract Overview;
8 Annuity Period................................. The Income Phase
9 Death Benefit.................................. Death Benefit
10 Purchases and Contract Value................... Contract Purchase and Participation; Your Account Value
11 Redemptions.................................... Right to Cancel; Systematic Distribution Options
12 Taxes.......................................... Taxation
13 Legal Proceedings.............................. Other Topics - Legal Matters and Proceedings
14 Table of Contents of the Statement of Contents of the Statement of Additional
Additional Information......................... Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORM N-4
ITEM NO. PART B (STATEMENT OF ADDITIONAL INFORMATION) LOCATION - STATEMENT OF ADDITIONAL
INFORMATION
<S> <C> <C>
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............................... Income Phase Payments
23 Financial Statements........................... Financial Statements
</TABLE>
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>
VARIABLE ANNUITY ACCOUNT B
Aetna Life Insurance and Annuity Company
Supplement Dated May 3, 1999
to the Prospectus and Contract Prospectus Summary dated May 3, 1999
Group Variable Annuity Contracts for Employer-Sponsored Deferred Compensation
Plans Producers' Deferred Compensation Plan and Producers' Incentive Savings
Plan
This supplement relates to the Producers' Deferred Compensation Plan and the
Producers' Incentive Savings Plan (the "Plans") for career agents and certain
brokers of Aetna Life Insurance Company and Aetna Life Insurance and Annuity
Company. The Plans have met the criteria allowing for the reduction or
elimination of certain charges under the contract. The Company will not deduct a
maintenance fee or an early withdrawal charge under the contract. (See "Fees.")
Form No. XCS.75996-99AB May 1999
<PAGE>
VARIABLE ANNUITY ACCOUNT B
Aetna Life Insurance and Annuity Company
Supplement Dated May 3, 1999
to the Prospectus and Contract Prospectus Summary dated May 3, 1999
Group Variable Annuity Contracts for Employer-Sponsored Deferred Compensation
Plans
The following is a negotiated provision regarding the early withdrawal charge
applicable to the participants of the American Chamber of Commerce Executives
Deferred Compensation Plan. (See "Fees.")
In addition to the applicable reasons listed in this Prospectus, an early
withdrawal charge is not deducted for any Account Value which is withdrawn due
to the Participant's separation from service.
Form No. XCS.75996-99CC May 1999
<PAGE>
VARIABLE ANNUITY ACCOUNT C
VARIABLE ANNUITY ACCOUNT B
Aetna Life Insurance and Annuity Company
Supplement Dated May 3, 1999
to May 3, 1999 Prospectus or Contract Prospectus Summary
GENERAL DESCRIPTION OF GET E
Series E of the Aetna GET Fund (GET E) is an investment option that may be
available during the accumulation phase of the contract. Aetna Life Insurance
and Annuity Company (the Company or we) makes a guarantee, as described below,
when you direct money into GET E. Aeltus Investment Management, Inc. is the
investment adviser to GET E.
We will offer GET E shares only during its offering period, which is scheduled
to run from June 15, 1999 through the close of business on September 14, 1999.
GET E may not be available under your contract, your plan or in your state.
Please read the GET E prospectus for a more complete description of GET E,
including its charges and expenses.
INVESTMENT OBJECTIVE OF GET E
GET E seeks to achieve maximum total return, without compromising a targeted
minimum rate of return, by participating in favorable equity market performance
during its guarantee period. GET E's guarantee period runs from September 15,
1999 through September 14, 2004.
THE GET FUND GUARANTEE
The guarantee period for GET E will end on September 14, 2004, which is GET E's
maturity date. The Company guarantees that the value of an accumulation unit of
the GET E subaccount under the contract on the maturity date (as valued after
the close of business on September 14, 2004), will not be less than its value as
determined after the close of business on the last day of the offering period.
If the value on the maturity date is lower than it was on the last day of the
offering period, we will transfer funds from our general account to the GET E
subaccount to make up the difference.
If you withdraw or transfer funds from GET E before the maturity date, we will
process the transactions at the actual unit value next determined after we
receive your order. The guarantee will not apply to these amounts or to amounts
deducted as a maintenance fee, if applicable.
MATURITY DATE
Before the maturity date, we will send a notice to each contract holder or
participant who has amounts in GET E. This notice will remind you that the
maturity date is approaching and that you must choose other investment options
for your GET E amounts. If you do not make a choice, on the maturity date we
will transfer your GET E amounts to another available series of the GET Fund
that is accepting deposits. If no GET Fund Series is available, we will transfer
50% of your GET E account value to Aetna Growth and Income VP and the remaining
50% to Aetna Bond VP. We will make these transfers as of the unit value next
determined after the transfer.
INCOME PHASE
GET E is not available during the Income Phase. You should not select this
option if you wish to begin income payments or to make other withdrawals or
transfers before the maturity date. You must transfer your GET E account value
to another available investment option before you may elect an annuity option.
REINVESTMENT
Some contracts allow you to reinvest all or a portion of the proceeds after a
full withdrawal. If you withdraw amounts from GET E and then elect to reinvest
them, we will reinvest them in a GET Fund series that is then accepting
deposits, if one is available. If one is not available, we will reallocate your
GET E amounts among the other investment options in which you were invested, on
a pro rata basis.
<PAGE>
The following information supplements the fee table contained in the prospectus
or contract prospectus summary:
FEES DEDUCTED FROM YOUR INVESTMENTS IN THE SEPARATE ACCOUNT
In addition to the amounts currently listed under the heading "Fee Table" in the
prospectus or contract prospectus summary, we will make a daily deduction of a
GET Guarantee Charge, equal on an annual basis to the percentage shown below,
from the amounts allocated to the GET E investment option:
<TABLE>
<S> <C>
GET E Guarantee Charge (deducted daily during the Guarantee Period) .... 0.50%
Maximum Total Separate Account Expenses .................................. 2.00%(1)
</TABLE>
(1) The Total Separate Account Expenses that apply to your contract may be
lower. Please refer to the "Fee Table" section of your prospectus or
contract prospectus summary.
Aetna GET Fund Series E Annual Expenses
(As a percentage of the average net assets)
<TABLE>
<CAPTION>
Investment Total Fund Annual Expenses
Advisory Fees(2) Other Expenses(3) (after expense reimbursement)(4)
---------------- ----------------- --------------------------------
<S> <C> <C> <C>
Aetna GET Fund Series E 0.60% 0.15% 0.75%
</TABLE>
For more information regarding expenses paid out of assets of the fund, see the
GET E prospectus.
Hypothetical Examples of Account Fees (EXAMPLE)--Aetna GET Fund Series E
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 GET E investment option under the contract
(until GET E's maturity date) and a 5% return on assets.(5)
Example A
If you withdraw your entire account value at the end of the periods shown, you
would pay the following expenses, including any applicable Early Withdrawal
Charge assessed:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years
------ ------- -------
<S> <C> <C>
$ $ $
</TABLE>
Example B
If you leave your entire account value invested or if you select an Income Phase
option at the end of the periods shown, you would pay the following expenses (no
Early Withdrawal Charge is assessed):
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years
------ ------- -------
<S> <C> <C>
$ $ $
</TABLE>
- -----------------------
(2) The Investment Advisory Fee will be 0.25% during the Offering Period. An
annual management fee of 0.60% will apply during the Guarantee Period.
(3) "Other Expenses" include an annual fund administrative fee of 0.075% of the
average daily net assets of GET E and any additional direct fund expenses.
(4) The Adviser is contractually obligated through December 31, 2000 to waive
all or a portion of its investment advisory fee and/or its administrative
fee and/or to reimburse a portion of the Fund's other expenses in order to
ensure that the Fund's Total Fund Annual Expenses do not exceed 0.75% of the
Fund's average daily net assets.
(5) The examples shown above reflect an annual mortality and expense risk charge
of 1.25%, an annual contract administrative expense charge of 0.25%, an
annual GET E guarantee charge of 0.50%, a $20 annual maintenance fee that
has been converted to a percentage of assets equal to .xxx%, and all charges
and expenses of the GET E Fund. Example A reflects an early withdrawal
charge of 5% of the account value at the end of years 1, 3 and 5. (The
expenses that you would pay under your contract may be lower. Please refer
to the "Fee Table" section of your prospectus or contract prospectus
summary.)
X.GETESPON-99 June 1999
<PAGE>
Prospectus - May 3, 1999
- --------------------------------------------------------------------------------
The Funds
Aetna Ascent VP
Aetna Balanced VP, Inc.
Aetna Income Shares d/b/a Aetna Bond VP
Aetna Crossroads VP
Aetna Growth VP
Aetna Variable Fund d/b/a Aetna Growth and Income VP
Aetna High Yield VP
Aetna Index Plus Large Cap VP
Aetna Index Plus Mid Cap VP
Aetna Index Plus Small Cap VP
Aetna International VP
Aetna Legacy VP
Aetna Variable Encore Fund d/b/a Aetna Money Market VP
Aetna Real Estate Securities VP
Aetna Small Company VP
Aetna Value Opportunity VP o
AIM V. I. Growth Capital Appreciation Fund
AIM V. I. Growth Fund
AIM V. I. Growth and Income Fund
AIM V. I. Value Fund
Calvert Social Balanced Portfolio
Fidelity VIP Equity-Income Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP Overseas Portfolio
Fidelity VIP II Contrafund Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Flexible Income Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
Lexington Natural Resources Trust*
Oppenheimer Global Securities Fund
Oppenheimer Strategic Bond Fund
Portfolio Partners MFS Emerging Equities Portfolio
Portfolio Partners MFS Research Growth Portfolio
Portfolio Partners MFS Value Equity Portfolio
Portfolio Partners Scudder International Growth Portfolio
Portfolio Partners T. Rowe Price Growth Equity Portfolio
The Contracts. The contracts described in this prospectus are group deferred
variable annuity contracts issued by Aetna Life Insurance and Annuity Company
(the Company). They are intended to be used as funding vehicles for certain
types of retirement plans, including those that qualify for beneficial tax
treatment, and/or to provide current income reduction under certain sections of
the Internal Revenue Code of 1986, as amended (Tax Code). The contracts were
formerly sold as both group contracts and employer-owned individual contracts.
Why Reading this Prospectus is Important. Before you participate in the contract
through a retirement plan, you should read this prospectus. It provides facts
about the contract and its investment options. Plan sponsors (generally your
employer) should read this prospectus to help determine if the contract is
appropriate for their plan. Keep this document for future reference.
Table of Contents . . . page 3
Contract Design. The contracts are designed to:
>Help you save for retirement while receiving beneficial tax treatment
>Offer a variety of investment options to help meet long-term financial goals
>Provide a benefit to a beneficiary in the event of death
>Provide future income payments over a lifetime or for a specified period
Investment Options. The contracts offer variable investment options and fixed
interest options. When we establish your account(s), the contract holder, or
you if permitted by the plan, instructs us to direct account dollars to any of
the available options. Some investment options may be unavailable through
certain contracts and plans, or in some states.
Variable Investment Options. These options are called subaccounts. Each
subaccount invests in one of the mutual funds (funds) listed on this page.
Earnings on amounts invested in a subaccount will vary depending on the
performance of its underlying fund. The subaccounts are within Variable Annuity
Account B (the separate account), a separate account of the Company. You do not
invest directly in or hold shares of the funds.
The funds in which the subaccounts invest have various risks. For information
about risks of investing in the funds see "Investment Options" in this
prospectus and each fund prospectus. Retain the fund prospectuses for future
reference.
Fixed Interest Options. These options offer certain guaranteed interest rates.
>Guaranteed Accumulation Account
>Fixed Plus Account
>Fixed Account
Except as specifically mentioned, this prospectus describes only the variable
investment options. However, we describe the fixed interest options in the
- -------------------------
* Transfers or deposits are not allowed into the subaccount investing in this
fund, except from accounts established under the contract before May 1,
1998. As soon as all those who have current allocations to the subaccount
under the contract have redirected their allocations to other investment
options, we will close the subaccount to all investments.
<PAGE>
Prospectus - May 3, 1999 (continued)
- --------------------------------------------------------------------------------
appendices to this prospectus. There is also a separate prospectus for the
Guaranteed Accumulation Account.
Getting Additional Information. You may obtain the May 3, 1999, Statement of
Additional Information (SAI) by indicating your request on your enrollment
materials or calling the Company at 1-800-525-4225. You may also obtain an SAI
for any of the funds by calling that number. This prospectus, the SAI and other
information about the separate account are posted on the Securities Exchange
Commission (SEC) web site, http://www.sec.gov. The SAI table of contents is
listed on page 36 of this prospectus. The SAI is incorporated into this
prospectus by reference.
Additional Disclosure Information. Neither the SEC, nor any state securities
commission, has approved or disapproved the securities offered through this
prospectus or passed on the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense. This prospectus is valid
only when accompanied by current prospectuses of the funds and the Guaranteed
Accumulation Account. We do not intend for this prospectus to be an offer to
sell or a solicitation of an offer to buy these securities in any state that
does not permit their sale.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Contract Overview ........................................... 4
Who's Who
The Contract and Your Retirement Plan
Contract Rights
Contract Facts
Contract Phases: Accumulation Phase, Income Phase
Questions: Contacting the Company
Sending Requests in Good Order
Fee Table ................................................... 6
Condensed Financial Information ............................. 10
Investment Options .......................................... 10
Contract Purchase and Participation ......................... 12
Contract Ownership and Rights ............................... 13
Right to Cancel ............................................. 14
Fees ........................................................ 15
Your Account Value .......................................... 19
Withdrawals ................................................. 21
Systematic Distribution Options ............................. 22
Death Benefit ............................................... 23
The Income Phase ............................................ 24
Taxation .................................................... 27
Other Topics ................................................ 31
The Company -- Variable Annuity Account B -- Performance
Reporting -- Voting Rights -- Contract Distribution --
Contract Modification -- Legal Matters and Proceedings --
Payment Delay or Suspension -- Transfer of Ownership;
Assignment -- Year 2000 Readiness
Contents of the Statement of Additional Information ......... 36
Appendix I -- The Guaranteed Accumulation Account ........... 37
Appendix II -- The Fixed Account ............................ 39
Appendix III -- The Fixed Plus Account ...................... 40
Appendix IV -- Fund Descriptions ............................ 42
Appendix V -- Condensed Financial Information ............... 45
</TABLE>
3
<PAGE>
Questions. Contact your local representative or write or call our Home Office:
Aetna Retirement Services
Annuity Services
151 Farmington Avenue
Hartford, CT 06156-1277
1-800-525-4225
Sending forms and written requests in good order.
If you are writing to change your beneficiary, request a withdrawal, or for any
other purpose, contact your local representative or the Company to learn what
information is required in order for the request to be in "good order." We can
only act upon written requests that are received in good order.
Contract Overview
- --------------------------------------------------------------------------------
The following is a summary. Please read each section of this prospectus for
additional information.
- --------------------------------------------------------------------------------
Who's Who
- --------------------------------------------------------------------------------
You (the participant): The individual participating in a retirement plan, where
the plan uses the contract as a funding option.
Plan Sponsor: The sponsor of your retirement plan. Generally, your employer.
Contract Holder: The person or entity to whom we issue the contract. Generally,
the plan sponsor.
We (the Company): Aetna Life Insurance and Annuity Company. We issue the
contract.
- --------------------------------------------------------------------------------
The Contract and Your Retirement Plan
- --------------------------------------------------------------------------------
Retirement plan (plan): A plan sponsor has established a retirement plan for
you. This contract is offered as a funding option for that plan. We are not a
party to the plan, so the terms and the conditions of the contract and the plan
may differ.
Plan Type. We refer to plans in this prospectus as 457 plans or non-457 plans.
For a description of each see "Taxation--Your Retirement Plan."
- --------------------------------------------------------------------------------
Contract Rights
- --------------------------------------------------------------------------------
The contract holder holds all rights under the contract, but may permit you to
exercise those rights through the plan.
For example: The contract may permit the contact holder to select investment
options for your account dollars. The plan may permit you to exercise that
right. For greater detail see "Contract Rights and Ownership."
- --------------------------------------------------------------------------------
Contract Facts
- --------------------------------------------------------------------------------
Free look/Right to Cancel: Contract holders may cancel the contract no later
than 10 days after they receive the contract. See "Right To Cancel."
Death Benefit: A beneficiary may receive a benefit in the event of your death
prior to the income phase. Death benefits during the income phase depend on the
payment option selected. See "Death Benefit" and "Income Phase."
Withdrawals: During the accumulation phase, the contract holder may, on your
behalf and subject to the limits in the contract, withdraw all or a part of
your account value. Certain fees and taxes may apply. See "Withdrawals" and
"Taxation."
Systematic Distribution Options: The contract holder may elect on your behalf
for you to receive regular payments from your account, while retaining the
account in the accumulation phase. See "Systematic Distribution Options."
Fees: Certain fees are deducted from your account value. See "Fee Table" and
"Fees."
Taxation: The Tax Code has certain rules that apply to amounts accumulated and
distributed under the contract. Tax penalties may apply if rules are not
followed. See "Taxation."
4
<PAGE>
- --------------------------------------------------------------------------------
Contract Phases
- --------------------------------------------------------------------------------
I. The Accumulation Phase (accumulating retirement benefits)
STEP 1: You or the contract holder provide Aetna Life Insurance and Annuity
Company with your completed enrollment materials. The contract holder directs us
to set up an account for you.
STEP 2: The contract holder, or you if permitted by your plan, direct us to
invest your account dollars in any of the:
(a) Fixed Interest Options
(b) Variable Investment Options. (The variable investment options are the
subaccounts of Variable Annuity Account B. Each one invests in a specific
mutual fund.)
STEP 2(b), continued: The subaccount(s) selected purchases shares of its
corresponding fund.
Payments to
Your Account
Step 1
Aetna Life Insurance and Annuity Company
a) Step 2 b)
Fixed Variable Annuity
Interest Account B
Options
Variable Investment Options
The Subaccounts
A B Etc.
Step 2 b)
Mutual Mutual
Fund A Fund B
II. The Income Phase The contract offers several payment options (see "Income
Phase.") In general, you may:
>Receive payments over a lifetime or for a specified period
>Receive payments monthly, quarterly, semi-annually or annually
>Select an option that provides a death benefit to beneficiaries
>Select fixed payments or payments that vary based on the performance of the
variable investment options you select.
5
<PAGE>
In This Section:
>Maximum Transaction Fees
>Maximum Fees deducted from investments in the Subaccounts
>Fund Fees
>Examples of Fee Deductions
Also see the "Fees" section for:
>Early Withdrawal Charge Schedules
>How, When and Why Fees are Deducted
>Reduction, Waiver and/or Elimination of Certain Fees
>Premium and Other Taxes
See "Income Phase" for:
>Fees during the income phase
Fee Table
- --------------------------------------------------------------------------------
The tables and examples in this section show the fees your account may incur
while accumulating dollars under the contract (the Accumulation Phase). See
"Income Phase" for fees that may apply after you begin receiving payments under
the contract. The fees shown below do not include premium taxes that may be
applicable.
Maximum Fees
Transaction Fees
Early Withdrawal Charge. This is a deferred sales charge. It is a percentage of
the amount withdrawn. The percentage will be determined by the applicable early
withdrawal charge schedule that applies to your account. In certain cases this
charge may not apply to all or a portion of your withdrawal.
Terms Used in the Schedules.
Purchase Payment Period: A specified period of time during which payments of an
agreed upon number and amount are due to your account.
Account Year: A 12-month period measured from the date we establish your
account, or measured from any anniversary of that date.
Early Withdrawal Charge Schedules:
<TABLE>
<CAPTION>
Installment Purchase Payment Accounts Single Purchase Payment Accounts
- --------------------------------------------------- ------------------------------------------------
<S> <C> <C> <C>
Purchase Payment Early Withdrawal Account Years Early Withdrawal
Periods Completed Charge Completed Charge
Fewer than 5 5% Fewer than 5 5%
5 or more but fewer than 7 4% 5 or more but fewer than 6 4%
7 or more but fewer than 9 3% 6 or more but fewer than 7 3%
9 or more but fewer than 10 2% 7 or more but fewer than 8 2%
More than 10 0% 8 or more but fewer than 9 1%
9 or more 0%
</TABLE>
Annual Maintenance Fee
Installment Purchase Payment Accounts.................................$20.00(1)
Single Purchase Payment Accounts.......................................$0.00
Fees Deducted From the Subaccounts
Maximum Amount
(Daily deductions equal to the given percentage on an annual basis)
Mortality and Expense Risk Charge......................................1.25%(1)
Administrative Expense Charge..........................................0.25%(2)
Total Separate Account Expenses........................................1.50%
(1) These charges may be reduced for certain plans.
(2) We only impose this charge under some contracts. See "Fees."
6
<PAGE>
Fees Deducted by the Funds
Using this Information. The following table shows the investment advisory fees
and other expenses charged annually by each fund. Fund fees are one factor that
impacts the value of a fund share. To learn about additional factors, refer to
the fund prospectus.
How Fees are Deducted. Fund fees are not deducted from account values. Instead,
fees are deducted from the value of fund shares on a daily basis, which in turn
will affect the value of each subaccount on a daily basis. Except as noted
below, the following figures are a percentage of the average net assets of each
fund, and are based on figures for the year ended December 31, 1998.
Fund Expense Table
<TABLE>
<CAPTION>
Investment
Advisory Fees(1) Other Expenses
(before expense (before expense Total Fund
reimbursement) reimbursement) Annual Expenses
------------------ ----------------- ----------------
<S> <C> <C> <C>
Aetna Ascent VP
Aetna Balanced VP, Inc.
Aetna Bond VP
Aetna Crossroads VP
Aetna Growth VP
Aetna Growth and Income VP
Aetna High Yield VP
Aetna Index Plus Large Cap VP
Aetna Index Plus Mid Cap VP
Aetna Index Plus Small Cap VP
Aetna International VP
Aetna Legacy VP
Aetna Money Market VP
Aetna Real Estate Securities VP
Aetna Small Company VP
Aetna Value Opportunity VP
AIM V. I. Capital Appreciation Fund
AIM V. I. Growth Fund
AIM V. I. Growth and Income Fund
AIM V. I. Value Fund
Calvert Social Balanced Portfolio
Fidelity VIP Equity-Income Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP Overseas Portfolio
Fidelity VIP II Contrafund Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Flexible Income Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
Lexington Natural Resources Trust
Oppenheimer Global Securities Fund
Oppenheimer Strategic Bond Fund
Portfolio Partners MFS Emerging Equities Portfolio (2)
Portfolio Partners MFS Research Growth Portfolio (2)
Portfolio Partners MFS Value Equity Portfolio
Portfolio Partners Scudder International Growth Portfolio
Portfolio Partners T. Rowe Price Growth Equity Portfolio
</TABLE>
7
<PAGE>
Footnotes to the "Fees Deducted by the Funds" Table
(1) Certain of the Fund advisers reimburse the Company for administrative
costs in connection with administering the funds as variable investment
options under the contracts. These reimbursements are paid out of the
investment advisory fees and are not charged to investors.
(2) The advisory fee is 0.70% of the first $500 million of average daily net
assets and 0.65% of assets over $500 million.
8
<PAGE>
Hypothetical Examples
Account Fees Incurred Over Time. The following hypothetical examples show the
fees paid over time if $1000 is invested in a subaccount, assuming a 5% annual
return on the investment. For the purpose of these examples, we deducted the
maximum mortality and expense risk charge of 1.25% annually, an administrative
expense charge of 0.25% annually and the maximum maintenance fee of $20
(converted to a percentage of assets equal to x.xxx%.)
> These examples are purely hypothetical
> They should not be considered a
representation of past or future fees or
expected returns
> Actual fees and/or returns may be more or
less than those shown in these examples
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
--------------------------------------- --------------------------------------
If you withdraw your entire account If you leave your entire account
value at the end of the periods shown, value invested or if you select an
you would pay the following fees, income phase payment option at the
including any applicable Early end of the periods shown, you would
Withdrawal Charge assessed:* pay the following fees (no Early
Withdrawal 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 Ascent VP
Aetna Balanced VP, Inc.
Aetna Bond VP
Aetna Crossroads VP
Aetna Growth VP
Aetna Growth and Income VP
Aetna High Yield VP
Aetna Index Plus Large Cap VP
Aetna Index Plus Mid Cap VP
Aetna Index Plus Small Cap VP
Aetna International VP
Aetna Legacy VP
Aetna Money Market VP
Aetna Real Estate Securities VP
Aetna Small Company VP
Aetna Value Opportunity VP
AIM V. I. Capital Appreciation Fund
AIM V. I. Growth Fund
AIM V. I. Growth and Income Fund
AIM V. I. Value Fund
Calvert Social Balanced Portfolio
Fidelity VIP Equity-Income Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP Overseas Portfolio
Fidelity VIP II Contrafund Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Flexible Income Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
Lexington Natural Resources Trust
Oppenheimer Global Securities Fund
Oppenheimer Strategic Bond Fund
Portfolio Partners MFS Emerging Equities Portfolio
Portfolio Partners MFS Research Growth Portfolio
Portfolio Partners MFS Value Equity Portfolio
Portfolio Partners Scudder International Growth
Portfolio
Portfolio Partners T. Rowe Price Growth Equity
Portfolio
</TABLE>
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* This example reflects deduction of an early withdrawal charge calculated
using the schedule applicable to Installment Purchase Payment Accounts.
** This example does not apply if during the income phase, a nonlifetime
payment option with variable payments is selected and a lump-sum withdrawal
is requested within 3 years after payments start. In this case, the lump sum
payment is treated as a withdrawal during the accumulation phase and may be
subject to an early withdrawal charge as shown in Example A.
9
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
Understanding Condensed Financial Information. In Appendix V, we provide
condensed financial information about the Variable Annuity Account B (the
separate account) subaccounts available under the contracts. The tables show
the value of the subaccounts over the past 10 years. For subaccounts that were
not available 10 years ago, we give a history from the date of first
availability.
Investment Options
- --------------------------------------------------------------------------------
The contract offers variable investment options and fixed interest options.
When we establish your account(s), the contract holder, or you if permitted by
the plan, instructs us to direct account dollars to any of the available
options.
Variable Investment Options. These options are called subaccounts. The
subaccounts are within Variable Annuity Account B (the separate account), a
separate account of the Company. Earnings on amounts invested in a subaccount
will vary depending on the performance and fees of its underlying fund. You do
not invest directly in or hold shares of the funds.
>Fund Descriptions. We provide brief descriptions of the funds in Appendix IV.
Please refer to the fund prospectuses for additional information.
Fixed Interest Options. For descriptions of the fixed interest options, see
Appendices I, II and III and the Guaranteed Accumulation Account prospectus.
Selecting Investment Options
o Choose options appropriate for you. Your Aetna representative can help you
evaluate which funds or fixed interest options may be appropriate for your
financial goals.
o Understand the risks associated with the options you choose. Some subaccounts
invest in funds that are considered riskier than others. Funds with
additional risks are expected to have a value that rises and falls more
rapidly and to a greater degree than other funds. For example, funds
investing in foreign or international securities are subject to additional
risks not associated with domestic investments, and their performance may
vary accordingly. Also, funds using derivatives in their investment strategy
may be subject to additional risks.
o Be informed. Read this prospectus, the fund prospectus, fixed interest option
appendices and the Guaranteed Accumulation Account prospectus.
Limits on Option Availability. Some funds and fixed interest options may not
be available through certain contracts and plans or in some states. We may add,
withdraw or substitute funds, subject to the conditions in the contract and
regulatory requirements.
Limits on Number of Options Selected. No more than 18 investment options may be
selected for your account at any one time. Each subaccount, the Fixed Account,
the Fixed Plus Account and each classification of the Guaranteed Accumulation
Account selected counts as one option.
10
<PAGE>
Limits Imposed by the Underlying Fund. Orders for the purchase of fund shares
may be subject to acceptance by the fund. We reserve the right to reject,
without prior notice, any allocation of payments to a subaccount if the
subaccount's investment in the corresponding fund is not accepted by the fund
for any reason.
Additional Risks of Investing in the Funds. (Mixed and Shared Funding)
"Shared funding" occurs when shares of a fund, which the subaccounts buy for
variable annuity contracts, are also bought by other insurance companies for
their variable annuity contracts.
"Mixed funding" occurs when shares of a fund, which the subaccounts buy for
variable annuity contracts, is bought for variable life insurance contracts
issued by us or other insurance companies.
>Shared--bought by more than one company
>Mixed--bought for annuities and life insurance
It is possible that a conflict of interest may arise due to mixed and/or shared
funding, that could adversely impact the value of a fund. For example, if a
conflict of interest occurred and one of the subaccounts withdrew its
investment in a fund, the fund may be forced to sell its securities at
disadvantageous prices, causing its share value to decrease. Each fund's board
of directors or trustees will monitor events to identify any conflicts which
might arise and to determine what action, if any, should be taken to address
such conflicts.
Transfers
- --------------------------------------------------------------------------------
Transfers Among Investment Options. During the accumulation phase, the contract
holder, or you if permitted by the plan, may transfer amounts of $500 or more
among investment options. Subject to the contract holder's approval, you may
make a request in writing, by telephone or, where applicable, electronically.
Transfers must be made in accordance with the terms of the contract and your
plan. Transfers from fixed interest options are restricted as outlined in
Appendices I, II and III. You may not make transfers once you enter the income
phase.
Value of Transferred Dollars. The value of amounts transferred in or out of the
funds will be based on the subaccount unit values next determined after we
receive your request in good order at our Home Office.
Telephone Transfers: Security Measures. To prevent fraudulent use of telephone
transactions, we have established security procedures. These include recording
calls on our toll-free telephone lines and requiring use of a personal
identification number (PIN) to execute transactions. You are responsible for
keeping your PIN and account information confidential. If we fail to follow
reasonable security procedures, we may be liable for losses due to unauthorized
or fraudulent telephone transactions. We are not liable for losses resulting
from following telephone instructions we believe to be genuine. If a loss
occurs when we rely on such instructions, you will bear the loss.
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<PAGE>
Limits on Frequent Transfers. The contracts are not designed to serve as
vehicles for frequent trading in response to short-term fluctuations in the
market. Such frequent trading can disrupt management of a fund and raise its
expenses. This in turn can have an adverse effect on fund performance.
Accordingly, organizations or individuals that use market-timing investment
strategies and make frequent transfers should not purchase the contracts.
We reserve the right to restrict, in our sole discretion and without prior
notice, transfers initiated by a market-timing organization or individual or
other party authorized to give transfer instructions on behalf of multiple
contract holders or participants. Such restrictions could include: (1) not
accepting transfer instructions from an agent acting on behalf of more than one
contract holder or participant; and (2) not accepting preauthorized transfer
forms from market timers or other entities acting on behalf of more than one
contract holder or participant at a time.
We further reserve the right to impose, without prior notice, restrictions on
transfers that we determine, in our sole discretion, will disadvantage or
potentially hurt the rights or interests of other contract holders or
participants.
The Dollar Cost Averaging Program. If available under your plan, you may
participate in our dollar cost averaging program. There is no additional charge
for this service. Dollar cost averaging is a system for investing that buys
fixed dollar amounts of an investment at regular intervals, regardless of
price. Our program transfers, at regular intervals, a fixed dollar amount to
one or more subaccounts that you select. Dollar cost averaging is not permitted
into the Lexington Natural Resources Trust subaccount. Dollar cost averaging
neither ensures a profit nor guarantees against loss in a declining market. You
should consider your financial ability to continue purchases through periods of
low price levels. For additional information about this program, contact your
local representative or call the Company at the number listed in "Contract
Overview--Questions."
Contract Purchase and Participation
- --------------------------------------------------------------------------------
Contracts Available for Purchase. The contracts are designed for deferred
compensation plans sponsored by an employer for its employees and/or
independent contractors. The plans may be sponsored by:
(1) Non-governmental tax-exempt organizations for deferrals that are subject to
Code Section 457 (457 Plans);
(2) Tax-exempt organizations for deferrals not subject to Code Section 457; and
(3) Taxable organizations.
The types of plans described in (2) and (3) above are referred to as non-457
plans.
Purchasing the Contract.
1. The contract holder submits the required forms and application to the
Company
2. We approve the forms and issue a contract to the contract holder
12
<PAGE>
Participating in the Contract
1. You complete an enrollment form and submit it to us
2. If your enrollment is accepted, we establish an account for you under the
contract
Acceptance or Rejection of Applications or Enrollment Forms. We must accept or
reject an application or your enrollment materials within two business days of
receipt. If the forms are incomplete, we may hold any forms and accompanying
payments for five days, unless you consent to our holding them longer. Under
limited circumstances, we may also agree, for a particular plan, to hold
payments for longer periods with the permission of the contract holder. If we
agree to do this, we will deposit the payments in the Aetna Money Market VP
subaccount until the forms are completed (or for a maximum of 105 days). If we
reject the application or enrollment, we will return the forms and any
payments.
Methods of Payment. The following payment methods are available:
>Continuous payments over time--into an installment purchase payment account
Payments to an installment purchase payment account must be at least $100 per
month ($1,200 annually). No payment may be less than $25.
>Lump sum transfer from a previous plan--into a single purchase payment
account, in accordance with our procedures in effect at the time of purchase.
If you participate in a 457 plan, the Tax Code places limits on how much of
your compensation may be deferred annually. See "Taxation" for further
information.
Allocation of Payments. The contract holder or you, if the contract holder
permits, directs us to allocate initial contributions to the investment options
available under the Plan. Generally you will specify this information on your
enrollment materials. After your enrollment, changes to allocations for future
payments or transfer of existing balances among investment options may be
requested in writing and, where available, by telephone or electronically.
Allocations must be in whole percentages and there may be limitations on the
number of investment options that can be selected at any one time. (See
"Investment Options" and "Transfers.")
Contract Ownership and Rights
- --------------------------------------------------------------------------------
Who owns the Contract? The contract holder. This is the person or entity to
whom we issue the contract.
Who Owns Money Accumulated under the Contract? All dollars accumulated under
the contracts, including contributions attributable to deferred compensation,
are part of your employer's general assets and subject to the claims of its
general creditors. The plan exclusively governs what benefits are available to
you and those benefits are provided from your employer's general assets.
What Rights Do I Have Under The Contract? The contract holder, usually your
employer, holds all rights under the contract. The contract holder's plan,
which you participate in, may permit you to exercise some of those rights.
13
<PAGE>
Right to Cancel
- --------------------------------------------------------------------------------
The contract holder may cancel the contract within ten days after receiving it
(or as otherwise allowed by state law) by returning it to the Company along
with a written notice of cancellation.
Refunds to Contract Holders. We will produce a refund to the contract holder
not later than seven days after we receive the contract and the written notice
of cancellation at our Home Office. The refund will equal the dollars
contributed to the contract plus any earnings or less any losses attributable
to those contributions allocated to the variable investment options, unless
otherwise required by law.
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 the plan or a prior
plan before such amounts are applied to the 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 the 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.
14
<PAGE>
Types of Fees
There are three types of fees your account may incur:
>Transaction Fees
o Early Withdrawal Charge
o Annual Maintenance Fee
>Fees Deducted from the Subaccounts
o Mortality and Expense Risk Charge
o Administrative Expense Charge
>Fees Deducted by the Funds
o Investment Advisory Fees
o Other Expenses
Terms to Understand
in Schedules
>Account Year -- a 12-month period measured from the date we establish your
account, or measured from any anniversary of that date.
>Payment Period (for installment payments)-- the period of time for completion
of the agreed upon number and amount of payments to the account. For example,
if a payment period consists of 12 payments per year and only 11 payments are
made, the payment period is not completed until the twelfth payment is made.
Fees
- --------------------------------------------------------------------------------
The following repeats and adds to information provided in the "Fee Table"
section. Please review both this section and the Fee Table for information on
fees.
I. Transaction Fees
Early Withdrawal Charge
Withdrawals of all or a portion of your account value may be subject to a
charge.
Amount: The charge is a percentage of the amount withdrawn. The percentage is
determined by the early withdrawal charge schedule that applies to your
account. It will never be more than 8.5% of your total payments to your
account.
Purpose: This is a deferred sales charge. It reimburses us for some of the sales
and administrative expenses associated with the contract. Our remaining sales
and administrative expenses will be covered by our general assets which are
attributable in part to the mortality and expense risk charge described in this
section.
Early Withdrawal Charge Schedules:
<TABLE>
<CAPTION>
Installment Purchase Payment Accounts Single Purchase Payment Accounts
- --------------------------------------------------- ------------------------------------------------
<S> <C> <C> <C>
Purchase Payment Early Withdrawal Account Years Early Withdrawal
Periods Completed Charge Completed Charge
- ------------------------------ ------------------ ---------------------------- -----------------
Fewer than 5 5% Fewer than 5 5%
5 or more but fewer than 7 4% 5 or more but fewer than 6 4%
7 or more but fewer than 9 3% 6 or more but fewer than 7 3%
9 or more but fewer than 10 2% 7 or more but fewer than 8 2%
More than 10 0% 8 or more but fewer than 9 1%
9 or more 0%
</TABLE>
Waiver. The early withdrawal charge is waived for portions of a withdrawal that
are:
>Used to provide payments to you during the income phase
>Paid because of your death before income phase payments begin
>Paid where your account value is $3500 or less and no part of the account has
been taken as a withdrawal or used to provide income phase payments within the
prior 12 months (If the contract holder makes a full withdrawal from more than
one of the accounts on your behalf, the value of those accounts will be added
together to be eligible for the $3,500 exemption. This option is not available
for contracts where we do not maintain participant accounts or for withdrawals
of all accounts under one contract)
>Taken because of the election of a systematic distribution option (See
"Systematic Distribution Options")
>Taken when you are 591/2 or older, have an installment purchase payment
account and have completed at least nine purchase payment periods
>For 457 plans only, due to a hardship from an unforeseeable emergency, as
defined in the Tax Code or
>For contracts issued in connection with retirement programs for select
management and highly compensated healthcare employees in plans formerly
carried under certain hospital association endorsements, withdrawn due to your
separation from service with your current employer
15
<PAGE>
Reduction, Waiver or Elimination: In addition to the specific waiver described
above, we may reduce, waive or eliminate the early withdrawal charge for a
particular plan. Any such reduction will reflect the differences we expect in
distribution costs or services meant to be defrayed by this charge. Factors we
consider for a reduction include, but are not limited to, the following:
>The number of participants under the plan
>The expected level of assets or cash flow under the plan
>Our agent's involvement in sales activities
>Our sales-related expenses
>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
>Our assessment of financial risk to the Company relating to withdrawals
We will not reduce the early withdrawal charge in a manner that is unfairly
discriminatory against any person.
We may also apply different early withdrawal charge provisions in contracts
issued to certain employer group or associations which have negotiated the
contract terms on behalf of their employees. We will offer any resulting early
withdrawal charge uniformly to all employees in the group.
Maintenance Fee
Maximum Amount: $20.00 (This fee only applies to installment purchase payment
accounts.)
When/How: For those plans that have a maintenance fee, each year during the
accumulation phase we deduct this fee from your account value. We deduct it on
your account anniversary and, in some cases, at the time of full withdrawal. It
is deducted on a pro rata basis from your account value invested in the
subaccounts and the fixed interest options.
Purpose: This fee reimburses us for our administrative expenses relating to the
establishment and maintenance of your account.
Reduction, Waiver or Elimination: When the plan meets certain criteria, we may
reduce, waive or eliminate the maintenance fee. Factors we consider reflect
differences in our level of administrative costs and services, such as:
>The size, type and nature of the group for which a contract is issued
>The anticipated level of administrative expenses such as billing for payments,
producing periodic reports, providing for the direct payment of account
charges rather than having them deducted from account values, and any other
factors pertaining to the level and expense of administrative services we will
provide
>The number of eligible participants and the program's participation rate
We will not unfairly discriminate against any person if we reduce or eliminate
the maintenance fee. We will make any reduction or elimination of this fee
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.
16
<PAGE>
II. Fees Deducted from Investments in the Subaccounts
Mortality and Expense Risk Charge
Maximum Amount: 1.25% annually of your account value invested in the
subaccounts.
When/How: This fee is deducted daily from the subaccounts. We do not deduct
this from any fixed interest option.
Purpose: The fee compensates us for the mortality and expense risks we assume
under the contracts.
>The mortality risks are those risks associated with our promise to make
lifetime payments based on annuity rates specified in the contracts and our
funding of the death benefit and other payments we make to owners or
beneficiaries of the accounts
>The expense risk is the risk that the actual expenses we incur under the
contracts will exceed the maximum costs that we can charge. If the amount we
deduct for this fee is not enough to cover our mortality costs and expenses
under the contracts, we will bear the loss. We may use any excess to recover
distribution costs relating to the contract and as a source of profit. We
expect to make a profit from this fee.
Reduction: We may reduce the mortality and expense risk charge from the maximum
when the plan meets certain criteria and we agree to the reduction with the
contract holder in writing. Some contracts have a reduced mortality and expense
risk charge only during the accumulation phase of the account which then
increases during the income phase. Any reduction will reflect differences in
expenses for administration based on such factors as:
>The plan design. For example, the plan may favor stability of invested assets
and limit the conditions for withdrawals and available investment options,
which in turn lowers administrative expenses.
>The size of the prospective group, projected annual number of eligible
participants and the program's participation rate, or the number of
participants estimated to choose the contract.
>The frequency, consistency and method of submitting payments.
>The method and extent of onsite services we provide and the contract holder's
involvement in services such as enrollment and ongoing participant services.
>The contract holder's support and involvement in the communication,
enrollment, participant education and other administrative services.
>The projected frequency of distributions.
>The type and level of other factors that affect the overall administrative
expense.
We will determine any reduction of mortality and expense risk on a basis that
is not unfairly discriminatory according to our rules in effect at the time a
contract application is approved. We reserve the right to change these rules
from time to time.
17
<PAGE>
Administrative Expense Charge
Maximum Amount: 0.25% annually of your account value invested in the
subaccounts.
When/How: For all participants who became covered under a contract on or before
November 5, 1984, we reserve the right to charge an administrative expense fee
of up to 0.25% annually. This fee may be assessed during the accumulation phase
and/or the income phase. If we are imposing this fee under the contract issued
in connection with your plan when you enter the income phase, the fee will
apply to you during the entire income phase.
>We do not currently impose this charge under any contracts issued in
connection with retirement programs for select management and highly
compensated healthcare employees in plans formerly carried under certain
hospital association endorsements.
>For contracts not in the above category, beginning on April 4, 1997 we began
to deduct this charge during the accumulation phase only for contracts
effective before October 31, 1996 where the number of participants was less
than 30 as of November 30, 1996 and the contract holder had chosen not to
elect one of the Company's electronic standards for cash collection and
application of participant contribution data. However, we do not impose the
administrative expense charge for participants under those contracts who
enrolled in a group contract or became covered under an individual contract
before November 5, 1984.
>We do not currently deduct an administrative expense charge during the
accumulation phase for any contracts other than those described above.
>We do not currently deduct an administrative expense charge during the income
phase for any contracts.
Purpose: This fee helps defray our administrative expenses that cannot be
covered by the mortality and expense risk charge described above. The fee is
not intended to exceed the average expected cost of administering the
contracts. We do not expect to make a profit from this fee.
III. Fund Expenses
Maximum Amount: Each fund determines its own advisory fees and expenses. For a
list of fund fees see "Fee Table." The fees are described in more detail in
each fund prospectus.
When/How: Fund fees are not deducted from your account. Fund advisory fees and
expenses are reflected in the daily value of the fund shares, which will in
turn affect the daily value of each subaccount.
Purpose: These amounts help to pay the funds' investment advisor and operating
expenses.
IV. Premium and Other Taxes
Maximum Amount: Some states and municipalities charge a premium tax on
annuities. These taxes currently range from 0% to 4%, depending on the
jurisdiction.
When/How: We reserve the right to deduct premium taxes from your account value
or from payments to your account at any time, but not before there is a tax
liability under state law. Our current practice is to deduct premium taxes at
18
<PAGE>
the time of a full withdrawal or the commencement of income phase payments. We
will not deduct any municipal premium tax of 1% or less, but we reserve the
right to reflect such an expense in our annuity purchase rates.
In addition, the Company reserves the right to assess a charge for any federal
taxes due against the separate account. (See "Taxation.")
Your Account Value
- --------------------------------------------------------------------------------
During the accumulation phase, your account value at any given time equals:
>Account dollars directed to the fixed interest options, including interest
earnings to date
>Less any deductions from the fixed interest options (e.g. withdrawals, fees)
>Plus the current dollar value of amounts invested in the subaccounts.
Subaccount Accumulation Units. When a fund is selected as an investment option,
your account dollars invest in "accumulation units" of the Variable Annuity
Account B subaccount corresponding to that fund. The subaccount invests
directly in the fund shares. The value of your interests in a subaccount is
expressed as the number of accumulation units you hold multiplied by an
"Accumulation Unit Value," as described below, for each unit.
Accumulation Unit Value (AUV). The value of each accumulation unit in a
subaccount is called the accumulation unit value or AUV. The value of
accumulation units vary daily in relation to the underlying fund's investment
performance. The value also reflects deductions for fund fees and expenses, the
mortality and expense risk charge, and the administrative charge (if any). We
discuss these deductions in more detail in "Fee Table" and "Fees."
Valuation. We determine the AUV every business day after the close of the New
York Stock Exchange. At that time, we calculate the current AUV by multiplying
the AUV last calculated by the "net investment factor" of the subaccount. The
net investment factor measures the investment performance of the subaccount
from one valuation to the next.
Current AUV = Prior AUV x Net Investment Factor
Net Investment Factor. The net investment factor for a subaccount between two
consecutive valuations, equals the sum of 1.0000 plus the net investment rate.
Net Investment Rate. The net investment rate is computed according to a formula
that is equivalent to the following:
>The net assets of the fund held by the subaccount as of the current valuation,
minus;
>The net assets of the fund held by the subaccount at the preceding valuation,
plus or minus;
>Taxes or provisions for taxes, if any, due to subaccount operations (with any
federal income tax liability offset by foreign tax credits to the extent
allowed);
>Divided by the total value of the subaccount units at the preceding valuation;
>Less a daily deduction for the mortality and expense risk charge and the
administrative expense charge (if any). See "Fees."
The net investment rate may be either positive or negative.
19
<PAGE>
Hypothetical Illustration. As a hypothetical illustration, assume that an
investor contributes $5,000 to his account and directs us to invest $3,000 in
Fund A and $2,000 in Fund B. After receiving the contribution and following the
next close of business of the New York Stock Exchange, the applicable AUV's are
$10 for Subaccount A, and $25 for Subaccount B. The investor's account is
credited with 300 accumulation units of subaccount A and 80 accumulation units
of subaccount B.
$5,000 contribution
Step 1
Aetna Life Insurance and Annuity Company
Step 2
Variable Annuity account B
Subaccount A Subaccount B Etc.
300 80
accumulation accumulation
units units
Step 3
Fund A Fund B
Step 1: An Investor
contributes $5000
Step 2:
A. He directs us to invest $3,000 in Fund A. His dollars purchase 300
accumulation units of Subaccount A ($3,000 divided by the current $10 AUV).
B. He directs us to invest $2,000 in Fund B. His dollars purchase 80
accumulation units of Subaccount B ($2,000 divided by the current $25 AUV).
Step 3: The separate account then purchases shares of the applicable funds at
the current market value (NAV).
The fund's subsequent investment performance, expenses and charges, and the
daily charges deducted from the subaccount, will cause the AUV to move up or
down on a daily basis.
Payments to Your Account. If all or a portion of initial payments are directed
to the subaccounts, they will purchase subaccount accumulation units at the AUV
next computed after our acceptance of the applicable application or enrollment
forms. Subsequent payments or transfers directed to the subaccounts that we
receive by the close of business of the New York Stock Exchange (Exchange) will
purchase subaccount accumulation units at the AUV computed after the close of
the Exchange on that day. The value of subaccounts may vary day to day.
20
<PAGE>
Taxes, Fees and Deductions
Amounts withdrawn may be subject to one or more of the following:
>Early Withdrawal Charge (see "Fees--Early Withdrawal Charge")
>Maintenance Fee (see "Fees--Maintenance Fee")
>Market Value Adjustment (see Appendix I)
>Tax Penalty (see "Taxation")
>Tax Withholding (see "Taxation")
To determine which may apply, refer to the appropriate sections of this
prospectus, contact your Aetna representative or call the Company at the number
listed in "Contract Overview--Questions."
Withdrawals
- --------------------------------------------------------------------------------
Making a Withdrawal. Subject to limitations on withdrawals from the Fixed Plus
Account, the contract holder may withdraw all or a portion of your account
value (on your behalf) at any time during the accumulation phase.
Steps for Making A Withdrawal. The contract holder, or you if permitted by the
plan must:
>Select the Withdrawal Amount
1) Full Withdrawal: You will receive, reduced by any required withholding tax,
your account value allocated to the subaccounts, the Guaranteed
Accumulation Account (plus or minus any applicable market value adjustment)
and to the Fixed Account, minus any applicable early withdrawal charge,
plus the amount available for withdrawal from the Fixed Plus Account.
2) Partial Withdrawal (Percentage or Specified Dollar Amount): You will
receive, reduced by any required withholding tax, the amount you specify,
subject to the value available in your account. However, the amount
actually withdrawn from your account will be adjusted by any applicable
early withdrawal charge for amounts withdrawn from the subaccounts, the
Guaranteed Accumulation Account or the Fixed Account, and any positive or
negative market value adjustment for amounts withdrawn from the Guaranteed
Accumulation Account. The amount available from the Fixed Plus Account may
be limited.
For a description of limitations on withdrawals from the Fixed Plus
Account, see Appendix III.
>Select Investment Options. If this is not specified, we will withdraw dollars
proportionally from each investment option in which you have an account value.
>Properly complete a disbursement form and submit it to our Home Office.
Calculation of Your Withdrawal. We determine your account value every normal
business day after the close of the New York Stock Exchange. We pay withdrawal
amounts based on your account value either: (1) As of the next valuation after
we receive a request for withdrawal in good order at our Home Office, or (2) On
such later date as specified on the disbursement form.
Delivery of Payment. Payments for withdrawal requests will be made in
accordance with SEC requirements. Normally, the payment will be sent not later
than seven calendar days following our receipt of the disbursement form in good
order.
21
<PAGE>
Features of a Systematic Distribution Option (SDO)
An SDO allows the contract holder to elect for you to receive regular payments
from your account, without moving into the income phase. By maintaining your
account in the accumulation phase, certain rights and flexibility are retained
and any accumulation phase fees may apply.
Systematic Distribution Options
- --------------------------------------------------------------------------------
Availability of Systematic Distribution Options (SDOs). To exercise one of
these options the account value must meet any minimum dollar amount and age
criteria applicable to that option. To determine what SDO's are available,
check with the contract holder or the Company.
The SDOs currently available under the contract include the following:
>SWO--Systematic Withdrawal Option. SWO is a series of automatic partial
withdrawals from your account based on the payment method selected. It is
designed for those who want a periodic income while retaining investment
flexibility for amounts accumulated under the contract.
>ECO--Estate Conservation Option. ECO offers the same investment flexibility as
SWO, but is designed for those who want to receive only the minimum
distribution that the Tax Code requires each year.
Under ECO, we calculate the minimum distribution amount required by law at
age 70-1/2, and pay you that amount once a year. ECO is available under 457
plans only.
>Other Systematic Distribution Options. We may add additional SDOs from time to
time. You may obtain additional information relating to any of the SDOs from
your local representative or from our Home Office.
Availability of Systematic Distribution Options The Company may discontinue the
availability of one or all of the SDOs at any time, and/or change the terms of
future elections.
Terminating a Systematic Distribution Option Once an SDO is elected, the
contract holder may revoke it 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 for an account, it may not be elected again, nor may
any other SDO be elected.
Charges and Taxation When the contract holder elects an SDO for your account,
your account value remains in the accumulation phase and subject to the charges
and deductions described in the "Fees" section. Taking a withdrawal through an
SDO may have tax consequences. If you are concerned about tax implications
consult a tax advisor before one of these options is elected.
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During the Income Phase
This section provides information about the accumulation phase. For death
benefit information applicable to the income phase (see "Income Phase").
Death Benefit
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The contract provides a death benefit in the event of your death, which is
payable to the contract holder (usually your employer). The contract holder may
direct that we make any payments to the beneficiary you name under the plan
(plan beneficiary).
During the Accumulation Phase
Payment Process
1. Following your death, the contract holder (on behalf of your plan
beneficiary) must provide the Company with proof of death acceptable to us
and a payment request in good order
2. The payment request should include selection of a benefit payment option.
3. Within seven days after we receive proof of death acceptable to us and
payment request in good order at our Home Office, we will mail payment,
unless otherwise requested.
Until a payment option is selected, account dollars will remain invested as at
the time of your death, and no distribution will be made.
If you die during the accumulation phase of your account, the following payment
options are available to your plan beneficiary, if allowed by your contract
holder and the Tax Code:
>Lump-sum payment
>Payment in accordance with any of the available income phase payment options
(see "Income Phase--Payment Options")
>If the plan beneficiary is your spouse, payment in accordance with the SDOs
(See "Systematic Distribution Options")
The following options are also available; however, the Tax Code limits how long
the death benefit proceeds may be left in these options:
>Leaving your account value invested in the contract; or
>Under some contracts, leaving your account value on deposit in the Company's
general account, and receiving monthly, quarterly, semi-annual or annual
interest payments at the interest rate then being credited on such deposits.
The beneficiary may withdraw the balance on deposit at any time or request to
receive payment in accordance with any of the available income phase payment
options (See "Income Phase--Payment Options.")
The Value of the Death Benefit. The death benefit will be based on your account
value as calculated on the next valuation following the date on which we
receive proof of death in good order. Interest, if any, will be paid from the
date of death at a rate no less than required by law.
Tax Code Requirements. The Tax Code requires distribution of death benefit
proceeds within a certain period of time. Failure to begin receiving death
benefit payments within those 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 "Taxation" for additional information.
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We may have used the following terms in prior prospectuses:
Annuity Phase--Income Phase
Annuity Option--Payment Option
Annuity Payment--Income Phase Payment
Annuitization--Initiating Income Phase Payments
The Income Phase
- --------------------------------------------------------------------------------
During the income phase you receive payments from your accumulated account
value.
Initiating Payments. At least 30 days prior to the date you want to start
receiving payments, the contract holder or you, if permitted by the plan, must
notify us in writing of the following:
>Start date
>Payment option (see the payment options table in this section)
>Payment frequency (i.e., monthly, quarterly, semi-annually or annually)
>Choice of fixed or variable payments
>Selection of an assumed net investment rate (only if variable payments are
elected)
>Under some plans, certification from your employer and/or submission of the
appropriate forms is also required
The account will continue in the accumulation phase until the contract holder
or you, as applicable, properly initiate payments. Once a payment option is
selected, it may not be changed; however, certain options allow you to withdraw
a lump sum.
What Affects Payment Amounts? Some of the factors that may affect payment
amounts include: your age, your account value, the payment option selected,
number of guaranteed payments (if any) selected, and whether variable or fixed
payments are selected.
Fixed Payments. Amounts funding fixed payments will be held in the Company's
general account. Fixed payment amounts do not vary over time.
Variable payments. Amounts funding your income phase payments will be held in
the subaccount(s) selected or a combination of subaccounts and fixed interest
options. The contracts may restrict the subaccounts available during the income
phase, and you may not make transfers once you enter the income phase. For
variable payments, an assumed net investment rate must be selected.
Payments from the Fixed Plus Account. If a nonlifetime payment option is
selected, payments from the Fixed Plus Account may only be made on a fixed
basis.
Assumed Investment Rate. For variable payments, an assumed investment rate must
be selected. If you select a 5% rate, your first payment will be higher, but
subsequent payments will increase only if the investment performance of the
subaccounts selected is greater than 5% annually, after deduction of fees.
Payment amounts will decline if the investment performance is less than 5%,
after deduction of fees.
If a 3-1/2% rate is selected, your first payment will be lower and subsequent
payments will increase more rapidly or decline more slowly depending on the
investment performance of the subaccounts selected. For more information about
selecting an assumed net investment rate, request a copy of the Statement of
Additional Information by calling the Company. (See "Contract
Overview--Questions.")
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Minimum Payment Amounts. The payment option selected must result in:
>A first payment of at least $20; or
>Total yearly payments of at least $100.
If your account value is too low to meet these minimum payment amounts, the
contract holder, on your behalf, must elect a lump-sum payment.
Charges Deducted. We make a daily deduction for mortality and expense risks
from amounts held in the subaccounts. Therefore, if you choose variable
payments and a nonlifetime payment option, we still make this deduction from
the subaccounts selected, even though we no longer assume any mortality risk
for you. We may also deduct a daily administrative charge from amounts held in
the subaccounts. (See "Fees.")
Death Benefit During the Income Phase. The death benefits that may be available
to a beneficiary are outlined in the payment option table below. If a lump sum
payment is due as a death benefit, we will make payment within seven calendar
days after we receive proof of death acceptable to us and the payment request
in good order at our Home Office.
Taxation. To avoid certain tax penalties, you and any beneficiary must meet the
distribution rules imposed by the Tax Code. (See "Taxation.")
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Payment Options
The following tables list the payment options and accompanying death benefits
which may be available under the contracts. Some contracts restrict the options
and the terms available. Check with your contract holder for details. We may
offer additional payment options under the contract from time to time.
Terms Used in the Tables:
Annuitant: The person(s) on whose life expectancy the income phase payments are
calculated.
Beneficiary: The person designated to receive the death benefit payable under
the contract.
<TABLE>
<CAPTION>
Lifetime Payment Options
<S> <C>
Length of Payments: For as long as the annuitant lives. It is possible that only one payment will be
Life Income made should the annuitant die prior to the second payment's due date.
Death Benefit--None: All payments end upon the annuitant's death.
Length of Payments: For as long as the annuitant lives, with payments guaranteed for a choice of
Life Income-- 5-20 years or as otherwise specified in the contract.
Guaranteed Death Benefit--Payment to the Beneficiary: If the annuitant dies before we have made all the
Payments guaranteed payments, we will pay the beneficiary a lump sum (unless otherwise requested) equal
to the present value of the remaining guaranteed payments.
Length of Payments: For as long as either annuitant lives. It is possible that only one payment will
be made should both annuitants die before the second payment's due date.
Death Benefit--Continuing Payments:
Life Income-- (a) This option allows a choice of 100%, 662/3% or 50% of the payment to continue to the
Two Lives surviving annuitant after the first death; or
(b) 100% of the payment to continue to the annuitant on the second annuitant's death, and 50%
of the payment to continue to the second annuitant on the annuitant's death.
Payments end after the deaths of both annuitants.
Length of Payments: For as long as either annuitant lives, with payments guaranteed for a
minimum of 120 months, or as otherwise specified in the contract.
Life Income-- Death Benefit--Continuing Payments: 100% of the payment to continue to the
Two Lives-- surviving annuitant after the first death.
Guaranteed Death Benefit--Payment to the Beneficiary: If both annuitants die before the guaranteed
Payments payments have all been paid, we will pay the beneficiary a lump sum (unless otherwise requested)
equal to the present value of the remaining guaranteed payments.
Nonlifetime Payment Options
Length of Payments: Payments generally may be fixed or variable and may be made for 3-30 years.
However, for amounts held in the Fixed Plus Account during the accumulation phase, the
payment must be on a fixed basis and must be for at least 5 years. In certain cases a lump sum
Nonlifetime-- payment may be requested at any time (see below).
Guaranteed Death Benefit--Payment to the Beneficiary: If the annuitant dies before we make all the
Payments guaranteed payments, we will pay the beneficiary a lump sum (unless otherwise requested) equal
to the present value of the remaining guaranteed payments, and we will not impose any early
withdrawal charge.
Lump Sum Payment: If the Nonlifetime--Guaranteed Payments option is elected with
variable payments, you may request at any time that all or a portion of the
present value of the remaining payments be paid in one sum. A lump sum elected
before three years of payments have been completed will be treated as a
withdrawal during the accumulation phase and we will charge any applicable early
withdrawal charge. (See "Fees--Early Withdrawal Charge.") Lump sum payments will
be sent within seven calendar days after we receive the request for payment in
good order at our Home Office.
</TABLE>
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In This Section
I. Introduction
II. Your Retirement Plan
III. Withdrawals and other Distributions
o Taxation of Distributions
o Withholding
IV. Minimum Distribution Requirements
o 50% Excise Tax
V. Contribution and Distribution Limits
VI. 415(m) Arrangements
VII. Bona Fide Severance Pay Plans
VIII. Taxation of the Company
Taxation
- --------------------------------------------------------------------------------
I. Introduction
This section discusses our understanding of current federal income tax laws
affecting the contract. You should keep the following in mind when reading it:
>Your tax position (or the tax position of the beneficiary, as applicable)
determines federal taxation of amounts held or paid out under the contract.
>Tax laws change. It is possible that a change in the future could affect
contracts issued in the past.
>This section addresses federal income tax rules and does not discuss federal
estate and gift tax implications, state and local taxes or any other tax
provisions.
>We do not make any guarantee about the tax treatment of the contract or
transactions involving the contract.
We do not intend this information to be tax advice. For advice about the effect
of federal income taxes or any other taxes on amounts held or paid out under the
contract, consult a tax adviser. For more comprehensive information contact the
Internal Revenue Service.
II. Your Retirement Plan
The tax rules applicable to retirement plans vary according to plan type, and
terms and conditions of the plan. To understand what tax rules apply, you need
to know the code section under which your plan qualifies. Contact your plan
sponsor, local representative or the Company to learn which code section applies
to your plan.
Plan Types. The contract is designed for use with deferred compensation plans
that qualify under code section 457 or non-section 457 deferred compensation
plans. Code section 457 provides for certain deferred compensation plans. These
plans may be offered by state governments, local governments, political
subdivisions, agencies, instrumentalities and certain affiliates of such
entities, and non-governmental tax exempt organizations. A code section 457
plan may be either a 457(b) (eligible) plan or a 457 (f) (ineligible) plan.
Either type of plan may permit participants to specify the form of investment
for their deferred compensation account. A non-section 457 deferred
compensation plan may be either a deferred compensation plan of a tax-exempt
employer that is "grandfathered" and not subject to 457 rules, or a deferred
compensation plan of a for-profit employer. The contract may also be used with
code section 415(m) arrangements.
The Contract and Retirement Plans. We make this contract available to plans
subject to code section 457 only if a non-governmental employer sponsors the
plan. Under such plans, as well as non-section 457 deferred compensation plans,
all amounts of deferred compensation, all property and rights purchased with
such amounts and all income attributable to such amounts, property and rights
remains solely the property and rights of the employer and is subject to the
claims of the employer's general creditors. Contract holders and contract
participants are responsible for determining that contributions, distributions
and other transactions satisfy applicable laws. Legal counsel and a tax adviser
should be consulted regarding the suitability of the contract.
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<PAGE>
Because the plan is not part of the contract, we are not bound by any plan's
terms or conditions.
III. Withdrawals and Other Distributions
Certain tax rules apply to distributions from the contract. A distribution is
any amount taken from the contract including withdrawals, income payments,
transfers and death benefit proceeds.
We report the taxable portion of all distributions to the IRS.
Taxation of Distributions
457(b) Plans. All amounts received under a 457(b) plan are includible in gross
income when paid or otherwise made available to you or your beneficiary.
457(f) Plans. Compensation deferred under a 457(f) plan is includible in gross
income in the first year when it is no longer subject to a "substantial risk of
forfeiture" as defined by the Tax Code.
Non-Section 457 Deferred Compensation Plans. Compensation deferred under a
non-Section 457 deferred compensation plan is includible in gross income in the
first year when paid or otherwise made available to you or your beneficiary.
Taxation of Death Benefit Proceeds
In general, payments received by your beneficiaries after your death are taxed
in the same manner as if you had received those payments.
Withholding for Federal Income Tax Liability
Any distributions under the contracts are generally subject to withholding.
Federal income tax liability rates vary according to the type of distribution
and the recipient's tax status.
All distributions, except death benefit proceeds, are subject to mandatory
federal income tax withholding as wages. No withholding is required on payments
to beneficiaries.
Non-resident Aliens. If you or a beneficiary is a non-resident alien, then any
withholding is governed by code section 1441 based on the individual's
citizenship, the country of domicile and treaty status.
IV. Minimum Distribution Requirements
To avoid certain tax penalties, you and any beneficiary must meet the minimum
distribution requirements imposed by the Tax Code. These requirements only
apply to 457(b) plans. These rules may dictate one or more of the following:
>Start date for distributions
>The time period in which all amounts in your account(s) must be distributed
>Distribution amounts
Start Date. Generally, you must begin receiving distributions by April 1 of the
calendar year following the calendar year in which you attain age 70-1/2 or
retire, whichever occurs later, unless you are a 5% owner, in which case such
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distributions must begin by April 1 of the calendar year following the calendar
year in which you attain age 70-1/2.
Time Period. We must pay out distributions from the contract over one of the
following time periods:
>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 beneficiary
Amount. Any distribution from a 457(b) plan, payable over a period of more than
one year, must be made in substantially non-increasing amounts.
50% Excise Tax. 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.
Minimum Distribution of Death Benefit Proceeds
The following only applies to 457(b) plans. Different distribution requirements
apply if your death occurs:
>After you begin receiving minimum distributions under the contract, or
>Before you begin receiving such distributions.
If your death occurs after you begin receiving minimum distributions under the
contract, distributions must be made at least as rapidly as under the method in
effect at the time of your death. Code section 401(a)(9) provides specific
rules for calculating the minimum required distributions at your death. The
rules differ, dependent upon:
>Whether your minimum required distribution was calculated each year based on
your single life expectancy or the joint life expectancies of you and your
beneficiary, and
>Whether life expectancy was recalculated.
The rules are complex and any beneficiary should consult with a tax adviser
before electing the method of calculation to satisfy the minimum distribution
requirements.
Should you die before you begin receiving minimum distributions under the
contract, your entire balance must be distributed by December 31 of the
calendar year containing the fifth anniversary of the date of your death. For
example, if you die on September 1, 1999, your entire balance must be
distributed to the beneficiary by December 31, 2004. However, if the
distribution begins by December 31 of the calendar year following the calendar
year of your death, then payments may be made in one of the following
time-frames:
>Over the life of the beneficiary
>Over a period not extending beyond the life expectancy of the beneficiary
For 457(b) plans, if the beneficiary is not your spouse, the time-frame may not
exceed fifteen years.
Start Dates for Spousal Beneficiaries. If the beneficiary is your spouse, the
distribution must begin on or before the later of the following:
>December 31 of the calendar year following the calendar year of your death.
>December 31 of the calendar year in which you would have attained age 70-1/2.
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<PAGE>
V. Contribution and Distribution Limits
457(b) Plan. If your employer's plan is a 457(b) plan, the Tax Code imposes a
maximum limit on annual contributions to your account(s) that may be excluded
from your gross income. For Section 457(b) plan participants, such limit is
generally the lesser of $8,000, as adjusted to reflect changes in the cost of
living, or 33% of your includible compensation (25% of gross compensation).
Under a 457(b) plan, amounts may not be made available to you earlier than (1)
the calendar year you attain age 70-1/2, (2) when you separate from service with
the employer or (3) when you are faced with an unforeseeable emergency. A
457(b) plan may permit a one-time in-service distribution if the total amount
payable to the participant does not exceed $5,000 and no amounts have been
deferred by the participant during the 2-year period ending on the date of
distribution.
457(f) Plan. A 457(f) plan is not subject to restrictions on contributions or
distributions, but must contain a "substantial risk of forfeiture" as defined
by the Tax Code. Generally, substantial risk of forfeiture means that your
right to receive deferred compensation is dependent upon your performance of
future services to an employer or other entity.
Non-Section 457 Deferred Compensation Plans. Non-Section 457 Deferred
Compensation Plans also are not subject to restrictions on contributions or
distributions.
VI. Code Section 415(m) Arrangements
If you participate in the contract through a qualified governmental excess
benefit arrangement, defined in code section 415(m), the amounts provided under
the contract may be subject to the same requirements as those applied to code
section 457(b) plans described above, except that the limits described in
"Contributions Excluded from Taxable Income" do not apply. If the code section
415(m) arrangement is not designed to meet the requirements of code section
457(b), then the amounts provided under the contract are taxed in accordance
with code section 451 and are generally taxable when paid or made available to
you.
VII. Bona Fide Severance Pay Plans
If you participate in the contract through certain bona fide severance pay
plans, described in code section 457(e)(11), amounts provided under the
contract are generally not taxable until paid or made available to you.
However, because these plans are not clearly defined in the Code, it may be
determined that your plan does not qualify as a bona fide severance pay plan.
If the plan does not qualify, then amounts provided under the contract are
taxable in the year in which they are deferred. Because of this lack of
clarity, it is imperative that you consult your tax adviser for guidance
regarding taxation.
VIII. Taxation of the Company
We are taxed as a life insurance company under the Tax Code. Variable Annuity
Separate Account B is not a separate entity from us. Therefore, it is not taxed
separately as a "regulated investment company," but is taxed as part of the
Company.
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We automatically apply investment income and capital gains attributable to the
separate account to increase reserves under the contracts. Because of this,
under existing federal tax law we believe that any such income and gains will
not be taxed to the extent that such income and gains are applied to increase
reserves under the contracts. In addition, any foreign tax credits attributable
to the separate account will be first used to reduce any income taxes imposed
on the separate account before being used by the Company.
In summary, we do not expect that we will incur any federal income tax
liability attributable to the separate account and we do not intend to make any
provision for such taxes. However, changes in federal tax laws and/or their
interpretation may result in our being taxed on income or gains attributable to
the separate account. In this case, we may impose a charge against the separate
account (with respect to some or all of the contracts) to set aside provisions
to pay such taxes. We may deduct this amount from the separate account,
including from your account value invested in the subaccounts.
Other Topics
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The Company
Aetna Life Insurance and Annuity Company (the Company, we) issues the contracts
described in this prospectus and is responsible for providing each contract's
insurance and annuity benefits.
We are a stock life insurance company organized under the insurance laws of the
State of Connecticut in 1976 and an indirect wholly owned subsidiary of Aetna
Inc. Through a merger, our operations include the business of Aetna Variable
Annuity Life Insurance Company (formerly known as Participating Annuity Life
Insurance Company, an Arkansas life insurance company organized in 1954).
We are engaged in the business of issuing life insurance and annuities in all
states of the United States. Our principal executive offices are located at:
151 Farmington Avenue
Hartford Connecticut 06156
Variable Annuity Account B
We established Variable Annuity Account B (the "separate account") in 1976 as a
segregated asset account to fund our variable annuity contracts. The separate
account is registered as a unit investment trust under the Investment Company
Act of 1940 (the "'40 Act"). It also meets the definition of "separate account"
under the federal securities laws.
The separate account is divided into "subaccounts." These subaccounts invest
directly in shares of a pre-assigned fund.
Although we hold title to the assets of the separate account, such assets are
not chargeable with the liabilities of any other business that we conduct.
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
obligations of the Company.
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Performance Reporting
We may advertise different types of historical performance for the subaccounts
including
>standardized average annual total returns
>non-standardized average annual total returns
We may also advertise certain ratings, rankings or other information related to
the Company, the subaccounts or the funds. For further details regarding
performance reporting and advertising request a Statement of Additional
Information at the number listed in "Contract Overview--Questions."
Standardized Average Annual Total Returns. We calculate standardized average
annual total returns according to a formula prescribed by the SEC. This shows
the percentage return applicable to $1,000 invested in the subaccount over the
most recent one, five and 10-year periods. If the investment option was not
available for the full period, we give a history from the date money was first
received in that option under the separate account. We include all recurring
charges during each period (e.g., mortality and expense risk charges, annual
maintenance fees, administrative expense charges (if any) and any applicable
early withdrawal charges).
Non-Standardized Average Annual Total Returns. We calculate non-standardized
average annual total returns in a similar manner as that stated above, except
we do not include the deduction of any applicable early withdrawal charge. Some
non-standardized returns may also exclude the effect of a maintenance fee. If
we reflected these charges in the calculation, they would decrease the level of
performance reflected by the calculation. Non-standardized returns may also
include performance from the Fund's inception date, if that date is earlier
than the one we use for standardized returns.
Voting Rights
Each of the subaccounts holds shares in a fund and each is entitled to vote at
regular and special meetings of that fund. Under our current view of applicable
law, we will vote the shares for each subaccount as instructed by persons
having a voting interest in the separate account. Under the contracts described
in this prospectus, the contract holder, not the plan participants, has all
voting rights. We will vote shares for which instructions have not been
received in the same proportion as those for which we received instructions.
Each person who has a voting interest in the separate account will receive
periodic reports relating to the funds in which he or she has an interest, as
well as any proxy materials and a form on which to give voting instructions.
Voting instructions will be solicited by a written communication at least 14
days before the meeting.
The number of votes (including fractional votes) the contract holder is
entitled to direct will be determined as of the record date set by any fund the
contract holder invests in through the subaccounts.
>During the accumulation phase, the number of votes is equal to the portion of
the account value invested in the fund, divided by the net asset value of one
share of that fund.
>During the income phase, the number of votes is equal to the portion of
reserves set aside for the contract's share of the fund, divided by the net
asset value of one share of that fund.
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Contract Distribution
The Company will serve as the principal underwriter for the securities sold by
this prospectus. The Company is registered as a broker-dealer with the SEC and
is a member of the National Association of Securities Dealers, Inc.
As principal underwriter, the Company will enter into arrangements with one or
more registered broker-dealers, including at least one affiliate of the
Company, to offer and sell the contracts described in this prospectus. We call
these entities "distributors."
We and one or more of our affiliates may also sell the contracts directly. All
individuals offering and selling the contracts must be registered
representatives of a broker-dealer and must be licensed as insurance agents to
sell variable annuity contracts.
Commission Payments. We may pay commissions to persons who offer and sell the
contracts. The maximum percentage amount we ever pay with respect to a given
purchase payment is the first-year percentage which ranges from 1% to 6% of the
first year of payments to an account. We may also pay renewal commissions on
payments made after the first year and, under group contracts, asset-based
service fees. The average of all commissions and asset-based service fees paid
is estimated to equal approximately 3% of the total payments made over the life
of an average contract. Some sales personnel may receive various types of
non-cash compensation as special sales incentives, including trips and
educational and/or business seminars. However, any such compensation will be
paid in accordance with NASD rules.
We may reimburse the distributor for certain expenses. The name of the
distributor and the registered representative responsible for your account are
stated in your enrollment materials. Commissions and sales related expenses are
paid by us and are not deducted from payments to your account.
Third Party Compensation Arrangements. Occasionally, we may:
>Pay commissions and fees to distributors affiliated or associated with the
contract holder, you and/or other contract participants.
>Enter into agreements with entities associated with the contract holder, you
and/or other participants. Through such agreements, we may pay the entities
for certain services in connection with administering the contract.
In both these circumstances there may be an understanding that the distributor
or entities would endorse us as a provider of the contract. You will be
notified if you are purchasing a contract that is subject to these
arrangements.
Contract Modification
We may change the contract as required by federal or state law. In addition, we
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 group
contract holder does not agree to a change, we reserve the right to refuse to
establish new accounts under the contract. Certain changes will require the
approval of appropriate state or federal regulatory authorities.
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Legal Matters and Proceedings
We are aware of no material legal proceedings pending which involve the
separate account or the Company as a party or which would materially affect the
separate account. The validity of the securities offered by this prospectus has
been passed upon by Counsel to the Company.
Payment Delay or Suspension
We reserve the right to suspend or postpone the date of any payment of benefits
or values under the following circumstances: (a) on any valuation date when the
New York Stock Exchange is closed (except customary weekend and holiday
closings) when trading on the Exchange is restricted; b) when an emergency
exists as determined by the SEC so that disposal of the securities held in the
subaccounts is not reasonably practicable or it is not reasonably practicable
fairly to determine the value of the subaccount's assets; (c) during any other
periods 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.
Transfer of Ownership; Assignment
An assignment of a contract will only be binding on us if it is made in writing
and sent to us at our Home Office. We will use reasonable procedures to confirm
that the assignment is authentic, including verification of signature. If we
fail to follow our own procedures, we will 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 contract holder and the interest
of the annuitant and any beneficiary will be subject to the rights of any
assignee we have on our records.
Year 2000 Readiness
As a healthcare and financial services enterprise, Aetna Inc. (referred to
collectively with its affiliates and subsidiaries as "Aetna"), is dependent on
computer systems and applications to conduct its business. Aetna has developed
and is currently executing a comprehensive risk-based plan designed to make its
mission-critical information technology ("IT") systems and embedded systems
Year 2000 ready. The plan for IT systems covers five stages including (i)
assessment, (ii) remediation, (iii) testing, (iv) implementation and (v) Year
2000 approval. At year end 1997, Aetna, including the Company, had
substantially completed the assessment stage. The remediation of mission-
critical IT systems was completed year end 1998. Testing of all
mission-critical IT systems is underway with Year 2000 approval targeted for
completion by mid-1999. The costs of these efforts will not affect the separate
account.
The Company, its affiliates and the mutual funds that serve as investment
options for the separate account also have relationships with investment
advisers, broker dealers, transfer agents, custodians or other securities
industry participants or other service providers that are not affiliated with
Aetna. Aetna, including the Company, has initiated communication with its
critical external relationships to determine the extent to which Aetna may be
vulnerable to such parties' failure to resolve their own Year 2000 issues.
Aetna and the Company have assessed and are prioritizing responses in an
attempt to mitigate risks with respect to the failure of these parties to be
Year 2000 ready. There can be no assurance that failure of third parties to
complete adequate
34
<PAGE>
preparations in a timely manner, and any resulting systems interruptions or
other consequences, would not have an adverse effect, directly or indirectly,
on the separate account, including, without limitation, its operation or the
valuation of its assets and units.
35
<PAGE>
Contents of the Statement of Additional Information
- --------------------------------------------------------------------------------
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
Income Phase Payments
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of Aetna Life Insurance and Annuity Company
36
<PAGE>
Appendix I
Guaranteed Accumulation Account
- --------------------------------------------------------------------------------
The Guaranteed Accumulation Account (GAA) is a fixed interest option that may
be available during the accumulation phase under the contracts. This appendix
is only a summary of certain facts about GAA. Please read the GAA prospectus
before investing in this option.
In General. Amounts that you invest in GAA will earn a guaranteed interest rate
if amounts are left in GAA for the specified period of time. If you withdraw or
transfer those amounts before the specified period of time has elapsed, we may
apply a "market value adjustment," which may be positive or negative.
When you decide to invest money in GAA, you will want to contact your
representative or the Company to learn:
>The interest rate we will apply to the amounts that you invest in GAA.
We change this rate periodically, so be certain you know what rate we
guarantee on the day your account dollars are invested into GAA.
>The period of time your account dollars need to remain in GAA in order to earn
that rate.
You are required to leave your account dollars in GAA for a specified period
of time (guaranteed term), in order to earn the guaranteed interest rate.
Deposit Periods. A deposit period is the time during which we offer a specific
interest rate if you deposit dollars for a certain guaranteed term. For a
particular interest rate and guaranteed term to apply to your account dollars,
you must invest them during the deposit period during which that rate and term
are offered.
Interest Rates. We guarantee different interest rates, depending on when
account dollars are invested in GAA. The interest rate we guarantee is an
annual effective yield; that means that the rate reflects a full year's
interest. We credit interest daily at a rate that will provide the guaranteed
annual effective yield over one year. The guaranteed interest rate will never
be less than the rate stated in the contract.
Fees and Other Deductions
>If all or a portion of your account value in GAA is withdrawn, you may incur
the following:
Market Value Adjustment (MVA)--as described in this appendix and in the GAA
prospectus;
Tax Penalties and/or Tax withholding--see "Taxation"
Early Withdrawal Charge--see "Fees"
Maintenance Fee--see "Fees"
>We do not make deductions from amounts in the GAA to cover mortality and
expense risks. Rather, we consider these risks when determining the credited
rate.
Market Value Adjustment (MVA)
If you withdraw or transfer your account value from GAA before the guaranteed
term is completed, an MVA may apply. The MVA reflects the change in the value
of the investment due to changes in interest rates since the date of deposit.
The MVA may be positive or negative.
>If interest rates at the time of withdrawal have increased since the date of
deposit, the value of the investment decreases and the MVA will be negative.
This could result in your receiving less than the amount you paid into GAA.
>If interest rates at the time of withdrawal have decreased since the date of
deposit, the value of the investment increases and the MVA will be positive.
Guaranteed Terms. The guaranteed term is the period of time account dollars
must be left in the GAA in order to earn the guaranteed interest rate specified
for that guaranteed term. We offer different guaranteed terms at different
times. Check with your representative or the Company to learn the details about
the guaranteed term(s) currently being offered.
37
<PAGE>
In general we offer the following guaranteed terms:
>Short-term--three years or fewer
>Long-term--ten years or less, but greater than three years
At the end of a guaranteed term, your contract holder or you if permitted may:
>Transfer dollars to a new guaranteed term
>Transfer dollars to other available investment options
>Withdraw dollars
Deductions may apply to withdrawals. See "Fees and Other Deductions" in this
section.
Transfer of Account Dollars. Generally, account dollars invested in GAA may be
transferred among guaranteed terms offered through the GAA, and/or to other
investment options offered through the contract. However, transfers may not be
made during the deposit period in which your account dollars are invested in
GAA or for 90 days after the close of that deposit period. We will apply an MVA
to transfers made before the end of a guaranteed term.
Income Phase. GAA can not be used as an investment option during the income
phase. However, the contract holder (or you, if permitted) may notify us at
least 30 days in advance to elect a variable payment option and to transfer
your GAA account dollars to any of the subaccounts available during the income
phase.
38
<PAGE>
Appendix II
Fixed Account
- --------------------------------------------------------------------------------
The Fixed Account is an investment option available during the accumulation
phase under the contracts. Amounts allocated to the Fixed Account are held in
the Company's general account which supports insurance and annuity obligations.
Additional information about this option may be found in the contract.
General Disclosure. 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 this prospectus about the Fixed Account may 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 Account has not been reviewed by the SEC.
Interest Rates. The Fixed Account guarantees that amounts allocated to this
option will earn the minimum interest rate specified in the contract. We may
credit a higher interest rate from time to time, but the rate we credit will
never fall below the guaranteed minimum specified in the contract. Amounts
applied to the Fixed Account will earn the interest rate in effect at the time
money is applied. Amounts in the Fixed Account will reflect a compound interest
rate as credited by us. The rate we quote is an annual effective yield.
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 the amounts you allocate to this
option and promising a minimum interest rate and income phase payment.
Withdrawals. Under certain emergency conditions, we may defer payment of any
withdrawal for a period of up to 6 months or as provided by federal law.
Additionally, if allowed by state law, we may pay withdrawals 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 before withdrawal;
and
(b) the sum of the current Fixed Account withdrawal and 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 before current withdrawal.
The contract describes how we will determine the interest rate credited to
amounts held in the Fixed Account during the payment period, including the
minimum interest rate.
Charges. We do not make deductions from amounts in the Fixed Account to cover
mortality and expense risks. We consider these risks when determining the
credited rate. If you make a withdrawal from amounts in the Fixed Account, an
early withdrawal charge may apply. (See "Fees--Early Withdrawal Charge.")
Transfers. During the accumulation phase, you may transfer account dollars from
the Fixed Account to any other available investment option. We may vary the
dollar amount that you are allowed to transfer, but it will never be less than
10% of your account value held in the Fixed Account. This 10% limit does not
apply to amounts being transferred into the Fixed Plus Account (if available
under the contract).
By notifying our Home Office at least 30 days before income phase payments
begin, you may elect to have amounts transferred to one or more of the
subaccounts available during the income phase to provide variable payments.
39
<PAGE>
Appendix III
Fixed Plus Account
- --------------------------------------------------------------------------------
The Fixed Plus Account is an investment option available under some contracts.
Amounts allocated to the Fixed Plus Account are held in the Company's general
account which supports insurance and annuity obligations. We reserve the right
to limit investment in or transfers to the Fixed Plus Account.
Additional information about this option may be found in the contract.
General Disclosure. 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 about the Fixed Plus Account
may 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.
Interest Rates. The Fixed Plus Account guarantees that amounts allocated to
this option will earn the minimum interest rate specified in the contract. We
may credit a higher interest rate from time to time, but the rate we credit
will never fall below the guaranteed minimum specified in the contract. We
credit amounts held in the Fixed Plus Account with a rate 0.25% higher than the
then-declared rate beginning in the tenth year after your account was
established. Amounts applied to the Fixed Plus Account will earn the interest
rate in effect at the time money is applied. Amounts in the Fixed Plus Account
will reflect a compound interest rate as credited by us. The rate we quote is
an annual effective yield. We do not make deductions from amounts in the Fixed
Plus Account to cover mortality and expense risks. We consider these risks in
determining the credited rate.
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 the amounts you allocate to this
option and promising a minimum interest rate and income phase payment.
Partial Withdrawal. Partial withdrawals are limited to 20% of the amount held in
the Fixed Plus Account on the day we receive a request in good order at our Home
Office. The 20% is reduced by any Fixed Plus withdrawals, transfers or income
phase payments made in last 12 months. In calculating 20% limit, we reserve the
right to include payments made through a Systematic Distribution Option.
The 20% limit is waived if a partial withdrawal is taken proportionally from
each investment option in which the account invests and is due to one or more
of the following:
>Election of any income phase payment option with fixed payments or a lifetime
payment option with variable payments
>Due to your death (the withdrawal must occur within six months after death and
can only be exercised once).
Full Withdrawal. Full withdrawals are paid, with interest, in five annual
payments equal to:
>One-fifth of the Fixed Plus Account value on the day we receive the request,
reduced by any Fixed Plus Account withdrawals, loans, transfers or income
phase payments made during the past 12 months
>One-fourth of the remaining Fixed Plus Account value 12 months later
>One-third of the remaining Fixed Plus Account value 12 months later
>One-half of the remaining Fixed Plus Account value 12 months later, and
>The balance of the Fixed Plus Account value 12 months later
A full withdrawal may be canceled at any time before the end of the
five-payment period.
Once we receive a request for full withdrawal, no further withdrawals or
transfers will be permitted from Fixed Plus Account.
40
<PAGE>
We will waive the above full withdrawal five-payment period if full withdrawal
is made due to any of the following:
>Your death before income phase payments have begun (request must be received
within 6 months after date of death)
>Election of any income phase payment option with fixed payments or a lifetime
payment option with variable payments
>Your account value in the Fixed Plus Account value is $3,500 or less and no
withdrawals, transfers or income phase payments have been made from your
account within the past 12 months
Transfers. Transfers are limited to 20% of the amount held in the Fixed Plus
Account on the day a request in good order is received at our Home Office. The
20% is reduced by any Fixed Plus Account withdrawals, transfers or income phase
payments made in past 12 months. We reserve the right to include payments made
through a Systematic Distribution Option in calculating the 20% limit. The 20%
limit will be waived if your account value in Fixed Plus Account is $1,000 or
less.
Income Phase. Amounts accumulating under the Fixed Plus Account can be
transferred to the subaccounts to fund variable lifetime income options during
the income phase. However, Fixed Plus Account values may not be used to fund
nonlifetime income options with variable payments.
Systematic Withdrawal Option (SWO). SWO described in "Systematic Distribution
Options," may not be elected if you have requested a Fixed Plus Account
transfer or withdrawal within the past 12 months.
41
<PAGE>
Appendix IV
Fund Descriptions
- --------------------------------------------------------------------------------
The investment results of the funds are likely to differ significantly and
there is no assurance that any of the funds will achieve their respective
investment objectives. Except as noted, all funds are diversified, as defined
under the Investment Company Act of 1940.
The contract holder may designate some or all of the mutual funds described
below as variable funding options under a contract.
Availability of funds may vary. See "Investment Options" for availability and
other information.
>Aetna Balanced VP, Inc. seeks to maximize investment return, consistent with
reasonable safety of principal by investing in a diversified portfolio of one
or more of the following asset classes: stocks, bonds and cash equivalents,
based on the investment adviser's judgment of which of those sectors or mix
thereof offers the best investment prospects.(1)
>Aetna Income Shares d/b/a Aetna Bond VP seeks to maximize total return,
consistent with reasonable risk, through investments in a diversified
portfolio consisting primarily of debt securities.(1)
>Aetna Variable Fund d/b/a Aetna Growth and Income VP seeks to maximize total
return through investments in a diversified portfolio of common stocks and
securities convertible into common stock.(1)
>Aetna Variable Encore Fund d/b/a Aetna Money Market VP seeks to provide high
current return, consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments. An investment in the Fund
is neither insured nor guaranteed by the U.S. Government.(1)
>Aetna Generation Portfolios, Inc.--Aetna Ascent VP seeks to provide capital
appreciation. The Portfolio is designed for investors who have an investment
horizon exceeding 15 years and who have a high level of risk tolerance.(1)
>Aetna Generation Portfolios, Inc.--Aetna Crossroads VP seeks to provide total
return (i.e., income and capital appreciation, both realized and unrealized).
The Portfolio is designed for investors who have an investment horizon
exceeding 10 years and who have a moderate level of risk tolerance.(1)
>Aetna Generation Portfolios, Inc.--Aetna Legacy VP seeks to provide total
return consistent with preservation of capital. The Portfolio is designed for
investors who have an investment horizon exceeding five years and who have a
low level of risk tolerance.(1)
>Aetna Variable Portfolios, Inc.--Aetna Growth VP seeks growth of capital
through investment in a diversified portfolio of common stocks and securities
convertible into common stocks believed to offer growth potential.(1)
>Aetna Variable Portfolios, Inc.--Aetna High Yield VP seeks high current income
and growth of capital primarily through investment in a diversified portfolio
of fixed income securities rated lower than BBB by Standard and Poor's
Corporation or lower than Baa3 by Moody's Investors Service, Inc.(1)
>Aetna Variable Portfolios, Inc.--Aetna Index Plus Large Cap VP seeks to
outperform the total return performance of publicly traded common stocks
represented in the S&P 500 Composite Stock Price Index.(1)
>Aetna Variable Portfolios, Inc.--Aetna Index Plus Mid Cap VP seeks to
outperform the total return performance of publicly traded common stocks
represented in the S&P 400.(1)
>Aetna Variable Portfolios, Inc.--Aetna Index Plus Small Cap VP seeks to
outperform the total return performance of publicly traded common stocks
represented by the S&P SmallCap 600 Index, a stock market index composed of
600 common stocks selected by Standard and Poor's Corporation.(1)
>Aetna Variable Portfolios, Inc.--Aetna International VP seeks long-term
capital growth primarily through investment in a diversified portfolio of
common stocks principally traded in countries outside of the United States.
Aetna International VP will not target any given level of current income.(1)
>Aetna Variable Portfolios, Inc.--Aetna Real Estate Securities VP seeks maximum
total return primarily through investment in a diversified portfolio of equity
securities issued by real estate companies, the majority of which are real
estate investment trusts (REITs).(1)
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<PAGE>
>Aetna Variable Portfolios, Inc.--Aetna Small Company VP seeks growth of
capital primarily through investment in a diversified portfolio of common
stocks and securities convertible into common stocks of companies with smaller
market capitalizations.(1)
>Aetna Variable Portfolios, Inc.--Aetna Value Opportunity VP seeks growth of
capital primarily through investment in a diversified portfolio of common
stocks and securities convertible into common stock(1)(a)
>AIM V.I. Capital Appreciation Fund seeks capital appreciation through
investments in common stocks, with emphasis on medium-sized and smaller
emerging growth companies.(2)
>AIM V.I. Growth Fund seeks growth of capital principally through investment in
common stocks of seasoned and better capitalized companies considered by AIM
to have strong earnings momentum. Current income will not be an important
criterion of investment selection, and any such income should be considered
incidental.(2)
>AIM V.I. Growth and Income Fund seeks growth of capital, with current income
as a secondary objective. Although the amount of the Fund's current income
will vary from time to time, it is anticipated that the current income
realized by the Fund will generally be greater than that realized by the
mutual funds whose sole objective is growth of capital.(2)
>AIM V.I. Value Fund seeks to achieve long-term growth of capital by investing
primarily in equity securities judged by AIM to be undervalued relative to the
current or projected earnings of the companies issuing the securities, or
relative to the current market values of assets owned by the companies issuing
the securities, or relative to the equity market, generally.(2)
>Calvert Social Balanced Portfolio is a nondiversified portfolio that seeks to
achieve a total return above the rate of inflation through an actively
managed, nondiversified portfolio of common and preferred stocks, bonds and
money market instruments which offer income and capital growth opportunity and
which satisfy the social criteria established for the Portfolio.(3)
>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 foreign issuers). Foreign
investments involve greater risks than U.S. investments, including political
and economic risks and the risk of currency fluctuation.(4)
>Fidelity Investments Variable Insurance Products Fund II--Contrafund Portfolio
seeks maximum total return over the long term by investing mainly in
securities of companies whose value the investment adviser believes is not
fully recognized by the public.(4)
>Janus Aspen Series--Aggressive Growth Portfolio is a nondiversified portfolio
that seeks long-term growth 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 December 31, 1998 included companies with
capitalizations between approximately $ million and $ billion, but which
is expected to change on a regular basis.(5)
>Janus Aspen Series--Balanced Portfolio seeks long-term capital growth,
consistent with preservation of capital and balanced by current income. The
Portfolio pursues its investment objective by, under normal circumstances,
investing 40%-60% of its assets in securities selected primarily for their
growth potential and 40%-60% of its assets in securities selected primarily
for their income potential.(5)
>Janus Aspen Series--Flexible Income Portfolio seeks to obtain maximum total
return, consistent with preservation of capital. The Portfolio pursues its
investment objective primarily through investments in income-producing
securities. Total return is expected to result from a combination of current
income and capital appreciation. The Portfolio invests in all types of
income-producing securities and may have substantial holdings of
43
<PAGE>
debt securities rated below investment grade (e.g., junk bonds).(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 primarily in common stocks of issuers of any
size. This Portfolio generally invests in larger, more established issuers.(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 nondiversified 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.
Transfers or deposits are not allowed into the subaccount investing in this
fund, except from accounts established under the contract before May 1, 1998.
As soon as all those who have current allocations to the subaccount under the
contract have redirected their allocations to other investment options, we
will close the subaccount to all investments.(6)
>Oppenheimer Global Securities Fund seeks long-term capital appreciation by
investing a substantial portion of its assets in securities of foreign issuers,
"growth-type" companies, cyclical industries and special situations which are
considered to have appreciation possibilities but which may be considered to be
speculative.(7)
>Oppenheimer Strategic Bond Fund seeks a high level of current income
principally derived from interest on debt securities and seeks to enhance such
income by writing covered call options on debt securities. The Fund intends to
invest principally in (i) foreign government and corporate debt securities,
(ii) securities of the U.S. Government and its agencies and instrumentality's
("U.S. Government securities"), and (iii) lower-rated high yield domestic debt
securities, commonly known as "junk bonds," which are subject to a greater
risk of loss of principal and nonpayment of interest than higher-rated
securities. These securities may be considered to be speculative. Current
income is not an objective.(7)
>Portfolio Partners, Inc.--MFS Emerging Equities Portfolio seeks to provide
long-term growth of capital. Dividend and interest income from portfolio
securities, if any, is incidental to the Portfolio's investment objective.(8a)
>Portfolio Partners, Inc.--MFS Research Growth Portfolio seeks long-term growth
of capital and future income.(8a)
>Portfolio Partners, Inc.--MFS Value Equity Portfolio seeks capital
appreciation. Dividend income, if any, is a consideration incidental to the
Portfolio's objective of capital appreciation.(8a)
>Portfolio Partners, Inc.--Scudder International Growth Portfolio seeks
long-term growth of capital primarily through a diversified portfolio of
marketable foreign equity securities.(8b)
>Portfolio Partners, Inc.--T. Rowe Price Growth Equity Portfolio seeks
long-term growth of capital and, secondarily, to increase dividend income by
investing primarily in common stocks of well established growth companies.(8c)
Investment Advisers for each of the Funds:
(1) Aeltus Investment Management, Inc.
(a) Bradley, Foster & Sargent, Inc. (subadviser)
(2) AIM Advisors, 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) OppenheimerFunds, Inc.
(8) Aetna Life Insurance and Annuity Company (adviser);
(a) Massachusetts Financial Services Company (subadviser)
(b) Scudder Kemper Investments, Inc. (subadviser)
(c) T. Rowe Price Associates, Inc. (subadviser)
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Appendix V
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE I
FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.75%
(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, 1998 (as applicable), is derived from
the financial statements of the separate account, which have been audited by
, independent auditors. The financial statements and the independent
auditors' report thereon for the year ended December 31, 1998 are included in
the Statement of Additional Information. The accumulation unit values and the
percentage change in the value of an accumulation unit reflect a mortality and
expense risk charge of 1.25% until February 23, 1996, when the mortality and
expense risk charge was reduced to 0.75% during the accumulation phase. It will
increase to 1.25% during the income phase.
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------- -------------- ---------------- -----------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.535 $ 13.055 $ 10.652 $ 10.000(2)
Value at end of period $ 15.535 $ 13.055 $ 10.652
Increase (decrease) in value of
accumulation unit(1) 19.00% 22.56% 6.52%
Number of accumulation units
outstanding at end of period 90,134 35,959 16,791
AETNA BALANCED VP, INC
Value at beginning of period $19.166 $ 15.765 $ 13.803 $ 10.971
Value at end of period $ 19.166 $ 15.765 $ 13.803
Increase (decrease) in value of
accumulation unit(1) 21.57% 14.22% 25.81%
Number of accumulation units
outstanding at end of period 1,970,116 2,141,189 6,430,772
AETNA BOND VP
Value at beginning of period $13.486 $ 12.546 $ 12.212 $ 10.457
Value at end of period $ 13.486 $ 12.546 $ 12.212
Increase (decrease) in value of
accumulation unit(1) 7.49% 2.74% 16.78%
Number of accumulation units
outstanding at end of period 1,921,538 2,206,334 4,853,662
AETNA CROSSROADS VP
Value at beginning of period $14.566 $ 12.483 $ 10.594 $ 10.000(2)
Value at end of period $ 14.566 $ 12.483 $ 10.594
Increase(decrease) in value of
accumulation unit(1) 16.69% 17.83% 5.94%
Number of accumulation units
outstanding at end of period 100,256 26,260 16,953
AETNA GROWTH VP
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
AETNA GROWTH AND
INCOME VP
Value at beginning of period $22.233 $ 17.246 $ 13.972 $ 10.698
Value at end of period $ 22.233 $ 17.246 $ 13.972
Increase (decrease) in value of
accumulation unit(1) 28.92% 23.43% 30.61%
Number of accumulation units
outstanding at end of period 14,879,862 14,930,380 30,554,957
AETNA HIGH YIELD VP
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
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.538 $ 10.940 $ 10.000(7)
Value at end of period $ 14.538 $ 10.940
Increase (decrease) in value of
accumulation unit(1) 32.89% 9.40%(9)
Number of accumulation units
outstanding at end of period 485,417 72,973
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
---------------- ------------ ---------------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
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
AETNA BALANCED VP, INC
Value at beginning of period $ 11.164 $ 10.286 $ 12.717 $ 10.882 $ 10.423 $ 10.000(4)
Value at end of period $ 10.971 $ 11.164 $ 10.286(3) $ 12.717 $ 10.882 $ 10.423
Increase (decrease) in value of
accumulation unit(1) (1.73)% 8.54% (3) 16.86% 4.40% 4.23%
Number of accumulation units
outstanding at end of period 3,541,703 318,711 6,537 1,324,822 984,798 639,219
AETNA BOND VP
Value at beginning of period $ 11.006 $ 10.160 $ 37.815 $ 32.066 $ 29.752 $ 26.291
Value at end of period $ 10.457 $ 11.006 $ 10.160(5) $ 37.815 $ 32.066 $ 29.752
Increase (decrease) in value of
accumulation unit(1) (4.99)% 8.33% (5) 17.93% 7.78% 13.16%
Number of accumulation units
outstanding at end of period 1,988,960 166,913 4,196 427,893 358,454 366,176
AETNA CROSSROADS VP
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
AETNA GROWTH VP
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
AETNA GROWTH AND
INCOME VP
Value at beginning of period $ 10.940 $ 10.378 $ 84.249 $ 67.496 $ 66.174 $ 51.900
Value at end of period $ 10.698 $ 10.940 $ 10.378(6) $ 84.249 $ 67.496 $ 66.174
Increase (decrease) in value of
accumulation unit(1) (2.21)% 5.41% (6) 24.82% 2.00% 27.50%
Number of accumulation units
outstanding at end of period 11,117,383 879,670 3,107 908,777 810,126 831,547
AETNA HIGH YIELD VP
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
AETNA INDEX PLUS LARGE
CAP VP
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
</TABLE>
45
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
AETNA INDEX PLUS MID
CAP VP
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
AETNA INDEX PLUS SMALL
CAP VP
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
AETNA INTERNATIONAL VP
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
AETNA LEGACY VP
Value at beginning of period $13.441 $ 11.826 $ 10.443 $ 10.000(8)
Value at end of period $ 13.441 $ 11.826 $ 10.443
Increase (decrease) in value of
accumulation unit(1) 13.65% 13.25% 4.43%
Number of accumulation units
outstanding at end of period 54,849 7,510 2,222
AETNA MONEY MARKET VP
Value at beginning of period $12.041 $ 11.502 $ 11.007 $ 10.509
Value at end of period $ 12.041 $ 11.502 $ 11.007
Increase (decrease) in value of
accumulation unit(1) 4.69% 4.50% 4.75%
Number of accumulation units
outstanding at end of period 2,066,545 2,421,519 4,354,272
AETNA REAL ESTATE
SECURITIES VP
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
AETNA SMALL
COMPANY VP
Value at beginning of period $13.704 $ 13.211
Value at end of period $ 13.704
Increase (decrease) in value of
accumulation unit(1) 3.73%(10)
Number of accumulation units
outstanding at end of period 2,408
AETNA VALUE
OPPORTUNITY VP
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 SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $17.944 $ 15.056 $ 13.480 $ 10.518
Value at end of period $ 17.944 $ 15.056 $ 13.480
Increase (decrease) in value of
accumulation unit(1) 19.18% 11.69% 28.17%
Number of accumulation units
outstanding at end of period 31,512 33,352 25,730
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $15.930 $ 12.529 $ 11.054 $ 10.000(2)
Value at end of period $ 15.930 $ 12.529 $ 11.054
Increase (decrease) in value of
accumulation unit(1) 27.15% 13.34% 10.54%
Number of accumulation units
outstanding at end of period 744,774 544,657 294,244
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
-------------- ------------ ------------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
AETNA INDEX PLUS MID
CAP VP
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
AETNA INDEX PLUS SMALL
CAP VP
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
AETNA INTERNATIONAL VP
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
AETNA LEGACY VP
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
AETNA MONEY MARKET VP
Value at beginning of period $ 10.223 $ 10.031 $ 34.122 $ 32.431 $ 30.285 $ 28.029
Value at end of period $ 10.509 $ 10.223 $ 10.031(9) $ 34.122 $ 32.431 $ 30.285
Increase (decrease) in value of
accumulation unit(1) 2.79% 1.91% (9) 5.21% 7.09% 8.05%
Number of accumulation units
outstanding at end of period 1,822,449 90,782 2,808 548,425 722,438 653,619
AETNA REAL ESTATE
SECURITIES VP
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
AETNA SMALL
COMPANY VP
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
AETNA VALUE
OPPORTUNITY VP
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 SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $ 11.010 $ 10.296 $ 10.000(11)
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
FIDELITY VIP EQUITY-
INCOME 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
</TABLE>
46
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------- ------------- ------------ ----------------
<S> <C> <C> <C> <C>
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $14.034 $ 11.451 $ 10.066 $ 10.000(2)
Value at end of period $ 14.034 $ 11.451 $ 10.066
Increase (decrease) in value of
accumulation unit(1) 22.56% 13.76% 0.66%
Number of accumulation units
outstanding at end of period 444,057 379,385 288,576
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $12.496 $ 11.286 $ 10.052 $ 10.000(2)
Value at end of period $ 12.496 $ 11.286 $ 10.052
Increase (decrease) in value of
accumulation unit(1) 10.72% 12.28% 0.52%
Number of accumulation units
outstanding at end of period 102,509 70,271 33,813
FIDELITY VIP II
CONTRAFUND PORTFOLIO
Value at beginning of period $15.517 $ 12.593 $ 10.468 $ 10.000(2)
Value at end of period $ 15.517 $ 12.593 $ 10.468
Increase (decrease) in value of
accumulation unit(1) 23.21% 20.31% 4.68%
Number of accumulation units
outstanding at end of period 710,711 569,561 379,862
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $15.554 $ 13.909 $ 12.992 $ 10.319
Value at end of period $ 15.554 $ 13.909 $ 12.992
Increase (decrease) in value of
accumulation unit(1) 11.82% 7.06% 25.91%
Number of accumulation units
outstanding at end of period 427,692 433,363 723,839
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $15.130 $ 12.484 $ 10.835 $ 10.000(2)
Value at end of period $ 15.130 $ 12.484 $ 10.835
Increase (decrease) in value of
accumulation unit(1) 21.19% 15.22% 8.35%
Number of accumulation units
outstanding at end of period 152,646 111,525 7,772
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.527 $ 13.096 $ 12.094 $ 9.886
Value at end of period $ 14.527 $ 13.096 $ 12.094
Increase (decrease) in value of
accumulation unit(1) 10.93% 8.29% 22.33%
Number of accumulation units
outstanding at end of period 97,715 73,340 84,048
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $15.558 $ 12.770 $ 10.870 $ 10.000(2)
Value at end of period $ 15.558 $ 12.770 $ 10.870
Increase (decrease) in value of
accumulation unit(1) 21.83% 17.47% 8.70%
Number of accumulation units
outstanding at end of period 197,548 144,443 26,022
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $16.901 $ 13.940 $ 10.893 $ 10.000(2)
Value at end of period $ 16.901 $ 13.940 $ 10.893
Increase (decrease) in value of
accumulation unit(1) 21.24% 27.97% 8.93%
Number of accumulation units
outstanding at end of period 1,273,110 803,488 227,582
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $14.025 $ 13.188 $ 10.479 $ 9.079
Value at end of period $ 14.025 $ 13.188 $ 10.479
Increase (decrease) in value of
accumulation unit(1) 6.35% 25.84% 15.42%
Number of accumulation units
outstanding at end of period 106,926 73,699 162,462
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
----------- ------------ ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
FIDELITY VIP 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 of period
FIDELITY VIP OVERSEAS
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
FIDELITY VIP II
CONTRAFUND 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 $ 10.000(12)
Value at end of period $ 10.319
Increase (decrease) in value of
accumulation unit(1) 3.19%
Number of accumulation units
outstanding at end of period 131,702
JANUS ASPEN 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 FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $ 10.000(12)
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
JANUS ASPEN 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 of period
JANUS ASPEN WORLDWIDE
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 of period
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $ 9.716 $ 10.000(13)
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
</TABLE>
47
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---------- ---------- -------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPPENHEIMER GLOBAL
SECURITIES FUND
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
OPPENHEIMER STRATEGIC
BOND FUND
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
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $15.361 $ 15.547
Value at end of period $ 15.361
Increase (decrease) in value of
accumulation unit(1) (1.20)%(10)
Number of accumulation units
outstanding at end of period 598,078
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $12.863 $ 13.110
Value at end of period $ 12.863
Increase (decrease) in value of
accumulation unit(1) (1.89)%(10)
Number of accumulation units
outstanding at end of period 462,383
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $21.541 $ 21.225
Value at end of period $ 21.541
Increase (decrease) in value of
accumulation unit(1) 1.49%(10)
Number of accumulation units
outstanding at end of period 164,474
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $18.070 $ 17.838
Value at end of period $ 18.070
Increase (decrease) in value of
accumulation unit(1) 1.30%(10)
Number of accumulation units
outstanding at end of period 280,633
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.534 $ 14.237
Value at end of period $ 14.534
Increase (decrease) in value of
accumulation unit(1) 2.09%(10)
Number of accumulation units
outstanding at end of period 360,615
</TABLE>
- -----------------
(1) The above figures are calculated by subtracting the beginning accumulation
unit value from the ending accumulation unit value, and dividing the
result by the beginning accumulation unit value. These figures do not
reflect the early withdrawal charges or the fixed dollar annual
maintenance fee, if any. Inclusion of these charges would reduce the
investment results shown.
(2) Reflects less than a full year of performance activity. The initial
accumulation unit value was established at $10.000 during August 1995,
when the fund became available under the contract.
(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 $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%.
(4) The initial accumulation unit value was established at $10.000 on June 23,
1989, the date on which the fund commenced operations.
48
<PAGE>
(5) 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%.
(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 $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%.
(7) Reflects less than a full year of performance activity. The initial
accumulation unit value was established at $10,000 during September 1996
when the portfolio became available under the contract.
(8) Reflects less than a full year of performance activity. The initial
accumulation unit value was established at $10.000 during September 1995,
when the fund became available under the contract.
(9) 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%.
(10) Reflects less than a full year of performance activity. Funds were first
received in this option during November 1997.
(11) 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.
(12) The initial accumulation unit value was established at $10.000 during
October 1994, when the funds were first received in this option.
(13) 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.
49
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE II
FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.25%
(Selected data for accumulation units outstanding throughout each period)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The condensed financial information presented below for each of the periods in
the ten-year period ended December 31, 1998 (as applicable), is derived from
the financial statements of the separate account, which have been audited by
, independent auditors. The financial statements and the independent
auditors' report thereon for the year ended December 31, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------- -------------------- ---------------- -----------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.392 $ 12.999 $ 10.652 $ 10.000(2)
Value at end of period $ 15.392 $ 12.999 $ 10.652
Increase (decrease) in value of
accumulation unit(1) 18.40% 22.04% 6.52%
Number of accumulation units
outstanding at end of period 317,579 99,589 16,791
AETNA BALANCED VP, INC
Value at beginning of period $18.989 $ 15.698 $ 13.803 $ 10.971
Value at end of period $ 18.989 $ 15.698 $ 13.803
Increase (decrease) in value of
accumulation unit(1) 20.96% 13.73% 25.81%
Number of accumulation units
outstanding at end of period 3,174,738 3,885,730 6,430,772
AETNA BOND VP
Value at beginning of period $13.361 $ 12.493 $ 12.212 $ 10.457
Value at end of period $ 13.361 $ 12.493 $ 12.212
Increase (decrease) in value of
accumulation unit(1) 6.96% 2.30% 16.78%
Number of accumulation units
outstanding at end of period 1,168,988 1,947,629 4,853,662
AETNA CROSSROADS VP
Value at beginning of period $14.432 $ 12.430 $ 10.594 $ 10.000(2)
Value at end of period $ 14.432 $ 12.430 $ 10.594
Increase (decrease) in value of
accumulation unit(1) 16.11% 17.32% 5.94%
Number of accumulation units
outstanding at end of period 175,559 74,128 16,953
AETNA GROWTH VP
Value at beginning of period $13.173 $ 14.437
Value at end of period $ 13.173
Increase (decrease) in value of
accumulation unit(1) (8.75)%(6)
Number of accumulation units
outstanding at end of period 2,695
AETNA GROWTH AND
INCOME VP
Value at beginning of period $22.028 $ 17.173 $ 13.972 $ 10.698
Value at end of period $ 22.028 $ 17.173 $ 13.972
Increase (decrease) in value of
accumulation unit(1) 28.27% 22.91% 30.61%
Number of accumulation units
outstanding at end of period 10,689,845 15,372,944 30,554,957
AETNA HIGH YIELD VP
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
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.444 $ 10.924 $ 10.000(8)
Value at end of period $ 14.444 $ 10.924
Increase (decrease) in value of
accumulation unit(1) 32.23% 9.24%
Number of accumulation units
outstanding at end of period 266,429 89,498
AETNA INDEX PLUS MID
CAP VP
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
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
---------------- ------------ ---------------- ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
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
AETNA BALANCED VP, INC
Value at beginning of period $ 11.164 $ 10.286 $ 12.717 $ 10.882 $ 10.423 $ 10.000(4)
Value at end of period $ 10.971 $ 11.164 $ 10.286(3) $ 12.717 $ 10.882 $ 10.423
Increase (decrease) in value of
accumulation unit(1) (1.73)% 8.54% (3) 16.86% 4.40% 4.23%
Number of accumulation units
outstanding at end of period 3,541,703 318,711 6,537 1,324,822 984,798 639,219
AETNA BOND VP
Value at beginning of period $ 11.006 $ 10.160 $ 37.815 $ 32.066 $ 29.752 $ 26.291
Value at end of period $ 10.457 $ 11.006 $ 10.160(5) $ 37.815 $ 32.066 $ 29,752
Increase (decrease) in value of
accumulation unit(1) (4.99)% 8.33% (5) 17.93% 7.78% 13.16%
Number of accumulation units
outstanding at end of period 1,988,960 166,913 4,196 427,893 358,454 366,176
AETNA CROSSROADS VP
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
AETNA GROWTH VP
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
AETNA GROWTH AND
INCOME VP
Value at beginning of period $ 10.940 $ 10.378 $ 84.249 $ 67.496 $ 66.174 $ 51.900
Value at end of period $ 10.698 $ 10.940 $ 10.378(7) $ 84.249 $ 67.496 $ 66.174
Increase (decrease) in value of
accumulation unit(1) (2.21)% 5.41% (7) 24.82% 2.00% 27.50%
Number of accumulation units
outstanding at end of period 11,117,383 879,670 3,107 908,777 810,126 831,547
AETNA HIGH YIELD VP
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
AETNA INDEX PLUS LARGE
CAP VP
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
AETNA INDEX PLUS MID
CAP VP
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
</TABLE>
50
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------- --------------- ------------- -----------------
<S> <C> <C> <C> <C>
AETNA INDEX PLUS SMALL
CAP VP
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
AETNA INTERNATIONAL VP
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
AETNA LEGACY VP
Value at beginning of period $13.317 $ 11.776 $ 10.443 $ 10.000(2)
Value at end of period $ 13.317 $ 11.776 $ 10.443
Increase (decrease) in value of
accumulation unit(1) 13.08 12.76% 4.43%
Number of accumulation units
outstanding at end of period 133,741 25,977 2,222
AETNA MONEY MARKET VP
Value at beginning of period $11.930 $ 11.453 $ 11.007 $ 10.509
Value at end of period $ 11.930 $ 11.453 $ 11.007
Increase (decrease) in value of
accumulation unit 4.16% 4.05% 4.73%
Number of accumulation units
outstanding at end of period 974,714 1,984,269 4,354,272
AETNA REAL ESTATE
SECURITIES VP
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
AETNA SMALL
COMPANY VP
Value at beginning of period $13.654 $ 13.503
Value at end of period $ 13.654
Increase (decrease) in value of
accumulation unit(1) 1.12%(6)
Number of accumulation units
outstanding at end of period 17,392
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $13.261 $ 12.904
Value at end of period $ 13.261
Increase (decrease) in value of
accumulation unit(1) 2.77%(6)
Number of accumulation units
outstanding at end of period 6,194
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $17.779 $ 14.992 $ 13.480 $ 10.518
Value at end of period $ 17.779 $ 14.992 $ 13.480
Increase (decrease) in value of
accumulation unit(1) 18.59% 11.22% 28.17%
Number of accumulation units
outstanding at end of period 20,122 6,303 25,730
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $15.784 $ 12.475 $ 11.054 $ 10.000(2)
Value at end of period $ 15.784 $ 12.475 $ 11.054
Increase (decrease) in value of
accumulation unit(1) 26.53% 12.86% 10.54%
Number of accumulation units
outstanding at end of period 328,562 208,072 294,244
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $13.904 $ 11.402 $ 10.066 $ 10.000(2)
Value at end of period $ 13.904 $ 11.402 $ 10.066
Increase (decrease) in value of
accumulation unit(1) 21.95% 13.27% 0.66%
Number of accumulation units
outstanding at end of period 229,060 199,720 288,576
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
-------------- ------------ ------------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
AETNA INDEX PLUS SMALL
CAP VP
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
AETNA INTERNATIONAL VP
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
AETNA LEGACY VP
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
AETNA MONEY MARKET VP
Value at beginning of period $ 10.223 $ 10.031 $ 34.122 $ 32.431 $ 30.285 $ 28.029
Value at end of period $ 10.509 $ 10.223 $ 10.031(9) $ 34.122 $ 32.431 $ 30.285
Increase (decrease) in value of
accumulation unit 2.79% 1.91% (9) 5.21% 7.09% 8.05%
Number of accumulation units
outstanding at end of period 1,822,449 90,782 2,808 548,425 722,438 653,619
AETNA REAL ESTATE
SECURITIES VP
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
AETNA SMALL
COMPANY VP
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
AETNA VALUE
OPPORTUNITY VP
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 SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $ 11.010 $ 10.296 $ 10.000(10)
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
FIDELITY VIP EQUITY-
INCOME 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
FIDELITY VIP 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 of period
</TABLE>
51
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------- ------------ ------------ ----------------
<S> <C> <C> <C> <C>
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $12.381 $ 11.238 $ 10.052 $ 10.000(2)
Value at end of period $ 12.381 $ 11.238 $ 10.052
Increase (decrease) in value of
accumulation unit(1) 10.17% 11.80% 0.52%
Number of accumulation units
outstanding at end of period 51,781 38,994 33,813
FIDELITY VIP II
CONTRAFUND PORTFOLIO
Value at beginning of period $15.374 $ 12.540 $ 10.468 $ 10.000(2)
Value at end of period $ 15.374 $ 12.540 $ 10.468
Increase (decrease) in value of
accumulation unit(1) 22.60% 19.79% 4.68%
Number of accumulation units
outstanding at end of period 465,699 273,189 379,862
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $15.410 $ 13.850 $ 12.992 $ 10.319
Value at end of period $ 15.410 $ 13.850 $ 12.992
Increase (decrease) in value of
accumulation unit(1) 11.26% 6.60% 25.91%
Number of accumulation units
outstanding at end of period 469,230 590,904 723,839
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $14.990 $ 12.431 $ 10.835 $ 10.000(2)
Value at end of period $ 14.990 $ 12.431 $ 10.835
Increase (decrease) in value of
accumulation unit(1) 20.58% 14.73% 8.35%
Number of accumulation units
outstanding at end of period 193,429 74,184 7,772
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.393 $ 13.040 $ 12.094 $ 9.886
Value at end of period $ 14.393 $ 13.040 $ 12.094
Increase (decrease) in value of
accumulation unit(1) 10.37% 7.83% 22.33%
Number of accumulation units
outstanding at end of period 109,812 96,128 84,048
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $15.414 $ 12.716 $ 10.870 $ 10.000(2)
Value at end of period $ 15.414 $ 12.716 $ 10.870
Increase (decrease) in value of
accumulation unit(1) 21.22% 16.98% 8.70%
Number of accumulation units
outstanding at end of period 179,226 132,465 26,022
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $16.745 $ 13.880 $ 10.893 $ 10.000(2)
Value at end of period $ 16.745 $ 13.880 $ 10.893
Increase (decrease) in value of
accumulation unit(1) 20.64% 27.43% 8.93%
Number of accumulation units
outstanding at end of period 953,522 520,275 227,582
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $13.896 $ 13.132 $ 10.479 $ 9.079
Value at end of period $ 13.896 $ 13.132 $ 10.479
Increase (decrease) in value of
accumulation unit(1) 5.82% 25.31% 15.42%
Number of accumulation units
outstanding at end of period 149,149 115,869 162,462
OPPENHEIMER GLOBAL
SECURITIES FUND
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
</TABLE>
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
FIDELITY VIP OVERSEAS
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
FIDELITY VIP II
CONTRAFUND 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 $ 10.000(11)
Value at end of period $ 10.319
Increase (decrease) in value of
accumulation unit(1) 3.19%
Number of accumulation units
outstanding at end of period 131,702
JANUS ASPEN 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 FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $ 10.000(11)
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
JANUS ASPEN 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 of period
JANUS ASPEN WORLDWIDE
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 of period
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $ 9.716 $ 10.000(12)
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
OPPENHEIMER GLOBAL
SECURITIES FUND
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
</TABLE>
52
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
--------- ----------- --------- -------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPPENHEIMER STRATEGIC
BOND FUND
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
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $15.219 $ 15.411
Value at end of period $ 15.219
Increase (decrease) in value of
accumulation unit(1) (1.24)%(6)
Number of accumulation units
outstanding at end of period 742,913
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $12.744 $ 12.995
Value at end of period $ 12.744
Increase (decrease) in value of
accumulation unit(1) (1.93)%(6)
Number of accumulation units
outstanding at end of period 664,979
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $21.343 $ 21.038
Value at end of period $ 21.343
Increase (decrease) in value of
accumulation unit(1) 1.45%(6)
Number of accumulation units
outstanding at end of period 296,540
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $17.903 $ 17.682
Value at end of period $ 17.903
Increase (decrease) in value of
accumulation unit(1) 1.25%(6)
Number of accumulation units
outstanding at end of period 411,600
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.400 $ 14.112
Value at end of period $ 14.400
Increase (decrease) in value of
accumulation unit(1) 2.04%(6)
Number of accumulation units
outstanding at end of period 231,297
</TABLE>
- -----------------
(1) The above figures are calculated by subtracting the beginning accumulation
unit value from the ending accumulation unit value, and dividing the
result by the beginning accumulation unit value. These figures do not
reflect the early withdrawal charges or the fixed dollar annual
maintenance fee, if any. Inclusion of these charges would reduce the
investment results shown.
(2) The initial accumulation unit value was established at $10.000 during
August 1995, when the fund became available under the contract.
(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 $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%.
(4) The initial accumulation unit value was established at $10.000 on June 23,
1989, the date on which the fund commenced operations.
(5) 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%.
53
<PAGE>
(6) Reflects less than a full year of performance activity. Funds were first
received in this option during November 1997.
(7) 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%.
(8) The initial accumulation unit value was established at $10.000 during
September 1996, when the portfolio became available under the contract.
(9) 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%.
(10) 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.
(11) The initial accumulation unit value was established at $10.000 during
October 1994, when the funds were first received in this option.
(12) 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.
54
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE III
FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.50%
INCLUDING A 0.25% ADMINISTRATIVE EXPENSE CHARGE BEGINNING APRIL 7, 1997
(Selected data for accumulation units outstanding throughout each period)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The condensed financial information presented below for each of the periods in
the two-year period ended December 31, 1998 (as applicable), is derived from
the financial statements of the separate account, which have been audited by
, independent auditors. The financial statements and the independent
auditors' report thereon for the year ended December 31, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997
---------- ----------------
<S> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.364 $ 12.994
Value at end of period $ 15.364
Increase (decrease) in value of accumulation unit(1) 18.24%(2)
Number of accumulation units outstanding at end of period 911
AETNA BALANCED VP, INC
Value at beginning of period $18.954 $ 15.823
Value at end of period $ 18.954
Increase (decrease) in value of accumulation unit(1) 19.79%(2)
Number of accumulation units outstanding at end of period 25,112
AETNA BOND VP
Value at beginning of period $13.337 $ 12.417
Value at end of period $ 13.337
Increase (decrease) in value of accumulation unit(1) 7.41%(2)
Number of accumulation units outstanding at end of period 36,018
AETNA CROSSROADS VP
Value at beginning of period $14.406 $ 12.428
Value at end of period $ 14.406
Increase (decrease) in value of accumulation unit(1) 15.91%(2)
Number of accumulation units outstanding at end of period 7,855
AETNA GROWTH VP
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
AETNA GROWTH AND INCOME VP
Value at beginning of period $21.988 $ 17.728
Value at end of period $ 21.988
Increase (decrease) in value of accumulation unit(1) 24.03%(2)
Number of accumulation units outstanding at end of period 188,162
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $14.418 $ 11.345
Value at end of period $ 14.418
Increase (decrease) in value of accumulation unit(1) 27.09%(2)
Number of accumulation units outstanding at end of period 11,672
AETNA INDEX PLUS MID CAP VP
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
AETNA INDEX PLUS SMALL CAP VP
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
AETNA LEGACY VP
Value at beginning of period $13.292 $ 12.076
Value at end of period $ 13.292
Increase (decrease) in value of accumulation unit(1) 10.07%(3)
Number of accumulation units outstanding at end of period 397
AETNA MONEY MARKET VP
Value at beginning of period $11.908 $ 11.572
Value at end of period $ 11.908
Increase (decrease) in value of accumulation unit(1) 2.91%(2)
Number of accumulation units outstanding at end of period 23,882
AETNA SMALL COMPANY VP
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
</TABLE>
55
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---------- ------------------
<S> <C> <C>
AETNA VALUE OPPORTUNITY VP
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
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $15.755 $ 12.668
Value at end of period $ 15.755
Increase (decrease) in value of accumulation unit(1) 24.37%(2)
Number of accumulation units outstanding at end of period 9,385
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $13.879 $ 11.373
Value at end of period $ 13.879
Increase (decrease) in value of accumulation unit(1) 22.03%(2)
Number of accumulation units outstanding at end of period 8,432
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $12.358 $ 11.356
Value at end of period $ 12.358
Increase (decrease) in value of accumulation unit(1) 8.83%(2)
Number of accumulation units outstanding at end of period 2,264
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $15.346 $ 12.473
Value at end of period $ 15.346
Increase (decrease) in value of accumulation unit(1) 23.04%(2)
Number of accumulation units outstanding at end of period 19,168
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $15.382 $ 12.282
Value at end of period $ 15.382
Increase (decrease) in value of accumulation unit(1) 25.24%(2)
Number of accumulation units outstanding at end of period 10,357
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $14.963 $ 12.742
Value at end of period $ 14.963
Increase (decrease) in value of accumulation unit(1) 17.43%(2)
Number of accumulation units outstanding at end of period 7,255
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $14.367 $ 13.043
Value at end of period $ 14.367
Increase (decrease) in value of accumulation unit(1) 10.15%(2)
Number of accumulation units outstanding at end of period 2,833
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $15.386 $ 12.975
Value at end of period $ 15.386
Increase (decrease) in value of accumulation unit(1) 18.58%(2)
Number of accumulation units outstanding at end of period 3,305
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $16.714 $ 14.460
Value at end of period $ 16.714
Increase (decrease) in value of accumulation unit(1) 15.59%(2)
Number of accumulation units outstanding at end of period 23,481
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $13.870 $ 12.300
Value at end of period $ 13.870
Increase (decrease) in value of accumulation unit(1) 12.77%(2)
Number of accumulation units outstanding at end of period 4,339
OPPENHEIMER GLOBAL SECURITIES FUND
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
OPPENHEIMER STRATEGIC BOND FUND
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
PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $15.192 $ 15.386
Value at end of period $ 15.192
Increase (decrease) in value of accumulation unit(1) (1.26)%(4)
Number of accumulation units outstanding at end of period 11,491
PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO
Value at beginning of period $12.721 $ 12.975
Value at end of period $ 12.721
Increase (decrease) in value of accumulation unit(1) (1.95)(4)
Number of accumulation units outstanding at end of period 17,743
</TABLE>
56
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---------- ------------------
<S> <C> <C>
PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO
Value at beginning of period $21.304 $ 21.005
Value at end of period $ 21.304
Increase (decrease) in value of accumulation unit(1) (1.42)%(4)
Number of accumulation units outstanding at end of period 2,468
PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $17.870 $ 17.653
Value at end of period $ 17.870
Increase (decrease) in value of accumulation unit(1) 1.23%(4)
Number of accumulation units outstanding at end of period 4,502
PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $14.374 $ 14.090
Value at end of period $ 14.374
Increase (decrease) in value of accumulation unit(1) 2.02%(4)
Number of accumulation units outstanding at end of period 14,429
</TABLE>
- -----------------
(1) The above figures are calculated by subtracting the beginning accumulation
unit value from the ending accumulation unit value, and dividing the
result by the beginning accumulation unit value. These figures do not
reflect the early withdrawal charges or the fixed dollar annual
maintenance fee, if any. Inclusion of these charges would reduce the
investment results shown.
(2) Reflects less than a full year of performance activity. Funds were first
received in this option during April 1997.
(3) Reflects less than a full year of performance activity. Funds were first
received in this option during May 1997.
(4) Reflects less than a full year of performance activity. Funds were first
received in this option during November 1997.
57
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE IV
FOR CONTRACTS CONTAINING LIMITS ON FEES
(Selected data for accumulation units outstanding throughout each period)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The condensed financial information presented below for each of the periods in
the two-year period ended December 31, 1998 (as applicable), is derived from
the financial statements of the separate account, which have been audited by
, independent auditors. The financial statements and the independent
auditors' report thereon for the year ended December 31, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997
---------- --------------------
<S> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.422 $ 13.943
Value at end of period $ 15.422
Increase (decrease) in value of accumulation unit(1) 10.61%(2)
Number of accumulation units outstanding at end of period 23,868
AETNA BALANCED VP, INC
Value at beginning of period $19.016 $ 16.898
Value at end of period $ 19.016
Increase (decrease) in value of accumulation unit(1) 12.53%(2)
Number of accumulation units outstanding at end of period 477,504
AETNA BOND VP
Value at beginning of period $13.373 $ 12.747
Value at end of period $ 13.373
Increase (decrease) in value of accumulation unit(1) 4.91%(2)
Number of accumulation units outstanding at end of period 489,431
AETNA CROSSROADS VP
Value at beginning of period $14.461 $ 13.178
Value at end of period $ 14.461
Increase (decrease) in value of accumulation unit(1) 9.74%(2)
Number of accumulation units outstanding at end of period 10,798
AETNA GROWTH AND INCOME VP
Value at beginning of period $22.060 $ 19.527
Value at end of period $ 22.060
Increase (decrease) in value of accumulation unit(1) 12.97%(2)
Number of accumulation units outstanding at end of period 4,106,796
AETNA LEGACY VP
Value at beginning of period $13.343 $ 12.335
Value at end of period $ 13.343
Increase (decrease) in value of accumulation unit(1) 8.18%(2)
Number of accumulation units outstanding at end of period 2,254
AETNA MONEY MARKET VP
Value at beginning of period $11.930 $ 11.654
Value at end of period $ 11.930
Increase (decrease) in value of accumulation unit(1) 2.37%(2)
Number of accumulation units outstanding at end of period 580,412
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $15.784 $ 14.017
Value at end of period $ 15.784
Increase (decrease) in value of accumulation unit(1) 12.60%(2)
Number of accumulation units outstanding at end of period 35,342
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $13.904 $ 12.498
Value at end of period $ 13.904
Increase (decrease) in value of accumulation unit(1) 11.26%(2)
Number of accumulation units outstanding at end of period 3,029
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $15.374 $ 13.535
Value at end of period $ 15.374
Increase (decrease) in value of accumulation unit(1) 13.59%(2)
Number of accumulation units outstanding at end of period 13,675
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $15.410 $ 13.806
Value at end of period $ 15.410
Increase (decrease) in value of accumulation unit(1) 11.62%(2)
Number of accumulation units outstanding at end of period 19,818
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $14.990 $ 13.554
Value at end of period $ 14.990
Increase (decrease) in value of accumulation unit(1) 10.60%(2)
Number of accumulation units outstanding at end of period 2,819
JANUS ASPEN FLEXIBLE INCOME 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
</TABLE>
58
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
---------- ------------------
<S> <C> <C>
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $15.414 $ 13.985
Value at end of period $ 15.414
Increase (decrease) in value of accumulation unit(1) 10.22%(2)
Number of accumulation units outstanding at end of period 750
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $16.745 $ 15.851
Value at end of period $ 16.745
Increase (decrease) in value of accumulation unit(1) 5.64%(2)
Number of accumulation units outstanding at end of period 44,433
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $13.896 $ 13.610
Value at end of period $ 13.896
Increase (decrease) in value of accumulation unit(1) 2.10%(2)
Number of accumulation units outstanding at end of period 1,753
PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $15.219 $ 15.411
Value at end of period $ 15.219
Increase (decrease) in value of accumulation unit(1) (1.24)%(3)
Number of accumulation units outstanding at end of period 11,848
PORTFOLIO PARTNERS MFS RESEARCH GROWTH PORTFOLIO
Value at beginning of period $12.744 $ 12.995
Value at end of period $ 12.744
Increase (decrease) in value of accumulation unit(1) (1.93)%(3)
Number of accumulation units outstanding at end of period 141,582
PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO
Value at beginning of period $21.343 $ 21.038
Value at end of period $ 21.343
Increase (decrease) in value of accumulation unit(1) (1.45)%(3)
Number of accumulation units outstanding at end of period 8,563
PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $17.903 $ 17.682
Value at end of period $ 17.903
Increase (decrease) in value of accumulation unit(1) 1.25%(3)
Number of accumulation units outstanding at end of period 3,986
PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $14.400 $ 14.112
Value at end of period $ 14.400
Increase (decrease) in value of accumulation unit(1) 2.04%(3)
Number of accumulation units outstanding at end of period 3,310
</TABLE>
- -----------------
(1) The above figures are calculated by subtracting the beginning accumulation
unit value from the ending accumulation unit value, and dividing the
result by the beginning accumulation unit value. These figures do not
reflect the early withdrawal charges or the fixed dollar annual
maintenance fee, if any. Inclusion of these charges would reduce the
investment results shown.
(2) Reflects less than a full year of performance activity. Funds were first
received in this option during June 1997.
(3) Reflects less than a full year of performance activity. Funds were first
received in this option during November 1997.
59
<PAGE>
For Master Applications Only
- --------------------------------------------------------------------------------
I hereby acknowledge receipt of an Account B Group Deferred Variable Prospectus
dated May 3, 1999 for 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.
SAI.75996-99) dated May 3, 1999.
- --------------------------------------------------------------------------------
CONTRACT HOLDER' S SIGNATURE
- --------------------------------------------------------------------------------
DATE
PROS.75996-99
60
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT B
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------------------------------------------
Statement of Additional Information dated May 3, 1999
Group Variable Annuity Contracts for Employer-Sponsored
Deferred Compensation Plans
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 3, 1999.
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
<TABLE>
<CAPTION>
Page
<S> <C>
General Information and History........................................... 2
Variable Annuity Account B................................................ 2
Offering and Purchase of Contracts........................................ 3
Performance Data.......................................................... 3
General............................................................. 3
Average Annual Total Return Quotations.............................. 4
Income Phase Payments..................................................... 8
Sales Material and Advertising............................................ 9
Independent Auditors...................................................... 9
Financial Statements of the Separate Account.............................. S-1
Financial Statements of Aetna Life Insurance and Annuity Company.......... F-1
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Life Insurance and Annuity Company (the "Company," we, us, our) 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, 1998, the Company
(ALIAC) had $___ billion invested through its products, including $___ billion
in its separate accounts (of which the Company or an affiliate oversees the
management of $___ billion) and $___ billion in its mutual funds offered outside
of its separate accounts. The Company is ranked among the top __% of all U.S.
life insurance companies based on assets as of December 31, 1997. The Company is
an indirect wholly owned subsidiary of Aetna Inc. The Company is engaged in the
business of issuing life insurance policies and annuity contracts. Our 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 a registered investment adviser under the
Investment Advisers Act of 1940, and a registered broker-dealer under the
Securities Exchange Act of 1934. We provide 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 charge and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the separate account are borne by the Company. See "Fees" in the prospectus. We
receive reimbursement for certain administrative costs from some advisers of the
funds used as funding options under the contract. These fees generally range up
to 0.425%.
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.
From this point forward, the term "contract(s)" refers only to those offered
through the prospectus.
VARIABLE ANNUITY ACCOUNT B
Variable Annuity Account B 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.
Payments to accounts under the contract may be allocated to one or more of the
subaccounts. Each subaccount invests in the shares of only one of the funds
listed below. We may make additions to, deletions from or substitutions of
available investment options as permitted by law and subject to the conditions
of the contract. 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.
2
<PAGE>
The funds currently available under the contract are as follows:
o Aetna Ascent VP
o Aetna Balanced VP, Inc.
o Aetna Income Shares d/b/a Aetna Bond VP
o Aetna Crossroads VP
o Aetna Growth VP
o Aetna Variable Fund d/b/a Aetna Growth and Income VP
o Aetna High Yield VP
o Aetna Index Plus Large Cap VP
o Aetna Index Plus Mid Cap VP
o Aetna Index Plus Small Cap VP
o Aetna International VP
o Aetna Legacy VP
o Aetna Variable Encore Fund d/b/a Aetna Money Market VP
o Aetna Real Estate Securities VP
o Aetna Small Company VP
o Aetna Value Opportunity VP
o AIM V.I. Capital Appreciation Fund
o AIM V.I. Growth Fund
o AIM V.I. Growth and Income Fund
o AIM V.I. Value Fund
o Calvert Social Balanced Portfolio
o Fidelity VIP Equity-Income Portfolio
o Fidelity VIP Growth Portfolio
o Fidelity VIP Overseas Portfolio
o Fidelity VIP II Contrafund Portfolio
o Janus Aspen Aggressive Growth Portfolio
o Janus Aspen Balanced Portfolio
o Janus Aspen Flexible Income Portfolio
o Janus Aspen Growth Portfolio
o Janus Aspen Worldwide Growth Portfolio
o Lexington Natural Resources Trust*
o Oppenheimer Global Securities Fund
o Oppenheimer Strategic Bond Fund
o Portfolio Partners MFS Emerging Equities Portfolio
o Portfolio Partners MFS Research Growth Portfolio
o Portfolio Partners MFS Value Equity Portfolio
o Portfolio Partners Scudder International Growth Portfolio
o Portfolio Partners T. Rowe Price Growth Equity Portfolio
* Transfers or deposits are not allowed into the subaccount investing in this
fund, except from accounts established under the contract before May 1, 1998.
As soon as all those who have current allocations to the subaccount under the
contract have redirected their allocations to other investment options, we will
close the subaccount to all investments.
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. We offer 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 "Contract Ownership and Rights" and "Your Account Value."
PERFORMANCE DATA
GENERAL
From time to time, we may advertise different types of historical performance
for the subaccounts of the separate account available under the contracts. We
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 payment of $1,000 is
applied to the various subaccounts under the contract, and then related to the
ending redeemable values over one, five and ten year periods (or fractional
periods thereof). The redeemable value is then divided by the initial investment
and this quotient is taken to the Nth root (N represents the number of years in
the period) and 1 is subtracted from the result which is then expressed as a
percentage, carried to at least the nearest hundredth of a percent. The
standardized figures use the actual returns of the fund since the date
contributions were first received in the fund under the separate account and
then adjust
3
<PAGE>
them to reflect the deduction of all recurring charges under the contracts
during each period (e.g., mortality and expense risk charges, maintenance fees,
administrative expense charges, and early withdrawal 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 total return
figures shown below may be different from the actual historical total return
under your contract because for periods prior to 1994, the subaccount's
investment performance was based on the performance of the underlying fund plus
any cash held by the subaccount.
The non-standardized figures will be calculated in a similar manner, except that
they will not reflect the deduction of any applicable early withdrawal charge,
and in some advertisements will also exclude the effect of the maintenance fee.
The deduction of the early withdrawal charge and the maintenance fee 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, and may include returns calculated from the fund's inception
date and/or the date contributions were first received in the fund under the
separate account. The non-standardized returns shown in the tables below reflect
the deduction of all charges under the contract except the early withdrawal
charge. The maintenance fee has been deducted for the purposes of calculating
the returns.
Investment results of the subaccounts 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 contract value and/or account value upon
redemption may be more or less than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The tables below show the average annual standardized and non-standardized total
return quotation figures for the periods ended December 31, 1998 for the
subaccounts under installment payment accounts with a $20 annual maintenance
fee. Both sets of returns below reflect a mortality and expense risk charge of
1.25% annually and the 0.25% administrative expense charge applicable under some
contracts. The non-standardized returns do not reflect the deduction of the
early withdrawal charge. We may also advertise returns based on other fee
schedules that apply to a particular contract holder. These fee schedules may
result in higher returns than those shown.
For the subaccounts funded by the Portfolio Partners portfolios, two sets of
performance returns are shown for each subaccount: one showing performance based
solely on the performance of the Portfolio Partners portfolio from November 28,
1997, the date the Portfolio commenced operations; and one quotation based on
(a) performance through November 26, 1997 of the fund it replaced under many
contracts and; (b) after November 26, 1997, based on the performance of the
Portfolio Partners portfolio.
For those subaccounts where results are not available for the full calendar
period indicated, performance for such partial periods is shown in the column
labeled "Since Inception." For standardized performance, the "Since Inception"
column shows the average annual return since the date contributions were first
received in the fund under the separate account. For non-standardized
performance, the "Since Inception" column shows average annual total return
since the fund's inception date.
4
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Date
Contributions
Installment Payment Account First
($20 Maintenance Fee) STANDARDIZED Received
Under the
Separate
Account
- -----------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Year 10 Year Inception*
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Ascent VP 08/31/95
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc. 06/30/89
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP 08/31/95
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP 05/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP(1)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 10/31/96
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP 08/31/95
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP(1)(2)
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP 05/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP 05/30/97
- -----------------------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio 11/30/92
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 12/30/94
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 12/30/94
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 01/31/95
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 06/30/95
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 10/31/94
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 01/31/95
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio 10/31/94
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 07/29/94
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 04/28/95
- -----------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust 05/26/93
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Emerging Equities Portfolio 11/28/97
- -----------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap/ Portfolio Partners MFS Emerging 09/30/93
Equities(3)
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Research Growth Portfolio 11/28/97
- -----------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation/ Portfolio Partners MFS
Research Growth(3) 08/31/92
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Value Equity Portfolio 11/28/97
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman AMT Growth/ Portfolio Partners MFS Value
Equity(3) 11/30/92
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners Scudder International Growth Portfolio 11/28/97
- -----------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio Class A/ Portfolio Partners Scudder
International Growth(3) 08/31/92
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners T. Rowe Price Growth Equity Portfolio 11/28/97
- -----------------------------------------------------------------------------------------------------------------------------------
Alger American Growth/ Portfolio Partners T. Rowe Price Growth 02/28/95
Equity(3)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the tables for an explanation of the
charges included and methodology used in the standardized and non-standardized
figures. These figures represent historical performance and should not be
considered a projection of future performance.
* Reflects performance from the date contributions were first received in the
fund under the separate account.
(1) These funds have been available through the separate account for more than
ten years.
(2) The current yield for the subaccount for the 7-day period ended December 31,
1998 (on an annualized basis) was ____%. Current yield more closely reflects
current earnings than does total return. The current yield reflects the
deduction of all charges under the contract that are deducted from the total
return quotations shown above except the maximum 5% early withdrawal charge.
(3) The fund first listed was replaced with the applicable Portfolio Partners
Portfolio after the close of business on November 26, 1997. The performance
shown is based on the performance of the replaced fund until November 26, 1997,
and the performance of the applicable Portfolio Partners Portfolio after that
date. The replaced fund may not have been available under all contracts. The
"Date Contributions First Received Under Separate Account" refers to the
applicable date for the replaced fund.
5
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Installment Payment Account Fund
($20 Maintenance Fee) NON-STANDARDIZED Inception
Date
- ------------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 3 Years 5 Years 10 Years Inception**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Ascent VP 07/05/95
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc. 04/03/89
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP 07/05/95
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP(1) 12/13/96
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 09/16/96
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP 07/05/95
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP(1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP 12/27/96
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP 12/13/96
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 05/05/93
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 05/05/93
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund 05/02/94
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 05/05/93
- ------------------------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 01/03/95
- ------------------------------------------------------------------------------------------------------------------------------------
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 Worldwide Growth Portfolio 09/13/93
- ------------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust 10/14/91
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund 11/12/90
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund 05/03/93
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Emerging Equities Portfolio 11/28/97
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap/ Portfolio Partners MFS Emerging 09/21/88
Equities(3)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Research Growth Portfolio 11/28/97
- ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation/ Portfolio Partners MFS
Research Growth(3)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners MFS Value Equity Portfolio 11/28/97
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman AMT Growth/ Portfolio Partners MFS Value
Equity(3)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners Scudder International Growth Portfolio 11/28/97
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio Class A/ Portfolio Partners Scudder
International Growth(3)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners T. Rowe Price Growth Equity Portfolio 11/28/97
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Growth/ Portfolio Partners T. Rowe Price Growth 01/09/89
Equity(3)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the tables for an explanation of the
charges included and methodology used in the standardized and non-standardized
figures. These figures represent historical performance and should not be
considered a projection of future performance.
** Reflects performance from the fund's inception date.
(1) These funds have been in operation for more than ten years.
(2) The current yield for the subaccount for the 7-day period ended December 31,
1998 (on an annualized basis) was ____%. Current yield more closely reflects
current earnings than does total return. The current yield reflects the
deduction of all charges under the contract that are deducted from the total
return quotations shown above. As in the table above, the maximum 5% early
withdrawal charge is not reflected.
6
<PAGE>
(3) The fund first listed was replaced with the applicable Portfolio Partners
Portfolio after the close of business on November 26, 1997. The performance
shown is based on the performance of the replaced fund until November 26, 1997,
and the performance of the applicable Portfolio Partners Portfolio after that
date. The replaced fund may not have been available under all contracts. The
"Fund Inception Date" refers to the applicable date for the replaced fund. If no
date is shown, the replaced fund has been in operation for more than ten years.
7
<PAGE>
INCOME PHASE PAYMENTS
When you begin receiving payments under the contract during the income phase
(see "Income Phase" in the prospectus), the value of your account is determined
using accumulation unit values as of the tenth valuation before the first
payment is due. Such value (less any applicable premium tax) is applied to
provide payments to you in accordance with the payment option and investment
options elected.
The Annuity option tables found in the contract show, for each option, the
amount of the first payment for each $1,000 of value applied. Thereafter,
variable 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 payments will increase thereafter only to the extent that the net
investment rate increases by more than 5% on an annual basis. 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 income phase 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 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 to the next (see "Your Account
Value" in the prospectus); such fluctuations reflect changes in the net
investment factor for the appropriate subaccount(s) (with a ten valuation lag
which gives the Company time to process 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 income phase.
EXAMPLE:
- --------
Assume that, at the date payments are to begin, there are 3,000 accumulation
units credited under a particular contract or account and that the value of an
accumulation unit for the tenth valuation 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 payment option elected, a first monthly variable
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 upon the valuation on 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 subaccount is
1.0015000 as of the tenth valuation 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 the prior valuation (assume such value to be $13.504376)
to produce an Annuity Unit value of $13.523359 for the valuation occurring when
the second payment is due.
8
<PAGE>
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
We may include hypothetical illustrations in our sales literature that explain
the mathematical principles of dollar cost averaging, compounded interest, tax
deferred accumulation, and the mechanics of variable annuity contracts. We may
also discuss the difference between variable annuity contracts and other types
of savings or investment products such as 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 subaccounts to established market
indices 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 subaccount
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
Service, 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. We may categorize the underlying funds in terms of the
asset classes they represent and use such categories in marketing materials for
the contracts. We may illustrate in advertisements the performance of the
underlying funds, if accompanied by performance which also shows the performance
of such funds reduced by applicable charges under the separate account. We may
also show in advertisements the portfolio holdings of the underlying funds,
updated at various intervals. From time to time, we will quote articles from
newspapers and magazines or other publications or reports such as The Wall
Street Journal, Money magazine, USA Today and The VARDS Report.
We 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.
9
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT B
Index
<TABLE>
<S> <C>
Statement of Assets and Liabilities........................................ S-2
Statements of Operations and Changes in Net Assets......................... S-6
Notes to Financial Statements.............................................. S-7
Independent Auditors' Report............................................... S-25
</TABLE>
S-1
<PAGE>
Form No. SAI.75996-99 ALIAC Ed. MAY 1999
<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:*
- Statement of Assets and Liabilities as of December 31,
1998
- Statements of Operations and Changes in Net Assets for the
years ended December 31, 1998 and 1997
- Notes to Financial Statements
- Independent Auditors' Report
Financial Statements of the Depositor:*
- Independent Auditors' Report
- Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996
- Consolidated Balance Sheets as of December 31, 1998 and
1997
- Consolidated Statements of Changes in Shareholder's Equity
for the years ended December 31, 1998, 1997 and 1996
- Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996
- Notes to Consolidated Financial Statements
*To be filed by amendment.
(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) Broker-Dealer Agreement(2)
(3.2) Alternative Form of Wholesaling Agreement and Related Selling
Agreement(3)
(4.1) Variable Annuity Contract (G-CDA-HF)(4)
(4.2) Variable Annuity Certificate (GTCC-HF)(5)
(4.3) Variable Annuity Contract (IA-CDA-IA)(4)
(4.4) Variable Annuity Contract (G-CDA-HD)(6)
(4.5) Variable Annuity Contract Certificate (GTCC-HD) to Contract
G-CDA-HD(7)
(4.6) Variable Annuity Contracts (GID-CDA-HO), (GLID-CDA-HO) and
(GSD-CDA-HO)(8)
(4.7) Variable Annuity Contract (I-CDA-HD)(9)
(4.8) Endorsement (EGET-IC(R)) to Contract G-CDA-HF(3)
(4.9) Endorsements (EIGET-IC(R)), (EIGF-IC) and (EGF-IC (SPD)) to
Contract IA-CDA-IA(10)
<PAGE>
(4.10) Endorsement (EFUND97) to Contracts GID-CDA-HO, GLID-CDA-HO and
GSD-CDA-HO(4)
(4.11) Endorsement (E98-G-CDA-HF/HD) to Contracts G-CDA-HF and
G-CDA-HD(11)
(4.12) Endorsement (E98-CDA-HO) to Contracts GLID-CDA-HO, GID-CDA-HO
and GSD-CDA-HO(11)
(4.13) Endorsement (E2ACB95) to Contract GLID-CDA-HO(8)
(4.14) Endorsement (EGETE-IC(R)) to Contract GLID-CDA-HO(12)
(5.1) Variable Annuity Contract Application (300-GTD-IA)(13)
(5.2) Variable Annuity Contract Application (710.00.141)(14)
(6.1) Certification of Incorporation of Aetna Life Insurance and
Annuity Company(15)
(6.2) Amendment of Certificate of Incorporation of Aetna Life
Insurance and Annuity Company(9)
(6.3) By-Laws as amended September 17, 1997 of Aetna Life Insurance
and Annuity Company(16)
(7) Not applicable
(8.1) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and AIM dated June 30, 1998(17)
(8.2) Service Agreement between Aetna Life Insurance and Annuity
Company and AIM effective June 30, 1998(17)
(8.3) Fund Participation Agreement by and among Aetna Life Insurance
and Annuity Company and Aetna Variable Fund, Aetna Variable
Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc.,
Aetna GET Fund on behalf of each of its series, Aetna
Generation Portfolios, Inc. on behalf of each of its series,
Aetna Variable Portfolios, Inc. on behalf of each of its
series, and Aeltus Investment Management, Inc. dated as of May
1, 1998(2)
(8.4) Amendment dated November 9, 1998 to Fund Participation
Agreement by and among Aetna Life Insurance and Annuity
Company and Aetna Variable Fund, Aetna Variable Encore Fund,
Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund
on behalf of each of its series, Aetna Generation Portfolios,
Inc. on behalf of each of its series, Aetna Variable
Portfolios, Inc. on behalf of each of its series, and Aeltus
Investment Management, Inc. dated as of May 1, 1998(18)
(8.5) Service Agreement between Aeltus Investment Management, Inc.
and Aetna Life Insurance and Annuity Company in connection
with the sale of shares of Aetna Variable Fund, Aetna Variable
Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc.,
Aetna GET Fund on behalf of each of its series, Aetna
Generation Portfolios, Inc. on behalf of each of its series,
and Aetna Variable Portfolios, Inc. on behalf of each of its
series dated as of May 1, 1998(2)
(8.6) Amendment dated November 4, 1998 to Service Agreement between
Aeltus Investment Management, Inc. and Aetna Life Insurance
and Annuity Company in connection with the sale of shares of
Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income
Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf
<PAGE>
of each of its series, Aetna Generation Portfolios, Inc. on
behalf of each of its series and Aetna Variable Portfolios,
Inc. on behalf of each of its series dated as of May 1,
1998(18)
(8.7) Fund Participation Agreement among Calvert Responsibly
Invested Balanced Portfolio, Calvert Asset Management Company,
Inc. and Aetna Life Insurance and Annuity Company dated
December 1, 1997(19)
(8.8) Service Agreement between Calvert Asset Management Company,
Inc. and Aetna Life Insurance and Annuity Company Dated
December 1, 1997(19)
(8.9) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996 and March 1, 1996(9)
(8.10) Fifth Amendment dated as of May 1, 1997 to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996 and March 1, 1996(20)
(8.11) Sixth Amendment dated November 6, 1997 to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996, March 1, 1996 and May 1, 1997(21)
(8.12) Seventh Amendment dated as of May 1, 1998 to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996, March 1, 1996, May 1, 1997 and November 6, 1997(2)
(8.13) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and
Fidelity Distribution Corporation dated February 1, 1994 and
amended December 15, 1994, February 1, 1995, May 1, 1995,
January 1, 1996 and March 1, 1996(9)
(8.14) Fifth Amendment dated as of May 1, 1997 to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1, 1995, May 1, 1995,
January 1, 1996 and March 1, 1996(20)
(8.15) Sixth Amendment dated as of January 20, 1998 to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1, 1995, May 1, 1995,
January 1, 1996, March 1, 1996 and May 1, 1997(22)
<PAGE>
(8.16) Seventh Amendment dated as of May 1, 1998 to the Fund
Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and
Fidelity Distributors Corporation dated February 1, 1994 and
amended on December 15, 1994, February 1, 1995, May 1, 1995,
January 1, 1996, March 1, 1996, May 1, 1997 and January 20,
1998(2)
(8.17) Service Agreement between Aetna Life Insurance and Annuity
Company and Fidelity Investments Institutional Operations
Company dated as of November 1, 1995(23)
(8.18) Amendment dated January 1, 1997 to Service Agreement between
Aetna Life Insurance and Annuity Company and Fidelity
Investments Institutional Operations Company dated as of
November 1, 1995(20)
(8.19) Service Contract between Fidelity Distributors Corporation and
Aetna Life Insurance and Annuity Company dated May 2, 1997(18)
(8.20) Fund Participation Agreement among Janus Aspen Series and
Aetna Life Insurance and Annuity Company and Janus Capital
Corporation dated December 8, 1997(24)
(8.21) Amendment dated October 12, 1998 to Fund Participation
Agreement among Janus Aspen Series and Aetna Life Insurance
and Annuity Company and Janus Capital Corporation dated
December 8, 1997(18)
(8.22) Service Agreement between Janus Capital Corporation and Aetna
Life Insurance and Annuity Company dated December 8, 1997(24)
(8.23) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Lexington Management Corporation regarding
Natural Resources Trust dated December 1, 1988 and amended on
February 11, 1991(3)
(8.24) Fund Participation Agreement dated March 11, 1997 between
Aetna Life Insurance and Annuity Company and Oppenheimer
Variable Annuity Account Funds and Oppenheimer Funds, Inc.(25)
(8.25) Service Agreement effective as of March 11, 1997 between
Oppenheimer Funds, Inc. and Aetna Life Insurance and Annuity
Company(25)
(9) Opinion and Consent of Counsel*
(10) Consent of Independent Auditors*
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data(26)
(14) Not applicable
(15.1) Powers of Attorney(17)
(15.2) Authorization for Signatures(3)
*To be filed by amendment.
1. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75986), as filed electronically on April
22, 1996 (Accession No. 0000950146-96-000563).
2. Incorporated by reference to Registration Statement on Form N-4 (File No.
333-56297), as filed electronically on June 8, 1998 (Accession No.
0000950146-98-000983).
<PAGE>
3. Incorporated by reference to Post-Effective Amendment No. 5 to Registration
Statement on Form N-4 (File No. 33-75986), as filed electronically on April
12, 1996 (Accession No. 0000912057-96-006383).
4. Incorporated by reference to Post-Effective Amendment No. 14 to
Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on July 29, 1997 (Accession No. 0000950146-97-001101).
5. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75980), as filed electronically on
February 12, 1997 (Accession No. 0000950146-97-000171).
6. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75982), as filed electronically on April
22, 1996 (Accession No. 0000912057-96-006790).
7. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 333-01107), as filed
electronically on February 4, 1999 (Accession No. 0000950146-99-000124).
8. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-75982), as filed
electronically on February 20, 1997 (Accession No. 0000950146-97-000217).
9. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on February 11, 1997 (Accession No. 0000950146-97-000159).
10. Incorporated by reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-4 (File No. 33-75964), as filed electronically on
August 30, 1996 (Accession No. 0000928389-96-000150).
11. Incorporated by reference to Post-Effective Amendment No. 15 to
Registration Statement on Form N-4 (File No. 33-75982), as filed
electronically on April 13, 1998 (Accession No. 0000950146-98-000610).
12. Incorporated by reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-4 (File No. 33-75986), as filed electronically on
August 30, 1996 (Accession No. 0000950146-96-000534).
13. Incorporated by reference to Post-Effective Amendment No. 14 to
Registration Statement on Form N-4 (File No. 33-75986), as filed
electronically on August 19, 1997 (Accession No. 0000950146-97-001302).
14. Incorporated by reference to Post-Effective Amendment No. 13 to
Registration Statement on Form N-4 (File No. 33-75996), as filed
electronically on August 21, 1997 (Accession No. 0000950146-97-001302).
15. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form S-1 (File No. 33-60477), as filed electronically on April
15, 1996 (Accession No. 0000950146-96-000534).
16. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-91846), as filed
electronically on October 30, 1997 (Accession No. 0000950146-97-001589).
<PAGE>
17. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 333-56297), as filed electronically on
August 4, 1998 (Accession No. 0000950146-98-001283).
18 Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement on Form N-4 (File No. 333-56297), as filed electronically on
December 14, 1998 (Accession No. 0000950146-98-002092).
19. Incorporated by reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-4 (File No. 333-01107), as filed electronically on
February 19, 1998 (Accession No. 0000950146-98-000248).
20. Incorporated by reference to Post-Effective Amendment No. 30 to
Registration Statement on Form N-4 (File No. 33-34370), as filed
electronically on September 29, 1997 (Accession No. 0000950146-97-001485).
21. Incorporated by Reference to Post-Effective Amendment No. 16 to
Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on February 9, 1998 (Accession No. 0000950146-98-000179).
22. Incorporated by reference to Post-Effective Amendment No. 7 to Registration
Statement on Form S-6 (File No. 33-75248), as filed electronically on
February 24, 1998 (Accession No. 0000950146-98-000267).
23. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-88720), as filed electronically on June
28, 1996 (Accession No. 0000928389-96-000136).
24. Incorporated by reference to Post-Effective Amendment No. 10 to
Registration Statement on Form N-4 (File No. 33-75992), as filed
electronically on December 31, 1997 (Accession No. 0000950146-97-001982).
25. Incorporated by reference to Post-Effective Amendment No. 27 to
Registration Statement on Form N-4 (File No. 33-34370), as filed
electronically on April 16, 1997 (Accession No. 0000950146-97-000617).
26. Incorporated by reference to Post-Effective Amendment No. 14 to
Registration Statement on Form N-4 (File No. 33-75996), as filed
electronically on April 16, 1998 (Accession No. 0000950146-98-000643).
<PAGE>
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal
Business Address* Positions and Offices with Depositor
- ----------------- ------------------------------------
<S> <C>
Thomas J. McInerney Director and President
Shaun P. Mathews Director and Senior Vice President
Catherine H. Smith Director, Chief Financial Officer and Senior Vice
President
Deborah Koltenuk Vice President, Treasurer and Corporate Controller
Therese M. Squillacote Vice President and Chief Compliance Officer
Kirk P. Wickman Vice President, General Counsel and Corporate Secretary
</TABLE>
* The principal business address of all directors and officers listed is
151 Farmington Avenue, Hartford, Connecticut 06156.
Item 26. Persons Controlled by or Under Common Control with the Depositor
or Registrant
Incorporated herein by reference to Item 26 of Post-Effective Amendment No.
2 to Registration Statement on Form N-4 (File No. 333-56297), as filed
electronically on December 14, 1998 (Accession No. 0000950146-98-002092).
Item 27. Number of Contract Owners
As of December 31, 1998, there were 15,102 individuals holding interests in
variable annuity contracts funded through Variable Annuity Account B.
Item 28. Indemnification
Section 21 of Public Act No. 97-246 of the Connecticut General Assembly (the
"Act") provides that a corporation may provide indemnification of or advance
expenses to a director, officer, employee or agent only as permitted by Sections
33-770 to 33-778, inclusive, of the Connecticut General Statutes, as amended by
Sections 12 to 20, inclusive, of this Act. Reference is hereby made to Section
33-771(e) of the Connecticut General Statutes ("CGS") regarding indemnification
of directors and Section 33-776(d) of CGS regarding indemnification of officers,
employees and agents of Connecticut corporations. These statutes provide in
general that Connecticut corporations incorporated prior to January 1, 1997
shall, except to the extent that
<PAGE>
their certificate of incorporation expressly provides otherwise, indemnify their
directors, officers, employees and agents against "liability" (defined as the
obligation to pay a judgment, settlement, penalty, fine, including an excise tax
assessed with respect to an employee benefit plan, or reasonable expenses
incurred with respect to a proceeding) when (1) a determination is made pursuant
to Section 33-775 that the party seeking indemnification has met the standard of
conduct set forth in Section 33-771 or (2) a court has determined that
indemnification is appropriate pursuant to Section 33-774. Under Section 33-775,
the determination of and the authorization for indemnification are made (a) by
the disinterested directors, as defined in Section 33-770(3); (b) by special
counsel; (c) by the shareholders; or (d) in the case of indemnification of an
officer, agent or employee of the corporation, by the general counsel of the
corporation or such other officer(s) as the board of directors may specify.
Also, Section 33-772 provides that a corporation shall indemnify an individual
who was wholly successful on the merits or otherwise against reasonable expenses
incurred by him in connection with a proceeding to which he was a party because
he was a director. In the case of a proceeding by or in the right of the
corporation or with respect to conduct for which the director, officer, agent or
employee was adjudged liable on the basis that he received a financial benefit
to which he was not entitled, indemnification is limited to reasonable expenses
incurred in connection with the proceeding against the corporation to which the
individual was named a party.
The statute does specifically authorize a corporation to procure indemnification
insurance on behalf of an individual who was a director, officer, employer or
agent of the corporation. Consistent with the statute, Aetna Inc. 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.
Item 29. Principal Underwriter
(a) In addition to serving as the principal underwriter and depositor for
the Registrant, Aetna Life Insurance and Annuity Company (Aetna) also
acts as the principal underwriter, only, for Aetna Variable Encore
Fund, Aetna Variable Fund, Aetna Generation Portfolios, Inc., Aetna
Income Shares, Aetna Balanced VP, Inc. (formerly Aetna Investment
Advisers Fund, Inc.), Aetna GET Fund, and Aetna Variable Portfolios,
Inc. and as the principal underwriter and investment adviser for
Portfolio Partners, Inc. (all management investment companies
registered under the Investment Company Act of 1940 (1940 Act)).
Additionally, Aetna acts as the principal underwriter and depositor for
Variable Life Account B of Aetna, Variable Annuity Account C of Aetna
and Variable Annuity Account G of Aetna (separate accounts of Aetna
registered as unit investment trusts under the 1940 Act). Aetna is also
the principal underwriter for Variable Annuity Account I of Aetna
Insurance Company of America (AICA) (a separate account of AICA
registered as a unit investment trust under the 1940 Act).
(b) See Item 25 regarding the Depositor.
<PAGE>
(c) Compensation as of December 31, 1998: *
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
<S> <C> <C> <C> <C>
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage
Underwriter Commissions or Annuitization Commissions Compensation**
- ----------- ----------- ---------------- ----------- --------------
Aetna Life Insurance $_________ $_________
and Annuity Company
</TABLE>
* To be filed by amendment.
** 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
Variable Annuity Account B.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules under it relating to the securities
described in and issued under this Registration Statement 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
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
<PAGE>
(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.
(e) Aetna Life Insurance and Annuity Company represents that the fees and
charges deducted under the contracts covered by this registration
statement, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed
by the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 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 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 5th day of February, 1999.
VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE INSURANCE AND ANNUITY
COMPANY
(Registrant)
By: AETNA LIFE INSURANCE AND ANNUITY COMPANY
(Depositor)
By: Thomas J. McInerney*
----------------------
Thomas J. McInerney
President
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 16 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
Thomas J. McInerney* Director and President )
- ------------------------- (principal executive officer) )
Thomas J. McInerney )
)
Shaun P. Mathews* Director ) February
- ------------------------- )
Shaun P. Mathews ) 5, 1999
)
Catherine H. Smith* Director and )
- ------------------------- Chief Financial Officer )
Catherine H. Smith )
)
Deborah Koltenuk* Vice President, Treasurer )
- ------------------------- and Corporate Controller )
Deborah Koltenuk )
</TABLE>
By: /s/ Julie E. Rockmore
-----------------
Julie E. Rockmore
*Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT B
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
<S> <C> <C>
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 Broker-Dealer Agreement *
99-B.3.2 Alternative Form of Wholesaling Agreement and Related Selling Agreement *
99-B.4.1 Variable Annuity Contract (G-CDA-HF) *
99-B.4.2 Variable Annuity Certificate (GTCC-HF) *
99-B.4.3 Variable Annuity Contract (IA-CDA-IA) *
99-B.4.4 Variable Annuity Contract (G-CDA-HD) *
99-B.4.5 Variable Annuity Contract Certificate (GTCC-HD) to Contract *
G-CDA-HD
99-B.4.6 Variable Annuity Contracts (GID-CDA-HO), (GLID-CDA-HO) and (GSD-CDA-HO) *
99-B.4.7 Variable Annuity Contract (I-CDA-HD) *
99-B.4.8 Endorsement (EGET-IC(R)) to Contract G-CDA-HF *
99-B.4.9 Endorsements (EIGET-IC(R)), (EIGF-IC) and *
(EGF-IC(SPD)) to Contract IA-CDA-IA
99-B.4.10 Endorsement (EFUND97) to Contracts GID-CDA-HO, *
GLID-CDA-HO and GSD-CDA-HO
99-B.4.11 Endorsement (E98-G-CDA-HF/HD) to Contracts G-CDA-HF and G-CDA-HD *
99-B.4.12 Endorsement (E98-CDA-HO) to Contracts GLID-CDA-HO, *
GID-CDA-HO and GSD-CDA-HO
</TABLE>
*Incorporated by reference
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
<S> <C> <C>
99-B.4.13 Endorsement (E2ACB95) to Contract GLID-CDA-HO *
99-B.4.14 Endorsement (EGETE-IC(R)) to Contract GLID-CDA-HO *
99-B.5.1 Variable Annuity Contract Application (300-GTD-IA) *
99-B.5.2 Variable Annuity Contract Application (710.00.141) *
99-B.6.1 Certification of Incorporation of Aetna Life Insurance *
and Annuity Company
99-B.6.2 Amendment of Certificate of Incorporation of Aetna Life *
Insurance and Annuity Company
99-B.6.3 By-Laws as amended September 17, 1997 of Aetna Life *
Insurance and Annuity Company
99-B.8.1 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company and AIM dated June 30, 1998
99-B.8.2 Service Agreement between Aetna Life Insurance and Annuity *
Company and AIM effective June 30, 1998
99-B.8.3 Fund Participation Agreement by and among Aetna Life Insurance and *
Annuity Company and Aetna Variable Fund, Aetna Variable Encore Fund,
Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on
behalf of each of its series, Aetna Generation Portfolios, Inc. on
behalf of each of its series, Aetna Variable Portfolios, Inc. on
behalf of each of its series, and Aeltus Investment Management, Inc.
dated as of May 1, 1998
99-B.8.4 Amendment dated November 9, 1998 to Fund Participation Agreement by *
and among Aetna Life Insurance and Annuity Company and Aetna
Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares,
Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its
series, Aetna Generation Portfolios, Inc. on behalf of each of its
series, Aetna Variable Portfolios, Inc. on behalf of each of its
series, and Aeltus Investment Management, Inc. dated as of May 1,
1998
</TABLE>
*Incorporated by reference
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
<S> <C> <C>
99-B.8.5 Service Agreement between Aeltus Investment Management, Inc. and *
Aetna Life Insurance and Annuity Company in connection with the sale
of shares of Aetna Variable Fund, Aetna Variable Encore Fund, Aetna
Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of
each of its series, Aetna Generation Portfolios, Inc. on behalf of
each of its series, and Aetna Variable Portfolios, Inc. on behalf of
each of its series dated as of May 1, 1998
99-B.8.6 Amendment dated November 4, 1998 to Service Agreement between Aeltus *
Investment Management, Inc. and Aetna Life Insurance and Annuity
Company in connection with the sale of shares of Aetna Variable
Fund, Aetna Variable Encore Fund, Aetna Income Shares, Aetna
Balanced VP, Inc., Aetna GET Fund on behalf of each of its series,
Aetna Generation Portfolios, Inc. on behalf of each of its series
and Aetna Variable Portfolios, Inc. on behalf of each of its series
dated as of May 1, 1998
99-B.8.7 Fund Participation Agreement among Calvert Responsibly Invested *
Balanced Portfolio, Calvert Asset Management Company, Inc. and Aetna
Life Insurance and Annuity Company dated December 1, 1997
99-B.8.8 Service Agreement between Calvert Asset Management Company, Inc. and *
Aetna Life Insurance and Annuity Company Dated December 1, 1997
99-B.8.9 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company, * Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996
and March 1, 1996
99-B.8.10 Fifth Amendment dated as of May 1, 1997 to the Fund Participation *
Agreement between Aetna Life Insurance and Annuity Company, Variable
Insurance Products Fund and Fidelity Distributors Corporation dated
February 1, 1994 and amended on December 15, 1994, February 1, 1995,
May 1, 1995, January 1, 1996 and March 1, 1996
</TABLE>
*Incorporated by reference
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
<S> <C> <C>
99-B.8.11 Sixth Amendment dated November 6, 1997 to the Fund Participation *
Agreement between Aetna Life Insurance and Annuity Company, Variable
Insurance Products Fund and Fidelity Distributors Corporation dated
February 1, 1994 and amended on December 15, 1994, February 1, 1995,
May 1, 1995, January 1, 1996, March 1, 1996 and May 1, 1997
99-B.8.12 Seventh Amendment dated as of May 1, 1998 to the Fund Participation *
Agreement between Aetna Life Insurance and Annuity Company, Variable
Insurance Products Fund and Fidelity Distributors Corporation dated
February 1, 1994 and amended on December 15, 1994, February 1, 1995,
May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997 and
November 6, 1997
99-B.8.13 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company, Variable Insurance Products Fund II and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996
and March 1,1996
99-B.8.14 Fifth Amendment dated as of May 1, 1997 to the Fund Participation *
Agreement between Aetna Life Insurance and Annuity Company, Variable
Insurance Products Fund II and Fidelity Distributors Corporation
dated February 1, 1994 and amended on December 15, 1994, February 1,
1995, May 1, 1995, January 1, 1996 and March 1, 1996
99-B.8.15 Sixth Amendment dated as of January 20, 1998 to the Fund *
Participation Agreement between Aetna Life Insurance and Annuity
Company, Variable Insurance Products Fund II and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996,
March 1, 1996 and May 1, 1997
</TABLE>
*Incorporated by reference
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
<S> <C> <C>
99-B.8.16 Seventh Amendment dated as of May 1, 1998 to the Fund Participation *
Agreement between Aetna Life Insurance and Annuity Company, Variable
Insurance Products Fund II and Fidelity Distributors Corporation
dated February 1, 1994 and amended on December 15, 1994, February 1,
1995, May 1, 1995, January 1, 1996, March 1, 1996, May 1, 1997 and
January 20, 1998
99-B.8.17 Service Agreement between Aetna Life Insurance and Annuity Company *
and Fidelity Investments Institutional Operations Company dated as
of November 1, 1995
99-B.8.18 Amendment dated January 1, 1997 to Service Agreement between Aetna *
Life Insurance and Annuity Company and Fidelity Investments
Institutional Operations Company dated as of November 1, 1995
99-B.8.19 Service Contract between Fidelity Distributors Corporation and Aetna *
Life Insurance and Annuity Company dated May 2, 1997
99-B.8.20 Fund Participation Agreement among Janus Aspen Series and Aetna Life *
Insurance and Annuity Company and Janus Capital Corporation dated
December 8, 1997
99-B.8.21 Amendment dated October 12, 1998 to Fund Participation Agreement *
among Janus Aspen Series and Aetna Life Insurance and Annuity
Company and Janus Capital Corporation dated December 8, 1997
99-B.8.22 Service Agreement between Janus Capital Corporation and Aetna Life *
Insurance and Annuity Company dated December 8, 1997
99-B.8.23 Fund Participation Agreement between Aetna Life Insurance and *
Annuity Company and Lexington Management Corporation regarding
Natural Resources Trust dated December 1, 1988 and amended on
February 11, 1991
99-B.8.24 Fund Participation Agreement dated March 11, 1997 between Aetna Life *
Insurance and Annuity Company and Oppenheimer Variable Annuity
Account Funds and Oppenheimer Funds, Inc.
</TABLE>
*Incorporated by reference
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
<S> <C> <C>
99-B.8.25 Service Agreement effective as of March 11, 1997 between Oppenheimer *
Funds, Inc. and Aetna Life Insurance and Annuity Company
99-B.9 Opinion and Consent of Counsel **
99-B.10 Consent of Independent Auditors **
99-B.13 Schedule for Computation of Performance Data *
99-B.15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
</TABLE>
* Incorporated by reference
** To be filed by amendment
