VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE INS & ANNUITY CO, 485APOS, 2000-05-08

VARIABLE ANNUITY ACCOUNT B OF AETNA LIFE INS & ANNUITY CO
485APOS, 2000-05-08

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As filed with the Securities and Exchange Registration No. 333-56297
Commission on May 8, 2000 Registration No. 811-2512
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-4
- --------------------------------------------------------------------------------

POST-EFFECTIVE AMENDMENT NO. 15 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, TS31, 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, TS31, Hartford, Connecticut 06156
(Name and Address of Agent for Service)

- --------------------------------------------------------------------------------

It is proposed that this filing will become effective:

_____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
X on July 14, 2000 pursuant to paragraph (a)(1) of Rule 485
-----
<PAGE>

VARIABLE ANNUITY ACCOUNT B
CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
FORM N-4 LOCATION - PROSPECTUS DATED
ITEM NO. PART A (PROSPECTUS) JULY 14, 2000
<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 - Description of Underlying
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......................... Purchase and Rights; Your Account Value

11 Redemptions.......................................... Your 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 Additional
Information.......................................... Contents of the Statement of Additional Information
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
LOCATION - STATEMENT OF
FORM N-4 PART B (STATEMENT OF ADDITIONAL INFORMATION
ITEM NO. ADDITIONAL INFORMATION) DATED JULY 14, 2000
<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 July 14, 2000
to July 14, 2000 Prospectus

GENERAL DESCRIPTION OF GET J

Series J of the Aetna GET Fund (GET J) is an investment option that may be
available during the accumulation phase of the contract. Aetna Life Insurance
and Annuity Company (the Company, we, our) makes a guarantee, as described
below, when you direct money into GET J. Aeltus Investment Management, Inc.
serves as investment adviser to GET J.

We will offer GET J shares only during its offering period, which is scheduled
to run from June 15, 2000 through the close of business on September 13, 2000.
GET J may not be available under your contract, your plan or in your state.
Please read the GET J prospectus for a more complete description of GET J,
including its charges and expenses.

INVESTMENT OBJECTIVE OF GET J

GET J seeks to achieve maximum total return, without compromising a minimum
targeted return, by participating in favorable equity market performance during
the guarantee period.

GET J's guarantee period runs from September 14, 2000 through September 13,
2005. During the offering period, all GET J assets will be invested in
short-term instruments, and during the guarantee period will be invested in a
combination of fixed income and equity securities.

THE GET FUND GUARANTEE

The guarantee period for GET J will end on September 13, 2005 which is GET J's
maturity date. The Company guarantees that the value of an accumulation unit of
the GET J subaccount under the contract on the maturity date (as valued after
the close of business on September 13, 2005) 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 J
subaccount to make up the difference. This means that if you remain invested in
GET J until the maturity date, at the maturity date you will receive no less
than the value of your separate account investment directed to GET J as of the
last day of the offering period, less any maintenance fees or any amounts you
transfer or withdraw from the GET J subaccount. The value of dividends and
distributions made by GET J throughout the guarantee period is taken into
account in determining whether, for purposes of the guarantee, the value of
your GET J investment on the maturity date is no less than its value as of the
last day of the offering period. The guarantee does not promise that you will
earn the fund's minimum targeted return referred to in the investment
objective.

If you withdraw or transfer funds from GET J 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 who has
amounts in GET J. This notice will remind you that the maturity date is
approaching and that you must choose other investment options for your GET J
amounts. If you do not make a choice, on the maturity date we will transfer
your GET J amounts to another available series of the GET Fund that is
accepting deposits. If no GET Fund series is available, we will transfer your
GET J amounts to the fund or funds designated by the Company.

X.GETJ56297-00 July 2000

<PAGE>

The following information supplements the "Fee Table" contained in the
prospectus:

MAXIMUM FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT

In addition to the amounts currently listed under the heading "Fee Table" in
the prospectus, we will make a daily deduction of a GET J Guarantee Charge,
equal on an annual basis to the percentage shown below, from the amounts
allocated to the GET J investment option:

<TABLE>
<S> <C>
GET J Guarantee Charge (deducted daily during the Guarantee Period) ................... 0.50%
Maximum Total Separate Account Expenses (including the optional 0.50% Premium Bonus
Option Charge(1))..................................................................... 2.40%(2)
</TABLE>

(1) If you elect the premium bonus option, the premium bonus option charge is
assessed during the first seven account years. After the seventh account
year, or if you do not elect the premium bonus option, the maximum total
separate expenses you would pay is 1.90%.
(2) The total separate account expenses that apply to your contract may be
lower. Please refer to the "Fee Table" section of your prospectus.

The following information supplements the "Fund Expense Table" contained in the
prospectus:

Aetna GET Fund Series J Annual Expenses
(As a percentage of the average net assets)

<TABLE>
<CAPTION>
Investment Total Fund Annual Expenses
Advisory Fees(3) Other Expenses(4) (after expense reimbursement)(5)
---------------- ----------------- -------------------------------
<S> <C> <C> <C>
Aetna GET Fund Series J 0.60% 0.15% 0.75%
</TABLE>

For more information regarding expenses paid out of assets of the fund, see the
GET J prospectus.

- -----------------------

(3) The Investment Advisory Fee will be 0.25% during the offering period and
0.60% during the guarantee period.

(4) "Other Expenses" include an annual fund administrative fee of 0.075% of the
average daily net assets of GET J and any additional direct fund expenses.

(5) The investment adviser is contractually obligated through GET J's maturity
date 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 GET J's Total Fund Annual Expenses do not
exceed 0.75% of the fund's average daily net assets. It is not expected that
GET J's actual expenses without this waiver or reimbursement will exceed
this amount.

<PAGE>

The following information supplements the "Hypothetical Examples" contained in
the prospectus.

HYPOTHETICAL EXAMPLES--AETNA GET FUND SERIES J

Account Fees You May Incur Over Time. The following hypothetical examples show
the fees and expenses paid over time if you invest $1,000 in the GET J
investment option under the contract (until GET J's maturity date) and assume a
5% annual return on the investment.(6)

> THESE EXAMPLES ARE PURELY Example A Example B
HYPOTHETICAL.
> THEY SHOULD NOT BE If you withdraw your entire If at the end of the periods
CONSIDERED A REPRESENTATION account value at the end of shown you (1) leave your
OF PAST OR FUTURE EXPENSES the periods shown, you would entire account value invested
OR EXPECTED RETURNS. pay the following expenses, or (2) select an income phase
> ACTUAL EXPENSES AND/OR including any applicable early payment option, you would
RETURNS MAY BE MORE OR LESS withdrawal charge: pay the following expenses
THAN THOSE SHOWN BELOW. (no early withdrawal charge is
reflected):

1 Year 3 Years 5 Years 1 Year 3 Years 5 Years
-------- --------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>

Aetna GET Fund Series J $ $ $ $ $ $
</TABLE>

- -----------------------

(6) The examples shown above reflect an annual mortality and expense risk charge
of 1.25%, an annual contract administrative expense charge of 0.15%, an
annual GET J guarantee charge of 0.50%, an annual premium bonus option
charge of 0.50%, a $30 annual maintenance fee that has been converted to a
percentage of assets equal to 0.022%, and all charges and expenses of the
GET J Fund. Example A reflects an early withdrawal charge of 7% of the
purchase payments at the end of year 1, 6% at the end of year 3, and 4% at
the end of year 5. (The expenses that you would pay under your contract may
be lower. Please refer to the "Fee Table" section of your prospectus.)

<PAGE>

The following information supplements "Appendix IV--Description of Underlying
Funds" contained in the prospectus:

Aetna GET Fund (Series J)

INVESTMENT OBJECTIVE

Seeks to achieve maximum total return without compromising a minimum targeted
return (Targeted Return) by participating in favorable equity market
performance during the guarantee period, from September 14, 2000 through
September 13, 2005, the maturity date.

POLICIES

Prior to September 14, 2000, assets are invested entirely in short-term
instruments. After that date, assets are allocated between equities and fixed
income securities. Equities consist primarily of common stocks. Fixed income
securities consist primarily of short- to intermediate-duration U.S. Government
securities and may also consist of mortgage backed securities and corporate
obligations. The investment adviser uses a proprietary computer model to
determine the percentage of assets to allocate between the fixed and the equity
components. As the value of the equity component declines, more assets are
allocated to the fixed component.

RISKS

The principal risks of investing in Series J are those generally attributable
to stock and bond investing. The success of Series J's strategy depends on the
investment adviser's skill in allocating assets between the equity and fixed
components and in selecting investments within each component. Because Series J
invests in both stocks and bonds, it may underperform stock funds when stocks
are in favor and underperform bond funds when bonds are in favor. The risks
associated with investing in stocks include sudden and unpredictable drops in
the value of the market as a whole and periods of lackluster or negative
performance. The principal risk associated with investing in bonds is that
interest rates may rise, which generally causes bond prices to fall. If at the
inception of, or any time during, the guarantee period interest rates are low,
Series J assets may be largely invested in the fixed component in order to
increase the likelihood of achieving the Targeted Return at the maturity date.
The effect of low interest rates on Series J would likely be more pronounced at
the beginning of the guarantee period as the initial allocation of assets would
include more fixed income securities. In addition, if during the guarantee
period the equity markets experienced a major decline, Series J assets may
become largely invested in the fixed component in order to increase the
likelihood of achieving the Targeted Return at the maturity date. Use of the
fixed component reduces Series J's ability to participate as fully in upward
equity market movements, and therefore represents some loss of opportunity, or
opportunity cost, compared to a portfolio that is fully invested in equities.

Investment Adviser: Aeltus Investment Management, Inc.

X.GETJ56297-00 July 2000

<PAGE>

VARIABLE ANNUITY ACCOUNT B
Aetna Life Insurance and Annuity Company

Supplement Dated July 14, 2000
to July 14, 2000 Prospectus

GENERAL DESCRIPTION OF GET K

Series K of the Aetna GET Fund (GET K) is an investment option that may be
available during the accumulation phase of the contract. Aetna Life Insurance
and Annuity Company (the Company, we, our) makes a guarantee, as described
below, when you direct money into GET K. Aeltus Investment Management, Inc.
serves as investment adviser to GET K.

We will offer GET K shares only during its offering period, which is scheduled
to run from September 14, 2000 through the close of business on December 13,
2000. GET K may not be available under your contract, your plan or in your
state. Please read the GET K prospectus for a more complete description of GET
K, including its charges and expenses.

INVESTMENT OBJECTIVE OF GET K

GET K seeks to achieve maximum total return, without compromising a minimum
targeted return, by participating in favorable equity market performance during
the guarantee period.

GET K's guarantee period runs from December 14, 2000 through December 13, 2005.
During the offering period, all GET K assets will be invested in short-term
instruments, and during the guarantee period will be invested in a combination
of fixed income and equity securities.

THE GET FUND GUARANTEE

The guarantee period for GET K will end on December 13, 2005 which is GET K's
maturity date. The Company guarantees that the value of an accumulation unit of
the GET K subaccount under the contract on the maturity date (as valued after
the close of business on December 13, 2005) 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 K
subaccount to make up the difference. This means that if you remain invested in
GET K until the maturity date, at the maturity date you will receive no less
than the value of your separate account investment directed to GET K as of the
last day of the offering period, less any maintenance fees or any amounts you
transfer or withdraw from the GET K subaccount. The value of dividends and
distributions made by GET K throughout the guarantee period is taken into
account in determining whether, for purposes of the guarantee, the value of
your GET K investment on the maturity date is no less than its value as of the
last day of the offering period. The guarantee does not promise that you will
earn the fund's minimum targeted return referred to in the investment
objective.

If you withdraw or transfer funds from GET K 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 who has
amounts in GET K. This notice will remind you that the maturity date is
approaching and that you must choose other investment options for your GET K
amounts. If you do not make a choice, on the maturity date we will transfer
your GET K amounts to another available series of the GET Fund that is
accepting deposits. If no GET Fund series is available, we will transfer your
GET K amounts to the fund or funds designated by the Company.

X.GETK56297-00 July 2000

<PAGE>

The following information supplements the "Fee Table" contained in the
prospectus:

MAXIMUM FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT

In addition to the amounts currently listed under the heading "Fee Table" in
the prospectus, we will make a daily deduction of a GET K Guarantee Charge,
equal on an annual basis to the percentage shown below, from the amounts
allocated to the GET K investment option:

<TABLE>
<S> <C>
GET K Guarantee Charge (deducted daily during the Guarantee Period) .................. 0.50%
Maximum Total Separate Account Expenses (including the optional 0.50% Premium Bonus
Option Charge(1)) ...................................................................... 2.40%(2)
</TABLE>

(1) If you elect the premium bonus option, the premium bonus option charge is
assessed during the first seven account years. After the seventh account
year, or if you do not elect the premium bonus option, the maximum total
separate account expenses you would pay is 1.90%.
(2) The total separate account expenses that apply to your contract may be
lower. Please refer to the "Fee Table" section of your prospectus.

The following information supplements the "Fund Expense Table" contained in the
prospectus:

Aetna GET Fund Series K Annual Expenses
(As a percentage of the average net assets)

For more information regarding expenses paid out of assets of the fund, see the
GET K prospectus.

- -----------------------
(3) The Investment Advisory Fee will be 0.25% during the offering period and
0.60% during the guarantee period.

(4) "Other Expenses" include an annual fund administrative fee of 0.075% of the
average daily net assets of GET K and any additional direct fund expenses.

(5) The investment adviser is contractually obligated through GET K's maturity
date 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 GET K's Total Fund Annual Expenses do not
exceed 0.75% of the fund's average daily net assets. It is not expected that
GET K's actual expenses without this waiver or reimbursement will exceed
this amount.

<PAGE>

The following information supplements the "Hypothetical Examples" contained in
the prospectus.

HYPOTHETICAL EXAMPLES--AETNA GET FUND SERIES K

Account Fees You May Incur Over Time. The following hypothetical examples show
the fees and expenses paid over time if you invest $1,000 in the GET K
investment option under the contract (until GET K's maturity date) and assume a
5% annual return on the investment.(6)

1 Year 3 Years 5 Years 1 Year 3 Years 5 Years
-------- --------- --------- -------- --------- --------

<S> <C> <C> <C> <C> <C> <C>
Aetna GET Fund Series K $ $ $ $ $ $
</TABLE>

- -----------------------

(6) The examples shown above reflect an annual mortality and expense risk charge
of 1.25%, an annual contract administrative expense charge of 0.15%, an
annual GET K guarantee charge of 0.50%, an annual premium bonus charge of
0.50%, a $30 annual maintenance fee that has been converted to a percentage
of assets equal to 0.022%, and all charges and expenses of the GET K Fund.
Example A reflects an early withdrawal charge of 7% of the purchase payments
at the end of year 1, 6% at the end of year 3, and 4% at the end of year 5.
(The expenses that you would pay under your contract may be lower. Please
refer to the "Fee Table" section of your prospectus.)

<PAGE>

The following information supplements "Appendix IV--Description of Underlying
Funds" contained in the prospectus:

Aetna GET Fund (Series K)

INVESTMENT OBJECTIVE

Seeks to achieve maximum total return without compromising a minimum targeted
return (Targeted Return) by participating in favorable equity market
performance during the guarantee period, from December 14, 2000 through
December 13, 2005, the maturity date.

POLICIES

Prior to December 14, 2000, assets are invested entirely in short-term
instruments. After that date, assets are allocated between equities and fixed
income securities. Equities consist primarily of common stocks. Fixed income
securities consist primarily of short- to intermediate-duration U.S. Government
securities and may also consist of mortgage backed securities and corporate
obligations. The investment adviser uses a proprietary computer model to
determine the percentage of assets to allocate between the fixed and the equity
components. As the value of the equity component declines, more assets are
allocated to the fixed component.

RISKS

The principal risks of investing in Series K are those generally attributable
to stock and bond investing. The success of Series K's strategy depends on the
investment adviser's skill in allocating assets between the equity and fixed
components and in selecting investments within each component. Because Series K
invests in both stocks and bonds, it may underperform stock funds when stocks
are in favor and underperform bond funds when bonds are in favor. The risks
associated with investing in stocks include sudden and unpredictable drops in
the value of the market as a whole and periods of lackluster or negative
performance. The principal risk associated with investing in bonds is that
interest rates may rise, which generally causes bond prices to fall. If at the
inception of, or any time during, the guarantee period interest rates are low,
Series K assets may be largely invested in the fixed component in order to
increase the likelihood of achieving the Targeted Return at the maturity date.
The effect of low interest rates on Series K would likely be more pronounced at
the beginning of the guarantee period as the initial allocation of assets would
include more fixed income securities. In addition, if during the guarantee
period the equity markets experienced a major decline, Series K assets may
become largely invested in the fixed component in order to increase the
likelihood of achieving the Targeted Return at the maturity date. Use of the
fixed component reduces Series K's ability to participate as fully in upward
equity market movements, and therefore represents some loss of opportunity, or
opportunity cost, compared to a portfolio that is fully invested in equities.

Investment Adviser: Aeltus Investment Management, Inc.

X.GETK56297-00 July 2000

<PAGE>

Contract Prospectus - July 14, 2000
- --------------------------------------------------------------------------------

[Begin sidebar]

The Funds

o Aetna Balanced VP, Inc.
o Aetna Income Shares d/b/a Aetna Bond VP
o Aetna Growth VP
o Aetna Variable Fund d/b/a Aetna Growth and Income VP
o Aetna Index Plus Large Cap VP
o Aetna International 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 Technology VP
o AIM V.I. Capital Appreciation Fund

o AIM V.I. Government Securities Fund

o AIM V.I. Growth Fund
o AIM V.I. Growth and Income Fund
o AIM V.I. Value Fund

o Alliance Variable Products--Growth and Income Portfolio
o Alliance Variable Products--Premier Growth Portfolio
o Alliance Variable Products--Quasar Portfolio

o Fidelity Variable Insurance Products Fund (VIP) Equity-Income Portfolio
o Fidelity Variable Insurance Products Fund (VIP) Growth Portfolio
o Fidelity Variable Insurance Products Fund (VIP) High Income Portfolio
o Fidelity Variable Insurance Products Fund II (VIP II) Contrafund[RegTM]
Portfolio
o Janus Aspen Aggressive Growth Portfolio
o Janus Aspen Balanced Portfolio
o Janus Aspen Growth Portfolio
o Janus Aspen Worldwide Growth Portfolio
o MFS Total Return Series
[o Mitchell Hutchins Series Trust Growth and Income Portfolio]
[o Mitchell Hutchins Series Trust Small Cap Portfolio]
[o Mitchell Hutchins Series Trust Tactical Allocation Portfolio]
o Oppenheimer Aggressive Growth Fund/VA
o Oppenheimer Main Street Growth & Income Fund/VA
o Oppenheimer Strategic Bond Fund/VA
o Portfolio Partners, Inc. (PPI) MFS Capital Opportunities Portfolio (formerly
PPI MFS Value Equity Portfolio)
o Portfolio Partners, Inc. (PPI) MFS Emerging Equities Portfolio
o Portfolio Partners, Inc. (PPI) MFS Research Growth Portfolio
o Portfolio Partners, Inc. (PPI) Scudder International Growth Portfolio

[End sidebar]

The Contract. The contract described in this prospectus is a group or individual
Aetna Variable Annuity deferred variable annuity contract issued by Aetna Life
Insurance and Annuity Company (the Company, we, us). It is issued to you, the
contract holder, as either a nonqualified deferred annuity, including contracts
offered to a custodian for an Individual Retirement Account as described in
Section 408(a) of the Internal Revenue Code of 1986, as amended (Tax Code); a
qualified individual retirement annuity (IRA); a qualified Roth IRA; or as a
qualified contract for use with certain employer sponsored retirement plans. The
Contract is not available as a SIMPLE IRA under Tax Code Section 408(p).

- --------------------------------------------------------------------------------

Why Reading this Prospectus Is Important. This prospectus contains facts about
the contract and its investment options that you should know before purchasing.
This information will help you decide if the contract is right for you. Please
read this prospectus carefully.

Table of Contents . . . page 3

- --------------------------------------------------------------------------------

Premium Bonus Option. We will credit a premium bonus to your account for each
purchase payment you make during the first account year if you elect the premium
bonus option. There is an annual charge for this option during the first seven
account years, and in certain circumstances this charge may be more than the
amount of the premium bonus. See "Premium Bonus Option-- Suitability." The
premium bonus option may not be available in all states.

Investment Options. The contract offers variable investment options and fixed
interest options. When we establish your account you instruct 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. Each subaccount invests in one of the mutual
funds listed on this page. Earnings on amounts invested in a subaccount will
vary depending upon the performance of its underlying fund. You do not invest
directly in or hold shares of the funds.

Risks Associated with Investing in the Funds. The funds in which the subaccounts
invest have various risks. Information about the risks of investing in the funds
is located in the "Investment Option" section on page 18, in Appendix
IV--Description of Underlying Funds and in each fund prospectus. Read this
prospectus in conjunction with the fund prospectuses, and retain the
prospectuses for future reference.

Getting Additional Information. You may obtain the July 14, 2000, Statement of
Additional Information (SAI) about the separate account by indicating your
request on your application or calling us at 1-800-238-6219. You may also obtain
an SAI for any of the funds by calling that number. The SEC also makes available
to the public reports and information about the separate account and the funds.
Certain reports and information, including this prospectus and SAI, are
available on the EDGAR Database on the Securities and Exchange Commission (SEC)
web site, www.sec.gov, or at the SEC Public Reference Room in Washington, D.C.
You may call 1-202-942-8090 to get information about the operations of the
Public Reference Room. You may obtain copies of reports and other information
about the separate account and the funds, after paying a duplicating fee, by
sending an e-mail request to [email protected] or by writing to the SEC Public
Reference Section, Washington, D.C. 20549-0102. The SAI table of contents is
listed on page 55 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. 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. We have not authorized
anyone to provide you with information that is different than that contained in
this prospectus.

*Effective May 15, 2000, transfers or deposits are not allowed into the
subaccount investing in this fund except those made pursuant to standing
instructions (e.g., dollar cost averaging, account rebalancing) in effect prior
to this date. See "Important Information Regarding the Aetna Real Estate
Securities VP Subaccount."
<PAGE>

Prospectus - July 14, 2000 (continued)
- --------------------------------------------------------------------------------

Fixed Interest Options.

> ALIAC Guaranteed Account (the Guaranteed Account)

> Fixed Account

Except as specifically mentioned, this prospectus describes only the investment
options offered through the separate account. However, we describe the fixed
interest options in appendices to this prospectus. There is also a separate
Guaranteed Account prospectus.

Availability of Options. Some funds or fixed interest options may be unavailable
through your contract or in your state.

Important Information Regarding the Aetna Real Estate Securities VP Subaccount

Subaccount to be Closed to New Investments. Effective May 15, 2000, the Aetna
Real Estate Securities VP subaccount is no longer available for new investments.
We will only accept deposits into the subaccount investing in this fund if they
are made pursuant to standing instructions (e.g., dollar cost averaging, account
rebalancing, etc.) in effect before the close of business on May 12, 2000.

Fund Shares to be Substituted with Shares of Aetna Money Market VP.

Plan of Substitution. On or before September 1, 2000, subject to applicable
regulatory approvals and the requisite vote of shareholders of the applicable
fund, any existing balance in Aetna Real Estate Securities VP will be invested
in (substituted with) shares of Aetna Money Market VP. You will not incur any
fees or charges as a result of the substitution. In addition, on and after
September 1, 2000, all investment allocations then being directed to the Aetna
Real Estate Securities VP subaccount will be redirected to the Aetna Money
Market VP subaccount. We do not believe that the substitution will create any
tax liability.

Transfer Rights. At any time prior to the date of substitution, you may transfer
your accumulated values from the subaccounts investing in substituted funds into
any other investment option available under your contract and no transfer fees
or other charges will be imposed. From and after the date of substitution, you
may, if you had values transferred from a subaccount as a result of a
substitution, transfer among any of the remaining investment options in
accordance with the terms of your contract and free of any transfer fees and
charges. Any such transfer will not be counted as one of the free transfers
permitted under your contract, provided that the transfer occurs prior to, or
within 90 days after, the substitution.

Surrender Rights. If you had shares substituted and elect to make a surrender
under the contract (if permitted by applicable tax law) within 30 days after the
date of the substitution, we will waive any early withdrawal charge on amounts
transferred as a result of the substitution. This offer to waive the early
withdrawal charge will not apply to amounts transferred after April 10, 2000
from the other investment options to the Aetna Real Estate Securities VP
subaccount. If you exercise this surrender right, you may incur income tax
liability and a tax penalty. See the "Taxation" section of this prospectus for a
discussion of tax consequences resulting from surrender. You should seek
qualified tax advice before exercising your surrender rights.

The contract is not a deposit with, obligation of or guaranteed or endorsed by
any bank, nor is it insured by the FDIC. The contract is subject to investment
risk, including the possible loss of the principal amount of your investment.
<PAGE>

TABLE OF CONTENTS

<TABLE>
- --------------------------------------------------------------
<S> <C>
Contract Overview ........................................ 4

Contract Design

New York Contracts

Contract Facts

Questions: Contacting the Company (sidebar)

Sending Forms and Written Requests in Good Order (sidebar)

Sending Additional Purchase Payments (sidebar)

Contract Phases: The Accumulation Phase, The Income Phase
- --------------------------------------------------------------
</TABLE>

<TABLE>
<S> <C>
Fee Table .................................. 8

Condensed Financial Information ............ 14

Purchase and Rights ........................ 14

Right to Cancel ............................ 16

Premium Bonus Option ....................... 16

Investment Options ......................... 18

Transfers Among Investment Options ......... 19

Transfers Between Option Packages .......... 22

Fees ....................................... 23

Your Account Value ......................... 28

Withdrawals ................................ 30

Systematic Distribution Options ............ 32

Death Benefit .............................. 33

The Income Phase ........................... 38

Taxation ................................... 42

Other Topics ............................... 50
</TABLE>

The Company -- Variable Annuity Account B -- Contract Distribution -- Payment of
Commissions -- Payment Delay or Suspension -- Performance Reporting -- Voting
Rights -- Contract Modifications -- Transfer of Ownership: Assignment --
Involuntary Terminations -- Legal Matters and Proceedings

<TABLE>
<S> <C>
Contents of the Statement of Additional Information ......... 55

Appendix I -- New York Contracts ............................ 56

Appendix II -- ALIAC Guaranteed Account ..................... 62

Appendix III -- Fixed Account ............................... 65

Appendix IV -- Description of Underlying Funds .............. 66

Appendix V -- Condensed Financial Information ............... 87
</TABLE>

3
<PAGE>

[Begin sidebar]

Questions: Contacting the Company. To answer your questions, contact your sales
representative or write or call our Home Office at:

Aetna Financial Services
Annuity Services
151 Farmington Avenue
Hartford, CT 06156-1258
1-800-238-6219

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 us or your sales representative to learn what information
is required for the request to be in "good order." We can only act upon requests
that are received in good order.

Sending Additional Purchase Payments.

Use one of the following addresses when sending additional purchase payments.

If using the U.S. Postal Service:

ALIAC
Attn: New Business Unit
P.O. Box 30670
Hartford, CT 06150-0670

If using express mail:

Fleet Bank/ALIAC #30670 Lockbox-CT/EH F03E
99 Founders Plaza, 3rd Floor
East Hartford, CT 06108

Express mail packages should not be sent to the P.O. Box address.

[End sidebar]

Contract Overview
- --------------------------------------------------------------------------------

The following is intended as a summary. Please read each section of this
prospectus for additional detail.

- --------------------------------------------------------------------------------
Contract Design
- --------------------------------------------------------------------------------

The contract described in this prospectus is a group or individual deferred
variable annuity contract. It is intended to be a retirement savings vehicle
that offers a variety of investment options to help meet long-term financial
goals. The term "contract" in this prospectus refers to individual contracts and
to certificates issued under group contracts.

- --------------------------------------------------------------------------------
New York Contracts
- --------------------------------------------------------------------------------

Some of the fees, features and benefits of the contract are different if it is
issued in the State of New York. For details regarding the New York contracts,
see Appendix I.

- --------------------------------------------------------------------------------
Contract Facts
- --------------------------------------------------------------------------------

Option Packages. There are three option packages available under the contract.
You select an option package at the time of application. Each option package is
distinct. The differences are summarized as follows:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Option Package I Option Package II Option Package III
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mortality and
Expense Risk
Charge(1): 0.80% 1.10% 1.25%
- ------------------------------------------------------------------------------------------------------------
Death Benefit(2) The greater of: The greatest of: The greatest of:
on Death of the (1) The sum of (1) The sum of (1) The sum of
Annuitant(3): all purchase all purchase all purchase
payments, adjusted payments, adjusted payments, adjusted
for amounts for amounts for amounts
withdrawn or withdrawn or withdrawn or
applied to an applied to an applied to an
income phase income phase income phase
payment option as payment option as payment option as
of the claim date; or of the claim date; or of the claim date;
(2) The account value (2) The account value or
on the claim date. on the claim date; (2) The account value
or on the claim date;
(3) The "step-up value" or
on the claim date. (3) The "step-up value"
on the claim date;
or
(4) The "roll-up value"
on the claim date.(4)
- ------------------------------------------------------------------------------------------------------------
Minimum Initial Non- Non- Non-
Purchase Payment(5): Qualified: Qualified: Qualified: Qualified: Qualified: Qualified:
$15,000 $1,500 $5,000 $1,500 $5,000 $1,500
- ------------------------------------------------------------------------------------------------------------
Free Withdrawals(6): 10% of your account 10% of your account 10% of your account
value each account value each account value each account
year, non-cumulative. year, non-cumulative. year, cumulative to a
maximum 30%.
- ------------------------------------------------------------------------------------------------------------
Nursing Home
Waiver -- Waiver Not
of Early With- Available Available Available
drawal Charge(7):
- ------------------------------------------------------------------------------------------------------------
</TABLE>

(1) See "Fee Table" and "Fees."

(2) See "Death Benefit." If a death benefit is payable based on account value,
step-up value or roll-up value, the death benefit will not include any
premium bonus credited to the account after or within 12 months of the date
of death. See "Premium Bonus Option--Forfeiture."

(3) When a contract holder who is not the annuitant dies, the amount of the
death benefit is not the same as shown above under each option package. See
"Death Benefit." Therefore, contract holders who are not also the annuitant
should seriously consider whether Option Packages II and III are suitable
for their circumstances.

(4) See Appendix I for details regarding the death benefit under Option Package
III for contracts issued in New York.

(5) See "Purchase and Rights."
(6) See "Fees."

(7) See "Fees" and Appendix I for contracts issued in New York.

4
<PAGE>

Premium Bonus Option. At the time of application you may elect the premium bonus
option. Once elected it may not be revoked. If you elect this option we will
credit your account with a 4% premium bonus for each purchase payment you make
during the first account year. The premium bonus will be included in your
account value and allocated among the investment options you have selected in
the same proportion as the purchase payment. See "Premium Bonus Option."

In exchange for the premium bonus, during the first seven account years you will
pay an annual premium bonus option charge equal to 0.50% of your account value
allocated to the subaccounts. We may also deduct this charge from amounts
allocated to the fixed interest options. See "Fee Table" and "Fees."

In each of the following circumstances all or part of a premium bonus credited
to your account will be forfeited:

> If you exercise your free look privilege and cancel your contract. See
"Premium Bonus Option--Forfeiture" and "Right to Cancel."

> If a death benefit is payable based on account value, step-up value or
roll-up value, but only the amount of any premium bonus credited to the
account after or within 12 months of the date of death. See "Premium Bonus
Option--Forfeiture" and "Death Benefit--Premium Bonus."

> If all or part of a purchase payment for which a premium bonus was credited
is withdrawn during the first seven account years. See "Premium Bonus
Option--Forfeiture" and "Withdrawals."

If you expect to make purchase payments to your contract after the first account
year, the premium bonus option may not be right for you. Also, if you anticipate
that you will need to make withdrawals from your account during the first seven
account years, you may not want to elect the premium bonus option. See "Premium
Bonus Option--Suitability." Your sales representative can help you decide if the
premium bonus option is right for you.

Transferability. You may transfer from one option package to another.

> Transfers must occur on an account anniversary.

> A written request for the transfer must be received by us within 60 days of
an account anniversary.

> Certain minimum account values must be met.

See "Transfers Between Option Packages."

Free Look/Right to Cancel. You may cancel your contract within ten days (some
states require more than ten days) of receipt. See "Right to Cancel."

Death Benefit. Your beneficiary may receive a financial benefit in the event of
your death prior to the income phase. The amount of the death benefit will
depend upon the option package selected. See "Death Benefit." Any death benefit
during the income phase will depend upon the income phase payment option
selected. See "The Income Phase."

Withdrawals. During the accumulation phase you may withdraw all or part of your
account value. Certain fees, taxes and early withdrawal penalties may apply. In
addition, the Tax Code restricts full and partial withdrawals in some
circumstances. See "Withdrawals." Amounts withdrawn from the Guaranteed Account
may be subject to a market value adjustment. See Appendix I.

5
<PAGE>

Systematic Distribution Options. These are made available for you to receive
periodic withdrawals from your account, while retaining the account in the
accumulation phase. See "Systematic Distribution Options."

Fees and Expenses. Certain fees and expenses are deducted from the value of your
contract. The fees and expenses deducted may vary depending upon the option
package you select. See "Fee Table" and "Fees."

Taxation. You will generally not pay taxes on any earnings from the annuity
contract described in this prospectus until they are withdrawn. Tax-qualified
retirement arrangements (e.g., IRAs or 403(b) plans) also defer payment of taxes
on earnings until they are withdrawn. If you are considering funding a
tax-qualified retirement arrangement with an annuity contract, you should know
that the annuity contract does not provide any additional tax deferral of
earnings beyond the tax deferral provided by the tax-qualified retirement
arrangement. However, annuities do provide other features and benefits which may
be valuable to you. You should discuss your decision with your financial
representative.

Taxes will generally be due when you receive a distribution. Tax penalties may
apply in some circumstances. See "Taxation."

6
<PAGE>

- --------------------------------------------------------------------------------
Contract Phases
- --------------------------------------------------------------------------------

[graphic]

Payments to
Your Account

Step 1 (down arrow)

Aetna Life Insurance and Annuity Company

(a) (down arrow) Step 2 (b) (down arrow)
Variable Annuity
Fixed Account B
Interest
Options Variable Investment Options

The Subaccounts

A B Etc.

(down arrow) Step 3 (down arrow)

Mutual Mutual
Fund A Fund B
[end graphic]

I. The Accumulation Phase (accumulating dollars under your contract)

STEP 1: You provide us with your completed application and initial purchase
payment. We establish an account for you and credit that account with your
initial purchase payment. If you elected the premium bonus option we will also
credit your account with a premium bonus.

STEP 2: You direct us to invest your purchase payment and the premium bonus, if
applicable, in one or more of the following investment options:

(a) Fixed Interest Options; or
(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 3: Each subaccount you select purchases shares of its assigned fund.

II. The Income Phase (receiving income phase payments from your contract)

When you want to begin receiving payments from your contract, you may select
from the options available. The contract offers several income phase payment
options (see "The Income Phase"). In general, you may:

> Receive income phase payments for a specified period of time or for life;

> Receive income phase payments monthly, quarterly, semi-annually or
annually;

> Select an income phase payment option that provides for payments to your
beneficiary; or

> Select income phase payments that are fixed or vary depending upon the
performance of the variable investment options you select.

7
<PAGE>

[Begin sidebar]

In this Section:

> Maximum Transaction Fees

> Maximum Fees Deducted from Investments in the Separate Account

> Fees Deducted by the Funds

> Hypothetical Examples

Also see the "Fees" section for:

> How, When and Why Fees are Deducted

> Reduction, Waiver and/or Elimination of Certain Fees

> Premium and Other Taxes

[End sidebar]

Fee Table
- --------------------------------------------------------------------------------

The tables and examples in this section show the fees that may affect your
account value during the accumulation phase. See "The Income Phase" for fees
that may apply after you begin receiving payments under the contract. The fees
shown do not reflect any premium tax that may apply.

These tables and examples apply to contracts issued outside of the State of New
York. See Appendix I for tables and examples for contracts issued in New York.

Maximum Transaction Fees

Early Withdrawal Charge. (As a percentage of payments withdrawn.)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
All Contracts, Except Roth IRA Contracts Issued Before July 14, 2000:
- --------------------------------------------------------------------------------
Early
Years From Receipt Withdrawal
of Purchase Payment Charge
------------------- ----------
<S> <C>
Less than 2 7%
2 or more but less than 4 6%
4 or more but less than 5 5%
5 or more but less than 6 4%
6 or more but less than 7 3%
7 or more 0%
- --------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Roth IRA Contracts Issued Before July 14, 2000:
- --------------------------------------------------------------------------------
Early
Withdrawal
Completed Account Years Charge
----------------------- ----------
<S> <C>
Less than 1 5%
1 or more but less than 2 4%
2 or more but less than 3 3%
3 or more but less than 4 2%
4 or more but less than 5 1%
5 or more 0%
- --------------------------------------------------------------------------------
</TABLE>

Annual Maintenance Fee............................................... $30.00(1)
Transfer Charge....................................................... $0.00(2)

(1) The annual maintenance fee will be waived if your account value is $50,000
or greater on the date this fee is due. See "Fees--Annual Maintenance Fee."

(2) During the accumulation phase we currently allow you 12 free transfers each
account year. We reserve the right to charge $10 for each additional
transfer. We currently do not impose this charge. See "Transfers" for
additional information.

8
<PAGE>

Maximum Fees Deducted from Investments in the Separate Account

Amount During the Accumulation Phase

(Daily deductions, equal to the following percentages on an annual basis, from
amounts invested in the subaccounts.)

<TABLE>
<CAPTION>
All Account
o If You Do Not Elect the Premium Bonus Option Years
<S> <C>
> Option Package I--
Mortality and Expense Risk Charge 0.80%
Administrative Expense Charge 0.15%
-----
Total Separate Account Expenses 0.95%
=====
> Option Package II--
Mortality and Expense Risk Charge 1.10%
Administrative Expense Charge 0.15%
-----
Total Separate Account Expenses 1.25%
=====
> Option Package III--
Mortality and Expense Risk Charge 1.25%
Administrative Expense Charge 0.15%
-----
Total Separate Account Expenses 1.40%
=====
</TABLE>

<TABLE>
<CAPTION>
After
Account the 7th
Years Account
o If You Elect the Premium Bonus Option 1-7 Year
<S> <C> <C>
> Option Package I--
Mortality and Expense Risk Charge 0.80% 0.80%
Administrative Expense Charge 0.15% 0.15%
Premium Bonus Option Charge 0.50% 0.00%
----- -----
Total Separate Account Expenses 1.45% 0.95%
===== =====
> Option Package II--
Mortality and Expense Risk Charge 1.10% 1.10%
Administrative Expense Charge 0.15% 0.15%
Premium Bonus Option Charge 0.50% 0.00%
----- -----
Total Separate Account Expenses 1.75% 1.25%
===== =====
> Option Package III--
Mortality and Expense Risk Charge 1.25% 1.25%
Administrative Expense Charge 0.15% 0.15%
Premium Bonus Option Charge 0.50% 0.00%
----- -----
Total Separate Account Expenses 1.90% 1.40%
===== =====
</TABLE>

9
<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 impacting
the share value, refer to the fund prospectus.

How fees are deducted. The fund fees are not deducted from account values.
Instead, they are deducted from the value of the fund shares on a daily basis,
which in turn affects the value of each subaccount that purchases fund shares.
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,
1999.

Fund Expense Table

<TABLE>
<CAPTION>
Total Fund Net Fund
Annual Annual
Expenses Expenses
Investment Without Total After
Advisory Other Waivers or Waivers and Waivers
Fund Name Fees(1) Expenses Reductions Reductions or Reductions
- --------- ------- -------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Aetna Balanced VP, Inc. 0.50% 0.09% 0.59% -- 0.59%
Aetna Bond VP 0.40% 0.09% 0.49% -- 0.49%
Aetna Growth VP(2) 0.60% 0.11% 0.71% 0.00% 0.71%
Aetna Growth and Income VP 0.50% 0.08% 0.58% -- 0.58%
Aetna Index Plus Large Cap VP(2) 0.35% 0.10% 0.45% 0.00% 0.45%
Aetna International VP(2) 0.85% 0.77% 1.62% 0.47% 1.15%
Aetna Money Market VP 0.25% 0.09% 0.34% -- 0.34%
Aetna Real Estate Securities VP(2) 0.75% 0.74% 1.49% 0.54% 0.95%
Aetna Small Company VP(2) 0.75% 0.13% 0.88% 0.00% 0.88%
Aetna Technology VP(2)(3) 0.95% 0.25% 1.20% 0.05% 1.15%
AIM V.I. Capital Appreciation Fund 0.62% 0.11% 0.73% -- 0.73%
AIM V.I. Government Securities Fund 0.50% 0.40% 0.90% -- 0.90%
AIM V.I. Growth Fund 0.63% 0.10% 0.73% -- 0.73%
AIM V.I. Growth and Income Fund 0.61% 0.16% 0.77% -- 0.77%
AIM V.I. Value Fund 0.61% 0.15% 0.76% -- 0.76%
Alliance Growth and Income Portfolio 0.63% 0.08% 0.71% -- 0.71%
Alliance Premier Growth Portfolio 1.00% 0.05% 1.05% -- 1.05%
Alliance Quasar Portfolio(4) 1.00% 0.19% 1.19% 0.24% 0.95%
Fidelity VIP Equity-Income Portfolio(5) 0.48% 0.09% 0.57% -- 0.57%
Fidelity VIP Growth Portfolio(5) 0.58% 0.08% 0.66% -- 0.66%
Fidelity VIP High Income Portfolio(5) 0.58% 0.11% 0.69% -- 0.69%
Fidelity VIP II Contrafund[RegTM] Portfolio(5) 0.58% 0.09% 0.67% -- 0.67%
Janus Aspen Aggressive Growth Portfolio(6) 0.65% 0.02% 0.67% 0.00% 0.67%
Janus Aspen Balanced Portfolio(6) 0.65% 0.02% 0.67% 0.00% 0.67%
Janus Aspen Growth Portfolio(6) 0.65% 0.02% 0.67% 0.00% 0.67%
Janus Aspen Worldwide Growth Portfolio(6) 0.65% 0.05% 0.70% 0.00% 0.70%
MFS Total Return Series(7) 0.75% 0.15% 0.90% 0.00% 0.90%
[Mitchell Hutchins Growth and Income
Portfolio(9) 0.70% 0.78% 1.48% -- 1.48%]
[Mitchell Hutchins Small Cap Portfolio(9) 1.00% 3.05% 4.05% -- 4.05%]
[Mitchell Hutchins Tactical Allocation Portfolio(9) 0.50% 0.49% 0.99% -- 0.99%]
Oppenheimer Aggressive Growth Fund/VA 0.66% 0.01% 0.67% -- 0.67%
Oppenheimer Main Street Growth & Income
Fund/VA 0.73% 0.05% 0.78% -- 0.78%
Oppenheimer Strategic Bond Fund/VA 0.74% 0.04% 0.78% -- 0.78%
PPI MFS Capital Opportunities Portfolio(8) 0.65% 0.25% 0.90% 0.00% 0.90%
PPI MFS Emerging Equities Portfolio(8) 0.67% 0.13% 0.80% 0.00% 0.80%
PPI MFS Research Growth Portfolio(8) 0.70% 0.15% 0.85% 0.00% 0.85%
PPI Scudder International Growth Portfolio(8) 0.80% 0.20% 1.00% 0.00% 1.00%
</TABLE>

10
<PAGE>

Footnotes to the "Fund Expense Table"

(1) Certain of the fund advisers reimburse the company for administrative costs
incurred in connection with administering the funds as variable funding
options under the contract. These reimbursements are generally paid out of
the Investment Advisory Fees and are not charged to investors. For the AIM
Funds, the reimbursements may be paid out of fund assets in an amount up to
0.25% annually. Any such reimbursements paid from the AIM Funds' assets are
included in the "Other Expenses" column.

(2) The investment adviser is contractually obligated through December 31, 2000
to waive all or a portion of its investment advisory fee and/or its
administrative services fee and/or to reimburse a portion of other expenses
in order to ensure that the fund's "Total Fund Annual Expenses Without
Waivers or Reductions" do not exceed the percentage reflected under "Net
Fund Annual Expenses After Waivers or Reductions."

(3) Aetna Technology VP commenced operations on May 1, 2000. Amounts reflected
in "Other Expenses" and "Total Fund Annual Expenses Without Waivers or
Reductions" are estimated amounts for the current fiscal year based on
expenses for comparable funds. Actual expenses may vary from those shown.

(4) The investment manager has agreed to waive its fees and reimburse the
Quasar Variable Portfolio to limit total expenses to 0.95% of daily net
assets until at least May 1, 2001.

(5) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain
funds', or the investment adviser on behalf of certain funds', custodian,
credits realized as a result of uninvested cash balances were used to
reduce a portion of each applicable fund's expenses. These credits are not
included under Total Waivers and Reductions. If these credits had been
included, the amounts shown under Net Fund Annual Expenses After Waivers or
Reductions presented in the table would have been 0.56% for Fidelity VIP
Equity-Income Portfolio; 0.65% for Fidelity VIP Growth Portfolio; and 0.65%
for Fidelity VIP II Contrafund[RegTM] Portfolio.

(6) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for Aggressive
Growth, Balanced, Growth and Worldwide Growth Portfolios. All expenses are
shown without the effect of expense offset arrangements.

(7) The series has an expense offset arrangement which reduces the series'
custodian fee based upon the amount of cash maintained by the series with
its custodian and dividend disbursing agent. The series may enter into
other such arrangements and directed brokerage arrangements, which would
also have the effect of reducing the series' expenses. The "Other Expenses"
shown above do not take into account these expense reductions, and are
therefore higher than the actual expenses of the series. Had these fee
reductions been taken into account, Net Fund Annual Expenses After Waivers
or Reductions would be lower and would equal 0.89% for the series.

(8) The investment adviser has agreed to reimburse the portfolios for expenses
and/or waive its fees, so that, through at least April 30, 2001, the
aggregate of each portfolio's expenses will not exceed the combined
investment advisory fees and other expenses shown under the Net Fund Annual
Expenses After Waivers or Reductions column above.

(9) The "Other Expenses" include an annual 0.25% fee imposed under a
distribution plan pursuant to Rule 12b-1 under the Investment Company Act
of 1940. This plan provides that each portfolio pays to the distributor of
the portfolios a distribution fee at an annual rate of 0.25% of its average
daily net assets attributable to its Class I shares. The distributor of the
portfolios uses the distribution fee to pay insurance companies whose
separate accounts purchase Class I shares for distribution-related services
that the insurance companies provide with respect to the Class I shares.

11
<PAGE>

Hypothetical Example: If You Do Not Elect the Premium Bonus Option

Account Fees You May Incur Over Time. The following hypothetical examples show
the fees and expenses paid over time if you invest $1,000 in the contract and
assume a 5% annual return on the investment. For the purpose of these examples,
we deducted total annual fund expenses and the maximum contract charges, except
the premium bonus option charge (i.e., a mortality and expense risk charge of
1.25%, an administrative expense charge of 0.15% and an annual maintenance fee
of $30 (converted to a percentage of assets equal to 0.022%)). The total annual
fund expenses used are those shown in the column "Total Fund Annual Expenses
Without Waiver or Reductions" in the Fund Expense Table.

<TABLE>
<CAPTION>
- -------------------------------------------- EXAMPLE A EXAMPLE B
> These examples are purely hypothetical. --------- ---------
> They should not be considered a If you withdraw your entire account If at the end of the periods shown you
representation of past or future expenses value at the end of the periods shown, (1) leave your entire account value
or expected returns. you would pay the following expenses, invested or (2) select an income phase
> Actual expenses and/or returns may be including any applicable early payment option, you would pay the
more or less than those shown in these withdrawal charge*: following expenses (no early with-
examples. drawal 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 Balanced VP, Inc.
Aetna Bond VP
Aetna Growth VP
Aetna Growth and Income VP
Aetna Index Plus Large Cap VP
Aetna International VP
Aetna Money Market VP
Aetna Real Estate Securities VP
Aetna Small Company VP
Aetna Technology VP
AIM V.I. Capital Appreciation Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. Value Fund
Alliance Growth and Income Portfolio
Alliance Premier Growth Portfolio
Alliance Quasar Portfolio
Fidelity VIP Equity-Income Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP High Income Portfolio
Fidelity VIP II Contrafund[RegTM] Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
MFS Total Return Series
[Mitchell Hutchins Growth & Income Portfolio]
[Mitchell Hutchins Small Cap Portfolio]
[Mitchell Hutchins Tactical Allocation Portfolio]
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
Oppenheimer Strategic Bond Fund/VA
PPI MFS Capital Opportunities Portfolio
PPI MFS Emerging Equities Portfolio
PPI MFS Research Growth Portfolio
PPI Scudder International Growth Portfolio
</TABLE>

- -----------------

* This example reflects deduction of an early withdrawal charge using the
early withdrawal charge schedule that applies to all contracts, including
Roth IRA contracts issued after July 13, 2000.

** This example does not apply during the income phase if you selected a
nonlifetime income phase payment option with variable payments and take a
lump-sum withdrawal 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 (refer to Example A).

12
<PAGE>

Hypothetical Example: If You Elect the Premium Bonus Option

Account Fees You May Incur Over Time. The following hypothetical examples show
the fees and expenses paid over time if you invest $1,000 in the contract and
assume a 5% annual return on the investment. For the purpose of these examples,
we deducted total annual fund expenses and the maximum contract charges (i.e., a
mortality and expense risk charge of 1.25%, an administrative expense charge of
0.15%, an annual maintenance fee of $30 (converted to a percentage of assets
equal to 0.022%) and the premium bonus option charge of 0.50% during the first
seven account years). The total annual fund expenses used are those shown in the
column "Total Fund Annual Expenses Without Waiver or Reductions" in the Fund
Expense Table.

<TABLE>
<CAPTION>
- -------------------------------------------- EXAMPLE A EXAMPLE B
> These examples are purely hypothetical. --------- ---------
> They should not be considered a If you withdraw your entire account If at the end of the periods shown you
representation of past or future expenses value at the end of the periods shown, (1) leave your entire account value
or expected returns. you would pay the following expenses, invested or (2) select an income phase
> Actual expenses and/or returns may be including any applicable early payment option, you would pay the
more or less than those shown in these withdrawal charge*: following expenses (no early
examples. 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 Balanced VP, Inc.
Aetna Bond VP
Aetna Growth VP
Aetna Growth and Income VP
Aetna Index Plus Large Cap VP
Aetna International VP
Aetna Money Market VP
Aetna Real Estate Securities VP
Aetna Small Company VP
Aetna Technology VP
AIM V.I. Capital Appreciation Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. Value Fund
Alliance Growth and Income Portfolio
Alliance Premier Growth Portfolio
Alliance Quasar Portfolio
Fidelity VIP Equity-Income Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP High Income Portfolio
Fidelity VIP II Contrafund[RegTM] Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
MFS Total Return Series
[Mitchell Hutchins Growth & Income Portfolio]
[Mitchell Hutchins Small Cap Portfolio]
[Mitchell Hutchins Tactical Allocation Portfolio]
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
Oppenheimer Strategic Bond Fund/VA
PPI MFS Capital Opportunities Portfolio
PPI MFS Emerging Equities Portfolio
PPI MFS Research Growth Portfolio
PPI Scudder International Growth Portfolio
</TABLE>

- -----------------

* This example reflects deduction of an early withdrawal charge using the
early withdrawal charge schedule that applies to all contracts, including
Roth IRA contracts issued after July 13, 2000.

13
<PAGE>

Condensed Financial Information
- --------------------------------------------------------------------------------

Understanding Condensed Financial Information. In Appendix V of this prospectus,
we provide condensed financial information about the Variable Annuity Account B
(the separate account) subaccounts you may invest in through the contract. The
numbers show the year-end unit values of each subaccount from the time purchase
payments were first received in the subaccounts under the contract.

Purchase and Rights
- --------------------------------------------------------------------------------

How to Purchase

> Individual Contracts. In some states, where group contracts are not
available, you may purchase the contract directly from us by completing an
application and delivering it and your initial purchase payment to us. Upon
our approval we will issue you a contract and set up an account for you
under the contract.

> Group Contracts. In most states we have distributors, usually
broker-dealers or banks, who hold the contract as a group contract (see
"Distribution"). You may purchase an interest (or, in other words,
participate) in the group contract by contacting a distributor and
completing an application and delivering it with your initial purchase
payment to that distributor. Upon our approval, we will set up an account
for you under the group contract and issue you a certificate showing your
rights under the contract.

> Joint Contracts (generally spouses). For a nonqualified contract, you may
participate in a group contract as a joint contract holder. References to
"contract holder" in this prospectus mean both contract holders under joint
contracts. Tax law prohibits the purchase of qualified contracts by joint
contract holders.

Maximum Issue Age. The maximum issue age for you and the annuitant (if you are
not the annuitant) on the date we establish your account is 90.

Your Rights Under the Contract

> Individual Contracts. You have all contract rights.

> Group Contracts. The holder of the group contract has title to the contract
and, generally, only the right to accept or reject any modifications to the
contract. You have all other rights to your account under the contract.

> Joint Contracts. Joint contract holders have equal rights under the
contract with respect to their account. All rights under the contract must
be exercised by both joint contract holders with the exception of transfers
among investment options. See the "Death Benefit" section for the rights of
the surviving joint contract holder upon the death of a joint contract
holder prior to the income phase start date.

Purchase Payment Methods. The following purchase payment methods are allowed:

> One lump sum;

> Periodic payments; or

> Transfer or rollover from a pre-existing retirement plan or account.

14
<PAGE>

We reserve the right to reject any purchase payments to a prospective or
existing account without advance notice. If you are considering making periodic
payments beyond the first contract year, the premium bonus option may not be
right for you. See "Premium Bonus Option--Suitability."

Purchase Payment Amounts.

The minimum initial purchase payment depends upon the option package selected at
issue and must be met without consideration of any premium bonus.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Option Option Option
Package I Package II Package III
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Minimum Non- Non- Non-
Initial Qualified: Qualified:* Qualified: Qualified:* Qualified: Qualified:*
Purchase ---------- ----------- ---------- ----------- ---------- -----------
Payment $15,000 $1,500 $5,000 $1,500 $5,000 $1,500
- ------------------------------------------------------------------------------------------
</TABLE>

* The Tax Code imposes a maximum limit on annual payments which may be
excluded from your gross income.

Additional purchase payments must be at least $50 (we may change this amount
from time to time.) A purchase payment of more than $1,000,000 will be allowed
only with our consent.

Reduction of Purchase Payment Amounts. In certain circumstances we may reduce
the minimum initial or additional purchase payment amount we will accept under a
contract. Whether such a reduction is available will be based on consideration
of each of the following factors:

> The size and type of the prospective group, if any, to which the reduction
would apply;

> The method and frequency of purchase payments to be made under the
contract; and

> The amount of compensation to be paid to distributors and their registered
representative on each purchase payment.

Any reduction of the minimum initial or additional purchase payment amount will
not be unfairly discriminatory against any person. We will make any such
reduction according to our own rules in effect at the time the purchase payment
is received. We reserve the right to change these rules from time to time.

Acceptance or Rejection of Your Application. We must accept or reject your
application within two business days of receipt. If the application is
incomplete, we may hold any forms and accompanying purchase payment(s) for five
business days. We may hold purchase payments for longer periods, pending
acceptance of the application, only with your permission. If the application is
rejected, the application and any purchase payments will be returned to you.

Allocating Purchase Payments to the Investment Options. We will allocate your
purchase payments among the investment options you select. Allocations must be
in whole percentages and there may be limits on the number of investment options
you may select. When selecting investment options you may find it helpful to
review the "Investment Options" section.

15
<PAGE>

Right to Cancel
- --------------------------------------------------------------------------------

When and How to Cancel. You may cancel your contract within ten days of receipt
(some states require more than ten days) by returning it to our Home Office
along with a written notice of cancellation.

Refunds. We will issue you a refund within seven days of our receipt of your
contract and written notice of cancellation. Unless your state requires
otherwise or unless you purchased an IRA, your refund will equal the purchase
payments made plus any earnings or minus any losses attributable to those
purchase payments allocated among the subaccounts. Any premium bonus credited to
your account will be forfeited and your refund will reflect any earnings or
losses attributable to the premium bonus. In other words, you will bear the
entire investment risk for amounts allocated among the subaccounts during this
period and the amount refunded could be less than the amount paid. If your state
requires or if you purchased an IRA, we will refund all purchase payments made.

If the purchase payments for your canceled contract came from a rollover from
another contract issued by us or one of our affiliates where an early withdrawal
charge was reduced or eliminated, the purchase payments will be restored to your
prior contract.

Premium Bonus Option
- --------------------------------------------------------------------------------

Election. At the time of application you may elect the premium bonus option.
Once elected it may not be revoked. The premium bonus option may not be
available under all contracts or in all states.

Premium Bonus Amount. If you elect this option we will credit your account with
a 4% premium bonus for each purchase payment you make during the first account
year. The premium bonus will be included in your account value and allocated
among the investment options you have selected in the same proportion as the
purchase payment. The amount of the premium bonus we credit to an account may be
reduced if the premium bonus option charge is reduced or eliminated.

Premium Bonus Option Charge. In exchange for the premium bonus, during the first
seven account years you will pay an annual premium bonus option charge equal to
0.50% of your account value allocated to the subaccounts. We may also deduct
this charge from amounts allocated to the fixed interest options. Under certain
contracts, the premium bonus option charge may be reduced or eliminated. See
"Fees--Reduction or Elimination of Certain Fees."

After the seventh account year you will no longer pay the premium bonus option
charge. We will administer the elimination of this charge by decreasing the
number of accumulation units and increasing the accumulation unit values of the
subaccounts in which you are then invested. The elimination of this charge and
the adjustment of the number of accumulation units and accumulation unit values
will not affect your account value. See "Your Account Value."

Forfeiture. In each of the following circumstances all or part of a premium
bonus credited to your account will be forfeited:

> If you exercise your free look privilege and cancel your contract. See
"Right to Cancel."

16
<PAGE>

> If all or part of a purchase payment for which a premium bonus was credited
is withdrawn during the first seven account years. The amount of the
premium bonus forfeited will be in the same percentage as the amount
withdrawn subject to an early withdrawal charge is to the total purchase
payments made during the first account year. See "Withdrawals."

The following hypothetical example illustrates how the forfeiture of premium
bonus is calculated when you withdraw all or part of a purchase payment for
which a premium bonus was credited during the first seven account years.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Purchase Premium Account Withdrawal
Date Payment Bonus Value Amount Explanation
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
July 14, 2000 $100,000 $4,000 $104,000 -- You make a $100,000 initial purchase payment
and we credit your account with a 4% ($4,000)
premium bonus. Your beginning account value
equals $104,000.
- -----------------------------------------------------------------------------------------------------------------------
July 14, 2003 -- -- $120,000 $30,000 Assume that your account value grows to $120,000
over the next three years and you request a
$30,000 withdrawal. $18,000 of that $30,000 will
be subject to an early withdrawal charge
($30,000 minus $12,000 (the 10% free withdrawal
amount, see "Fees--Free Withdrawals")) and you
would pay a $1,080 early withdrawal charge (6%
of $18,000). Additionally, because $18,000 is
18% of the $100,000 purchase payment made in the
first account year, 18% of your $4,000 premium
bonus, or $720, would be forfeited.*
- -----------------------------------------------------------------------------------------------------------------------

</TABLE>

- ---------------------------
*This example assumes that either Option Package I or II has been in effect
since you purchased the contract. If Option Package III has been in effect
since inception, none of the withdrawal would be subject to an early withdrawal
charge because the 30% cumulative free withdrawal amount ($36,000) would be
greater than the amount of the withdrawal. See "Fees--Free Withdrawals."
Therefore, the withdrawal would not result in forfeiture of any of the premium
bonus.

See Appendix I for details about forfeiture of the premium bonus under contracts
issued in New York.

Suitability. If you expect to make purchase payments to your account after the
first account year, the premium bonus option may not be right for you. Your
account will not be credited with a premium bonus for purchase payments made
after the first account year yet we will assess the premium bonus option charge
against your account value which is increased by these additional purchase
payments. Consequently, the amount of the premium bonus option charge you would
pay over time may be more than the amount of the premium bonus we credited to
your account. Also, if you anticipate that you will need to make withdrawals
from your account during the first seven account years, you may not want to
elect the premium bonus option. When you make such a withdrawal you may forfeit
part of your premium bonus, and the amount of the premium bonus option charge
you have paid may be more than the amount of the premium bonus not forfeited.
Your sales representative can help you decide if the premium bonus option is
right for you.

17
<PAGE>

Investment Options
- --------------------------------------------------------------------------------

The contract offers variable investment options and fixed interest options.

> Mutual Fund (fund) Descriptions. We provide brief descriptions of the funds
in Appendix IV. 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. Shares of the funds will rise and
fall in value and you could lose money by investing in the funds. Shares of
the funds are not bank deposits and are not guaranteed, endorsed or insured
by any financial institution, the Federal Deposit Insurance Corporation or
any other government agency. Unless otherwise noted, all funds are
diversified as defined under the Investment Company Act of 1940. Refer to
the fund prospectuses for additional information. Fund prospectuses may be
obtained, free of charge, from our Home Office at the address and phone
number listed in "Contract Overview--Questions: Contacting the Company" or
by contacting the SEC Public Reference Room.

Fixed Interest Options. If available in your state, the ALIAC Guaranteed Account
(the Guaranteed Account) or the Fixed Account. The Guaranteed Account offers
certain guaranteed minimum interest rates for a stated period of time. Amounts
must remain in the Guaranteed Account for specific periods to receive the quoted
interest rates, or a market value adjustment will be applied. The market value
adjustment may be positive or negative. The Fixed Account guarantees payment of
the minimum interest rate specified in the contract. The Fixed Account is only
available in certain states. For a description of these options, see Appendices
II and III and the Guaranteed Account prospectus.

- --------------------------------------------------------------------------------

Selecting Investment Options

o Choose options appropriate for you. Your sales representative can help you
evaluate which investment 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 values that rise and fall more
rapidly and to a greater degree than other funds. For example, funds
investing in foreign or international securities are subject to risks not
associated with domestic investments, and their investment 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 prospectuses, the Guaranteed
Account and Fixed Account appendices and the Guaranteed Account prospectus.

- --------------------------------------------------------------------------------

Limits on Availability of Options. Some funds or fixed interest options may be
unavailable through your contract or in your state. We may add, withdraw or
substitute funds, subject to the conditions in your contract and compliance with
regulatory requirements.

18
<PAGE>

Limits on How Many Investment Options You May Select. Although there is
currently no limit, we reserve the right to limit the number of investment
options you may select at any one time or during the life of the contract. For
purposes of determining any limit, each subaccount and each guaranteed term of
the Guaranteed Account, or an investment in the Fixed Account in certain
contracts, will be considered an investment option.

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 a purchase payment 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, are 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, which 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
may arise and to determine what action, if any, should be taken to address such
conflicts.

Transfers Among Investment Options
- --------------------------------------------------------------------------------

You may transfer amounts among the available subaccounts. During the
accumulation phase we allow you 12 free transfers each account year. We reserve
the right to charge $10 for each additional transfer. We currently do not impose
this charge. During the income phase we allow you four free transfers each
account year. We reserve the right to charge $10 for each additional transfer.
We currently do not impose this charge.

Transfers from the Guaranteed Account are subject to certain restrictions and
may be subject to a market value adjustment. Transfers from the Fixed Account
are subject to certain restrictions and transfers into the Fixed Account from
any of the other investment options are not allowed. Transfers must be made in
accordance with the terms of your contract.

Transfer Requests. Requests may be made in writing, by telephone or, where
applicable, electronically.

Limits on Frequent Transfers. The contract is not designed to serve as a vehicle
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.

19
<PAGE>

Accordingly, organizations or individuals that use market-timing investment
strategies and make frequent transfers should not purchase the contract.

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. Such restrictions could include: (1) not accepting transfer
instructions from an agent acting on behalf of more than one contract holder;
and (2) not accepting preauthorized transfer forms from market timers or other
entities acting on behalf of more than one contract holder 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.

Additionally, 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 transfer request to a subaccount if the subaccount's investment in the
corresponding fund is not accepted for any reason.

Value of Your Transferred Dollars. The value of amounts transferred into or out
of subaccounts will be based on the subaccount unit values next determined after
we receive your transfer request in good order at our Home Office or, if you are
participating in the dollar cost averaging or account rebalancing programs,
after your scheduled transfer or reallocation.

Telephone and Electronic Transactions: Security Measures. To prevent fraudulent
use of telephone and electronic transactions (including, but not limited to,
internet 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 or other electronic transactions. We are not liable for
losses resulting from telephone or electronic instructions we believe to be
genuine. If a loss occurs when we rely on such instructions, you will bear the
loss.

The Dollar Cost Averaging Program. Dollar cost averaging is an investment
strategy whereby you purchase fixed dollar amounts of an investment at regular
intervals, regardless of price. Under this program a fixed dollar amount is
automatically transferred from certain subaccounts, the Guaranteed Account or
Fixed Account to any of the other subaccounts. A market value adjustment will
not be applied to dollar cost averaging transfers from a guaranteed term of the
Guaranteed Account during participation in the dollar cost averaging program. If
such participation is discontinued, we will automatically transfer the remaining
balance in that guaranteed term to another guaranteed term of the same duration,
unless you initiate a transfer into another investment option. In either case a
market value adjustment will apply. See Appendix II for more information about
dollar cost averaging from the Guaranteed Account. If dollar cost averaging is
stopped with respect to amounts invested in the Fixed Account, the remaining
balance will be transferred to the money market 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. There is no additional charge for
this program and transfers made under this program do not count as

20
<PAGE>

transfers when determining the number of free transfers that may be made each
calendar year. For additional information about this program, contact your sales
representative or call us at the number listed in "Contract Overview--Questions:
Contacting the Company."

In certain states purchase payments allocated to the Fixed Account may require
participation in the dollar cost averaging program.

Dollar cost averaging is not available if you elect to participate in the
account rebalancing program.

The Account Rebalancing Program. Account rebalancing allows you to reallocate
your account value to match the investment allocations you originally selected.
Only account values invested in the subaccounts may be rebalanced. We
automatically reallocate your account value annually (or more frequently as we
allow). Account rebalancing neither ensures a profit nor guarantees against loss
in a declining market. There is no additional charge for this program and
transfers made under this program do not count as transfers when determining the
number of free transfers that may be made each calendar year. You may
participate in this program by completing the account rebalancing section of
your application or by contacting us at the address and/or number listed in
"Contract Overview--Questions: Contacting the Company."

Account rebalancing is not available if you elect to participate in the dollar
cost averaging program.

21
<PAGE>

Transfers Between Option Packages
- --------------------------------------------------------------------------------

You may transfer from one option package to another.

> Transfers must occur on an account anniversary.

> A written request for the transfer must be received by us within 60 days of
an account anniversary.

> The following minimum account values need to be met:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Transfers to Transfers to
Option Package I Option Packages II or III
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Minimum Account Value Non- Non-
Qualified: Qualified: Qualified: Qualified:
---------- ---------- ---------- ----------
$15,000 $1,500 $5,000 $1,500
- -----------------------------------------------------------------------------------
</TABLE>

> You will receive a new contract schedule page upon transfer.

> Only one option package may be in effect at any time.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Transfers to Transfers to Transfers to
Option Package I Option Package II Option Package III
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Death Benefit(1): Death Benefit(1): Death Benefit(1):
o The sum of all purchase payments o The sum of all purchase payments o The sum of all purchase payments
made, adjusted for amounts made, adjusted for amounts made, adjusted for amounts
withdrawn or applied to an income withdrawn or applied to an income withdrawn or applied to an income
phase payment option as of the phase payment option as of the phase payment option as of the
claim date, will continue to be claim date, will continue to be claim date, will continue to be
calculated from the account calculated from the account calculated from the account
effective date. effective date. effective date.
o The "step-up value" under Option o If transferring from Option Package o If transferring from Option Package
Packages II and III will terminate on I, the "step-up value" will be I, the "step-up value" will be
the new schedule effective date. calculated beginning on the new calculated beginning on the new
o The "roll-up value" under Option schedule effective date. schedule effective date.
Package III will terminate on the o If transferring from Option Package o If transferring from Option Package
new schedule effective date. III, the "step-up value" will continue II, the "step-up value" will continue
to be calculated from the date to be calculated from the date
calculated under Option calculated under Option Package II.
Package III. o The "roll-up value" will be calculated
o The "roll-up value" under Option beginning on the new schedule
Package III will terminate on the effective date.
new schedule effective date.
- -----------------------------------------------------------------------------------------------------------------------------
Nursing Home Waiver(2): Nursing Home Waiver(2): Nursing Home Waiver(2):
o The availability of the waiver of the o If transferring from Option Package o If transferring from Option Package
early withdrawal charge under the I, the waiting period under I, the waiting period under the
Nursing Home Waiver will terminate the Nursing Home Waiver will begin Nursing Home Waiver will begin to
on the new schedule effective date. to be measured from the new be measured from the new schedule
schedule effective date. effective date.
o If transferring from Option Package o If transferring from Option Package
III, the waiting period will have II, the waiting period will have been
been satisfied on the new schedule satisfied on the new schedule
effective date. effective date.
- -----------------------------------------------------------------------------------------------------------------------------
Free Withdrawals(3): Free Withdrawals(3): Free Withdrawals(3):
o If transferring from Option Package o If transferring from Option Package o The cumulative to 30% available
III, any available free withdrawal III, any available free withdrawal free withdrawal amount will begin to
amount in excess of 10% will be lost amount in excess of 10% will be lost be calculated as of the new schedule
as of the new schedule effective date. as of the new schedule effective effective date.
date.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) See "Death Benefit."

(2) See "Fees--Nursing Home Waiver."

(3) See "Fees--Free Withdrawals."

22
<PAGE>

[Begin sidebar]

Types of Fees

There are four types of fees or deductions that may affect your account.

TRANSACTION FEES

o Early Withdrawal Charge

o Annual Maintenance Fee

o Transfer Charge

FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT

o Mortality and Expense Risk Charge

o Administrative Expense Charge

o Premium Bonus Option Charge

FEES DEDUCTED BY THE FUNDS

o Investment Advisory Fees

o Other Expenses

PREMIUM AND OTHER TAXES

[End sidebar]

Fees
- --------------------------------------------------------------------------------

The following repeats and adds to information provided in the "Fee Table"
section. Please review both sections for information on fees.

TRANSACTION FEES

Early Withdrawal Charge

Withdrawals of all or a portion of your account value may be subject to a
charge.

Amount. A percentage of the purchase payments that you withdraw. The percentage
will be determined by the early withdrawal charge schedule that applies to your
account.

Early Withdrawal Charge Schedules

(The following schedules apply to contracts issued outside of the State of New
York. See Appendix I for the schedule that applies to New York contracts.)

Purpose. This is a deferred sales charge. It reimburses us for some of the sales
and administrative expenses associated with the contract. If our expenses are
greater than the amount we collect for the early withdrawal charge, we may use
any of our corporate assets, including potential profit that may arise from the
mortality and expense risk charge, to make up any difference.

First In, First Out. The early withdrawal charge is calculated separately for
each purchase payment withdrawn. For purposes of calculating your early
withdrawal charge, we consider that your first purchase payment to the account
(first in) is the first you withdraw (first out).

Examples: Where the early withdrawal charge is based on the number of years
since the purchase payment was received, if your initial purchase payment was
made three years ago, we will deduct an early withdrawal charge equal to 6% of
the portion of that purchase payment withdrawn.

For certain Roth IRA contracts where the early withdrawal charge is based on the
number of completed account years, if your initial purchase payment was made
three years ago, we will deduct an early withdrawal charge equal to 2% of the
portion of that purchase payment withdrawn.

23
<PAGE>

In each case the next time you make a withdrawal we will access the early
withdrawal charge, if any, against the portion of the first purchase payment you
did not withdraw and/or subsequent purchase payments to your account in the
order they were received.

Earnings may be withdrawn after all purchase payments have been withdrawn. There
is no early withdrawal charge for withdrawal of earnings.

Free Withdrawals. There is no early withdrawal charge if, during each account
year, the amount withdrawn is 10% or less of your account value on the later of
the date we established your account or the most recent anniversary of that
date. Under Option Package III, any unused percentage of the 10% free withdrawal
amount shall carry forward into successive account years, up to a maximum 30% of
your account value.

The free withdrawal amount will be adjusted for amounts withdrawn under a
systematic distribution option or taken as a required minimum distribution
during the account year.

Waiver. The early withdrawal charge is waived for purchase payments withdrawn if
the withdrawal is:

> Used to provide income phase payments to you;

> Paid due to the annuitant's death during the accumulation phase in an
amount up to the sum of purchase payments made, minus the total of all
partial withdrawals, amounts applied to an income phase payment option and
deductions made prior to the annuitant's death;

> Paid upon a full withdrawal where your account value is $2,500 or less and
no part of the account has been withdrawn during the prior 12 months;

> Taken because of the election of a systematic distribution option (see
"Systematic Distribution Options");

> Applied as a rollover to certain Roth IRAs issued by us or an affiliate;

> If approved in your state, taken under a qualified contract, when the
amount withdrawn is equal to the minimum distribution required by the Tax
Code for your account calculated using a method permitted under the Tax
Code and agreed to by us (including required minimum distributions using
the ECO systematic distribution option (see "Systematic Distribution
Options")); or

> Paid upon termination of your account by us (see "Other Topics --
Involuntary Terminations").

Nursing Home Waiver. Under Option Packages II and III, you may withdraw all or a
portion of your account value without an early withdrawal charge if:

> More than one account year has elapsed since the schedule effective date;

> The withdrawal is requested within three years of the annuitant's admission
to a licensed nursing care facility (in Oregon there is no three year
limitation period and in New Hampshire non-licensed facilities are
included); and

> The annuitant has spent at least 45 consecutive days in such nursing care
facility.

We will not waive the early withdrawal charge if the annuitant was in a nursing
care facility for at least one day during the two week period immediately
preceding or following the schedule effective date. It will also not apply to
contracts where prohibited by state law. See Appendix I for contracts issued in
New York.

24
<PAGE>

Annual Maintenance Fee

Maximum Amount. $30.00

When/How. Each year during the accumulation phase we deduct this fee from your
account value. We deduct it on your account anniversary and at the time of full
withdrawal. It is deducted proportionally from each investment option.

Purpose. This fee reimburses us for our administrative expenses relating to the
establishment and maintenance of your account.

Elimination. We will not deduct the annual maintenance fee if your account value
is $50,000 or more on the date this fee is to be deducted.

Transfer Charge

Amount. During the accumulation phase we currently allow you 12 free transfers
each account year. We reserve the right to charge $10 for each additional
transfer. We currently do not impose this charge.

Purpose. This charge reimburses us for administrative expenses associated with
transferring your dollars among investment options.

FEES DEDUCTED FROM INVESTMENTS IN THE SEPARATE ACCOUNT

Mortality and Expense Risk Charge

Maximum Amount. During the accumulation phase the amount of this charge, on an
annual basis, is equal to the following percentages of your account value
invested in the subaccounts:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Option Package I Option Package II Option Package III
- ------------------------------------------------------------------
<S> <C> <C>
0.80% 1.10% 1.25%
- ------------------------------------------------------------------
</TABLE>

During the income phase this charge, on an annual basis, is equal to 1.25% of
amounts invested in the subaccounts.

When/How. We deduct this charge daily from the subaccounts corresponding to the
funds you select. We do not deduct this charge from any fixed interest option.

Purpose. This charge compensates us for the mortality and expense risks we
assume under the contract.

> The mortality risks are those risks associated with our promise to make
lifetime income phase payments based on annuity rates specified in the
contract.

> The expense risk is the risk that the actual expenses we incur under the
contract will exceed the maximum costs that we can charge.

If the amount we deduct for this charge is not enough to cover our mortality
costs and expenses under the contract, 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 charge.

25
<PAGE>

Administrative Expense Charge

Maximum Amount. During the accumulation phase the amount of this charge, on an
annual basis, is equal to the following percentages of your account value
invested in the subaccounts:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Option Package I Option Package II Option Package III
- ------------------------------------------------------------------
<S> <C> <C>
0.15% 0.15% 0.15%
- ------------------------------------------------------------------
</TABLE>

There is currently no administrative expense charge during the income phase. We
reserve the right, however, to charge an administrative expense charge of up to
0.25% during the income phase.

When/How. If imposed, we deduct this charge daily from the subaccounts
corresponding to the funds you select. We do not deduct this charge from the
fixed interest options. If we are imposing this charge when you enter the income
phase, the charge will apply to you during the entire income phase.

Purpose. This charge helps defray our administrative expenses that cannot be
covered by the mortality and expense risk charges described above. This charge
is not intended to exceed the average expected cost of administering the
contract. We do not expect to make a profit from this charge.

Premium Bonus Option Charge.

Maximum Amount. 0.50%, but only if you elect the premium bonus option.

When/How. We deduct this charge daily from the subaccounts corresponding to the
funds you select. We may also deduct this charge from amounts allocated to the
fixed interest options. This charge is deducted for the first seven account
years during the accumulation phase and, if applicable, the income phase.

Purpose. This charge compensates us for the cost associated with crediting the
premium bonus to your account on purchase payments made during the first account
year.

REDUCTION OR ELIMINATION OF CERTAIN FEES

When sales of the contract are made to individuals or a group of individuals in
a manner that results in savings of sales or administrative expenses, we may
reduce or eliminate the early withdrawal charge, annual maintenance fee,
mortality and expense risk charge, administrative expense charge or premium
bonus option charge. Our decision to reduce or eliminate any of these fees will
be based on one or more of the following:

> The size and type of group to whom the contract is issued;

> The amount of expected purchase payments;

> A prior or existing relationship with the Company, such as being an
employee or former employee of the Company or one of our affiliates,
receiving distributions or making transfers from other contracts issued by
us or one of our affiliates or transferring amounts held under qualified
retirement plans sponsored by us or one of our affiliates;

> The type and frequency of administrative and sales services provided; or

> The level of annual maintenance fee and early withdrawal charges.

26
<PAGE>

In the case of an exchange of another contract issued by us or one of our
affiliates where the early withdrawal charge has been waived, the early
withdrawal charge for certain contracts offered by this prospectus may be
determined based on the dates purchase payments were received in the prior
contract.

The reduction or elimination of any of these fees will not be unfairly
discriminatory against any person and will be done according to our rules in
effect at the time the contract is issued. We reserve the right to change these
rules from time to time. The right to reduce or eliminate any of these fees may
be subject to state approval.

FEES DEDUCTED BY THE FUNDS

Maximum Amount. Each fund's advisory fee and expenses are different. They are
set forth in "Fee Table--Fees Deducted by the Funds" and described in more
detail in each fund prospectus.

When/How. A fund's fees and expenses are not deducted from your account value.
Instead, they are reflected in the daily value of fund shares which, in turn,
will affect the daily value of the subaccounts.

Purpose. These fees and expenses help to pay the fund's investment adviser and
operating expenses.

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 upon the
jurisdiction.

When/How. We reserve the right to deduct premium taxes from your account value
or from purchase payments to the account at any time, but not before there is a
tax liability under state law. For example, we may deduct premium taxes at the
time of a complete withdrawal or we may reflect the cost of premium taxes in our
income phase payment rates when you commence income phase payments.

In addition, we reserve the right to assess a charge for any federal taxes due
against the separate account. See "Taxation."

27
<PAGE>

Your Account Value
- --------------------------------------------------------------------------------

During the accumulation phase your account value at any given time equals:

> The current dollar value of amounts invested in the subaccounts; plus

> The current dollar values of amounts invested in the fixed interest
options, including interest earnings to date.

Subaccount Accumulation Units. When you select a fund 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 AUV varies 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, the administrative expense charge and premium bonus option charge (if
any). We discuss these deductions in more detail in "Fee Table" and "Fees."

Valuation. We determine the AUV every normal 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's units at the preceding valuation; minus

> A daily deduction for the mortality and expense risk charge and the
administrative expense charge, if any, and any other fees deducted from
investments in the separate account, such as the premium bonus option
charge and guarantee charges for the Aetna GET fund. See "Fees."

The net investment rate may be either positive or negative.

28
<PAGE>

Hypothetical Illustration. As a hypothetical illustration assume that your
initial purchase payment to a qualified contract is $5,000 and you direct us to
invest $3,000 in Fund A and $2,000 in Fund B. Also assume that on the day we
receive the purchase payment the applicable AUVs after the next close of
business of the New York Stock Exchange are $10 for Subaccount A and $20 for
Subaccount B. Your account is credited with 300 accumulation units of Subaccount
A, and 100 accumulation units of Subaccount B.

Step 1: You make an initial purchase payment of $5,000.

[graphic]

$5,000 Purchase Payment

Step 1 (down arrow)

Aetna Life Insurance and Annuity Company

Step 2 (down arrow)

Variable Annuity Account B

Subaccount A Subaccount B Etc.
300 100
accumulation accumulation
units units

(down arrow) Step 3 (down arrow)

Fund A Fund B
[end graphic]

Step 2:

A. You direct us to invest $3,000 in Fund A. The purchase payment purchases
300 accumulation units of Subaccount A ($3,000 divided by the current $10
AUV).

B. You direct us to invest $2,000 in Fund B. The purchase payment purchases
100 accumulation units of Subaccount B ($2,000 divided by the current $20
AUV).

Step 3: The separate account purchases shares of the applicable funds at the
then current market value (net asset value or NAV).

Each 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.

Purchase Payments to Your Account. If all or a portion of your initial purchase
payment is directed to the subaccounts, it will purchase subaccount accumulation
units at the AUV next computed after our acceptance of your application as
described in "Purchase and Rights." Subsequent purchase payments or transfers
directed to the subaccounts will purchase subaccount accumulation units at the
AUV next computed following our receipt of the purchase payment or transfer
request in good order. The value of subaccounts may vary day to day.

29
<PAGE>

[Begin sidebar]

Taxes, Fees and Deductions

Amounts withdrawn may be subject to one or more of the following:

> Early Withdrawal Charge (see "Fees--Early Withdrawal Charge")

> Annual Maintenance Fee (see "Fees--Annual Maintenance Fee")

> Premium Bonus Option Charge (See "Premium Bonus Option--Premium Bonus
Option Charge")

> Market Value Adjustment for amounts held in the Guaranteed Account (see
Appendix I and the Guaranteed Account prospectus)

> Tax Penalty (see "Taxation")

> Tax Withholding (see "Taxation")

To determine which may apply to you, refer to the appropriate sections of this
prospectus, contact your sales representative or call us at the number listed in
"Contract Overview--Questions: Contacting the Company."

[End sidebar]

Withdrawals
- --------------------------------------------------------------------------------

You may withdraw all or a portion of your account value at any time during the
accumulation phase. If you participate in the contract through a 403(b) plan,
certain restrictions apply. See "Restrictions on Withdrawals From 403(b) Plan
Accounts."

Steps for Making A Withdrawal

> 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 Account
(plus or minus any applicable market value adjustment) and the Fixed
Account, minus any applicable early withdrawal charge, annual maintenance
fee and forfeited premium bonus.

(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, any positive or negative market value adjustment
for amounts withdrawn from the Guaranteed Account and any forfeited premium
bonus. See Appendices II and III and the Guaranteed Account prospectus for
more information about withdrawals from the Guaranteed Account and the
Fixed Account.

> Select investment options. If you do not specify this, we will withdraw
dollars proportionally from each of your investment options.

> Properly complete a disbursement form and deliver it to our Home Office.

Restrictions on Withdrawals From 403(b) Plan Accounts

Under Section 403(b) contracts the withdrawal of salary reduction contributions
and earnings on such contributions is generally prohibited prior to the
participant's death, disability, attainment of age 59-1/2, separation from
service or financial hardship. See "Taxation."

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 as of the next valuation after we receive a
request for withdrawal in good order at our Home Office.

Delivery of Payment. Payments for withdrawal requests will be made in accordance
with SEC requirements. Normally, your withdrawal amount will be sent no later
than seven calendar days following our receipt of your properly- completed
disbursement form in good order.

Reinstating a Full Withdrawal. Within 30 days after a full withdrawal, if
allowed by law and the contract, you may elect to reinstate all or a portion of
your withdrawal. We must receive any reinstated amounts within 60 days of the
withdrawal. We reserve the right, however, to accept a reinstatement election
received more than 30 days after the withdrawal and accept proceeds received
more than 60 days after the withdrawal. We will credit your account for the
amount reinstated based on the subaccount values next computed following our
receipt of your request and the amount to be reinstated. We will credit the
amount reinstated proportionally for annual maintenance fees and early

30
<PAGE>

withdrawal charges imposed at the time of withdrawal. We will deduct from the
amount reinstated any annual maintenance fee which fell due after the withdrawal
and before the reinstatement. We will reinstate in the same investment options
and proportions in place at the time of withdrawal. If you withdraw amounts from
a series of the Aetna GET Fund and then elect to reinstate them, we will
reinstate 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 amounts among
other investment options in which you invested, on a pro rata basis. The
reinstatement privilege may be used only once. Special rules apply to
reinstatement of amounts withdrawn from the Guaranteed Account (see Appendix II
and the Guaranteed Account prospectus). We will not credit your account for
market value adjustments or any premium bonus forfeited that we deducted at the
time of your withdrawal. Seek competent advice regarding the tax consequences
associated with reinstatement.

31
<PAGE>

[Begin sidebar]

Features of a Systematic Distribution Option

A systematic distribution option allows you to receive regular payments from
your contract without moving into the income phase. By remaining in the
accumulation phase, you retain certain rights and investment flexibility not
available during the income phase.

[End sidebar]

Systematic Distribution Options
- --------------------------------------------------------------------------------

The following systematic distribution options may be available:

> SWO--Systematic Withdrawal Option. SWO is a series of automatic partial
withdrawals from your account based on a payment method you select.
Consider this option if you would like a periodic income while retaining
investment flexibility for amounts accumulated in the account.

> 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, generally at age 70-1/2,
and pay you that amount once a year. ECO is not available under
nonqualified contracts. An early withdrawal charge will not be deducted
from and a market value adjustment will not be applied to any part of your
account value paid under an ECO.

> LEO--Life Expectancy Option. LEO provides for annual payments for a number
of years equal to your life expectancy or the life expectancy of you and a
designated beneficiary. It is designed to meet the substantially equal
periodic payment exception to the 10% premature distribution penalty under
Tax Code section 72. See "Taxation."

Other Systematic Distribution Options. We may add additional systematic
distribution options from time to time. You may obtain additional information
relating to any of the systematic distribution options from your sales
representative or by calling us at the number listed in "Contract Overview--
Questions: Contacting the Company."

Systematic Distribution Option Availability. If allowed by applicable law, we
may discontinue the availability of one or more of the systematic distribution
options for new elections at any time and/or to change the terms of future
elections.

Eligibility for a Systematic Distribution Option. To determine if you meet the
age and account value criteria and to assess terms and conditions that may
apply, contact your sales representative or the Company at the number listed in
"Contract Overview--Questions: Contacting the Company."

Terminating a Systematic Distribution Option. You may revoke a systematic
distribution option at any time by submitting a written request to our Home
Office. ECO, once revoked, may not, unless allowed under the Tax Code, be
elected again.

Charges and Taxation. When you elect a systematic distribution option your
account value remains in the accumulation phase and subject to the charges and
deductions described in the "Fees" and "Fee Table" sections. Taking a withdrawal
under a systematic distribution option may have tax consequences. If you are
concerned about tax implications, consult a qualified tax adviser before
electing an option.

32
<PAGE>

[Begin sidebar]

This section provides information about the death benefit during the
accumulation phase. For death benefit information applicable to the income
phase, see "The Income Phase."

Terms to Understand:

Account Year/Account Anniversary: A period of 12 months measured from the date
we established your account and each anniversary of this date. Account
anniversaries are measured from this date.

Annuitant(s): The person(s) on whose life or life expectancy(ies) the income
phase payments are based.

Beneficiary(ies): The person(s) or entity(ies) entitled to receive a death
benefit under the contract.

Claim Date: The date proof of death and the beneficiary's right to receive the
death benefit are received in good order at our Home Office.

Contract Holder (You/Your): The contract holder of an individually owned
contract or the certificate holder of a group contract. The contract holder and
annuitant may be the same person.

Schedule Effective Date: The date an option package and benefits become
effective. The initial schedule effective date equals the date we established
your account. Thereafter, this date can occur only on an account anniversary.

[End sidebar]

Death Benefit
- --------------------------------------------------------------------------------

During the Accumulation Phase

Who Receives the Death Benefit? If you would like certain individuals or
entities to receive the death benefit when it becomes payable, you may name them
as your beneficiaries. However, if you are a joint contract holder and you die,
the beneficiary will automatically be the surviving joint contract holder. In
this circumstance any other beneficiary you named will be treated as the primary
or contingent beneficiary, as originally named, of the surviving joint contract
holder. The surviving joint contract holder may change the beneficiary
designation. If you die and no beneficiary exists, the death benefit will be
paid in a lump sum to your estate.

Designating Your Beneficiary. You may designate a beneficiary on your
application or by contacting your sales representative or us as indicated in
"Contract Overview--Questions: Contacting the Company."

When is a Death Benefit Payable? During the accumulation phase a death benefit
is payable when the contract holder or the annuitant dies. If there are joint
contract holders, the death benefit is payable when either one dies.

Death Benefit Amount. The death benefit depends upon the option package in
effect on the date the annuitant dies.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Option Package I Option Package II Option Package III
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Death Benefit The greater of: The greatest of: The greatest of:
on Death of (1) The sum of (1) The sum of (1) The sum of
the Annuitant: all purchase all purchase all purchase
payments, payments, payments,
adjusted for adjusted for adjusted for
amounts amounts amounts
withdrawn or withdrawn or withdrawn or
applied to an applied to an applied to an
income phase income phase income phase
payment option payment option payment option
as of the claim as of the claim as of
date; or date; or the claim date; or
(2) The account (2) The account (2) The account
value* on the value* on the value* on the
claim date. claim date; or claim date; or
(3) The "step-up (3) The "step-up
value"* (as value"* (as
described below) described below)
on the claim date. on the claim
date; or
(4) The "roll-up
value"* (as
described below)
on the claim
date.**
- --------------------------------------------------------------------------------
</TABLE>

* For purposes of calculating the death benefit, the account value, step-up
value and roll-up value will be reduced by the amount of any premium bonus
credited to your account after or within 12 months of the date of death.
See "Premium Bonus Option--Forfeiture."

** See Appendix I for details about the Option Package III death benefit for
contracts issued in New York.

33
<PAGE>

Step-up Value. On the schedule effective date, the step-up value is equal to the
greater of:

> The account value; or

> The step-up value, if any, calculated on the account anniversary prior to
the schedule effective date, adjusted for purchase payments made and
amounts withdrawn or applied to an income phase payment option during the
prior account year.

Thereafter, once each year on the anniversary of the schedule effective date
until the anniversary immediately preceding the annuitant's 85th birthday or
death, whichever is earlier, the step-up value is equal to the greater of:

> The step-up value most recently calculated, adjusted for purchase payments
made and amounts withdrawn or applied to an income phase payment option
during the prior account year; or

> The account value on that anniversary of the schedule effective date.

On each anniversary of the schedule effective date after the annuitant's 85th
birthday, the step-up value shall be equal to the step-up value on the
anniversary immediately preceding the annuitant's 85th birthday, adjusted for
purchase payments made and amounts withdrawn or applied to an income phase
payment option since that anniversary.

On the claim date, the step-up value shall equal the step-up value on the
anniversary of the schedule effective date immediately preceding the annuitant's
death, adjusted for purchase payments made and amounts withdrawn or applied to
an income phase payment option since that anniversary.

For purposes of calculating the death benefit, the step-up value will be reduced
by the amount of any premium bonus credited to your account after or within 12
months of the date of death. See "Premium Bonus Option--Forfeiture."

Roll-up Value. On the schedule effective date, the roll-up value is equal to the
account value. Thereafter, once each year on the anniversary of the schedule
effective date until the anniversary immediately preceding the annuitant's 76th
birthday or death, whichever is earlier, the roll-up value is equal to the
roll-up value most recently calculated multiplied by a factor of 1.05, adjusted
for purchase payments made and amounts withdrawn or applied to an income phase
payment option during the prior account year. The roll-up value may not exceed
200% of the account value on the schedule effective date, adjusted for purchase
payments made and amounts withdrawn or applied to an income phase payment option
since that date.

On each anniversary of the schedule effective date after the annuitant's 76th
birthday, the roll-up value shall be equal to the roll-up value on the
anniversary immediately preceding the annuitant's 76th birthday, adjusted for
purchase payments made and amounts withdrawn or applied to an income phase
payment option since that anniversary. On the claim date, the roll-up value
shall equal the roll-up value on the anniversary of the schedule effective date
immediately preceding the annuitant's death, adjusted for purchase payments made
and amounts withdrawn or applied to an income phase payment option since that
anniversary.

For purposes of calculating the death benefit, the roll-up value will be reduced
by the amount of any premium bonus credited to your account after or within 12
months of the date of death. See "Premium Bonus Option--Forfeiture."

34
<PAGE>

The "roll-up value" is not available on contracts issued in the State of New
York. See Appendix I for details about the Option Package III death benefit for
contracts issued in New York.

Adjustment. For purposes of determining the death benefit, the adjustment for
purchase payments made will be dollar for dollar. The adjustment for amounts
withdrawn or applied to an income phase payment option will be proportionate,
reducing the sum of all purchase payments made, the step-up value and the
roll-up value in the same proportion that the account value was reduced on the
date of the withdrawal or application to an income phase payment option.

Death Benefit Greater than the Account Value. Notwithstanding which option
package is selected, on the claim date, if the amount of the death benefit is
greater than the account value, the amount by which the death benefit exceeds
the account value will be deposited and allocated to the money market subaccount
available under the contract, thereby increasing the account value available to
the beneficiary to an amount equal to the death benefit.

Prior to the election of a method of payment of the death benefit by the
beneficiary, the account value will remain in the account and continue to be
affected by the investment performance of the investment option(s) selected. The
beneficiary has the right to allocate or transfer any amount to any available
investment option (subject to a market value adjustment, as applicable). The
amount paid to the beneficiary will equal the adjusted account value on the day
the payment is processed.

Death Benefit Amounts in Certain Cases

If a Spousal Beneficiary Continues the Account Following the Death of the
Contract Holder/Annuitant. If a spousal beneficiary continues the account at the
death of a contract holder who was also the annuitant, the spousal beneficiary
becomes the annuitant. The option package in effect at the death of the contract
holder will also apply to the spousal beneficiary, unless later changed by the
spousal beneficiary.

The amount of the death benefit payable at the death of a spousal beneficiary
who has continued the account shall be determined under the option package then
in effect, except that:

(1) In calculating the sum of all purchase payments, adjusted for amounts
withdrawn or applied to an income phase payment option, the account value
on the claim date following the original contract holder's/ annuitant's
death shall be treated as the spousal beneficiary's initial purchase
payment;

(2) In calculating the step-up value, the step-up value on the claim date
following the original contract holder's/annuitant's death shall be treated
as the spousal beneficiary's initial step-up value; and

(3) In calculating the roll-up value, the roll-up value on the claim date
following the original contract holder's/annuitant's death shall be
treated as the initial roll-up value.

If the Contract Holder is not the Annuitant. Under nonqualified contracts only
the death benefit described above under Option Packages I, II and III will not
apply if a contract holder (including a spousal beneficiary who has continued
the account) who is not also the annuitant dies. In these

35
<PAGE>

circumstances the amount paid will be equal to the account value on the date the
payment is processed, plus or minus any market value adjustment. An early
withdrawal charge may apply to any full or partial payment of this death
benefit.

Because the death benefit in these circumstances equals the account value, plus
or minus any market value adjustment, a contract holder who is not also the
annuitant should seriously consider whether Option Packages II and III are
suitable for their circumstances.

If the spousal beneficiary who is the annuitant continues the account at the
death of the contract holder who was not the annuitant, the annuitant will not
change. The option package in effect at the death of the contract holder will
also apply to the spousal beneficiary, unless later changed by the spousal
beneficiary, and the death benefit payable at the spousal beneficiary's death
shall be determined under the option package then in effect.

Guaranteed Account. For amounts held in the Guaranteed Account, see Appendix II
for a discussion of the calculation of the death benefit.

Death Benefit--Methods of Payment

For Qualified Contracts. Under a qualified contract if the annuitant dies the
beneficiary may choose one of the following three methods of payment:

> Apply some or all of the account value, plus or minus any market value
adjustment, to any of the income phase payment options (subject to the Tax
Code distribution rules (see "Taxation Minimum Distribution
Requirements"));

> Receive, at any time, a lump-sum payment equal to all or a portion of the
account value, plus or minus any market value adjustment; or

> Elect SWO, ECO or LEO (described in "Systematic Distribution Options"),
provided the election would satisfy the Tax Code minimum distribution
rules.

Payments from a Systematic Distribution Option. If the annuitant was receiving
payments under a systematic distribution option and died before the Tax Code's
required beginning date for minimum distributions, payments under the systematic
distribution option will stop. The beneficiary, or contract holder on behalf of
the beneficiary, may elect a systematic distribution option provided the
election is permitted under the Tax Code minimum distribution rules. If the
annuitant dies after the required beginning date for minimum distributions,
payments will continue as permitted under the Tax Code minimum distribution
rules, unless the option is revoked.

Distribution Requirements. Subject to Tax Code limitations, a beneficiary may be
able to defer distribution of the death benefit. Death benefit payments must
satisfy the distribution rules in Tax Code Section 401(a)(9). See "Taxation."

For Nonqualified Contracts.

(1) If you die and the beneficiary is your surviving spouse, or if you are a
non-natural person and the annuitant dies and the beneficiary is the
annuitant's surviving spouse, then the beneficiary becomes the successor
contract holder. In this circumstance the Tax Code does not require
distributions under the contract until the successor contract holder's
death.

36
<PAGE>

As the successor contract holder, the beneficiary may exercise all rights
under the account and has the following options:

(a) Continue the contract in the accumulation phase;

(b) Elect to apply some or all of the account value, plus or minus any
market value adjustment, to any of the income phase payment options;
or

(c) Receive at any time a lump-sum payment equal to all or a portion of
the account value, plus or minus any market value adjustment.

If you die and are not the annuitant, an early withdrawal charge will apply
if a lump sum is elected.

(2) If you die and the beneficiary is not your surviving spouse, he or she may
elect option 1(b) or option 1(c) above (subject to the Tax Code
distribution rules). See "Taxation--Minimum Distribution Requirements."

In this circumstance the Tax Code requires any portion of the account
value, plus or minus any market value adjustment, not distributed in
installments over the beneficiary's life or life expectancy, beginning
within one year of your death, must be paid within five years of your
death. See "Taxation."

(3) If you are a natural person but not the annuitant and the annuitant dies,
the beneficiary may elect option 1(b) or 1(c) above. If the beneficiary
does not elect option 1(b) within 60 days from the date of death, the gain,
if any, will be included in the beneficiary's income in the year the
annuitant dies.

Payments from a Systematic Distribution Option. If the contract holder or
annuitant dies and payments were made under SWO, payments will stop. A
beneficiary, however, may elect to continue SWO.

Taxation. In general, payments received by your beneficiary after your death are
taxed to the beneficiary in the same manner as if you had received those
payments. Additionally, your beneficiary may be subject to tax penalties if he
or she does not begin receiving death benefit payments within the time-frame
required by the Tax Code. See "Taxation."

37
<PAGE>

[Begin sidebar]

We may have used the following terms in prior prospectuses:

Annuity Phase--Income Phase

Annuity Option--Income Phase Payment Option

Annuity Payment--Income Phase Payment

[End sidebar]

The Income Phase
- --------------------------------------------------------------------------------

During the income phase you stop contributing dollars to your account and start
receiving payments from your accumulated account value.

Initiating Payments. At least 30 days prior to the date you want to start
receiving payments you must notify us in writing of all of the following:

> Payment start date;

> Income phase payment option (see the income phase payment options table in
this section);

> Payment frequency (i.e., monthly, quarterly, semi-annually or annually);

> Choice of fixed, variable or a combination of both fixed and variable
payments; and

> Selection of an assumed net investment rate (only if variable payments are
elected).

Your account will continue in the accumulation phase until you properly initiate
income phase payments. Once an income phase payment option is selected it may
not be changed.

What Affects Payment Amounts? Some of the factors that may affect the amount of
your income phase payments include your age, gender, account value, the income
phase payment option selected, the number of guaranteed payments (if any)
selected and whether you select fixed, variable or a combination of both fixed
and variable payments and, for variable payments, the assumed net investment
rate selected.

Fixed Payments. Amounts funding fixed income phase payments will be held in the
Company's general account. The amount of fixed payments does not vary with
investment performance over time.

Variable Payments. Amounts funding your variable income phase payments will be
held in the subaccount(s) you select. Not all subaccounts available during the
accumulation phase may be available during the income phase. Payment amounts
will vary depending upon the performance of the subaccounts you select. For
variable income phase payments, you must select an assumed net investment rate.

Assumed Net Investment Rate. If you select variable income phase payments, you
must also select an assumed net investment rate of either 5% or 3-1/2%. If you
select a 5% rate, your first income phase payment will be higher, but subsequent
payments will increase only if the investment performance of the subaccounts you
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 you select a 3-1/2% rate, your first income phase payment will be lower and
subsequent payments will increase more rapidly or decline more slowly depending
upon changes to the net investment rate of the subaccounts you selected. For
more information about selecting an assumed net investment rate, call us for a
copy of the SAI. See "Contract Overview--Questions: Contacting the Company."

Minimum Payment Amounts. The income phase payment option you select must result
in:

38
<PAGE>

> A first income phase payment of at least $50; or

> Total yearly income phase payments of at least $250.

If your account value is too low to meet these minimum payment amounts, you will
receive one lump-sum payment. Unless prohibited by law, we reserve the right to
increase the minimum payment amount based on increases reflected in the Consumer
Price Index-Urban (CPI-U) since July 1, 1993.

Restrictions on Start Dates and the Duration of Payments. Income phase payments
may not begin during the first account year, or, unless we consent, later than
the later of:

(a) The first day of the month following the annuitant's 85th birthday; or

(b) The tenth anniversary of the last purchase payment made to your account.

Income phase payments will not begin until you have selected an income phase
payment option. Failure to select an income phase payment option by the later of
the annuitant's 85th birthday or the tenth anniversary of your last purchase
payment may have adverse tax consequences. You should consult with a qualified
tax adviser if you are considering delaying the selection of an income phase
payment option before the later of these dates.

For qualified contracts only, income phase payments may not extend beyond:

(a) The life of the annuitant;

(b) The joint lives of the annuitant and beneficiary;

(d) A guaranteed period greater than the joint life expectancies of the
annuitant and beneficiary.

When income phase payments start the age of the annuitant plus the number of
years for which payments are guaranteed may not exceed 95.

See "Taxation" for further discussion of rules relating to income phase
payments.

Charges Deducted.

> If variable income phase payments are selected, we make a daily deduction
for mortality and expense risks from amounts held in the subaccounts.
Therefore, if you choose variable income phase payments and a nonlifetime
income phase payment option, we still make this deduction from the
subaccounts you select, even though we no longer assume any mortality
risks. The amount of this charge, on an annual basis, is equal to 1.25% of
amounts invested in the subaccounts. See "Fees--Mortality and Expense Risk
Charge."

> There is currently no administrative expense charge during the income
phase. We reserve the right, however, to charge an administrative expense
charge of up to 0.25% during the income phase. If imposed, we deduct this
charge daily from the subaccounts corresponding to the funds you select. If
we are imposing this charge when you enter the income phase, the charge
will apply to you during the entire income phase. See "Fees--Administrative
Expense Charge."

39
<PAGE>

> If you elected the premium bonus option and variable income phase payments,
we may also deduct the premium bonus option charge. We deduct this charge
daily during the first seven account years from the subaccounts
corresponding to the funds you select. If fixed income phase payments are
selected, this charge may be reflected in the income phase payment rates.
See "Fees--Premium Bonus Option Charge."

Death Benefit during the Income Phase. The death benefits that may be available
to a beneficiary are outlined in the income phase payment options 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
request for the payment in good order at our Home Office. If continuing income
phase payments are elected, the beneficiary may not elect to receive a lump sum
at a future date unless the income phase payment option specifically allows a
withdrawal right. We will calculate the value of any death benefit at the next
valuation after we receive proof of death and a request for payment. Such value
will be reduced by any payments made after the date of death.

Beneficiary Rights. A beneficiary's right to elect an income phase payment
option or receive a lump-sum payment may have been restricted by the contract
holder. If so, such rights or options will not be available to the beneficiary.

Partial Entry into the Income Phase. You may elect an income phase payment
option for a portion of your account dollars, while leaving the remaining
portion invested in the accumulation phase. Whether the Tax Code considers such
payments taxable as income phase payments or as withdrawals is currently
unclear; therefore, you should consult with a qualified tax adviser before
electing this option. The same or different income phase payment option may be
selected for the portion left invested in the accumulation phase.

Taxation. To avoid certain tax penalties, you or your beneficiary must meet the
distribution rules imposed by the Tax Code. Additionally, when selecting an
income phase payment option, the Tax Code requires that your expected payments
will not exceed certain durations. See "Taxation" for additional information.

Payment Options.

The following table lists the income phase payment options and accompanying
death benefits available during the income phase. We may offer additional income
phase payment options under the contract from time to time.

Once income phase payments begin the income phase payment option selected may
not be changed.

Terms to understand:

Annuitant(s): The person(s) on whose life expectancy(ies) the income phase
payments are based.

Beneficiary(ies): The person(s) or entity(ies) entitled to receive a death
benefit under the contract.

40
<PAGE>

<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
made if the annuitant dies prior to the second payment's due date.
Life Income 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 your choice
of 5 to 30 years or as otherwise specified in the contract.
Life Income-- Death Benefit--Payment to the Beneficiary: If the annuitant dies before we have made all the
Guaranteed guaranteed payments, we will continue to pay the beneficiary the remaining payments, unless the
Payments beneficiary elects to receive a lump-sum payment 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 if both annuitants die before the second payment's due date.
Continuing Payments: When you select this option you choose for:
(a) 100%, 66-2/3% or 50% of the payment to continue to the surviving annuitant after the first
Life Income-- death; or
Two Lives (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.
Death Benefit--None: All payments end upon the death of both annuitants.
- -----------------------------------------------------------------------------------------------------------------------------
Length of Payments: For as long as either annuitant lives, with payments guaranteed from 5 to 30
years or as otherwise specified in the contract.
Continuing Payments: 100% of the payment to continue to the surviving annuitant after the first
Life Income-- death.
Two Lives-- Death Benefit--Payment to the Beneficiary: If both annuitants die before we have made all the
Guaranteed guaranteed payments, we will continue to pay the beneficiary the remaining payments, unless the
Payments beneficiary elects to receive a lump-sum payment equal to the present value of the remaining
guaranteed payments.
- -----------------------------------------------------------------------------------------------------------------------------
Life Income-- Length of Payments: For as long as the annuitant lives.
Cash Refund Death Benefit--Payment to the Beneficiary: Following the annuitant's death, we will pay a lump
Option (limited sum payment equal to the amount originally applied to the income phase payment option (less
availability-- any applicable premium tax) and less the total amount of income payments paid.
fixed payments
only)
- -----------------------------------------------------------------------------------------------------------------------------
Life Income-- Length of Payments: For as long as either annuitant lives.
Two Lives--Cash Continuing Payments: 100% of the payment to continue after the first death.
Refund Option Death Benefit--Payment to the Beneficiary: When both annuitants die we will pay a lump-sum
(limited payment equal to the amount applied to the income phase payment option (less any applicable
availability--fixed premium tax) and less the total amount of income payments paid.
payments only)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Nonlifetime Payment Option
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Length of Payments: You may select payments for 5 to 30 years (15 to 30 years if you elected the
premium bonus option). In certain cases a lump-sum payment may be requested at any time (see
below).
Nonlifetime-- Death Benefit--Payment to the Beneficiary: If the annuitant dies before we make all the
Guaranteed guaranteed payments, we will continue to pay the beneficiary the remaining payments, unless the
Payments beneficiary elects to receive a lump-sum payment equal to the present value of the remaining
guaranteed payments. 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 lump sum. Any
such lump-sum payments 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 the Home Office.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Calculation of Lump-Sum Payments: If a lump-sum payment is available under the
income phase payment options above, the rate used to calculate the present value
of the remaining guaranteed payments is the same rate we used to calculate the
income phase payments (i.e., the actual fixed rate used for fixed payments or
the 3-1/2% or 5% assumed net investment rate used for variable payments).

41
<PAGE>

[Begin sidebar]

In this Section

INTRODUCTION

CONTRACT TYPE

WITHDRAWALS AND OTHER DISTRIBUTIONS
o Taxation of Distributions
o 10% Penalty Tax
o Withholding for Federal Income Tax Liability

MINIMUM DISTRIBUTION REQUIREMENTS
o 50% Excise Tax
o Minimum Distribution of Death Benefit Proceeds (403(b) Plans and
408(b) and 408A IRAs)
o Minimum Distribution of Death Benefit Proceeds (Nonqualified
Contracts)

RULES SPECIFIC TO CERTAIN PLANS
o 403(b) Plans
o 408(b) and 408A IRAs

TAXATION OF NONQUALIFIED CONTRACTS

TAXATION OF THE COMPANY

When consulting a tax adviser, be certain that he or she has expertise in the
Tax Code sections applicable to your tax concerns.

[End sidebar]

Taxation
- --------------------------------------------------------------------------------

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 any
transaction involving the contract; and

> Contract holder means the contract holder of an individually owned contract
or the certificate holder of a group 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 (IRS).
- --------------------------------------------------------------------------------

Taxation of Gains Prior to Distribution. You generally will not pay taxes on any
earnings from the annuity contract described in this prospectus until they are
withdrawn. Tax-qualified retirement arrangements under Tax Code sections 403(b),
408(b) and 408A also generally defer payment of taxes on earnings until they are
withdrawn. (See "Taxation of Distributions" later in this "Taxation" section for
a discussion of how distributions under the various types of arrangements are
taxed.) If you are considering funding one of these tax-qualified retirement
arrangements with an annuity contract, you should know that the annuity contract
does not provide any additional tax deferral of earnings beyond the tax deferral
provided by the tax-qualified retirement arrangement. However, annuities do
provide other features and benefits which may be valuable to you. You should
discuss your decision with your financial representative.

Additionally, although earnings under the contract are generally not taxed until
withdrawn, the IRS has stated in published rulings that a variable contract
owner will be considered the owner of separate account assets if the contract
owner possesses incidents of investment control over the assets. In these
circumstances income and gains from the separate account assets would be
currently includible in the variable contract owner's gross income. The Treasury
announced that it will issue guidance regarding the extent to which owners could
direct their investments among subaccounts without being treated as owners of
the underlying assets of the separate account. It is possible that the
Treasury's position, when announced, may adversely affect the tax treatment of
existing contracts. The Company therefore reserves the right to modify the
contract as necessary to attempt to prevent the contract holder from being
considered the federal tax owner of a pro rata share of the assets of the
separate account.

Diversification. Tax Code section 817(h) requires that in a nonqualified
contract the investments of the funds be "adequately diversified" in accordance

42
<PAGE>

with Treasury Regulations in order for the contract to qualify as an annuity
contract under federal tax law. The separate account, through the funds, intends
to comply with the diversification requirements prescribed by the Treasury in
Reg. Sec. 1.817-5, which affects how the funds' assets may be invested.

CONTRACT TYPE

The contract is designed for use on a non-tax qualified basis as a nonqualified
contract or with certain retirement arrangements that qualify under Tax Code
sections 403(b), 408(b) or 408A.

Tax Rules. The tax rules vary according to whether the contract is a
nonqualified contract or used with a qualified retirement arrangement. If used
with a qualified retirement arrangement, you need to know the Tax Code section
under which your arrangement qualifies. Contact your plan sponsor, sales
representative or the Company to learn which Tax Code section applies to your
arrangement.

The Contract. Contract holders 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. If the contract is purchased in conjunction with a retirement
plan, the plan is not a part of the contract and we are not bound by the plan's
terms or conditions.

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 phase payments,
rollovers, exchanges and death benefit proceeds.

We report the taxable portion of all distributions to the IRS.

Taxation of Distributions

Nonqualified Contracts. A full withdrawal of a nonqualified contract is taxable
to the extent that the amount received exceeds the investment in the contract. A
partial withdrawal is taxable to the extent that the account value immediately
before the withdrawal exceeds the investment in the contract. In other words, a
partial withdrawal is treated first as a withdrawal of taxable earnings.

For income phase payments a portion of each payment which represents the
investment in the contract is not taxable. An exclusion ratio is calculated to
determine the nontaxable portion.

For fixed income phase payments in general, there is no tax on the portion of
each payment which represents the same ratio that the investment in the contract
bears to the total dollar amount of the expected payments as defined in Tax Code
section 72(c). The entire annuity payment will be taxable once the recipient has
recovered the investment in the contract.

For variable income phase payments, an equation is used to establish a specific
dollar amount of each payment that is not taxed. The dollar amount is determined
by dividing the investment in the contract by the total number of expected
periodic payments. The entire payment will be taxable once the recipient has
recovered the investment in the contract.

43
<PAGE>

All deferred nonqualified annuity contracts that are issued by the Company (or
its affiliates) to the same contract holder during any calendar year are treated
as one annuity contract for purposes of determining the amount includible in
gross income under Tax Code section 72(e). In addition, the Treasury Department
has specific authority to issue regulations that prevent the avoidance of Tax
Code section 72(e) through the serial purchase of annuity contracts or
otherwise.

403(b) Plans. All distributions from these plans are taxed as received unless
either of the following is true:

> The distribution is rolled over to another plan of the same type or to a
traditional IRA in accordance with the Tax Code; or

> You made after-tax contributions to the plan. In this case, depending upon
the type of distribution, the amount will be taxed according to the rules
detailed in the Tax Code.

408(b) IRAs. All distributions from a traditional IRA are taxed as received
unless either one of the following is true:

> The distribution is rolled over to another traditional IRA or, if the IRA
contains only amounts previously rolled over from a 401(a), 401(k) or
403(b) plan, the distribution is transferred to another plan of the same
type; or

> You made after-tax contributions to the plan. In this case the distribution
will be taxed according to rules detailed in the Tax Code.

408A Roth IRAs. A qualified distribution from a Roth IRA is not taxed when it is
received. A qualified distribution is a distribution:

> Made after the five-taxable year period beginning with the first taxable
year for which a contribution was made; and

> Made after you attain age 59-1/2, die, become disabled as defined in the
Tax Code or for a qualified first-time home purchase.

If a distribution is not qualified, it will be taxable to the extent of the
accumulated earnings. A partial distribution will first be treated as a return
of contributions which is not taxable and then as taxable accumulated earnings.

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.

10% Penalty Tax

Under certain circumstances the Tax Code may impose a 10% penalty tax on the
taxable portion of any distribution from a nonqualified contract or from a
contract used with a 403(b), 408(b) or 408A arrangement.

Nonqualified Contracts. The 10% penalty tax applies to the taxable portion of a
distribution from a nonqualified annuity unless certain exceptions apply,
including one or more of the following:

(a) You have attained age 59-1/2;

(b) You have become disabled as defined in the Tax Code;

44
<PAGE>

(d) The distribution is made in substantially equal periodic payments (at least
annually) over your life or life expectancy or the joint lives or joint
life expectancies of you and your beneficiary; or

(e) The distribution is allocable to investment in the contract before August
14, 1982.

403(b) Plans. The 10% penalty tax applies to the taxable portion of a
distribution from a 403(b) plan, unless certain exceptions apply, including one
or more of the following:

(a) You have attained age 59-1/2;

(b) You have become disabled as defined in the Tax Code;

(d) You have separated from service with the plan sponsor at or after age 55;

(e) The distribution is rolled over into another plan of the same type or to an
IRA in accordance with the Tax Code;

(f) You have separated from service with the plan sponsor and the distribution
is made in substantially equal periodic payments (at least annually) over
your life or life expectancy or the joint lives or joint life expectancies
of you and your beneficiary; or

(g) The distribution is equal to unreimbursed medical expenses that qualify for
deduction as specified in the Tax Code.

408(b) and 408A IRAs. In general, except for (d), the exceptions for 403(b)
plans also apply to distributions from an IRA, including a distribution from a
Roth IRA that is not a qualified distribution or a rollover to a Roth IRA that
is not a qualified rollover contribution. The penalty tax is also waived on a
distribution made from an IRA to pay for health insurance premiums for certain
unemployed individuals or used for a qualified first-time home purchase or for
higher education expenses.

Withholding for Federal Income Tax Liability

Any distributions under the contract are generally subject to withholding.
Federal income tax liability rates vary according to the type of distribution
and the recipient's tax status.

Nonqualified Contracts. Generally, you or a beneficiary may elect not to have
tax withheld from distributions.

403(b) Plans. Generally, distributions from these plans are subject to a
mandatory 20% federal income tax withholding. However, withholding will not be
required if you elect a direct rollover of the distributions or in the case of
certain distributions described in the Tax Code.

408(b) and 408A IRAs. Generally, you or a beneficiary may elect not to have tax
withheld from distributions.

Non-resident Aliens. If you or your beneficiary are non-resident aliens, then
any withholding is governed by Tax Code section 1441 based on the individual's
citizenship, the country of domicile and treaty status.

MINIMUM DISTRIBUTION REQUIREMENTS

To avoid certain tax penalties, you and any beneficiary must meet the minimum
distribution requirements imposed by the Tax Code. The requirements do not apply
to either nonqualified contracts or Roth IRA

45
<PAGE>

contracts, except with regard to death benefits. 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; or

> 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 or the contract is an IRA, in which case such
distributions must begin by April 1 of the calendar year following the
calendar year in which you attain age 70-1/2; or

> Under 403(b) plans, if the Company maintains separate records of amounts
held as of December 31, 1986. In this case distribution of these amounts
generally must begin by the end of the calendar year in which you attain
age 75 or retire, if later. However, if you take any distributions in
excess of the minimum required amount, then special rules require that some
or all of the December 31, 1986 balance be distributed earlier.

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.

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
(403(b) Plans and 408(b) and 408A IRAs)

The following applies to 403(b), 408(b) and 408A arrangements. 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. Tax Code section 401(a)(9) provides specific
rules for calculating the minimum required distributions at your death. The
rules differ, depending 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; or

> 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.

46
<PAGE>

If your death occurs 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, 2000, your entire balance must be distributed to the
beneficiary by December 31, 2005. However, if distributions begin by December 31
of the calendar year following the calendar year of your death, then payments
may be made over either of the following time-frames:

> Over the life of the beneficiary; or

> Over a period not extending beyond the life expectancy of the beneficiary.

Start Dates for Spousal Beneficiaries. If the beneficiary is your spouse,
distributions must begin on or before the later of the following:

> December 31 of the calendar year following the calendar year of your death;
or

> December 31 of the calendar year in which you would have attained age
70-1/2.

Special Rule for IRA Spousal Beneficiaries. In lieu of taking a distribution
under these rules, a spousal beneficiary may elect to treat the account as his
or her own IRA and defer taking a distribution until his or her age 70-1/2. The
surviving spouse is deemed to have made such an election if the surviving spouse
makes a rollover to or from the account or fails to take a distribution within
the required time period.

Minimum Distribution of Death Benefit Proceeds
(Nonqualified Contracts)

Death of the Contract Holder. The following requirements apply to nonqualified
contracts at your death. Different distribution requirements apply if your death
occurs:

> After you begin receiving income phase payments under the contract; or

> Before you begin receiving such distributions.

If your death occurs after you begin receiving income phase payments,
distributions must be made at least as rapidly as under the method in effect at
the time of your death.

If your death occurs before you begin receiving income phase payments, your
entire balance must be distributed within five years after the date of your
death. For example, if you die on September 1, 2000, your entire balance must be
distributed by August 31, 2005. However, if distributions begin within one year
of your death, then payments may be made over one of the following time-frames:

> Over the life of the beneficiary; or

> Over a period not extending beyond the life expectancy of the beneficiary.

Spousal Beneficiaries. If the beneficiary is your spouse, the account may be
continued with the surviving spouse as the new contract holder.

Death of Annuitant. If the contract holder is a non-natural person and the
annuitant dies, the same rules apply as outlined above for death of a contract
holder. If the contract holder is a natural person but not the annuitant and the
annuitant dies, the beneficiary must elect an income phase payment option within
60 days of the date of death, or any gain under the contract will be includible
in the beneficiary's income in the year the annuitant dies.

47
<PAGE>

RULES SPECIFIC TO CERTAIN PLANS

403(b) Plans

Under Tax Code section 403(b), contributions made by public school systems or
nonprofit healthcare organizations and other Tax Code section 501(c)(3) tax
exempt organizations to purchase annuity contracts for their employees are
generally excludable from the gross income of the employee.

Assignment or Transfer of Contracts. Adverse tax consequences to the plan and/or
to you may result if your beneficial interest in the contract is assigned or
transferred to any person except to an alternate payee under a qualified
domestic relations order in accordance with Tax Code section 414(p) or to the
Company as collateral for a loan.

Exclusions from Gross Income. In order to be excludable from gross income, total
annual contributions made by you and your employer to a 403(b) plan cannot
exceed the lesser of the following limits set by the Tax Code:

> The first limit, under Tax Code section 415, is generally the lesser of 25%
of your compensation or $30,000. Compensation means your compensation from
the employer sponsoring the plan and, for years beginning after December
31, 1997, includes any elective deferrals under Tax Code section 402(g) and
any amounts not includible in gross income under Tax Code sections 125 or
457;

> The second limit, which is the exclusion allowance under Tax Code section
403(b), is usually calculated according to a formula that takes into
account your length of employment, any pretax contributions you and your
employer have already made under the plan and any pretax contributions to
certain other retirement plans; or

> An additional limit specifically limits your salary reduction contributions
to generally no more than $10,000 annually (subject to indexing). Your own
limit may be higher or lower, depending upon certain conditions.

The first two limits apply to your contributions as well as to any contributions
made by your employer on your behalf.

Purchase payments to your account(s) will be excluded from your gross income
only if the plan meets certain nondiscrimination requirements.

Restrictions on Distributions. Tax Code section 403(b)(11) restricts the
distribution under Tax Code section 403(b) contracts of:

(1) Salary reduction contributions made after December 31, 1988;

(2) Earnings on those contributions; and

(3) Earnings during such period on amounts held as of December 31, 1988.

Distribution of those amounts may only occur upon your death, attainment of age
59-1/2, separation from service, disability or financial hardship. Income
attributable to salary reduction contributions and credited on or after January
1, 1989, may not be distributed in the case of hardship.

408(b) and 408A IRAs

Tax Code section 408(b) permits eligible individuals to contribute to a
traditional IRA on a pre-tax (deductible) basis. Employers may establish
Simplified Employee Pension (SEP) plans and contribute to a traditional IRA
owned by the employee. Tax Code section 408A permits eligible individuals to
contribute to a Roth IRA on an after-tax (nondeductible) basis.

48
<PAGE>

Assignment or Transfer of Contracts. Adverse tax consequences may result if you
assign or transfer your interest in the contract to persons other than your
spouse incident to a divorce.

Eligibility. Eligibility to contribute to a traditional IRA on a pre-tax basis
or to establish a Roth IRA or to roll over or transfer from a traditional IRA to
a Roth IRA depends upon your adjusted gross income.

Rollovers and Transfers. Rollovers and direct transfers are permitted from a
401, 403(a) or a 403(b) arrangement to a traditional IRA. Distributions from
these arrangements are not permitted to be transferred or rolled over to a Roth
IRA. A Roth IRA can accept transfers/rollovers only from a traditional IRA,
subject to ordinary income tax, or from another Roth IRA.

TAXATION OF NONQUALIFIED CONTRACTS

In General. Tax Code section 72 governs taxation of annuities in general. Under
a nonqualified contract if you are a natural person you generally are not taxed
on increases in the account value until distribution occurs by withdrawing all
or part of such account value. The taxable portion of a distribution is taxable
as ordinary income.

Non-Natural Holders of a Nonqualified Contract. If you are not a natural person,
a nonqualified contract generally is not treated as an annuity for income tax
purposes and the income on the contract for the taxable year is currently
taxable as ordinary income. Income on the contract is any increase over the year
in the surrender value, adjusted for purchase payments made during the year,
amounts previously distributed and amounts previously included in income. There
are some exceptions to this rule and a non-natural person should consult with
its tax adviser prior to purchasing the contract. A non-natural person exempt
from federal income taxes should consult with its tax adviser regarding
treatment of income on the contract for purposes of the unrelated business
income tax. When the contract holder is not a natural person, a change in
annuitant is treated as the death of the contract holder.

Transfers, Assignments or Exchanges of a Nonqualified Contract. A transfer of
ownership of a nonqualified contract, the designation of an annuitant, payee or
other beneficiary who is not also the contract holder, the selection of certain
annuity dates or the exchange of a contract may result in certain tax
consequences. The assignment, pledge or agreement to assign or pledge any
portion of the account value generally will be treated as a distribution. Anyone
contemplating any such designation, transfer, assignment, selection or exchange
should contact a tax adviser regarding the potential tax effects of such a
transaction.

TAXATION OF THE COMPANY

We are taxed as a life insurance company under the Tax Code. Variable Annuity
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.

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

49
<PAGE>

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
- --------------------------------------------------------------------------------

The Company

We issue the contract described in this prospectus and are 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. 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. The 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 contract are
obligations of the Company.

Contract Distribution

We serve as the principal underwriter for the securities sold by this
prospectus. We are registered as a broker-dealer with the SEC and a member of
the

50
<PAGE>

National Association of Securities Dealers, Inc. (NASD).

As principal underwriter we will enter into arrangements with one or more
registered broker-dealers, including at least one affiliate of the Company, to
offer and sell the contract described in this prospectus. We may also enter into
these arrangements with banks that may be acting as broker-dealers without
separate registration under the Securities Exchange Act of 1934 pursuant to
legal and regulatory exceptions. In this prospectus we refer to the registered
broker-dealers and the banks described above as "distributors." We and one or
more of our affiliates may also sell the contract directly. All individuals
offering and selling the contract must be registered representatives of a
broker-dealer, or employees of a bank exempt from registration under the
Securities Exchange Act of 1934, and must be licensed as insurance agents to
sell variable annuity contracts.

Occasionally we may enter into arrangements with independent entities to help
find broker-dealers or banks interested in distributing the contract or to
provide training, marketing and other sales-related functions or administrative
services. We will reimburse such entities for expenses related to and may pay
fees to such entities in return for these services.

We may offer customers of certain broker-dealers special guaranteed rates in
connection with the Guaranteed Account offered through the contract and may
negotiate different commissions for these broker-dealers.

We may also contract with independent third party broker-dealers who will act as
wholesalers by assisting us in selecting broker-dealers or banks interested in
acting as distributors. These wholesalers may also provide training, marketing
and other sales related functions for the Company and the distributors and may
provide certain administrative services in connection with the contract. We may
pay such wholesalers compensation based on payments to contracts purchased
through distributors that they select.

We may also designate third parties to provide services in connection with the
contracts such as reviewing applications for completeness and compliance with
insurance requirements and providing the distributors with approved marketing
material, prospectuses or other supplies. These parties will also receive
payments for their services based on purchase payments, to the extent such
payments are allowed by applicable securities laws. We will pay all costs and
expenses related to these services.

Payment of Commissions

We pay distributors and their registered representatives who sell the contract
commissions and service fees. Distributors will be paid commissions up to an
amount currently equal to 7% of purchase payments or as a combination of a
certain percentage of purchase payments at time of sale and a trail commission
as a percentage of assets. Under the latter arrangement commission payments may
exceed 7% of purchase payments over the life of the 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. In addition,
we may provide additional compensation to the Company's supervisory and other
management personnel if the overall amount of investments in funds advised by
the Company or its affiliates increases over time.

51
<PAGE>

We pay these commissions, fees and related distribution expenses out of any
early withdrawal charges assessed or out of our general assets, including
investment income and any profit from investment advisory fees and mortality and
expense risk charges. No additional deductions or charges are imposed for
commissions and related expenses.

Payment Delay or Suspension

We reserve the right to suspend or postpone the date of any payment of benefits
or values under any one of the following circumstances:

> On any valuation date when the New York Stock Exchange is closed (except
customary weekend and holiday closings) or when trading on the New York
Stock Exchange is restricted;

> 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 to fairly determine the value of the
subaccount's assets; or

> 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.

Performance Reporting

We may advertise different types of historical performance for the subaccounts
including:

> Standardized average annual total returns; and

> Non-standardized average annual total returns.

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 subaccounts over the
most recent one, five and ten-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. Standardized average annual
total returns reflect deduction of all recurring charges during each period
(i.e., mortality and expense risk charges, annual maintenance fees,
administrative expense charges, if any, and any applicable early withdrawal
charges), but currently do not include deduction of any premium bonus option
charge. To the extent permitted by applicable law, we may include the premium
bonus and any corresponding premium bonus charge in standardized average annual
total returns in the future.

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. Non-standardized calculations do not
include the premium bonus or premium bonus option charge.

We may also advertise ratings, rankings or other information related to the
Company, the subaccounts or the funds. For further details regarding performance
reporting and advertising, you may request a Statement of Additional Information
(SAI) by calling us at the number listed in "Contract Overview--Questions:
Contacting the Company."

52
<PAGE>

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 subaccount. If you are a contract holder under a group
contract, you have a fully vested interest in the contract and may instruct the
group contract holder how to direct the Company to cast a certain number of
votes. 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) you are entitled to direct will
be determined as of the record date set by any fund you invest in through the
subaccounts.

> During the accumulation phase the number of votes is equal to the portion
of your 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.

Contract Modifications

We may change the contract as required by federal or state law or as otherwise
permitted in the contract. In addition, we may, upon 30 days' written notice to
the group contract holder, make other changes to a group contract that would
apply only to individuals who become participants under that contract after the
effective date of such changes. If a 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.

Transfer of Ownership: Assignment

We will accept assignments or transfers of ownership of a nonqualified contract
or a qualified contract where such assignments or transfers are not prohibited,
with proper notification. The date of any assignment or transfer of ownership
will be the date we receive the notification at our Home Office. An assignment
or transfer of ownership may have tax consequences and you should consult with a
tax adviser before assigning or transferring ownership of the contract.

An assignment of a contract will only be binding on the Company if it is made in
writing and sent to the Company 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 such 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.

53
<PAGE>

Involuntary Terminations

We reserve the right to terminate any account with a value of $2,500 or less
immediately following a partial withdrawal. However, an IRA may only be closed
out when payments to the contract have not been received for a 24-month period
and the paid-up annuity benefit at maturity would be less than $20 per month. If
such right is exercised, you will be given 90 days' advance written notice. No
early withdrawal charge will be deducted for involuntary terminations. We do not
intend to exercise this right in cases where the account value is reduced to
$2,500 or less solely due to investment performance.

Legal Matters and Proceedings

We are aware of no material legal proceedings pending which involve the separate
account 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.

In recent years, several life insurance and annuity companies have been named as
defendants in lawsuits, including class action lawsuits, relating to life
insurance and annuity pricing and sales practices. A purported class action
complaint was filed in the Circuit Court of Lauderdale County, Alabama on March
28, 2000, by Loretta Shaner against the Company (the "Shaner Complaint"). The
Shaner Complaint seeks unspecified compensatory damages from the Company and
unnamed affiliates of the Company. The Shaner Complaint claims that the
Company's sale of deferred annuity products for use as investments in
tax-deferred contributory retirement plans (e.g., IRAs) is improper. This
litigation is in the preliminary stages. The Company intends to defend the
action vigorously.

The Company also is a party to other litigation and arbitration proceedings in
the ordinary course of its business, none of which is expected to have a
material adverse effect on the Company.

54
<PAGE>

Contents of the Statement of Additional Information
- --------------------------------------------------------------------------------

The Statement of Additional Information (SAI) contains more specific information
on the separate account and the contract, as well as the financial statements of
the separate account and the Company. The following is a list of the contents of
the SAI.

<TABLE>
<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 .............................................. 7

Sales Material and Advertising ..................................... 8

Independent Auditors ............................................... 9

Financial Statements of the Separate Account ....................... S-1

Financial Statements of Aetna Life Insurance and Annuity Company and

Subsidiaries ....................................................... F-1
</TABLE>

You may request an SAI by calling the Company at the number listed in "Contract
Overview--Questions: Contacting the Company."

55
<PAGE>

Appendix I
New York Contracts
- --------------------------------------------------------------------------------

Some of the fees, features and benefits of the contract are different if it is
issued in the State of New York. This Appendix contains the sections of the
prospectus that contain those differences and should be read in conjunction with
the rest of the prospectus.

1. The following table replaces the table in the "Contract Overview" section:

- --------------------------------------------------------------------------------
Contract Facts
- --------------------------------------------------------------------------------

Option Packages: There are three option packages available under the contract.
You select an option package at the time of application. Each option package is
distinct. The differences are summarized as follows:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Option Package I Option Package II Option Package III
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mortality and
Expense Risk
Charge(1): 0.80% 1.10% 1.25%
- ----------------------------------------------------------------------------------------------------
Death Benefit(2) The greater of: The greatest of: The greatest of:
on Death of the (1) The sum of all (1) The sum of all (1) The sum of all
Annuitant(3): purchase payments, purchase payments, purchase payments,
adjusted for amounts adjusted for amounts adjusted for amounts
withdrawn or withdrawn or withdrawn or
applied to an income applied to an income applied to an income
phase payment phase payment phase payment
option as of the claim option as of the claim option as of the claim
date; or date; or date; or
(2) The account value on (2) The account value on (2) The account value on
the claim date. the claim date; the claim date;
or or
(3) The "step-up value" (3) The "step-up value"
on the claim on the claim
date. date.(4)
- ----------------------------------------------------------------------------------------------------
Minimum Initial Non- Non- Non-
Payment/Account Qualified: Qualified: Qualified: Qualified: Qualified: Qualified:
Value(5): $15,000 $1,500 $5,000 $1,500 $5,000 $1,500
- ----------------------------------------------------------------------------------------------------
10% of your account value 10% of your account 10% of your account value
each account value each account each account year,
Free Withdrawals(6): year, non-cumulative. year, non-cumulative. cumulative to a
maximum 30%.
- ----------------------------------------------------------------------------------------------------
Nursing Home
Waiver--Waiver of Not Available Not Available Not Available
Early Withdrawal
Charge(7):
- ----------------------------------------------------------------------------------------------------
</TABLE>

(1) See "Fee Table" and "Fees."

(2) See "Death Benefit." If a death benefit is payable based on account value
or step-up value, the death benefit will not include any premium bonus
credited to the account after or within 12 months of the date of death. See
Item 4 "Premium Bonus Option-- Forfeiture" in this Appendix.

(4) The death benefit is the same under Option Packages II and III for
contracts issued in New York. Therefore, contract holders of contracts
issued in New York should seriously consider whether Option Package III is
suitable for their circumstances.

(5) See "Purchase and Rights."

(6) See "Fees."

(7) See "Fees."

56
<PAGE>

2. The following early withdrawal charge schedule replaces the early
withdrawal charge schedules in the Fee Table:

Early Withdrawal Charge. (As a percentage of payments withdrawn.)

<TABLE>
<CAPTION>
- -------------------------------------------------------------------
All Contracts
- -------------------------------------------------------------------
Years From Receipt of Purchase Payment Early Withdrawal Charge
-------------------------------------- -----------------------
<S> <C>
Less than 1 7%
1 or more but less than 2 6%
2 or more but less than 3 5%
3 or more but less than 4 4%
4 or more but less than 5 3%
5 or more but less than 6 2%
6 or more but less than 7 1%
7 or more 0%
- -------------------------------------------------------------------
</TABLE>

57
<PAGE>

3. The following Hypothetical Examples replace the Hypothetical Examples at
the end of the "Fee Table":

Hypothetical Example: If You Do Not Elect the Premium Bonus Option Account Fees
You May Incur Over Time. The following hypothetical examples show the fees and
expenses paid over time if you invest $1,000 in the contract and assume a 5%
annual return on the investment. For the purpose of these examples, we deducted
total annual fund expenses and the maximum contract charges, except the premium
bonus option charge (i.e., a mortality and expense risk charge of 1.25%, an
administrative expense charge of 0.15% and an annual maintenance fee of $30
(converted to a percentage of assets equal to 0.022%)). The total annual fund
expenses used are those shown in the column "Total Fund Annual Expenses Without
Waiver or Reductions" in the Fund Expense Table.

<TABLE>
<CAPTION>
- -------------------------------------------- EXAMPLE A EXAMPLE B
> These examples are purely hypothetical. --------- ---------
> They should not be considered a If you withdraw your entire account If at the end of the periods shown you
representation of past or future expenses value at the end of the periods shown, (1) leave your entire account value
or expected returns. you would pay the following expenses, invested or (2) select an income phase
> Actual expenses and/or returns may be including any applicable early payment option, you would pay the
more or less than those shown in these withdrawal charge: following expenses (no early with-
examples. drawal 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 Balanced VP, Inc.
Aetna Bond VP
Aetna Growth VP
Aetna Growth and Income VP
Aetna Index Plus Large Cap VP
Aetna International VP
Aetna Money Market VP
Aetna Real Estate Securities VP
Aetna Small Company VP
Aetna Technology VP
AIM V.I. Capital Appreciation Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. Value Fund
Alliance Growth and Income Portfolio
Alliance Premier Growth Portfolio
Alliance Quasar Portfolio
Fidelity VIP Equity-Income Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP High Income Portfolio
Fidelity VIP II Contrafund[RegTM] Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
MFS Total Return Series
[Mitchell Hutchins Growth & Income Portfolio ]
[Mitchell Hutchins Small Cap Portfolio ]
[Mitchell Hutchins Tactical Allocation Portfolio ]
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
Oppenheimer Strategic Bond Fund/VA
PPI MFS Capital Opportunities Portfolio
PPI MFS Emerging Equities Portfolio
PPI MFS Research Growth Portfolio
PPI Scudder International Growth Portfolio
</TABLE>

- -----------------
* This example does not apply during the income phase if you selected a
nonlifetime income phase payment option with variable payments and take a
lump-sum withdrawal 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 (refer to Example A).

58
<PAGE>

Hypothetical Example: If You Elect the Premium Bonus Option

Account Fees You May Incur Over Time. The following hypothetical examples show
the fees and expenses paid over time if you invest $1,000 in the contract and
assume a 5% annual return on the investment. For the purpose of these examples,
we deducted total annual fund expenses and the maximum contract charges (i.e., a
mortality and expense risk charge of 1.25%, an administrative expense charge of
0.15%, an annual maintenance fee of $30 (converted to a percentage of assets
equal to 0.022%) and the premium bonus option charge of 0.50% during the first
seven account years). The total annual fund expenses used are those shown in the
column "Total Fund Annual Expenses Without Waiver or Reductions" in the Fund
Expense Table.

<TABLE>
<CAPTION>
- -------------------------------------------- EXAMPLE A EXAMPLE B
> These examples are purely hypothetical. --------- ---------
> They should not be considered a If you withdraw your entire account If at the end of the periods shown you
representation of past or future expenses value at the end of the periods shown, (1) leave your entire account value
or expected returns. you would pay the following expenses, invested or (2) select an income phase
> Actual expenses and/or returns may be including any applicable early payment option, you would pay the
more or less than those shown in these withdrawal charge: following expenses (no early with-
examples. drawal 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 Balanced VP, Inc.
Aetna Bond VP
Aetna Growth VP
Aetna Growth and Income VP
Aetna Index Plus Large Cap VP
Aetna International VP
Aetna Money Market VP
Aetna Real Estate Securities VP
Aetna Small Company VP
Aetna Technology VP
AIM V.I. Capital Appreciation Fund
AIM V.I. Government Securities Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. Value Fund
Alliance Growth and Income Portfolio
Alliance Premier Growth Portfolio
Alliance Quasar Portfolio
Fidelity VIP Equity-Income Portfolio
Fidelity VIP Growth Portfolio
Fidelity VIP High Income Portfolio
Fidelity VIP II Contrafund[RegTM] Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
MFS Total Return Series
[Mitchell Hutchins Growth & Income Portfolio ]
[Mitchell Hutchins Small Cap Portfolio ]
[Mitchell Hutchins Tactical Allocation Portfolio ]
Oppenheimer Aggressive Growth Fund/VA
Oppenheimer Main Street Growth & Income Fund/VA
Oppenheimer Strategic Bond Fund/VA
PPI MFS Capital Opportunities Portfolio
PPI MFS Emerging Equities Portfolio
PPI MFS Research Growth Portfolio
PPI Scudder International Growth Portfolio
</TABLE>

59
<PAGE>

4. The following replaces the "Forfeiture" subsection in the "Premium Bonus
Option" section:

Forfeiture. In each of the following circumstances all or part of a premium
bonus credited to your account will be forfeited:

> If you exercise your free look privilege and cancel your contract. See
"Right to Cancel."

> If all or part of a purchase payment for which a premium bonus was credited
is withdrawn during the first seven account years. The amount of the
premium bonus forfeited will be calculated by:

(1) Determining the amount of the premium bonus that is subject to forfeiture
according to the following table:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------
Completed Account Years Amount of Premium
at the Time of the Withdrawal Bonus Subject to Forfeiture
- ------------------------------------------------------------------
<S> <C>
Less than 1 100%
1 or more but less than 2 100%
2 or more but less than 3 100%
3 or more but less than 4 100%
4 or more but less than 5 100%
5 or more but less than 6 75%
6 or more but less than 7 50%
7 or more 0%
- ------------------------------------------------------------------
</TABLE>

(2) And multiplying that amount by the same percentage as the amount withdrawn
subject to the early withdrawal charge is to the total of all purchase
payments made to the account during the first account year.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Purchase Premium Account Withdrawal
Date Payment Bonus Value Amount Explanation
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
July 14, 2000 $100,000 $4,000 $104,000 -- You make a $100,000 initial purchase payment
and we credit your account with a 4% ($4,000)
premium bonus. Your beginning account value
equals $104,000.
- -----------------------------------------------------------------------------------------------------------------------
July 14, 2003 -- -- $120,000 $30,000 Assume that your account value grows to $120,000
over the next three years and you request a
$30,000 withdrawal. $18,000 of that $30,000 will
be subject to an early withdrawal charge
($30,000 minus $12,000 (the 10% free withdrawal
amount, see "Fees--Free Withdrawals")) and you
would pay a $720 early withdrawal charge (4% of
$18,000). Additionally, 100% of the premium
bonus is subject to forfeiture according to the
table above, and because $18,000 is 18% of the
$100,000 purchase payment made in the first
account year, 18% of your $4,000 premium bonus,
or $720, would be forfeited.*
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

- -----------------
*This example assumes that either Option Package I or II has been in effect
since you purchased the contract. If Option Package III has been in effect
since inception, none of the withdrawal would be subject to an early withdrawal
charge because the 30% cumulative free withdrawal amount ($36,000) would be
greater than the amount of the withdrawal. See "Fees--Free Withdrawals."
Therefore, the withdrawal would not result in forfeiture of any of the premium
bonus.

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<PAGE>

5. The following replaces the "Death Benefit Amount" subsection in the "Death
Benefit" section:

Death Benefit Amount. The death benefit depends upon the option package in
effect on the date the annuitant dies.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
Option Package I Option Package II Option Package III**
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Death Benefit The greater of: The greatest of: The greatest of:
on Death of (1) The sum of (1) The sum of (1) The sum of
the Annuitant: all purchase all purchase all purchase
payments, payments, payments,
adjusted for adjusted for adjusted for
amounts amounts amounts
withdrawn or withdrawn or withdrawn or
applied to an applied to an applied to an
income phase income phase income phase
payment option payment option payment option
as of the claim as of the claim as of
date; or date; or the claim date; or
(2) The account (2) The account (2) The account
value* on the value* on the value* on the
claim date. claim date; or claim date; or
(3) The "step-up (3) The "step-up
value"* (as value"* (as
described below) described below)
on the claim date. on the claim
date.**
- -------------------------------------------------------------------------------------
</TABLE>

* For purposes of calculating the death benefit, the account value and
step-up value will be reduced by the amount of any premium bonus credited
to your account after or within 12 months of the date of death. See
"Premium Bonus Option-- Forfeiture."

** For contracts issued in the state of New York, the benefit payable upon the
death of the annuitant under Option Package III is the same as that
described under Option Package II. Therefore, contract holders of contracts
issued in New York should seriously consider whether Option Package III is
suitable for their circumstances.

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<PAGE>

Appendix II

ALIAC Guaranteed Account
- --------------------------------------------------------------------------------

The ALIAC Guaranteed Account (the Guaranteed Account) is a fixed interest option
available during the accumulation phase under the contract. This appendix is
only a summary of certain facts about the Guaranteed Account. Please read the
Guaranteed Account prospectus carefully before investing in this option.

In General. Amounts invested in the Guaranteed Account earn specified interest
rates if left in the Guaranteed Account for specified periods of time. If you
withdraw or transfer those amounts before the specified periods elapse, we may
apply a market value adjustment (described below) which may be positive or
negative.

When deciding to invest in the Guaranteed Account, contact your sales
representative or the Company to learn:

> The interest rate(s) we will apply to amounts invested in the Guaranteed
Account.
We change the rate(s) periodically. Be certain you know the rate we
guarantee on the day your account dollars are invested in the Guaranteed
Account. Guaranteed interest rates will never be less than an annual
effective rate of 3%.

> The period of time your account dollars need to remain in the Guaranteed
Account in order to earn the rate(s).
You are required to leave your account dollars in the Guaranteed Account
for a specified period of time in order to earn the guaranteed interest
rate(s).

Deposit Period. During a deposit period, we offer a specific interest rate for
dollars invested for a certain guaranteed term. For a specific interest rate and
guaranteed term to apply, account dollars must be invested in the Guaranteed
Account during the deposit period for which that rate and term are offered.

Interest Rates. We guarantee different interest rates, depending upon when
account dollars are invested in the Guaranteed Account. For guaranteed terms one
year or longer, we may apply more than one specified interest rate. The interest
rate we guarantee is an annual effective yield. That means 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. Guaranteed interest rates will
never be less than an annual effective rate of 3%. The interest rate guarantees
are based on the Company's claims-paying ability.

Guaranteed Terms. The guaranteed term is the period of time account dollars must
be left in the Guaranteed Account in order to earn the guaranteed interest rate.
For guaranteed terms one year or longer, we may offer different rates for
specified time periods within a guaranteed term. We offer different guaranteed
terms at different times. We also may offer more than one guaranteed term of the
same duration with different interest rates. Check with your sales
representative or the Company to learn what terms are being offered. The Company
also reserves the right to limit the number of guaranteed terms or the
availability of certain guaranteed terms.

Fees and Other Deductions. If all or a portion of your account value in the
Guaranteed Account is withdrawn or transferred, you may incur one or more of the
following:

> Market Value Adjustment (MVA)--as described in this appendix and in the
Guaranteed Account prospectus;

> Tax penalties and/or tax withholding--see "Taxation;"

> Early withdrawal charge--see "Fees;" or

> Maintenance fee--see "Fees."

We do not make deductions from amounts in the Guaranteed Account to cover
mortality and expense risks. Rather, we consider these risks when determining
the interest rate to be credited.

Market Value Adjustment (MVA). If your account value is withdrawn or transferred
from the Guaranteed Account before the guaranteed term is completed, an MVA may
apply. The MVA reflects investment value changes caused by changes in interest
rates occurring since the date of deposit. The MVA may be positive or negative.

If interest rates at the time of withdrawal or transfer 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

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<PAGE>

you paid into the Guaranteed Account. If interest rates at the time of
withdrawal or transfer have decreased since the date of deposit, the value of
the investment increases and the MVA will be positive.

MVA Waiver. For withdrawals or transfers from a guaranteed term before the
guaranteed term matures, the MVA may be waived for:

> Transfers due to participation in the dollar cost averaging program;

> Withdrawals taken due to your election of SWO or ECO (described in
"Systematic Distribution Options"), if available;

> Withdrawals for minimum distributions required by the Tax Code and for
which the early withdrawal charge is waived; and

> Withdrawals due to your exercise of the right to cancel your contract
(described in "Right to Cancel").

Death Benefit. When a death benefit is paid under the contract within six months
of the date of death, only a positive aggregate MVA amount, if any, is applied
to the account value attributable to amounts withdrawn from the Guaranteed
Account. This provision does not apply upon the death of a spousal beneficiary
or joint contract holder who continued the account after the first death. If a
death benefit is paid more than six months from the date of death, a positive or
negative aggregate MVA amount, as applicable, will be applied.

Partial Withdrawals. For partial withdrawals during the accumulation phase,
amounts to be withdrawn from the Guaranteed Account will be withdrawn
proportionally from each group of deposits having the same length of time until
the maturity date ("Guaranteed Term Group"). Within a guaranteed term group, the
amount will be withdrawn first from the oldest deposit period, then from the
next oldest and so on until the amount requested is satisfied.

Guaranteed Terms Maturity. As a guaranteed term matures, assets accumulating
under the Guaranteed Account may be (a) transferred to a new guaranteed term,
(b) transferred to other available investment options, or (c) withdrawn. Amounts
withdrawn may be subject to an early withdrawal charge, taxation and, if you are
under age 59-1/2, tax penalties may apply.

If no direction is received from you at our Home Office by the maturity date of
a guaranteed term, the amount from the maturing guaranteed term will be
transferred to a new guaranteed term of a similar length. If the same guaranteed
term is no longer available, the next shortest guaranteed term available in the
current deposit period will be used. If no shorter guaranteed term is available,
the next longer guaranteed term will be used.

If you do not provide instructions concerning the maturity value of a maturing
guaranteed term, the maturity value transfer provision applies. This provision
allows transfers or withdrawals without an MVA if the transfer or withdrawal
occurs during the calendar month immediately following a guaranteed term
maturity date. This waiver of the MVA only applies to the first transaction
regardless of the amount involved in the transaction.

Under the Guaranteed Account each guaranteed term is counted as one funding
option. If a guaranteed term matures and is renewed for the same term, it will
not count as an additional investment option for purposes of any limitation on
the number of investment options.

Subsequent Purchase Payments. Purchase payments received after your initial
purchase payment to the Guaranteed Account will be allocated in the same
proportions as the last allocation, unless you properly instruct us to do
otherwise. If the same guaranteed term(s) are not available, the next shortest
term will be used. If no shorter guaranteed term is available, the next longer
guaranteed term will be used.

Dollar Cost Averaging. The Company may offer more than one guaranteed term of
the same duration and credit one with a higher rate contingent upon use only
with the dollar cost averaging program. If amounts are applied to a guaranteed
term which is credited with a higher rate using dollar cost averaging and the
dollar cost averaging is discontinued, the amounts will be transferred to
another guaranteed term of the same duration and an MVA will apply.

Transfer of Account Dollars. Generally, account dollars invested in the
Guaranteed Account may be transferred among guaranteed terms offered through the
Guaranteed Account and/or to other investment options offered through the
contract. However, transfers may not be made during the deposit period in which
your account

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<PAGE>

dollars are invested in the Guaranteed Account 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. The 90-day wait does not apply to (1) amounts transferred on
the maturity date or under the maturity value transfer provision; (2) amounts
transferred from the Guaranteed Account before the maturity date due to the
election of an income phase payment option; (3) amounts distributed under the
ECO or SWO (see "Systematic Distribution Options"); and (4) amounts transferred
from an available guaranteed term in connection with the dollar cost averaging
program.

Transfers after the 90-day period are permitted from guaranteed term(s) to other
guaranteed term(s) available during a deposit period or to other available
investment options. Transfers of the Guaranteed Account values on or within one
calendar month of a term's maturity date are not counted as one of the 12 free
transfers of accumulated values in the account.

Reinvesting Amounts Withdrawn from the Guaranteed Account. If amounts are
withdrawn and then reinvested in the Guaranteed Account, we apply the reinvested
amount to the current deposit period. This means the guaranteed annual interest
rate and guaranteed terms available on the date of reinvestment will apply. We
reinvest amounts proportionately in the same way as they were allocated before
withdrawal. Your account value will not be credited for any negative MVA that
was deducted at the time of withdrawal.

The Income Phase. The Guaranteed Account cannot be used as an investment option
during the income phase. However, you may notify us at least 30 days in advance
to elect a fixed or variable payment option and to transfer your Guaranteed
Account dollars to the general account or any of the subaccounts available
during the income phase. Transfers made due to the election of a lifetime income
phase payment option will be subject to only a positive aggregate MVA.

Distribution. The Company is the principal underwriter of the contract. The
Company is registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 as a broker-dealer and is a member of the
National Association of Securities Dealers, Inc. From time to time the Company
may offer customers of certain broker-dealers special guaranteed rates in
connection with the Guaranteed Account offered through the contract and may
negotiate different commissions for these broker-dealers.

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<PAGE>

Appendix III

Fixed Account
- --------------------------------------------------------------------------------

General Disclosure.

> The Fixed Account is an investment option available during the accumulation
phase under the contract.

> Amounts allocated to the Fixed Account are held in the Company's general
account which supports insurance and annuity obligations.

> Interests in the Fixed Account have not been registered with the SEC in
reliance on exemptions under the Securities Act of 1933, as amended.

> Disclosure in this prospectus regarding 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.

> Additional information about this option may be found in the contract.

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. Interest rate guarantees are based on the Company's claims-paying
ability.

> Our determination of credited interest rates reflects a number of factors,
including mortality and expense risks, interest rate guarantees, 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.

Dollar Cost Averaging. Amounts you invest in the Fixed Account must be
transferred into the other investment options available under the contract over
a period not to exceed 12 months. If you discontinue dollar cost averaging, the
remaining balance amounts in the Fixed Account will be transferred into the
money market subaccount available under the contract, unless you direct us to
transfer the balance into other available options.

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.

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."

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.

By notifying the 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.

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<PAGE>

Appendix IV

Description of Underlying Funds
- --------------------------------------------------------------------------------

The investment results of the mutual funds (funds) are likely to differ
significantly and there is no assurance that any of the funds will achieve their
respective investment objectives. Shares of the funds will rise and fall in
value and you could lose money by investing in the funds. Investments in the
funds are not bank deposits and are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Except as noted,
all funds are diversified, as defined under the Investment Company Act of 1940.

Aetna Balanced VP, Inc.

Investment Objective

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.

Policies

Under normal market conditions, allocates assets among the following asset
classes: equities such as common and preferred stocks; and debt, such as bonds,
mortgage-related and other asset-backed securities, U.S. Government securities,
and money market instruments. Typically maintains approximately 60% of total
assets in equities and 40% of total assets in debt (including money market
instruments), although those percentages may vary from time to time.

Risks

Principal risks are those generally attributable to stock and bond investing.
The success of the fund's strategy depends on the investment adviser's skill in
allocating fund assets between equities and debt and in choosing investments
within those categories. Risks attributable to stock investing include sudden
and unpredictable drops in the value of the market as a whole and periods of
lackluster or negative performance. Stocks of smaller companies tend to be less
liquid and more volatile than stocks of larger companies and can be particularly
sensitive to expected changes in interest rates, borrowing costs and earnings.
Fixed-income investments are subject to the risk that interest rates will rise,
which generally causes bond prices to fall. Also, economic and market conditions
may cause issuers to default or go bankrupt. Values of high-yield bonds are even
more sensitive to economic and market conditions than other bonds. Prices of
mortgage-related securities, in addition to being sensitive to changes in
interest rates, also are sensitive to changes in the prepayment patterns on the
underlying instruments.

Investment Adviser: Aeltus Investment Management, Inc.

Aetna Income Shares d/b/a Aetna Bond VP

Investment Objective

Seeks to maximize total return, consistent with reasonable risk, through
investments in a diversified portfolio consisting primarily of debt securities.
It is anticipated that capital appreciation and investment income will both be
major factors in achieving total return.

Policies

Under normal market conditions, invests at least 65% of total assets in
high-grade corporate bonds, mortgage-related and other asset-backed securities,
and securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities. High-grade securities are rated at least A by Standard &
Poor's Corporation (S&P) or Moody's Investors Service, Inc. (Moody's), or if
unrated, considered by the investment adviser to be of comparable quality. May
also invest up to 15% of total assets in high-yield bonds, and up to 25% of
total assets in foreign debt securities.

Risks

Principal risks are those generally attributable to debt investing, including
increases in interest rates and loss of principal. Generally, when interest
rates rise, bond prices fall. Bonds with longer maturities tend to be more

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<PAGE>

sensitive to changes in interest rates. For all bonds there is a risk that the
issuer will default. High-yield bonds generally are more susceptible to the risk
of default than higher rated bonds. Prices of mortgage-related securities, in
addition to being sensitive to changes in interest rates, also are sensitive to
changes in the prepayment patterns on the underlying instruments. Foreign
securities have additional risks. Some foreign securities tend to be less liquid
and more volatile than their U.S. counterparts. In addition, accounting
standards and market regulations tend to be less standardized in certain foreign
countries. These risks are usually higher for securities of companies in
emerging markets. Securities of foreign companies may be denominated in foreign
currency. Exchange rate fluctuations may reduce or eliminate gains or create
losses.

Investment Adviser: Aeltus Investment Management, Inc.

Aetna Variable Fund d/b/a Aetna Growth and Income VP

Investment Objective

Seeks to maximize total return through investments in a diversified portfolio of
common stocks and securities convertible into common stock. It is anticipated
that capital appreciation and investment income will both be major factors in
achieving total return.

Policies

Under normal market conditions, invests at least 65% of total assets in common
stocks that the investment adviser believes have significant potential for
capital appreciation or income growth. Tends to emphasize stocks of larger
companies. Also invests assets across other asset classes (including stocks of
small and medium-sized companies, international stock, real estate securities
and fixed income securities). May invest principally in common stocks having
significant potential for capital appreciation, or may purchase common stocks
principally for their income potential through dividends and option writing, or
may acquire securities having a mix of these characteristics.

Risks

Principal risks are those generally attributable to stock investing. These risks
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. Although the investment adviser
emphasizes large cap stocks, to the extent the Fund is diversified across asset
classes, it may not perform as well as less diversified funds when large cap
stocks are in favor. Additionally, stocks of medium-sized and smaller companies
tend to be more volatile and less liquid than stocks of larger companies.

Investment Adviser: Aeltus Investment Management, Inc.

Aetna Variable Encore Fund d/b/a Aetna Money Market VP

Investment Objective

Seeks to provide high current return, consistent with preservation of capital
and liquidity, through investment in high-quality money market instruments.

Policies

Invests only in a diversified portfolio of high-quality fixed income securities
denominated in U.S. dollars, with short remaining maturities. These securities
include U.S. Government securities, such as U.S. Treasury bills and securities
issued or sponsored by U.S. government agencies. They also may include corporate
debt securities, commercial paper, asset-backed securities and certain
obligations of U.S. and foreign banks, each of which must be highly rated by
independent rating agencies or, if unrated, considered by the investment adviser
to be of comparable quality. Maintains a dollar-weighted average portfolio
maturity of 90 days or less.

Risks

It is possible to lose money by investing in the fund. There is no guaranty the
fund will achieve its investment objective. An investment in the fund is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.

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<PAGE>

A weak economy, strong equity markets and changes by the Federal Reserve in its
monetary policies all could affect short-term interest rates and therefore the
value and yield of the fund's shares.

Investment Adviser: Aeltus Investment Management, Inc.

Aetna Variable Portfolios, Inc.--Aetna Growth VP

Investment Objective

Seeks growth of capital through investment in a diversified portfolio consisting
primarily of common stocks and securities convertible into common stocks
believed to offer growth potential.

Policies

Under normal market conditions, invests at least 65% of total assets in common
stocks and securities convertible into common stock. Tends to emphasize stocks
of larger companies, although may invest in companies of any size. Uses
internally developed quantitative computer models to evaluate the financial
characteristics of approximately 1,000 companies. The investment adviser
analyzes these characteristics in an attempt to identify companies it believes
have strong growth characteristics or demonstrate a positive trend in earnings
estimates, but whose full value is not reflected in the stock price. Focuses on
companies that the investment adviser believes have strong, sustainable and
improving earnings growth, and established market positions in a particular
industry.

Risks

Principal risks are those generally attributable to stock investing. They
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. Growth-oriented stocks typically
sell at relatively high valuations as compared to other types of stocks. If a
growth stock does not exhibit the consistent level of growth expected, its price
may drop sharply. Historically, growth-oriented stocks have been more volatile
than value-oriented stocks.

Investment Adviser: Aeltus Investment Management, Inc.

Aetna Variable Portfolios, Inc.--Aetna Index Plus Large Cap VP

Investment Objective

Seeks to outperform the total return performance of the Standard & Poor's 500
Composite Index (S&P 500), while maintaining a market level of risk.

Policies

Invests at least 80% of net assets in stocks included in the S&P 500 (other than
Aetna Inc. common stock). The investment adviser attempts to achieve the
objective by overweighting those stocks in the S&P 500 that the investment
adviser believes will outperform the index, and underweighting (or avoiding
altogether) those stocks that the investment adviser believes will underperform
the index. In determining stock weightings, uses internally developed
quantitative computer models to evaluate various criteria, such as the financial
strength of each company and its potential for strong, sustained earnings
growth. At any one time, the fund's portfolio generally includes approximately
400 of the stocks included in the S&P 500. Although the fund will not hold all
the stocks in the S&P 500, the investment adviser expects that there will be a
close correlation between the performance of the fund and that of the S&P 500 in
both rising and falling markets.

Risks

Principal risks are those generally attributable to stock investing. These risks
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. The success of the fund's
strategy depends significantly on the investment adviser's skill in determining
which securities to overweight, underweight or avoid altogether.

Investment Adviser: Aeltus Investment Management, Inc.

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Aetna Variable Portfolios, Inc.--Aetna International VP

Investment Objective

Seeks long-term capital growth primarily though investment in a diversified
portfolio of common stocks principally traded in countries outside of the United
States. The fund will not target any given level of current income.

Policies

Under normal market conditions, invests at least 65% of total assets in
securities principally traded in three or more countries outside of the United
States. These securities may include common stocks as well as securities
convertible into common stock. Diversifies the fund by investing in a mix of
stocks that the investment adviser believes have the potential for long-term
growth, as well as stocks that appear to be trading below their perceived value.
Allocates assets among several geographic regions and individual countries,
investing primarily in those areas that the investment adviser believes have the
greatest potential for growth as well as stable exchange rates. Invests
primarily in established foreign securities markets, although may invest in
emerging markets as well. Uses internally developed quantitative computer models
to evaluate the financial characteristics of over 2,000 companies in an attempt
to select companies with long-term sustainable growth characteristics. Employs
currency hedging strategies to protect from adverse effects on the U.S. dollar.

Risks

Principal risks are those generally attributable to stock investing which
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. Stocks of foreign companies tend
to be less liquid and more volatile than their U.S. counterparts. Accounting
standards and market regulations tend to be less standardized in certain foreign
countries, and economic and political climates tend to be less stable. Stocks of
foreign companies may be denominated in foreign currency. Exchange rate
fluctuations may reduce or eliminate gains or create losses. Hedging strategies
intended to reduce this risk may not perform as expected. Investments in
emerging markets are subject to the same risks applicable to foreign investments
generally, although those risks may be increased due to conditions in such
countries.

Investment Adviser: Aeltus Investment Management, Inc.

Aetna Variable Portfolios, Inc.--Aetna Small Company VP

Investment Objective

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.

Policies

Under normal market conditions, invests at least 65% of total assets in common
stocks and securities convertible into common stock of small-capitalization
companies, defined as: the 2,000 smallest of the 3,000 largest U.S. companies
(as measured by market capitalization); all companies not included above that
are included in the Standard & Poor's SmallCap 600 Index or the Russell 2000
Index; and companies with market capitalizations lower than any companies
included in the first two categories. For purposes of the 65% policy, the
largest company in this group in which the fund intends to invest currently has
a market capitalization of approximately $1.5 billion. Invests in stocks that
the investment adviser believes have the potential for long-term growth, as well
as those that appear to be trading below their perceived value. Uses internally
developed quantitative computer models to evaluate financial characteristics of
over 2,000 companies in an attempt to identify companies whose perceived value
is not reflected in the stock price. Considers the potential of each company to
create or take advantage of unique product opportunities, its potential to
achieve long-term sustainable growth and the quality of its management.

Risks

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<PAGE>

lack the management experience, financial resources, product diversification,
and competitive strengths of larger companies. In many instances, the frequency
and volume of trading in small cap stocks are substantially less than of stocks
of larger companies. As a result, the stocks of smaller companies may be subject
to wider price fluctuations and/or may be less liquid. When selling a large
quantity of a particular stock, the fund may have to sell at a discount from
quoted prices or may have to make a series of small sales over an extended
period of time due to the more limited trading volume of smaller company stocks.
Stocks of smaller companies can be particularly sensitive to expected changes in
interest rates, borrowing costs and earnings.

Investment Adviser: Aeltus Investment Management, Inc.

Aetna Variable Portfolios, Inc.--Aetna Technology VP

Investment Objective

Seeks long-term capital appreciation.

Policies

Primarily invests in common stocks and securities convertible into common stock
of companies in the information technology industry sector. These companies
include companies that the subadviser considers to be principally engaged in the
development, production, or distribution of products or services related to the
processing, storage, transmission, or presentation of information or data. A
particular company will be considered to be principally engaged in the
information technology industries if, at the time of investment, the investment
adviser determines that at least 50% of the company's assets, gross income, or
net profits are committed to, or derived from, those industries. A company will
also be considered to be principally engaged if the subadviser considers that
the company has the potential for capital appreciation primarily as a result of
particular products, technology, patents, or other market advantages in those
industries. In selecting stocks, the subadviser looks at a company's valuation
relative to its potential long-term growth rate. May look to see whether a
company offers a new or improved product, service or business operation; whether
it has experienced a positive change in its financial or business condition;
whether the market for its goods or services has expanded or experienced a
positive change; and whether there is a potential catalyst for positive change
in the company's business or stock price. May sell a security if the subadviser
determines that the company has become overvalued due to price appreciation or
has experienced a change in its business fundamentals, if the company's growth
rate slows substantially, or if the subadviser believes that another investment
offers a better opportunity.

Risks

Principal risks are those generally attributable to stock investing which
include sudden and unpredictable drops in the value of the market as a whole and
periods of lackluster or negative performance. Stocks of smaller companies tend
to be less liquid and more volatile than stocks of larger companies. Further,
stocks of smaller companies also can be particularly sensitive to expected
changes in interest rates, borrowing costs and earnings. Because the fund's
investments are concentrated in the information technology industries, the Fund
may be subject to more abrupt swings in value than a fund which invests in a
broader range of industries. Investments in information technology companies may
be highly volatile. The fund may experience difficulty in establishing or
closing out positions in these securities at prevailing market prices. Also,
there may be less publicly available information about small companies or less
market interest in their securities as compared to larger companies, and it may
take longer for the prices of the securities to reflect the full value of their
issuers' earnings potential or assets.

Investment Adviser: Aeltus Investment Management, Inc.
Subadviser: Elijah Asset Management, LLC

AIM V.I. Capital Appreciation Fund

Investment Objective

Seeks growth of capital through investment in common stocks, with emphasis on
medium- and small-sized growth companies.

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Policies

The portfolio managers focus on companies they believe are likely to benefit
from new or innovative products, services or processes as well as those that
have experienced above-average, long-term growth in earnings and have excellent
prospects for future growth. The portfolio managers consider whether to sell a
particular security when any of those factors materially changes. The fund may
also invest up to 20% of its total assets in foreign securities.

Risks

The prices of equity securities change in response to many factors, including
the historical and prospective earnings of the issuer, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. This is especially true with respect to common stocks of smaller
companies, whose prices may go up and down more than common stocks of larger,
more-established companies. Also, since common stocks of smaller companies may
not be traded as often as common stocks of larger, more-established companies,
it may be difficult or impossible for the fund to sell securities at a desirable
price.

Investment Adviser: A I M Advisors, Inc.

AIM V.I. Government Securities Fund

Investment Objective

Seeks to achieve a high level of current income consistent with reasonable
concern for safety of principal by investing in debt securities issued,
guaranteed or otherwise backed by the United States Government.

Policies

The portfolio managers focus on securities that they believe have favorable
prospects for current income, consistent with their concern for safety of
principal. The portfolio managers consider whether to sell a particular security
when any of those factors materially changes.

In anticipation of or in response to adverse market conditions, for cash
management purposes, or for defensive purposes, the fund may temporarily hold
all or a portion of its assets in cash, money market instruments, shares of
affiliated money market funds, bonds or other debt securities. As a result, the
fund may not achieve its investment objective. The prices of foreign securities
may be affected by other factors, including, currency exchange rate, political
and economic conditions, regulations and foreign markets. These factors may
affect the prices of securities issued by foreign companies located in
developing countries more than those in countries with mature economies.

Risks

The prices of debt securities change in response to many factors. Debt
securities are particularly vulnerable to credit risk and interest rate
fluctuations. Interest rate increases can cause the price of a debt security to
decrease. The longer a debt security's duration, the more sensitive it is to
this risk. The prices of high-coupon U.S. Government agency mortgage-backed
securities fall more slowly when interest rates rise than do prices of other
fixed-rate securities. Some of the securities purchased by the fund are not
guaranteed by the U.S. Government. The agency or instrumentality issuing such
security may default or otherwise be unable to honor a financial obligation.

Investment Adviser: A I M Advisors, Inc.

AIM V.I. Growth Fund

Investment Objective

Seeks growth of capital primarily by investing in seasoned and better
capitalized companies considered to have strong earnings momentum.

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Policies

The portfolio managers focus on companies that have experienced above-average
growth in earnings and have excellent prospects for future growth. The portfolio
managers consider whether to sell a particular security when any of those
factors materially changes. The fund may also invest up to 20% of its total
assets in foreign securities.

Risks

Investment Adviser: A I M Advisors, Inc.

AIM V.I. Growth and Income Fund

Investment Objective

Seeks growth of capital with a secondary objective of current income.

Policies

The fund seeks to meet these objectives by investing at least 65% of its net
assets in income-producing securities, including dividend-paying common stocks
and convertible securities. The portfolio managers purchase securities of
established companies that have long-term above-average growth in earnings and
dividends, and growth companies that they believe have the potential for
above-average growth in earnings and dividends. The portfolio managers consider
whether to sell a particular security when they believe the security no longer
has that potential or the capacity to generate income. The fund may also invest
up to 20% of its total assets in foreign securities.

The fund may engage in active and frequent trading of portfolio securities to
achieve its investment objectives. If the fund does trade in this way, it may
incur increased transaction costs and brokerage commissions, both of which can
lower the actual return on your investment.

Risks

The prices of equity securities change in response to many factors, including
the historical and prospective earnings of the issuer, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. The values of the convertible securities in which the fund may invest
also will be affected by market interest rates, the risk that the issuer may
default on interest or principal payments and the value of the underlying common
stock into which these securities may be converted. Specifically, since these
types of convertible securities pay fixed interest and dividends, their values
may fall if market interest rates rise and rise if market interest rates fall.
Additionally, an issuer may have the right to buy back certain of the
convertible securities at a time and at a price that is unfavorable to the fund.

Investment Adviser: A I M Advisors, Inc.

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AIM V.I. Value Fund

Investment Objective

Seeks to achieve long-term growth of capital by investing primarily in equity
securities judged by the fund's investment adviser to be undervalued relative to
the investment adviser's appraisal of the current or projected earnings of the
companies issuing the securities, or relative to current market values of assets
owned by the companies issuing the securities or relative to the equity market
generally. Income is a secondary objective.

Policies

The fund also may invest in preferred stocks and debt instruments that have
prospects for growth of capital. The fund may also invest up to 25% of its total
assets in foreign securities.

The portfolio managers focus on undervalued equity securities of (1)
out-of-favor cyclical growth companies; (2) established growth companies that
are undervalued compared to historical relative valuation parameters; (3)
companies where there is early but tangible evidence of improving prospects that
are not yet reflected in the price of the company's equity securities; and (4)
companies whose equity securities are selling at prices that do not reflect the
current market value of their assets and where there is reason to expect
realization of this potential in the form of increased equity values. The
portfolio managers consider whether to sell a particular security when they
believe the company no longer fits into any of the above categories.

Risks

The prices of equity securities change in response to many factors, including
the historical and prospective earnings of the issuer, the value of its assets,
general economic conditions, interest rates, investor perceptions and market
liquidity. If the seller of a repurchase agreement in which the fund invests
defaults on its obligation or declares bankruptcy, the fund may experience
delays in selling the securities underlying the repurchase agreement. As a
result, the fund may incur losses arising from decline in the value of those
securities, reduced levels of income and expenses of enforcing its rights.

Investment Adviser: A I M Advisors, Inc.

Alliance Variable Products--Growth and Income Portfolio

Investment Objective

Seeks reasonable current income and reasonable opportunity for appreciation
through investments primarily in dividend-paying common stocks of good quality.

Policies

Invests primarily in dividend-paying common stocks of large, well-established
"blue-chip" companies. May invest in fixed-income and convertible securities and
in securities of foreign issuers. Restricts its investments in foreign
securities to issues of high quality.

Risks

Principal risks include market risk, interest rate risk, and credit risk. Market
risk is the risk that the value of the Portfolio's investments will fluctuate as
the stock or bond markets fluctuate and that prices overall will decline over
shorter or longer-term periods. Interest rate risk is the risk that changes in
interest rates will affect the value of the Portfolio's investments in debt
securities, such as bonds, notes, and asset-backed securities, or other
income-producing securities. Increases in interest rates may cause the value of
a Portfolio's investments to decline. Credit risk is the risk that the issuer or
the guarantor of a debt security, or the counterparty to a derivatives contract,
will be unable or unwilling to make timely payments of interest or principal, or
to otherwise honor its obligations. Investment in foreign securities are subject
to increased credit risk because of the difficulties of

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requiring foreign entities to honor their contractual commitments, and because a
number of foreign governments and other issuers are already in default.
Investments in foreign securities have foreign risk and currency risk. Foreign
risk includes the risk that investments in foreign securities may experience
more rapid and extreme changes in value than if they invested solely in
securities of U.S. companies; foreign companies usually are not subject to the
same degree of regulation as U.S. companies; differing reporting, accounting,
and auditing standards; and the risk that political changes or diplomatic
developments could adversely affect the Portfolio's investments in a foreign
country. Currency risk is the risk that fluctuations in the exchange rates
between the U.S. dollar and foreign currencies may negatively affect the value
of the Portfolio's investments. Investment Adviser:

Alliance Capital Management L.P.

Alliance Variable Products--Premier Growth Portfolio

Investment Objective

Seeks growth of capital by pursuing aggressive investment policies.

Policies

Invests primarily in equity securities of U.S. companies. Focuses on a
relatively small number of intensively researched companies selected from a
research universe of more than 600 companies that have strong management,
superior industry positions, excellent balance sheets, and superior earnings
growth prospects. Normally, invests in about 40-50 companies, with the 25 most
highly regarded of these companies usually constituting approximately 70% of the
Portfolio's net assets. During market declines, while adding to positions in
favored stocks, the Portfolio becomes somewhat more aggressive, gradually
reducing the number of companies represented in its portfolio. Conversely, in
rising markets, while reducing or eliminating fully-valued positions, the
Portfolio becomes somewhat more conservative, gradually increasing the number of
companies represented in its portfolio. Through this approach, the investment
adviser seeks to gain positive returns in good markets while providing some
measure of protection in poor markets. May also invest up to 20% of its net
assets in convertible securities.

Risks

Among the principal risks is market risk. This is the risk that the value of the
Portfolio's investments will fluctuate as the stock or bond markets fluctuate
and that prices overall will decline over shorter or longer-term periods.
Because the Portfolio invests in a smaller number of securities than many other
equity funds, you investment has the risk that changes in the value of a single
security may have a more significant effect, either negative or positive, on the
Portfolio's net asset value.

Investment Adviser: Alliance Capital Management L.P.

Alliance Variable Products--Quasar Portfolio

Investment Objective

Seeks growth of capital by pursuing aggressive investment policies. Current
income is incidental to the Portfolio's objective.

Policies

Generally invests in a widely diversified portfolio of equity securities spread
among many industries that offer the possibility of above-average earnings
growth. Currently emphasizes investment in small-cap companies. Invests in
well-known and established companies and in new and unseasoned companies. Can
invest in the equity securities of any company and industry and in any type of
security with potential for capital appreciation. When selecting securities, the
investment adviser considers the economic and political outlook, the values of
specific securities relative to other investments, trends in the determinants of
corporate profits, and management capabilities and practices. May also invest in
non-convertible bonds, preferred stocks, and foreign securities.

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Risks

Among the principal risks is market risk. This is the risk that the value of the
Portfolio's investments will fluctuate as the stock or bond markets fluctuate
and that prices overall will decline over shorter or longer-term periods.
Investments in smaller companies tend to be more volatile than investments in
large-cap or mid-cap companies. To the extent the Portfolio invests in
non-convertible bonds, preferred stocks, and foreign stocks, the investment has
interest rate risk, credit risk, foreign risk, and currency risk. Interest rate
risk is the risk that changes in interest rates will affect the value of the
Portfolio's investments in debt securities, such as bonds, notes, and
asset-backed securities, or other income-producing securities. Increases in
interest rates may cause the value of a Portfolio's investments to decline.
Credit risk is the risk that the issuer or the guarantor of a debt security, or
the counterparty to a derivatives contract, will be unable or unwilling to make
timely payments of interest or principal, or to otherwise honor its obligations.
Investment in foreign securities are subject to increased credit risk because of
the difficulties of requiring foreign entities to honor their contractual
commitments, and because a number of foreign governments and other issuers are
already in default. Investments in foreign securities have foreign risk and
currency risk. Foreign risk includes the risk that investments in foreign
securities may experience more rapid and extreme changes in value than if they
invested solely in securities of U.S. companies; foreign companies usually are
not subject to the same degree of regulation as U.S. companies; differing
reporting, accounting, and auditing standards; and the risk that political
changes or diplomatic developments could adversely affect the Portfolio's
investments in a foreign country. Currency risk is the risk that fluctuations in
the exchange rates between the U.S. dollar and foreign currencies may negatively
affect the value of the Portfolio's investments

Investment Adviser: Alliance Capital Management L.P.

Fidelity Variable Insurance Products Fund--Equity Income Portfolio

Investment Objective

Seeks reasonable income. Also considers the potential for capital appreciation.
Seeks a yield which exceeds the composite yield on the securities comprising the
S&P 500.

Policies

Normally invests at least 65% of total assets in income-producing equity
securities. May also invest in other types of equity securities and debt
securities, including lower-quality debt securities. May invest in securities of
both foreign and domestic issuers. Emphasis on above-average income-producing
equity securities tends to lead to investments in large cap "value" stocks. In
making investment decisions, the investment adviser relies on fundamental
analysis of each issuer and its potential for success in light of its current
financial condition, its industry position, and economic and market conditions.
May use various techniques, such as buying and selling futures contracts, to
increase or decrease exposure to changing security prices, or other factors that
affect security values.

Risks

The value of equity securities fluctuates in response to issuer, political,
market and economic developments. In the short term, equity prices can fluctuate
dramatically in response to these developments. Debt securities have varying
levels of sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise. Securities with longer
maturities and mortgage securities can be more sensitive to interest rate
changes. Foreign investments, especially those in emerging markets, can be more
volatile and potentially less liquid than U.S. investments due to increased
risks of adverse issuer, political, regulatory, market or economic developments.
Lower-quality debt securities (those of less than investment-grade quality) can
be more volatile due to increased sensitivity to adverse issuer, political,
regulatory, market or economic developments. Lower-quality debt securities
involve greater risk of default or price changes due to changes in the credit
quality of the issuer. "Value" stocks can react differently to issuer,
political, market and economic developments than the market as a whole and other
types of stocks. "Value" stocks may not ever realize their full value.

Investment Adviser: Fidelity Management & Research Company

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Fidelity Variable Insurance Products Fund--Growth Portfolio

Investment Objective

Seeks capital appreciation.

Policies

Normally invests primarily in common stocks of companies the investment adviser
believes have above-average growth potential. Companies with high growth
potential tend to be companies with higher than average price/ earning (P/E)
ratios and are often called "growth" stocks. May invest in securities of both
foreign and domestic issuers. In making investment decisions, the investment
adviser relies on fundamental analysis of each issuer and its potential for
success in light of its current financial condition, its industry position, and
economic and market conditions. May use various techniques, such as buying and
selling futures contracts, to increase or decrease exposure to changing security
prices, or other factors that affect security values.

Risks

The value of equity securities fluctuates in response to issuer, political,
market and economic developments. In the short term, equity prices can fluctuate
dramatically in response to these developments. Foreign investments, especially
those in emerging markets, can be more volatile and potentially less liquid than
U.S. investments due to increased risks of adverse issuer, political,
regulatory, market or economic developments. "Growth" stocks tend to be
sensitive to changes in their earnings and more volatile than other types of
stocks.

Investment Adviser: Fidelity Management & Research Company

Fidelity Variable Insurance Products Fund--High Income Portfolio

Investment Objective

Seeks a high level of current income while also considering growth of capital.

Policies

Normally invests at least 65% of total assets in income-producing debt
securities, preferred stocks and convertible securities, with an emphasis on
lower-quality debt securities. May also invest in non-income producing
securities, including defaulted securities and common stocks. Currently intends
to limit common stocks to 10% of total assets. May invest in securities of both
foreign and domestic issuers. In making investment decisions, the investment
adviser relies on fundamental analysis of each issuer and its potential for
success in light of its current financial condition, its industry position, and
economic and market conditions. May use various techniques, such as buying and
selling futures contracts, to increase or decrease exposure to changing security
prices, interest rates or other factors that affect security values.

Risks

Debt securities have varying levels of sensitivity to changes in interest rates.
In general, the price of a debt security can fall when interest rates rise.
Securities with longer maturities and mortgage securities can be more sensitive
to interest rate changes. The value of equity securities fluctuates in response
to issuer, political, market and economic developments. In the short term,
equity prices can fluctuate dramatically in response to these developments.
Foreign investments, especially those in emerging markets, can be more volatile
and potentially less liquid than U.S. investments due to increased risks of
adverse issuer, political, regulatory, market or economic developments.
Lower-quality debt securities (those of less than investment-grade quality) can
be more volatile due to increased sensitivity to adverse issuer, political,
regulatory, market or economic developments. Lower-quality debt securities
involve greater risk of default or price changes due to changes in the credit
quality of the issuer.

Investment Adviser: Fidelity Management & Research Company
Subadvisers: Fidelity Management & Research (U.K.) Inc.; Fidelity Management &
Research Far East Inc.; Fidelity Investments Japan Limited

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Fidelity Variable Insurance Products Fund II--Contrafund Portfolio

Investment Objective

Seeks long-term capital appreciation.

Policies

Normally invests primarily in common stocks of companies whose value the
investment adviser believes is not fully recognized by the public. May invest in
securities of both foreign and domestic issuers. May tend to buy "growth" stocks
or "value" stocks, or a combination of both types. In making investment
decisions, the investment adviser relies on fundamental analysis of each issuer
and its potential for success in light of its current financial condition, its
industry position, and economic and market conditions. May use various
techniques, such as buying and selling futures contracts, to increase or
decrease exposure to changing security prices, interest rates or other factors
that affect security values.

Risks

The value of equity securities fluctuates in response to issuer, political,
market and economic developments. In the short term, equity prices can fluctuate
dramatically in response to these developments. Debt securities have varying
levels of sensitivity to changes in interest rates. In general, the price of a
debt security can fall when interest rates rise. Securities with longer
maturities and mortgage securities can be more sensitive to interest rate
changes. Foreign investments, especially those in emerging markets, can be more
volatile and potentially less liquid than U.S. investments due to increased
risks of adverse issuer, political, regulatory, market or economic developments.
"Growth" stocks tend to be sensitive to changes in their earnings and more
volatile than other types of stocks. "Value" stocks can react differently to
issuer, political, market and economic developments than the market as a whole
and other types of stocks. "Value" stocks may not ever realize their full value.

Investment Adviser: Fidelity Management & Research Company
Subadvisers: Fidelity Management & Research (U.K.) Inc.; Fidelity Management &
Research Far East Inc.; Fidelity Investments Japan Limited

Janus Aspen Series--Aggressive Growth Portfolio

Investment Objective

Seeks long-term growth of capital.

Policies

A nondiversified portfolio that invests primarily in common stocks selected for
their growth potential and normally invests at least 50% of its equity assets in
medium-sized companies. Medium-sized companies are those whose market
capitalizations at the time of investment fall within the range of companies in
the Standard and Poor's (S&P) MidCap 400 Index. The market capitalizations
within the Index will vary, but as of December 31, 1999, they ranged from
approximately $170 million to $37 billion. May at times hold substantial
positions in cash or similar investments.

Risks

Because the Portfolio may invest substantially all of its assets in common
stocks, the main risk is that the value of the stocks it holds might decrease in
response to the activities of an individual company or in response to general
market and/or economic conditions. In addition, a nondiversified portfolio has
the ability to take larger positions in a smaller number of issuers. Because the
appreciation or depreciation of a single stock may have a greater impact on the
net asset value of a nondiversified portfolio, its share price can be expected
to fluctuate more than a diversified portfolio. Performance may also be affected
by risks specific to certain types of investments, such as foreign securities,
derivative investments, non-investment grade debt securities
(high-yield/high-risk securities or "junk" bonds) or companies with relatively
small market capitalizations. Smaller or newer companies may suffer more
significant losses as well as realize more substantial growth than larger or
more established issuers. Investments in such companies tend to be more volatile
and somewhat more speculative. Issues associated with investing in foreign
securities include currency risk, political and economic risk, regulatory risk,
market risk and transaction costs. High-yield/high-risk securities are generally
more dependent on the ability of the issuer to

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meet interest and principal payments (i.e., credit risk). They are more
vulnerable to real or perceived economic changes, political changes or other
adverse developments specific to the issuer.

Investment Adviser: Janus Capital Corporation

Janus Aspen Series--Balanced Portfolio

Investment Objective

Seeks long-term capital growth, consistent with preservation of capital and
balanced by current income.

Policies

Normally invests 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. Will normally invest at least 25% of its assets in
fixed-income securities. Assets may shift between the growth and income
components of the Portfolio based on the portfolio manager's analysis of
relevant market, financial and economic conditions. May at times hold
substantial positions in cash or similar investments.

Risks

Because the Portfolio may invest a significant portion of its assets in common
stocks, the main risk is that the value of the stocks it holds might decrease in
response to the activities of an individual company or in response to general
market and/or economic conditions. The income component of the Portfolio's
holdings includes fixed-income securities which generally will decrease in value
when interest rates rise. Another risk associated with fixed-income securities
is the risk that an issuer of a bond will be unable to make principal and
interest payments when due (i.e. credit risk). Performance may also be affected
by risks specific to certain types of investments, such as foreign securities,
derivative investments, non-investment grade debt securities
(high-yield/high-risk securities or "junk" bonds) or companies with relatively
small market capitalizations. Smaller or newer companies may suffer more
significant losses as well as realize more substantial growth than larger or
more established issuers. Investments in such companies tend to be more volatile
and somewhat more speculative. Issues associated with investing in foreign
securities include currency risk, political and economic risk, regulatory risk,
market risk and transaction costs. High-yield/high-risk securities are generally
more susceptible to credit risk. They are more vulnerable to real or perceived
economic changes, political changes or other adverse developments specific to
the issuer.

Investment Adviser: Janus Capital Corporation

Janus Aspen Series--Growth Portfolio

Investment Objective

Seeks long-term growth of capital in a manner consistent with the preservation
of capital.

Policies

Generally invests primarily in common stocks of larger, more established
companies selected for their growth potential, although it can invest in
companies of any size. May at times hold substantial positions in cash or
similar investments.

Risks

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yield/high-risk securities are generally more dependent on the ability of the
issuer to meet interest and principal payments (i.e., credit risk). They are
more vulnerable to real or perceived economic changes, political changes or
other adverse developments specific to the issuer.

Investment Adviser: Janus Capital Corporation

Janus Aspen Series--Worldwide Growth Portfolio

Investment Objective

Seeks long-term growth of capital in a manner consistent with the preservation
of capital.

Policies

Invests primarily in common stocks of companies of any size throughout the
world. Normally invests in issuers from at least five different countries,
including the United States. May at times invest in fewer than five countries or
even in a single country. May hold substantial positions in cash or similar
investments.

Risks

Because the Portfolio may invest substantially all of its assets in common
stocks, the main risk is that the value of the stocks it holds might decrease in
response to the activities of an individual company or in response to general
market and/or economic conditions. Performance may also be affected by risks
specific to certain types of investments, such as foreign securities, derivative
investments, non-investment grade debt securities (high-yield/ high-risk
securities or "junk" bonds) or companies with relatively small market
capitalizations. Smaller or newer companies may suffer more significant losses
as well as realize more substantial growth than larger or more established
issuers. Investments in such companies tend to be more volatile and somewhat
more speculative. Issues associated with investing in foreign securities include
currency risk, political and economic risk, regulatory risk, market risk and
transaction costs. High-yield/high-risk securities are generally more dependent
on the ability of the issuer to meet interest and principal payments (i.e.,
credit risk). They are more vulnerable to real or perceived economic changes,
political changes or other adverse developments specific to the issuer.

Investment Adviser: Janus Capital Corporation

MFS Total Return Series

Investment Objective

Seeks primarily to provide above-average income (compared to a portfolio
invested entirely in equity securities) consistent with the prudent employment
of capital. Its secondary objective is to provide a reasonable opportunity for
growth of capital and income.

Policies

Under normal market conditions, invests at least 40%, but no more than 75%, of
net assets in common stocks and related securities (referred to as equity
securities); bonds, warrants or rights convertible into stock; and depositary
receipts for those securities. Invests at least 25% of net assets in
non-convertible fixed income securities. May vary the percentage of assets
invested in any one type of security (within the limits described above). May
invest in foreign securities and may have exposure to foreign currencies through
its investment in these securities. Generally, seeks to purchase equity
securities that the investment adviser believes are undervalued in the market
relative to their long-term potential focusing on companies with relatively
large market capitalization (i.e., market capitalizations of $5 billion or
more). Fixed income securities include U.S. government securities,
mortgage-backed and asset-backed securities, and corporate bonds. The series has
engaged and may engage in active and frequent trading to achieve its principal
investment strategies.

Risks

In allocating investments, the series could miss attractive investment
opportunities by underweighting markets where there are significant returns, and
could lose value by overweighting markets where there are significant declines.
The value of securities held by the series may decline due to changing economic,
political or market conditions, or disappointing earnings results. If
anticipated events do not occur or are delayed, or if investor perceptions about

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undervalued securities do not improve, the market price of these securities may
not rise or may fall. Fixed income securities are subject to interest rate risk
(the risk that when interest rates rise, the prices of fixed income securities
will generally fall) and credit risk (the risk that the issuer of a fixed income
security will not be able to pay principal and interest when due). Securities
with longer maturities are affected more by interest rate risk. Investing in
foreign securities involves risks relating to political social and economic
developments abroad, as well as risks resulting from the differences between the
regulations to which U.S. and foreign issuers are subject. Fixed income
securities traded in the over-the-counter market may be harder to purchase or
sell at a fair price. The inability to purchase or sell these fixed income
securities at a fair price could have a negative impact on the series'
performance. Frequent trading may result in the realization and distribution to
shareholders of higher capital gains as compared to a series with less active
trading policies. Frequent trading also increases transaction costs, which could
detract from the series' performance.

Investment Adviser: Massachusetts Financial Services Company

[Mitchell Hutchins Series Trust Growth and Income Portfolio (Class I shares)

Investment Objective

Has an investment objective of current income and capital growth.

Policies

Invests primarily in dividend-paying stocks of companies that its investment
adviser believes have potential for rapid earnings growth. Also invests, to a
lesser extent, in bonds when the investment adviser believes those investments
offer opportunities for capital appreciation because interest rates may fall or
credit factors or ratings affecting particular issuers may improve. May invest
in securities of foreign issuers that are denominated in U.S. dollars and traded
in U.S. markets. In selecting stocks for the fund, the adviser uses its own
Factor Valuation Model to identify companies that appear undervalued. The model
ranks companies based on "value" factors such as dividends, cash flows, earnings
and book values, as well as on "growth" factors, such as earnings momentum and
industry performance forecasts. The adviser then applies fundamental analysis to
select specific stocks from among those in the top 20% identified by the model.

Risks

The prices of common stocks and other equity securities generally fluctuate more
than those of other investments. They reflect changes in the issuing company's
financial condition and changes in the overall market. The fund could lose all
of its investment in a company's stock. The Fund is subject, to a lesser extent,
to interest rate risk, which means that the value of the fund's bond investments
generally will fall when interest rates rise. Because interest rate risk is the
primary risk presented by U.S. government and other very high quality bonds,
changes in interest rates may actually have a greater effect on the value of
those bonds than on lower quality bonds. An investment in the fund also presents
credit risk. Credit risk is the risk that the issuer of a bond will not make
principal or interest payments when they are due. Even if an issuer does not
default on a payment, a bond's value may decline if the market believes that the
issuer has become less able, or less willing, to make payments on time. Foreign
securities involve risks that normally are not associated with securities of
U.S. issuers. These include risks relating to political, social and economic
developments abroad and differences between U.S. and foreign regulatory
requirements and market practices. When securities are denominated in foreign
currencies, they also are subject to currency risk. (i.e., the risk that the
value of a foreign currency in which one or more of a fund's investments are
denominated will fall in relation to the U.S. dollar).

Investment Adviser: Mitchell Hutchins Asset Management Inc.]

[Mitchell Hutchins Series Trust Small Cap Portfolio (Class I shares)

Investment Objective

Has an investment objective of long-term capital appreciation.

Policies

Invests primarily in stocks of small capitalization ("small cap") companies,
which are defined as companies that

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have market capitalizations of up to $1 billion at the time of purchase. May
invest, to a lesser extent, in stocks of larger companies, preferred stocks, and
bonds, including convertible securities. Invests in bonds when its investment
adviser believes those investments offer opportunities for capital appreciation
because interest rates may fall or credit factors or ratings affecting
particular issuers may improve. May invest in securities of foreign issuers that
are denominated in U.S. dollars and traded in U.S. markets. In selecting stocks
for the fund, the adviser uses its own Factor Valuation Model to identify
companies that appear undervalued. The model ranks companies based on "value"
factors such as dividends, cash flows, earnings and book values, as well as on
"growth" factors, such as earnings momentum and industry performance forecasts.
The adviser then applies fundamental analysis to select specific stocks from
among those of small cap companies identified by the model.

Risks

The prices of common stocks and other equity securities generally fluctuate more
than those of other investments. They reflect changes in the issuing company's
financial condition and changes in the overall market. The fund may lose a
substantial part, or even all, of its investment in a company's stock.
Securities of small cap companies generally involve greater risk than securities
of larger companies because small cap companies may be more vulnerable to
adverse business or economic developments. Small cap companies also may have
limited product lines, markets or financial resources, and may be dependent on a
relatively small management group. Securities of small cap companies may be less
liquid and more volatile than securities of larger companies or the market
averages in general. In addition, small cap companies may not be well-known to
the investing public, may not have institutional ownership and may have only
cyclical, static or moderate growth prospects. The value of bonds can be
expected to fall when interest rates rise and to rise when interest rates fall.
Interest rate risk is the risk that interest rates will rise, so that the value
of the fund's investments in bonds will fall. Because interest rate risk is the
primary risk presented by U.S. government and other very high quality bonds,
changes in interest rates may actually have a greater effect on the value of
those bonds than on lower quality bonds. An investment in the fund also presents
credit risk. Credit risk is the risk that the issuer of a bond will not make
principal or interest payments when they are due. Even if an issuer does not
default on a payment, a bond's value may decline if the market believes that the
issuer has become less able, or less willing, to make payments on time. Foreign
securities involve risks that normally are not associated with securities of
U.S. issuers. These include risks relating to political, social and economic
developments abroad and differences between U.S. and foreign regulatory
requirements and market practices. When securities are denominated in foreign
currencies, they also are subject to currency risk. (i.e., the risk that the
value of a foreign currency in which one or more of a fund's investments are
denominated will fall in relation to the U.S. dollar).

Investment Adviser: Mitchell Hutchins Asset Management Inc.]

[Mitchell Hutchins Series Trust Tactical Allocation Portfolio (Class I shares)

Investment Objective

Has an investment objective of total return, consisting of long-term capital
appreciation and current income.

Policies

Allocates its assets between a stock portion that is designed to track the
performance of the S&P 500 Composite Stock Price Index and a fixed income
portion that consists of either five-year U.S. Treasury notes or U.S. Treasury
bills with remaining maturities of 30 days. The investment adviser reallocates
assets in accordance with the recommendations of its own Tactical Allocation
Model on the first business day of each month. The Model attempts to track the
performance of the S&P 500 Index in periods of strong market performance. The
Model attempts to take a more defensive posture by reallocating assets to bonds
or cash when the Model signals a potential bear market, prolonged downturn in
stock prices or significant loss in value. The Model can recommend stock
allocations of 100%, 75%, 50%, 25% or 0%. If the Model recommends a stock
allocation of less than 100%, it also recommends a fixed income allocation for
the remainder of the fund's assets. The Model uses a bond risk premium
determination to decide whether to recommend five-year U.S. Treasury notes or
30-day U.S. Treasury bills. When the Model recommends a more than 50% fixed
income allocation, the fund must invest in other high quality bonds or money
market instruments to the extent needed to limit the fund's investments in U.S.
Treasury obligations to no more than 55% of its assets. This limit is imposed by
Internal Revenue Code diversification requirements for segregated asset accounts
used to fund variable annuity or variable life contracts.

81
<PAGE>

Risks

Investment Adviser: Mitchell Hutchins Asset Management Inc.]

Oppenheimer Aggressive Growth Fund/VA

Investment Objective

Seeks to achieve long-term capital appreciation by investing in "growth-type"
companies.

Policies

The Fund invests mainly in equity securities, such as common stocks, preferred
stocks and convertible securities. It invests primarily in U.S. companies, but
can also buy foreign stocks. The Fund emphasizes investments in companies that
the Manager believes have potential for increased stock prices relative to the
overall stock market. Growth companies can include established companies
entering a growth cycle in their business, as well as newer companies. The Fund
can invest in securities of issuers of all market capitalizations, but currently
focuses on companies with market capitalizations of $5 billion. The Fund can
also use hedging instruments and certain derivative instruments in an effort to
manage investment risks.

Risks

The fund's investments in stocks are subject to changes in their value from a
number of factors. They include stock market movements and events affecting
particular industries. Stocks of growth companies may provide greater
opportunities for capital appreciation, but may be more volatile than other
stocks. The Fund invests mainly in small and medium-size companies, which tend
to have more volatile stock prices than large companies.

Investment Adviser: OppenheimerFunds, Inc.

Oppenheimer Main Street Growth & Income Fund/VA

Investment Objective

Seeks a high total return (which includes growth in the value of its shares as
well as current income) from equity and debt securities.

Policies

Invests in equity securities, such as common stocks, preferred stocks and
convertible securities in the U.S. while the Fund can purchase foreign
securities and debt securities. Currently, it does not emphasize those
investments. Although the fund can invest in securities of issuers of all market
capitalization ranges, it currently focuses on companies with large
capitalizations. The fund can also use hedging instruments and certain
derivative investments to try to manage investment risks.

82
<PAGE>

Risks

The fund's investments in stocks and bonds are subject to changes in their value
from a number of factors. They include changes in general stock and bond market
movements, or the change in value of particular stocks or bonds because of an
event affecting the issuer. Changes in interest rates can also affect stock and
bond prices. Because the Fund currently focuses its investments in stocks of
U.S. issuers, it will be affected primarily by changes in the U.S. Stock Market.

Investment Adviser: OppenheimerFunds, Inc.

Oppenheimer Strategic Bond Fund/VA

Investment Objective

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.

Policies

Invests mainly in debt securities of issuers in three market sectors: foreign
governments and companies, U.S. government securities and lower-rated high-yield
securities of U.S. companies. Under normal market conditions, the fund invests
in each of those three market sectors. However, the fund is not obligated to do
so, and the amount of its assets in each of the three sectors will vary over
time. The fund can invest up to 100% of its assets in any one sector at any
time, if the manager believes that in doing so the fund can achieve its
objective without undue risk. The fund's foreign investments can include debt
securities of issuers in developed markets as well as emerging markets, which
have special risks. The fund can also use hedging instruments and certain
derivative investments to try to enhance income or try to manage investment
risks.

Risks

The fund's investments in debt securities are subject to changes in their value
from a number of factors. They include changes in general bond market movements
in the U.S. and abroad, or the change in value of particular bonds because of an
event affecting the issuer. The fund can focus significant amounts of its
investments in foreign debt securities. Therefore, it will be subject to the
risks that economic, political or other events can have on the values of
securities of issuers in particular foreign countries. These risks are
heightened in the case of emerging market debt securities. Changes in interest
rates can also affect securities prices.

Investment Adviser: OppenheimerFunds, Inc.

Portfolio Partners, Inc. (PPI) MFS Capital Opportunities Portfolio (formerly
known as PPI MFS Value Equity Portfolio)

Investment Objective

Seeks capital appreciation.

Policies

Invests primarily (at least 65% of total assets) in common stocks and related
securities, such as preferred stock, convertible securities and depositary
receipts. Focuses on companies believed to have favorable growth prospects and
attractive valuations based on current and expected earnings or cash flow.
Investments may include securities traded in the over-the-counter markets.

May invest in foreign securities (including emerging market securities) and may
have exposure to foreign currencies through its investment in these securities,
its direct holdings of foreign currencies or through its use of foreign currency
exchange contracts for the purchase or sale of a fixed quantity of a foreign
currency at a future date.

Also may invest in debt securities issued by both U.S. and foreign companies,
including non-investment grade debt securities.

83
<PAGE>

Risks

Investment in the portfolio is subject to the following risks:

o Market and Company Risk: The value of the securities in which the portfolio
invests may decline due to changing economic, political or market
conditions, or due to the financial condition of the company which issued
the security. In addition, securities of growth companies may be more
volatile because such companies usually invest a high portion of their
earnings in their businesses and may lack the dividends of value companies,
which can cushion the security prices in a declining market.

o Over the Counter Risk: Equity securities that are traded over the counter
may be more volatile than exchange listed securities, and the portfolio may
experience difficulty in purchasing or selling these securities at a fair
price.

o Foreign Markets Risk: Investment in foreign securities involves additional
risks relating to political, social and economic developments abroad. Other
risks from these investments result from the differences between the
regulations to which U.S. and foreign issuers and markets are subject.

o Emerging Markets Risk: Emerging markets are generally defined as countries
in the initial stages of their industrialization cycles with low per capita
income. Investments in emerging markets securities involve all of the risks
of investment in foreign securities, and also have additional risks.

o Currency Risk: Exposure to foreign currencies may cause the value of the
portfolio to decline in the event that the U.S. dollar strengthens against
these currencies, or in the event that foreign governments intervene in the
currency markets.

o Interest Rate Risk: Investment in debt securities involves risks relating
to interest rate movement. If interest rates go up, the value of debt
securities held by the portfolio will decline.

o Credit Risk: Investment in non-investment grade debt securities involves
credit risk because issuers of non-investment grade securities are more
likely to have difficulty making timely payments of interest or principal.

Investment Adviser: Aetna Life Insurance and Annuity Company
Subadviser: Massachusetts Financial Services Company

Portfolio Partners, Inc. (PPI) MFS Emerging Equities Portfolio

Investment Objective

Seeks long-term growth of capital.

Policies

Invests primarily (at least 80% of total assets) in common stocks and related
securities, such as preferred stock, convertible securities and depositary
receipts, of emerging growth companies. Emerging growth companies are companies
believed to be either early in their life cycle but which have the potential to
become major enterprises, or major enterprises whose rates of earnings growth
are expected to accelerate. Investments may include securities traded in the
over-the-counter markets.

May also invest in foreign securities and may have exposure to foreign
currencies through its investment in these securities, its direct holdings of
foreign currencies or through its use of foreign currency exchange contracts for
the purchase or sale of a fixed quantity of foreign currency at a future date.

Risks

Investment in the portfolio is subject to the following risks:

o Emerging Growth Risk: The portfolio's performance is particularly sensitive
to changes in the value of emerging growth companies. Investments in
emerging growth companies may be subject to more abrupt or erratic market
movements and may involve greater risks than investments in other
companies.

84
<PAGE>

o Foreign Markets Risk: Investment in foreign securities involves risks
related to political, social and economic developments abroad. These risks
result from differences between the regulations to which U.S. and foreign
issuers and Markets are subject.

o Currency Risk: Exposure to foreign currencies may cause the value of the
portfolio to decline if the U.S. dollar strengthens against these
currencies or if foreign governments intervene in the currency markets.

Investment Adviser: Aetna Life Insurance and Annuity Company
Subadviser: Massachusetts Financial Services Company

Portfolio Partners, Inc. (PPI) MFS Research Growth Portfolio

Investment Objective

Seeks long-term growth of capital and future income.

Policies

Invests primarily (at least 65% of total assets) in common stocks and related
securities, such as preferred stock, convertible securities and depositary
receipts. Focuses on companies believed to have favorable prospects for
long-term growth, attractive valuations based on current and expected earnings
or cash flow, dominant or growing market share and superior management. May
invest in companies of any size. Investments may also include securities traded
on securities exchanges or in the over-the-counter markets.

May invest in foreign securities and may have exposure to foreign currencies
through its investment in these securities, its direct holdings of foreign
currencies or through its use of foreign currency exchange contracts for the
purchase or sale of a fixed quantity of foreign currency at a future date.

Risks

Investment in the portfolio is subject to the following risks:

o Over-the-Counter Risk: Equity securities that are traded over-the-counter
may be more volatile than exchange-listed securities, and the portfolio may
experience difficulty in purchasing or selling these securities at a fair
price.

Investment Adviser: Aetna Life Insurance and Annuity Company
Subadviser: Massachusetts Financial Services Company

Portfolio Partners, Inc. (PPI) Scudder International Growth Portfolio

Investment Objective

Seeks long-term growth of capital.

Policies

Invests primarily (at least 65% of total assets) in the equity securities of
foreign companies believed to have high growth potential. Normally invests in
securities of at least three different countries other than the U.S. Will invest
in securities in both developed and developing markets. Seeks to invest in those
companies believed to be best able to capitalize on the growth and changes
taking place within and between various regions of the world. Typically, these
are companies with leading or rapidly developing business franchises, strong
financial positions,

85
<PAGE>

and high quality management capable of defining and implementing strategies to
take advantage of local, regional or global markets.

Also may invest in debt securities issued by both U.S. and foreign companies,
including non-investment grade debt securities.

Risks

Investment in the portfolio is subject to the following risks:

o Interest Rate Risk: Investment in debt securities involves risks relating
to interest rate movement. If interest rates go up, the value of debt
securities held by the portfolio will decline.

Investment Adviser: Aetna Life Insurance and Annuity Company
Subadviser: Scudder Kemper Investments, Inc.

86
<PAGE>

Appendix V

Condensed Financial Information
- --------------------------------------------------------------------------------

(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, 1999 (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, 1999 are included in
the Statement of Additional Information.

<TABLE>
<CAPTION>
0.95% Total Charges
-------------------
1999 1998
---- ----
<S> <C> <C>
AETNA BALANCED VP, INC.
Value at beginning of period $10.337 $9.555(1)
Value at end of period $11.632 $10.337
Number of accumulation units outstanding at end of period 417,961 5,235
AETNA BOND VP
Value at beginning of period $10.319 $10.157(3)
Value at end of period $10.145 $10.319
Number of accumulation units outstanding at end of period 708,744 16,582
AETNA GROWTH VP
Value at beginning of period $10.489 $8.387(3)
Value at end of period $14.022 $10.489
Number of accumulation units outstanding at end of period 453,570 8,460
AETNA GROWTH AND INCOME VP
Value at beginning of period $9.886 $7.862(3)
Value at end of period $11.498 $9.886
Number of accumulation units outstanding at end of period 1,093,630 125,488
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $10.716 $8.469(3)
Value at end of period $13.193 $10.716
Number of accumulation units outstanding at end of period 2,135,759 31,054
AETNA INTERNATIONAL VP
Value at beginning of period $9.149 $8.583(1)
Value at end of period $13.715 $9.149
Number of accumulation units outstanding at end of period 75,017 587
AETNA MONEY MARKET VP
Value at beginning of period $10.199 $10.122(3)
Value at end of period $10.615 $10.199
Number of accumulation units outstanding at end of period 2,174,383 103,626
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $8.903 $8.690(1)
Value at end of period $8.446 $8.903
Number of accumulation units outstanding at end of period 36,876 10,325
AETNA SMALL COMPANY VP
Value at beginning of period $9.357 $8.799(1)
Value at end of period $12.128 $9.357
Number of accumulation units outstanding at end of period 163,679 13,538
AIM V.I. CAPITAL APPRECIATION FUND
Value at beginning of period $10.245 $7.522(3)
Value at end of period $14.675 $10.245
Number of accumulation units outstanding at end of period 190,831 10,913
AIM V.I. GROWTH FUND
Value at beginning of period $10.779 $7.856(3)
Value at end of period $14.438 $10.779
Number of accumulation units outstanding at end of period 300,327 11,163
AIM V.I. GROWTH AND INCOME FUND
Value at beginning of period $10.663 $7.948(3)
Value at end of period $14.179 $10.663
Number of accumulation units outstanding at end of period 370,289 3,666

<CAPTION>
1.25% Total Charges 1.40% Total Charges
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
AETNA BALANCED VP, INC.
Value at beginning of period $10.323 $9.276(2) $10.316 $9.581(1)
Value at end of period $11.581 $10.323 $11.555 $10.316
Number of accumulation units outstanding at end of period 403,187 17,681 237,246 9,447
AETNA BOND VP
Value at beginning of period $10.305 $10.119(3) $10.298 $10.188(1)
Value at end of period $10.101 $10.305 $10.078 $10.298
Number of accumulation units outstanding at end of period 806,343 30,949 300,240 3,930
AETNA GROWTH VP
Value at beginning of period $10.475 $8.359(3) $10.468 $8.899(1)
Value at end of period $13.961 $10.475 $13.930 $10.468
Number of accumulation units outstanding at end of period 536,727 8,297 114,036 2,298
AETNA GROWTH AND INCOME VP
Value at beginning of period $9.872 $7.672(3) $9.866 $8.961(1)
Value at end of period $11.447 $9.872 $11.422 $9.866
Number of accumulation units outstanding at end of period 1,317,642 55,707 407,605 47,020
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $10.702 $8.964(2) $10.694 $9.134(3)
Value at end of period $13.136 $10.702 $13.107 $10.694
Number of accumulation units outstanding at end of period 2,394,661 94,255 926,393 4,957
AETNA INTERNATIONAL VP
Value at beginning of period $9.137 $8.497(1) $9.131 $8.663(4)
Value at end of period $13.655 $9.137 $13.625 $9.131
Number of accumulation units outstanding at end of period 79,291 4,529 28,091 718
AETNA MONEY MARKET VP
Value at beginning of period $10.186 $10.086(2) $10.179 $10.120(1)
Value at end of period $10.569 $10.186 $10.546 $10.179
Number of accumulation units outstanding at end of period 1,313,322 44,014 707,569 47,079
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $8.891 $8.833(1) $8.885 $8.648(1)
Value at end of period $8.409 $8.891 $8.391 $8.885
Number of accumulation units outstanding at end of period 34,137 2,082 6,188 19
AETNA SMALL COMPANY VP
Value at beginning of period $9.345 $7.219(3) $9.338 $8.739(4)
Value at end of period $12.074 $9.345 $12.048 $9.338
Number of accumulation units outstanding at end of period 114,138 7,787 39,754 396
AIM V.I. CAPITAL APPRECIATION FUND
Value at beginning of period $10.231 $7.914(3) $10.224 $9.078(1)
Value at end of period $14.611 $10.231 $14.579 $10.224
Number of accumulation units outstanding at end of period 317,266 17,420 156,884 857
AIM V.I. GROWTH FUND
Value at beginning of period $10.764 $8.120(3) $10.757 $9.702(4)
Value at end of period $14.375 $10.764 $14.343 $10.757
Number of accumulation units outstanding at end of period 722,832 14,904 228,578 1,498
AIM V.I. GROWTH AND INCOME FUND
Value at beginning of period $10.649 $8.179(3) $10.641 $8.830(3)
Value at end of period $14.117 $10.649 $14.086 $10.641
Number of accumulation units outstanding at end of period 938,411 9,968 259,387 7,172
</TABLE>

87
<PAGE>

Condensed Financial Information (continued)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
0.95% Total Charges
-------------------
1999 1998
---- ----
<S> <C> <C>
AIM V.I. VALUE FUND
Value at beginning of period $10.616 $7.820(3)
Value at end of period $13.659 $10.616
Number of accumulation units outstanding at end of period 895,401 27,668
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $9.911 $8.459(3)
Value at end of period $10.438 $9.911
Number of accumulation units outstanding at end of period 735,175 48,260
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $10.265(5)
Value at end of period $12.649
Number of accumulation units outstanding at end of period 84,394
FIDELITY VIP HIGH INCOME PORTFOLIO
Value at beginning of period $8.949 $8.626(1)
Value at end of period $9.586 $8.949
Number of accumulation units outstanding at end of period 590,621 40,909
FIDELITY VIP II CONTRAFUND[RegTM] PORTFOLIO
Value at beginning of period $10.535 $8.083(3)
Value at end of period $12.966 $10.535
Number of accumulation units outstanding at end of period 1,126,347 42,196
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $11.042 $7.183(3)
Value at end of period $24.654 $11.042
Number of accumulation units outstanding at end of period 1,018,787 18,318
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $10.945 $9.175(3)
Value at end of period $13.742 $10.945
Number of accumulation units outstanding at end of period 1,721,022 114,603
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.938 $7.907(3)
Value at end of period $15.599 $10.938
Number of accumulation units outstanding at end of period 1,611,327 138,459
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $9.576 $7.245(3)
Value at end of period $15.599 $9.576
Number of accumulation units outstanding at end of period 1,828,183 63,712
MFS TOTAL RETURN SERIES
Value at beginning of period $10.171 $9.712(1)
Value at end of period $10.385 $10.171
Number of accumulation units outstanding at end of period 321,447 11,625
MITCHELL HUTCHINS SERIES TRUST GROWTH AND
INCOME PORTFOLIO
Value at beginning of period $9.816(7)
Value at end of period $10.960
Number of accumulation units outstanding at end of period 10,141
MITCHELL HUTCHINS SERIES TRUST SMALL CAP
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units outstanding at end of period
MITCHELL HUTCHINS SERIES TRUST TACTICAL
ALLOCATION PORTFOLIO
Value at beginning of period $9.451(7)
Value at end of period $10.651
Number of accumulation units outstanding at end of period 101,508
OPPENHEIMER AGGRESSIVE GROWTH FUND/VA
Value at beginning of period $9.362 $7.289(3)
Value at end of period $17.027 $9.362
Number of accumulation units outstanding at end of period 102,852 730
OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA
Value at beginning of period $9.080 $6.913(3)
Value at end of period $10.946 $9.080
Number of accumulation units outstanding at end of period 341,458 27,241
OPPENHEIMER STRATEGIC BOND FUND/VA
Value at beginning of period $9.823 $9.550(1)
Value at end of period $10.005 $9.823
Number of accumulation units outstanding at end of period 247,095 21,480
PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO
Value at beginning of period $10.193 $9.507(1)
Value at end of period $15.023 $10.193
Number of accumulation units outstanding at end of period 207,410 10,086
PPI MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $10.371 $7.999(3)
Value at end of period $15.499 $10.371
Number of accumulation units outstanding at end of period 360,244 11,391

<CAPTION>
1.25% Total Charges 1.40% Total Charges
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
AIM V.I. VALUE FUND
Value at beginning of period $10.601 $8.093(3) $10.594 $9.664(4)
Value at end of period $13.599 $10.601 $13.569 $10.594
Number of accumulation units outstanding at end of period 1,538,846 29,486 492,467 9,219
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $9.897 $8.314(3) $9.891 $9.412(4)
Value at end of period $10.392 $9.897 $10.369 $9.891
Number of accumulation units outstanding at end of period 1,507,320 59,609 471,012 9,907
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $10.231(5) $10.793(6)
Value at end of period $12.628 $12.618
Number of accumulation units outstanding at end of period 124,948 35,352
FIDELITY VIP HIGH INCOME PORTFOLIO
Value at beginning of period $8.936 $8.411(1) $8.930 $8.987(4)
Value at end of period $9.544 $8.936 $9.523 $8.930
Number of accumulation units outstanding at end of period 712,099 19,661 244,927 48,476
FIDELITY VIP II CONTRAFUND[RegTM] PORTFOLIO
Value at beginning of period $10.521 $8.746(2) $10.514 $8.946(1)
Value at end of period $12.909 $10.521 $12.881 $10.514
Number of accumulation units outstanding at end of period 1,682,680 29,543 604,942 3,861
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $11.027 $6.858(3) $11.020 $9.497(4)
Value at end of period $24.546 $11.027 $24.492 $11.020
Number of accumulation units outstanding at end of period 994,780 21,356 368,330 944
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $10.930 $8.301(3) $10.923 $9.275(2)
Value at end of period $13.681 $10.930 $13.651 $10.923
Number of accumulation units outstanding at end of period 2,130,090 27,397 778,170 9,108
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.923 $7.596(3) $10.915 $9.157(1)
Value at end of period $15.531 $10.923 $15.497 $10.915
Number of accumulation units outstanding at end of period 2,407,010 35,759 647,596 6,648
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $9.563 $8.027(2) $9.557 $8.519(1)
Value at end of period $15.531 $9.563 $15.497 $9.557
Number of accumulation units outstanding at end of period 2,118,680 39,602 583,969 7,974
MFS TOTAL RETURN SERIES
Value at beginning of period $10.157 $9.772(1) $10.150 $9.737(1)
Value at end of period $10.339 $10.157 $10.317 $10.150
Number of accumulation units outstanding at end of period 675,246 12,838 307,463 27,534
[MITCHELL HUTCHINS SERIES TRUST GROWTH AND
INCOME PORTFOLIO
Value at beginning of period $10.189(7) $10.056(7)
Value at end of period $10.937 $10.925
Number of accumulation units outstanding at end of period 60,271 3,629]
[MITCHELL HUTCHINS SERIES TRUST SMALL CAP
PORTFOLIO
Value at beginning of period $11.067(8) $9.764(6)
Value at end of period $11.828 $11.816
Number of accumulation units outstanding at end of period 14,182 404]
[MITCHELL HUTCHINS SERIES TRUST TACTICAL
ALLOCATION PORTFOLIO
Value at beginning of period $9.852(7) $9.567(9)
Value at end of period $10.629 $10.618
Number of accumulation units outstanding at end of period 541,487 49,695]
OPPENHEIMER AGGRESSIVE GROWTH FUND/VA
Value at beginning of period $9.350 $6.300(3) $9.343 $8.309(4)
Value at end of period $16.952 $9.350 $16.915 $9.343
Number of accumulation units outstanding at end of period 139,615 12,609 58,765 407
OPPENHEIMER MAIN STREET GROWTH & INCOME FUND/VA
Value at beginning of period $9.067 $6.647(3) $9.061 $8.449(1)
Value at end of period $10.898 $9.067 $10.874 $9.061
Number of accumulation units outstanding at end of period 737,210 41,656 255,253 1,468
OPPENHEIMER STRATEGIC BOND FUND/VA
Value at beginning of period $9.810 $9.566(3) $9.803 $9.768(4)
Value at end of period $9.961 $9.810 $9.939 $9.803
Number of accumulation units outstanding at end of period 321,797 13,169 118,824 10
PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO
Value at beginning of period $10.180 $9.302(1) $10.173 $9.421(4)
Value at end of period $14.957 $10.180 $14.924 $10.173
Number of accumulation units outstanding at end of period 361,089 9,561 99,417 161
PPI MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $10.357 $6.702(3) $10.350 $8.599(1)
Value at end of period $15.431 $10.357 $15.397 $10.350
Number of accumulation units outstanding at end of period 421,059 13,509 173,671 12,479
</TABLE>

88
<PAGE>

Condensed Financial Information (continued)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
0.95% Total Charges 1.25% Total Charges
------------------- -------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
PPI MFS RESEARCH GROWTH PORTFOLIO
Value at beginning of period $10.113 $8.805(1) $10.099 $9.089(1)
Value at end of period $12.424 $10.113 $12.370 $10.099
Number of accumulation units outstanding at end of period 208,889 4,604 434,221 36,363
PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $9.248 $8.553(1) $9.236 $8.395(3)
Value at end of period $14.511 $9.248 $14.448 $9.236
Number of accumulation units outstanding at end of period 292,270 46,182 180,822 25,860

<CAPTION>
1.40% Total Charges
-------------------
1999 1998
---- ----
<S> <C> <C>
PPI MFS RESEARCH GROWTH PORTFOLIO
Value at beginning of period $10.092 $8.886(1)
Value at end of period $12.343 $10.092
Number of accumulation units outstanding at end of period 145,910 6,259
PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $9.229 $8.841(1)
Value at end of period $14.416 $9.229
Number of accumulation units outstanding at end of period 122,089 2,368
</TABLE>

- -----------------

(1) Funds were first received in this option during November 1998.

(2) Funds were first received in this option during September 1998.

(3) Funds were first received in this option during October 1998.

(4) Funds were first received in this option during December 1998.

(5) Funds were first received in this option during September 1999.

(6) Funds were first received in this option during October 1999.

(7) Funds were first received in this option during May 1999.

(8) Funds were first received in this option during July 1999.

(9) Funds were first received in this option during June 1999.

89
<PAGE>

- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT B
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------------------------------------------

Statement of Additional Information dated July 14, 2000

AETNA VARIABLE ANNUITY

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 July 14, 2000.

A free prospectus is available upon request from the local Aetna Life Insurance
and Annuity Company office or by writing to or calling:

Aetna Financial Services
Annuity Services
151 Farmington Avenue
Hartford, Connecticut 06156-1258
1-800-238-6219

Read the prospectus before you invest. Unless otherwise indicated, 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................................................................ 7
Sales Material and Advertising....................................................... 8
Independent Auditors................................................................. 9
Financial Statements of the Separate Account......................................... S-1
Financial Statements of Aetna Life Insurance and Annuity Company and Subsidiaries ... F-1
</TABLE>
<PAGE>

GENERAL INFORMATION AND HISTORY

Aetna Life Insurance and Annuity Company (the Company, we, us, our) issues the
contract described in the 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 assets
include the business of Aetna Variable Annuity Life Insurance Company (formerly
Participating Annuity Life Insurance Company organized in 1954). Our Home Office
is located at 151 Farmington Avenue, Hartford, Connecticut 06156.

As of December 31, 1999, the Company and its subsidiary life company had $53
billion invested through their products, including $39 billion in their separate
accounts (of which the Company, or it subsidiary Aeltus Investment Management,
Inc., oversees the management of $24 billion). The Company is ranked among the
top 2% of all U.S. life insurance companies rated by A.M. Best Company based on
assets as of December 31, 1998.

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.
Purchase 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 or
under all contracts.
<PAGE>

The funds currently available under the contract are as follows:

<TABLE>
<S> <C>
Aetna Balanced VP, Inc. Fidelity Variable Insurance Products Fund (VIP) Growth
Aetna Income Shares d/b/a Aetna Bond VP Portfolio
Aetna Growth VP Fidelity Variable Insurance Products Fund (VIP ) High Income
Aetna Variable Fund d/b/a Aetna Growth and Income VP Portfolio
Aetna Index Plus Large Cap VP Fidelity Variable Insurance Products Fund II (VIP II)
Aetna International VP Contrafund [Reg TM] Portfolio
Aetna Variable Encore Fund d/b/a Aetna Money Market VP Janus Aspen Aggressive Growth Portfolio
Aetna Real Estate Securities VP* Janus Aspen Balanced Portfolio
Aetna Small Company VP Janus Aspen Growth Portfolio
Aetna Technology VP Janus Aspen Worldwide Growth Portfolio
AIM V.I. Capital Appreciation Fund MFS Total Return Series
AIM V.I. Government Securities Mitchell Hutchins Series Trust Growth & Income Portfolio
AIM V.I. Growth Fund Mitchell Hutchins Series Trust Small Cap Portfolio
AIM V.I. Growth and Income Fund Mitchell Hutchins Series Trust Tactical Allocation Portfolio
AIM V.I. Value Fund Oppenheimer Aggressive Growth Fund/VA
Alliance Variable Products -- Growth and Income Portfolio Oppenheimer Main Street Growth & Income Fund/VA
Alliance Variable Products -- Premier Growth Portfolio Oppenheimer Strategic Bond Fund/VA
Alliance Variable Products -- Quasar Portfolio Portfolio Partners, Inc. (PPI) MFS Capital Opportunities
Fidelity Variable Insurance Products Fund (VIP) Equity-Income Portfolio
Portfolio Portfolio Partners, Inc. (PPI) MFS Emerging Equities Portfolio
Portfolio Partners, Inc. (PPI) MFS Research Growth Portfolio
Portfolio Partners, Inc. (PPI) Scudder International Growth
Portfolio
</TABLE>

Complete descriptions of each of the funds, including their investment
objectives, policies, risks and fees and expenses, are contained in the
prospectuses and statements of additional information for each of the funds.

OFFERING AND PURCHASE OF CONTRACTS

The Company is both the depositor and the principal underwriter for the
securities sold under 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 the contracts are purchased can be found in
the prospectus under the sections entitled "Purchase 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 contract. 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 purchase 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,
adjusted to reflect the deduction of the maximum recurring charges under the
contract during each period (i.e., Option Package III: 1.25% mortality and
expense risk charge, $30 annual maintenance fee, 0.15% administrative charge,
and early withdrawal charge of 7% of purchase payments grading down to 0% after
7 years). These charges will be deducted on a pro rata basis in the case of
fractional periods. The

3
<PAGE>

maintenance fee is converted to a percentage of assets based on the average
account size under the contract described in the prospectus. The total return
figures shown below will be lower than the standardized figures for Option
Packages I and II because of the lower mortality and expense risk charge under
those Option Packages (0.80% and 1.10% respectively). We may also advertise
standardized returns and non-standardized returns using the fees and charges
applicable to Option Packages I and II.

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 annual
maintenance fee. The deduction of the early withdrawal charge and the annual
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 the maximum recurring
charges under the contract except the early withdrawal charge (i.e., Option
Package III: 1.25% mortality and expense risk charge, $30 annual maintenance
fee, and 0.15% administrative charge). We may also advertise returns based on
lower charges that may apply to contracts under Option Packages I and II.

Standardized and non-standardized calculations do not currently include the
premium bonus or reflect the deduction of the corresponding premium bonus
charge; but, to the extent permitted by applicable law, we may include the
premium bonus and corresponding charge in the standardized and non-standardized
average annual total returns in the future.

Investment results of the funds will fluctuate over time, and any presentation
of the subaccounts' total return quotations for any prior period should not be
considered as a representation of how the subaccounts will perform in any future
period. Additionally, the account value upon redemption may be more or less than
your original cost.

AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The tables below reflect the average annual standardized and non-standardized
total return quotation figures for the periods ended December 31, 1999 for the
subaccounts under the contract. The standardized returns assume the maximum
charges under the contract (i.e., Option Package III) as described under
"General" above. The non-standardized returns assume the same charges but do not
include the early withdrawal charges. We may also advertise returns based on
lower charges that may apply to particular contracts under option packages I and
II.

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 the average annual total return
since the fund's inception date.

4
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------
Date Contributions
First Received
STANDARDIZED Under the Separate
Account
- ------------------------------------------------------------------------------------------------------------------------------------
Since
SUBACCOUNT 1 Year 5 Year 10 Year Inception*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Balanced VP, Inc.(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 10/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna International VP 05/05/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP(1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP 05/06/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 10/02/1998
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 10/02/1998
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund 10/02/1998
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 10/02/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 12/30/1994
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 12/30/1994
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio 06/30/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund [Reg TM] Portfolio 06/30/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 10/31/1994
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 01/31/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 07/29/1994
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 04/28/1995
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series 05/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Growth & Income Portfolio 05/05/1999
- ------------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Small Cap Portfolio 07/02/1999
- ------------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Tactical Allocation Portfolio 05/17/1999
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Aggressive Growth Fund/VA 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Growth & Income Fund/VA 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Capital Opportunities Portfolio 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Growth/PPI MFS Capital Opportunities(3) 11/30/1992
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Emerging Equities Portfolio 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap/PPI MFS Emerging Equities(3) 09/30/1993
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation/PPI MFS Research Growth(3) 08/31/1992
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio Class A/PPI Scudder International
Growth(3) 08/31/1992
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Please refer to the discussion preceding the tables for an explanation of the
charges included and methodology used in calculating 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 seven-day period ended December
31, 1999 (on an annualized basis) was 4.38%. 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 7% 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 the Separate
Account" refers to the applicable date for the replaced fund. If no date is
shown, contributions were first received in the replaced fund under the
separate account more than ten years ago.

5
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------
Fund
NON-STANDARDIZED Inception
Date
- ------------------------------------------------------------------------------------------------------------------------------------
Since
SUBACCOUNT 1 Year 3 Years 5 Years 10 Years Inception**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Balanced VP, Inc.(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP 12/13/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 09/16/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna International VP 12/22/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP(1)(2)
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP 12/15/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP 12/27/1996
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 05/05/1993
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Government Securities Fund
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund 05/02/1994
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 05/05/1993
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 05/05/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Growth and Income Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Premier Growth Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Alliance Quasar Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP High Income Portfolio(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund [Reg TM] Portfolio 01/03/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
MFS Total Return Series 01/03/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Growth & Income Portfolio 01/04/1999
- ------------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Small Cap Portfolio 05/03/1999
- ------------------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Tactical Allocation Portfolio 01/04/1999
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Aggressive Growth Fund/VA(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Main Street Growth & Income Fund/VA 07/05/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA 05/03/1993
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Capital Opportunities Portfolio 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Growth/PPI MFS Capital Opportunities(3)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Emerging Equities Portfolio 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap/PPI MFS Emerging Equities(3)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation/PPI MFS Research
Growth(3)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio Class A/PPI Scudder International
Growth(3)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

** 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 seven-day period ended December
31, 1999 (on an annualized basis) was 4.38%. 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 7%
early withdrawal charge is not reflected.
(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.

6
<PAGE>

INCOME PHASE PAYMENTS

When you begin receiving payments under the contract during the income phase
(see "The Income Phase" in the prospectus), the value of your account is
determined using accumulation unit values as of the tenth valuation before the
first income phase payment is due. Such value (less any applicable premium tax)
is applied to provide income phase payments to you in accordance with the income
phase payment option and investment options elected.

The annuity option tables found in the contract show, for each option, the
amount of the first income phase payment for each $1,000 of value applied.
Thereafter, variable income phase payments fluctuate as the annuity unit
value(s) fluctuates with the investment experience of the selected investment
option(s). The first income phase payment and subsequent income phase payments
also vary depending upon the assumed net investment rate selected (3.5% or 5%
per annum). Selection of a 5% rate causes a higher first income phase payment,
but income phase payments will increase thereafter only to the extent that the
investment performance of the subaccounts you selected is greater than 5%
annually, after deduction of fees. Income phase payments would decline if the
performance was less than 5%. Use of the 3.5% assumed rate causes a lower first
income phase payment, but subsequent income phase payments would increase more
rapidly or decline more slowly as changes occur in the performance of the
subaccounts selected.

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 income phase 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 income phase 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 income phase payments are to begin, there are 3,000
accumulation units credited under a particular contract 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 income phase payment option elected, a first monthly
variable income phase payment of $6.68 per $1000 of value applied; the
annuitant's first monthly income phase payment would thus be $40.950 multiplied
by $6.68, or $273.55.

7
<PAGE>

Assume then that the value of an annuity unit upon the valuation on which the
first income phase payment was due was $13.400000. When this value is divided
into the first monthly income phase 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
income phase payment, multiplying this factor by .9999058* (to take into account
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 income phase payment is due. The second
monthly income phase 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 an income phase payment of $276.07.

*If an assumed net investment rate of 5% is elected, the appropriate factor to
take into account 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.

8
<PAGE>

We may provide in advertising, sales literature, periodic publications or other
materials information on various topics of interest to current and prospective
contract holders. 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 contract and the
characteristics of and market for such financial instruments.

INDEPENDENT AUDITORS

________________, 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
[To be filed by amendment.]

10
<PAGE>

Form No. SAI. 56297-00 ALIAC Ed. July 2000

<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, 1999
- Statement of Operations for the year ended December 31, 1999
- Statements of Changes in Net Assets for the years ended
December 31, 1999 and 1998
- Condensed Financial Information for the year ended December
31, 1999
- 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, 1999, 1998 and 1997
- Consolidated Balance Sheets as of December 31, 1999 and 1998
- Consolidated Statements of Changes in Shareholder's Equity for
the years ended December 31, 1999, 1998 and 1997
- Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997
- 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 (GM-VA-98)(2)
(4.2) Variable Annuity Contract Certificate (GMC-VA-98)(2)
(4.3) Endorsement (EVAGET98) to Variable Annuity Contract GM-VA-98 and
Variable Annuity Contract Certificate GMC-VA-98(4)
(4.4) Endorsement (EGET-99) to Variable Annuity Contract GM-VA-98 and
Variable Annuity Contract Certificate GMC-VA-98(5)

<PAGE>

(4.5) Endorsement (EVA-PB-00) to Variable Annuity Contract GM-VA-98 and
Variable Annuity Contract Certificate GMC-VA-98
(4.6) Form of Endorsement (EVA-PB-00(NY))
(5) Variable Annuity Contract Application(9.5.89-6(9/98))(6)
(6.1) Certificate of Incorporation of Aetna Life Insurance and Annuity
Company(7)
(6.2) Amendment of Certificate of Incorporation of Aetna Life Insurance
and Annuity Company(8)
(6.3) By-Laws as amended September 17, 1997 of Aetna Life Insurance and
Annuity Company(9)
(7) Not applicable
(8.1) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and AIM dated June 30, 1998(6)
(8.2) Service Agreement between Aetna Life Insurance and Annuity Company
and AIM effective June 30, 1998(6)
Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Alliance Capital dated March 1, 2000(10)
(8.3) Service Agreement between Aetna Life Insurance and Annuity Company
and Alliance Capital dated March 1, 2000(10)
(8.4) 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)
(8.5) 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(11)
(8.6) Second Amendment dated December 31, 1999 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 and amended on November 9, 1998(12)
(8.7) Third Amendment dated February 11, 2000 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 and amended on November 9, 1998 and December 31, 1999(13)
(8.8) Fourth Amendment dated May 1, 2000 to Fund Participation Agreement
by and among Aetna Life Insurance and Annuity Company and Aetna
Variable Fund,

<PAGE>

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 and
amended on November 9, 1998, December 31, 1999 and February 11,
2000(13)
(8.9) 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)
(8.10) 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(11)
(8.11) Second Amendment dated February 11, 2000 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 and November 14, 1998(13)
(8.12) Third Amendment dated May 1, 2000 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, November 14, 1998 and February 11,
2000(13)
(8.13) 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(8)
(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 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(14)
(8.15) 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

<PAGE>

December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996,
March 1, 1996 and May 1, 1997(15)
(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 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)
(8.17) Eighth Amendment dated December 1, 1999 to 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, November 6, 1997 and May 1, 1998(12)
(8.18) 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(8)
(8.19) 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(14)
(8.20) 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(16)
(8.21) 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)
(8.22) Eighth Amendment dated December 1, 1999 to 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, January 20, 1998 and May 1, 1998(12)
(8.23) Service Agreement between Aetna Life Insurance and Annuity Company
and Fidelity Investments Institutional Operations Company dated as
of November 1, 1995(17)
(8.24) 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(14)

<PAGE>

(8.25) Service Contract between Fidelity Distributors Corporation and
Aetna Life Insurance and Annuity Company dated May 2, 1997(11)
(8.26) Fund Participation Agreement among Janus Aspen Series and Aetna
Life Insurance and Annuity Company and Janus Capital Corporation
dated December 8, 1997(18)
(8.27) 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(11)
(8.28) Second Amendment dated December 1, 1999 to Fund Participation
Agreement among Janus Aspen Series and Aetna Life Insurance and
Annuity Company and Janus Capital Corporation dated December 8,
1997 and amended on October 12, 1998(12)
(8.29) Service Agreement between Janus Capital Corporation and Aetna Life
Insurance and Annuity Company dated December 8, 1997(18)
(8.30) Fund Participation Agreement among MFS Variable Insurance Trust,
Aetna Life Insurance and Annuity Company and Massachusetts
Financial Services Company dated April 30, 1996, and amended on
September 3, 1996, March 14, 1997 and November 28, 1997(2)
(8.31) Fourth Amendment dated May 1, 1998 to the Fund Participation
Agreement by and among MFS Variable Insurance Trust, Aetna Life
Insurance and Annuity Company and Massachusetts Financial Services
Company dated April 30, 1996, and amended on September 3, 1996,
March 14, 1997 and November 28, 1997(6)
(8.32) Fifth Amendment dated May 1, 1998 to Fund Participation Agreement
by and among MFS Variable Insurance Trust, Aetna Life Insurance and
Annuity Company and Massachusetts Financial Services Company dated
April 30, 1996, and amended on September 3, 1996, March 14, 1997
and November 28, 1997(19)
(8.33) Fifth Amendment dated July 1, 1999 to Fund Participation Agreement
by and among MFS Variable Insurance Trust, Aetna Life Insurance and
Annuity Company and Massachusetts Financial Services Company dated
April 30, 1996, and amended on September 3, 1996, March 14, 1997,
November 28, 1997 and May 1, 1998(20)
(8.34) Fund Participation Agreement dated May 1, 1999 between Aetna Life
Insurance and Annuity Company, Mitchell Hutchins Series Trust, and
Mitchell Hutchins Asset Management, Inc.(21)
(8.35) Service Agreement dated May 1, 1999 between Mitchell Hutchins Asset
Management, Inc. and Aetna Life Insurance and Annuity Company(21)
(8.36) Fund Participation Agreement dated March
11, 1997 between Aetna Life Insurance and Annuity Company and
Oppenheimer Variable Annuity Account Funds and Oppenheimer Funds,
Inc.(22)
(8.37) First Amendment dated December 1, 1999 to Fund Participation
Agreement between Aetna Life Insurance and Annuity Company and
Oppenheimer Variable Annuity Account Funds and Oppenheimer Funds,
Inc. dated March 11, 1997(12)
(8.38) Service Agreement effective as of March 11, 1997 between
Oppenheimer Funds, Inc. and Aetna Life Insurance and Annuity
Company(22)
(9) Opinion and Consent of Counsel*

<PAGE>

(10) Consent of Independent Auditors*
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data(6)
(14.1) Powers of Attorney(13)
(14.2) 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 on April 22, 1996.
2. Incorporated by reference to Registration Statement on Form N-4 (File No.
333-56297), as filed on June 8, 1998.
3. Incorporated by reference to Post-Effective Amendment No. 5 to Registration
Statement on Form N-4 (File No. 33-75986), as filed on April 12, 1996.
4. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on September 14, 1998.
5. Incorporated by reference to Post-Effective Amendment No. 13 to Registration
Statement on Form N-4 (File No. 333-01107), as filed on April 7, 1999.
6. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on August 4, 1998.
7. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form S-1 (File No. 33-60477), as filed on April 15, 1996.
8. Incorporated by reference to Post-Effective Amendment No. 12 to Registration
Statement on Form N-4 (File No. 33-75964), as filed on February 11, 1997.
9. Incorporated by reference to Post-Effective Amendment No. 12 to Registration
Statement on Form N-4 (File No. 33-91846), as filed on October 30, 1997.
10. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 333-87305), as filed on April , 26, 2000.
11. Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on December 14, 1998.
12. Incorporated by reference to Post-Effective Amendment No. 19 to Registration
Statement on Form N-4 (File No. 333-01107), as filed on February 16, 2000.
13. Incorporated by reference to Post-Effective Amendment No. 20 to Registration
Statement on Form N-4 (File No. 333-01107), as filed on April 4, 2000.
14. Incorporated by reference to Post-Effective Amendment No. 30 to Registration
Statement on Form N-4 (File No. 33-34370), as filed on September 29, 1997.
15. Incorporated by reference to Post-Effective Amendment No. 16 to Registration
Statement on Form N-4 (File No. 33-75964), as filed on February 9, 1998.
16. Incorporated by Reference to Post-Effective Amendment No. 7 to Registration
Statement on Form S-6 (File No. 33-75248), as filed on February 24, 1998.
17. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-88720), as filed on June 28, 1996.

<PAGE>

18. Incorporated by reference to Post-Effective Amendment No. 10 to Registration
Statement on Form N-4 (File No. 33-75992), as filed on December 31, 1997.
19. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on February 16, 1999.
20. Incorporated by reference to Post-Effective Amendment No. 11 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on November 23, 1999.
21. Incorporated by reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on June 25, 1999.
22. Incorporated by reference to Post-Effective Amendment No. 27 to Registration
Statement on Form N-4 (File No. 33-34370), as filed on April 16, 1997.

<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, Corporate Controller,
and Assistant Treasurer

Therese M. Squillacote Vice President and Chief Compliance
Officer

Kirk P. Wickman Senior 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 24 of Post-Effective Amendment No.
38 to the Registration Statement on Form N-1A (File No. 33-41694), as filed on
February 23, 2000.

Item 27. Number of Contract Owners
- ----------------------------------

As of March 31, 2000, there were 101,788 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 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,

<PAGE>

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 of the corporation. Pursuant to
Section 33-771(d), 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 and
international 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 Life Account C 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>

<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
<S> <C> <C> <C> <C>
Name of Net Underwriting Compensation on
Principal Underwriter Discounts and Commissions Redemption or Brokerage
Annuitization Commissions Compensation*

Aetna Life Insurance $1,170,405 $60,339,195
and Annuity Company
</TABLE>

* 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) The Company hereby represents that it is relying upon and will comply
with the provisions of Paragraphs (1) through (4) of the SEC Staff's
No-Action Letter dated November 28, 1988 with respect to language
concerning withdrawal restrictions applicable to plans established
pursuant to Section 403(b) of the Internal Revenue Code. See American
Counsel of Life Insurance; SEC No-Action Letter, [1988 WL 235221, *13
(S.E.C.].

(e) 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.

(f) 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 duly caused this Post-Effective Amendment to its
Registration Statement on Form N-4 (File No. 333-56297) to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hartford,
State of Connecticut, on the 8th day of May, 2000.

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. 15 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.

Signature Title Date
- --------- ----- ----

Thomas J. McInerney* Director and President )
- ------------------- )
Thomas J. McInerney (principal executive officer) )
)
Catherine H. Smith* Director and Chief Financial Officer ) May
- ------------------- ) 8, 2000
Catherine H. Smith )
)
Shaun P. Mathews* Director )
- ------------------- )
Shaun P. Mathews )
)
Deborah Koltenuk* Vice President, Corporate Controller, )
- ------------------- )
Deborah Koltenuk and Assistant Treasurer )

By: /s/ J. Neil McMurdie
----------------------------------------------
J. Neil McMurdie
*Attorney-in-Fact
<PAGE>

VARIABLE ANNUITY ACCOUNT B
Exhibit Index

Exhibit No. Exhibit
- ---------- -------
99-B.4.5 Endorsement (EVA-PB-00) to Variable
Annuity Contract GM-VA-98 and Variable
Annuity Contract Certificate GMC-VA-98 ------------

99-B.4.6 Form of Endorsement
(EVA-PB-00(NY)) *

99-B.9 Opinion and Consent of Counsel *

99-B.10 Consent of Independent Auditors *

*To be filed by amendment

Ex-99.B.4.5

Aetna Life Insurance and Annuity Company

PREMIUM BONUS ENDORSEMENT

The Contract and Certificate, if applicable, are hereby endorsed by adding the
following:

1) Right to Cancel. On the Contract and Certificate cover page, add the
following to the Right to Cancel provision:

If the Right to Cancel is exercised, any Premium Bonus credited to the Account
will be forfeited. In those states which require the return of account value,
the amount returned will reflect any losses or earnings attributable to the
Premium Bonus.

2) On Schedule - Accumulation Period, add the following to the chart under the
heading Separate Account, Charges to Separate Account:

Premium Bonus Charge [0.50%].

3) On Schedule - Annuity Period, add the following under the heading Separate
Account - Variable Annuity Payment, Charges to Separate Account:

Premium Bonus Charge

If an Annuity Payout Option is selected during the first seven Account Years, an
additional daily charge is deducted at an annual effective rate of [0.50%] for
the Premium Bonus Charge. If a fixed Annuity Payout Option is chosen, this
charge may be reflected in the payment rates. This charge will remain in effect
for seven years from the Account Effective Date.

4) In Section I. Definitions, replace Account Value with the following:

Account Value:

As of the most recent Valuation Date, the Account Value is equal to the total of
the Purchase Payment(s) made to the Account;

(a) Plus any Premium Bonus amount;
(b) Plus or minus the investment experience for the amount, if any, allocated to
one or more of the Subaccounts;
(c) Plus interest added to the amount, if any, allocated to the Guaranteed
Account;
(d) Plus any additional amount deposited to the Account (see Section IV - OPTION
PACKAGES);
(e) Less the amount of any Maintenance Fee deducted;
(f) Less any additional fee(s), charges, or taxes, if applicable, deducted;
(g) Less any amount(s) withdrawn; and
(h) Less any amount(s) applied to an Annuity Payout Option.

5) In Section I. Definitions, add the following:

Premium Bonus:

A percentage of an applicable Purchase Payment that is credited to an Account by
Aetna. This amount is in addition to the Purchase Payment. A Premium Bonus will
only be credited on Purchase Payments received during the first Account Year.
The Premium Bonus percentage may vary depending on the amount of the Premium
Bonus Charge.

Premium Bonus Charge:

The Premium Bonus Charge is equal to [0.50%], on an annual basis, of the Account
Value allocated to the Separate Account. We may also deduct this charge from
amounts allocated to the Guaranteed Account or the General Account. The Premium
Bonus Charge is deducted daily at a rate that will yield the annual charge. The
Premium Bonus Charge will remain in effect for seven years from the Account
Effective Date and will be deducted during the Accumulation Period and, if
applicable, the Annuity Period.

EVA-PB-00
<PAGE>

6) In Section III. Purchase Payment, Account Value, and Withdrawal Provisions,
add the following:

Premium Bonus Option:

For each Purchase Payment made during the first Account Year, Aetna will credit
a Premium Bonus of [4%] to the Account. The Premium Bonus will be allocated to
the Subaccount(s) or Guaranteed Term(s) selected in the same proportion as the
Purchase Payment. The Premium Bonus Option may be elected only at the time of
purchase. The election is irrevocable.

Forfeiture of Premium Bonus:

The Premium Bonus will be forfeited in the following circumstances:

(a) If the Right to Cancel is exercised;

(b) If a death benefit is payable based upon the Account Value, Step-up Value,
or Roll-up Value, but only if the Premium Bonus was credited to the Account
after or within 12 months of the date of death.

(c) If all or part of a Purchase Payment for which a Premium Bonus is credited
is withdrawn during the first seven Account Years. The amount of the Premium
Bonus forfeited will be in the same percentage as the amount withdrawn
subject to the Deferred Sales Charge is to the total of all Purchase
Payments made to the Account during the first Account Year.

Aetna will deduct any forfeited Premium Bonus on a pro rata basis from the
Subaccount(s) and/or the Guaranteed Term(s) in which the Account Value is
invested at the time of the withdrawal.

7) In Section III. Purchase Payment, Account Value, and Withdrawal Provisions,
add the following to Death Benefit Amount:

For purposes of calculating the death benefit, the Account Value, the Step-up
Value, and the Roll-up Value as applicable, will be reduced by the amount of the
Premium Bonus credited to the Account after or within 12 months of the date of
death.

8) In Section V. Annuity Payout Provisions, replace Annuity Payout Option 1 -
Payments for a specified period with the following:

Annuity Payout Option 1 - Payments for a specified period:

Payments are made for a specified number of years. The number of years must be
at least 15 and not more than 30.

Endorsed and made a part of the Contract on the Effective Date.

/s/ Thomas J. McInerney

President
Aetna Life Insurance and Annuity Company

EVA-PB-00

Aetna Life Insurance and Annuity Company

PREMIUM BONUS ENDORSEMENT

The Contract and Certificate, if applicable, are hereby endorsed by adding the
following:

1) Right to Cancel. On the Contract and Certificate cover page, add the
following to the Right to Cancel provision:

If the Right to Cancel is exercised, any Premium Bonus credited to the
Account will be forfeited.

2) On Schedule - Accumulation Period, add the following to the chart under the
heading Separate Account, Charges to Separate Account:

Premium Bonus Charge 0.50%.

3) On Schedule - Accumulation Period, under the heading Separate Account and
Guaranteed Account add the following to Minimum Account Value:

At time of Purchase, the Premium Bonus amount is not included for purposes
of meeting the Minimum Account Value.

4) On Schedule - Annuity Period, add the following under the heading Separate
Account - Variable Annuity Payment, Charges to Separate Account:

Premium Bonus Charge

If an Annuity Payout Option is selected during the first seven Account
Years, an additional daily charge is deducted at an annual effective rate
of 0.50% for the Premium Bonus Charge. If a fixed Annuity Payout Option is
chosen, this charge may be reflected in the payment rates. This charge will
remain in effect for seven years from the Account Effective Date.

5) In Section I. Definitions, replace Account Value with the following:

Account Value:

As of the most recent Valuation Date, the Account Value is equal to the
total of the Purchase Payment(s) made to the Account;

(a) Plus any Premium Bonus amount;

(b) Plus or minus the investment experience for the amount, if any,
allocated to one or more of the Subaccounts;

(d) Plus any additional amount deposited to the Account (see Section IV -
OPTION PACKAGES);

(e) Less the amount of any Maintenance Fee deducted;

(f) Less any additional fee(s), charges, or taxes, if applicable, deducted;

(g) Less any amount(s) withdrawn; and

(h) Less any amount(s) applied to an Annuity Payout Option.

6) In Section I. Definitions, add the following:

Premium Bonus:

A percentage of an applicable Purchase Payment that is credited to an
Account by Aetna. This amount is in addition to the Purchase Payment. A
Premium Bonus will only be credited on Purchase Payments received during
the first Account Year. The Premium Bonus percentage may vary depending on
the amount of the Premium Bonus Charge.

Premium Bonus Charge:

The Premium Bonus Charge is equal to 0.50%, on an annual basis, of the
Account Value allocated to the Separate Account. We may also deduct this
charge from amounts allocated to the Guaranteed Account or the General
Account. The Guaranteed Rates, after any deduction of the Premium Bonus
Charge, will not be less than 3.0%. The Premium Bonus Charge is deducted
daily at a rate that will yield the annual charge. The Premium Bonus Charge
will remain in effect for seven years from the Account Effective Date and
will be deducted during the Accumulation Period and, if applicable, the
Annuity Period.

EVA-PB-00(NY)

<PAGE>

7) In Section III. Purchase Payment, Account Value, and Withdrawal Provisions,
add the following:

Premium Bonus Option:

For each Purchase Payment made during the first Account Year, Aetna will
credit a Premium Bonus of 4% to the Account. The Premium Bonus will be
allocated to the Subaccount(s) or Guaranteed Term(s) selected in the same
proportion as the Purchase Payment. The Premium Bonus Option may be elected
only at the time of purchase. The election is irrevocable.

Forfeiture of Premium Bonus:

The Premium Bonus will be forfeited in the following circumstances:

(a) If the Right to Cancel is exercised;

(b) If a death benefit is payable based upon the Account Value or Step-up
Value, but only if the Premium Bonus was credited to the Account after
or within 12 months of the date of death.

(c) If all or part of a Purchase Payment for which a Premium Bonus is
credited is withdrawn during the first seven Account Years. For each
withdrawal, the amount of the Premium Bonus to be forfeited will be
calculated by:

(i) Determining the amount of the Premium Bonus that is subject to
forfeiture according to the following table:

<TABLE>
<CAPTION>
Completed Account Years Amount of Premium
at the Time of the Withdrawal Bonus Subject to Forfeiture
----------------------------------------------------- -- ----------------------------------------------------
<S> <C>
Less than 1 100%

1 or more but less than 2 100%

2 or more but less than 3 100%

3 or more but less than 4 100%

4 or more but less than 5 100%

5 or more but less than 6 75%

6 or more but less than 7 50%

7 or more 0%
</TABLE>

(ii) And multiplying that amount by the same percentage as the amount
withdrawn subject to the Deferred Sales Charge is to the total of
all Purchase Payments made to the Account during the first
Account Year.

Aetna will deduct any forfeited Premium Bonus on a pro rata basis from the
Subaccount(s) and/or the Guaranteed Term(s) in which the Account Value is
invested at the time of the withdrawal.

8) In Section III. Purchase Payment, Account Value, and Withdrawal Provisions,
add the following to Death Benefit Amount:

For purposes of calculating the death benefit, the Account Value and the
Step-up Value as applicable, will be reduced by the amount of the Premium
Bonus credited to the Account after or within 12 months of the date of
death.

<PAGE>

9) In Section V. Annuity Payout Provisions, replace Annuity Payout Option 1 -
Payments for a specified period with the following:

Annuity Payout Option 1 - Payments for a specified period:

Payments are made for a specified number of years. The number of years must
be at least 15 and not more than 30..

Endorsed and made a part of the Contract on the Effective Date.

Thomas J. McInerney
President
Aetna Life Insurance and Annuity Company