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[LOGO OF AETNA LIFE INSURANCE AND ANNUITY COMPANY APPEARS HERE]
VARIABLE ANNUITY
ACCOUNT C
Aetna Life Insurance and Annuity Company
Prospectus Dated:
IRA Customer Service May 1, 1995 [LOGO OF 1994
151 Farmington Avenue IRA/SEP APPEARS
Hartford, Connecticut 06156-1258 HERE]
Telephone: 1-800-531-4547
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INDIVIDUAL VARIABLE ANNUITY CONTRACTS FOR
INDIVIDUAL RETIREMENT ANNUITIES (SECTION 408(B)), INTERNAL IRA ROLLOVER AND
SIMPLIFIED EMPLOYEE PENSION PLANS (SECTION 408(K))
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The Contracts ("Contracts") described in this prospectus are offered by
Aetna Life Insurance and Annuity Company (the "Company"). The Contracts
are designed to provide for retirement income. The Contracts are
established under Section 408 of the Internal Revenue Code of 1986, as
amended ("Code"). Amounts held under the Contracts may be entitled to
tax-deferred treatment under certain sections of the Code.
The Contracts allow values to accumulate under credited interest or
variable options, or a combination of these options. They also provide
for the payment of annuity benefits on a fixed or variable basis, or a
combination thereof.
The variable funding options currently available through the Separate
Account under the Contract described in this Prospectus are as follows:
. Aetna Variable Fund . Fidelity Equity-Income Portfolio
. Aetna Income Shares . Fidelity Growth Portfolio
. Aetna Variable Encore Fund . Fidelity Overseas Portfolio
. Aetna Investment Advisers Fund, Inc.. Janus Aspen Aggressive Growth
Portfolio
. Aetna Ascent Variable Portfolio . Janus Aspen Balanced Portfolio
. Aetna Crossroads Variable Portfolio . Janus Aspen Growth Portfolio
. Aetna Legacy Variable Portfolio . Janus Aspen Short-Term Bond
Portfolio
. Alger American Growth Portfolio . Janus Aspen Worldwide Growth
Portfolio
. Alger American Small Cap Portfolio . Scudder International Portfolio
. Fidelity Contrafund Portfolio . TCI Growth (a Twentieth Century
Fund)
The availability of the above Funds is subject to applicable regulatory
authorization. Not all Funds may be available in all jurisdictions or
under all Contracts.
The credited interest options available for the accumulation of values
are the Guaranteed Interest Account (IRA and SEP Plans, everywhere
except Washington and New York), the Guaranteed Accumulation Account
(New York only) and the Fixed Account. Credited interest options are
offered only in those states in which they are approved. Except as
specifically mentioned, this prospectus describes only the variable
options of the Contracts. Information concerning the credited interest
options is found in Appendix I, Appendix II and Appendix III,
respectively.
This Prospectus sets forth concisely the information about Variable
Annuity Account C (the "Separate Account") that a prospective investor
should know before investing. Additional information about the
"Separate Account" is contained in a Statement of Additional
Information ("SAI") dated May 1, 1995, which has been filed with the
Securities and Exchange Commission and is incorporated herein by
reference. The Table of Contents for the SAI is printed in this
prospectus. An SAI may be obtained without charge by indicating the
request on the application accompanying this prospectus or by calling
1-800-531-4547.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT
PROSPECTUSES OF THE FUNDS AND GUARANTEED ACCUMULATION ACCOUNT (NEW YORK
ONLY). ALL PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE
REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE INFORMATION OR TO MAKE
ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN
CONNECTION WITH THE OFFERS CONTAINED IN THIS PROSPECTUS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE.
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TABLE OF CONTENTS
<TABLE>
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Page
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DEFINITIONS................................................................ 3
PROSPECTUS SUMMARY......................................................... 5
FEE TABLE.................................................................. 6
CONDENSED FINANCIAL INFORMATION............................................ 9
PERFORMANCE DATA........................................................... 11
THE COMPANY................................................................ 12
VARIABLE ANNUITY ACCOUNT C................................................. 12
THE FUNDS.................................................................. 12
Fund Investment Advisers.................................................. 15
Mixed and Shared Funding.................................................. 15
Fund Additions and Limitations............................................ 15
PURCHASE OF CONTRACT
Contract Purchase......................................................... 16
Net Purchase Payments..................................................... 16
Distribution.............................................................. 17
DETERMINING CONTRACT VALUE
Accumulation Units........................................................ 17
Net Investment Factor..................................................... 18
CONTRACT RIGHTS
Right to Cancel........................................................... 18
Transfers and Allocation Changes.......................................... 18
Withdrawals............................................................... 19
Reinvestment Privilege.................................................... 19
CHARGES AND DEDUCTIONS
Maintenance Fee........................................................... 19
Mortality and Expense Risk Charges........................................ 20
Administrative Expense Charge............................................. 20
Fund Expenses............................................................. 20
Allocation and Transfer Fees.............................................. 20
Deferred Sales Charge..................................................... 21
Premium Tax............................................................... 22
</TABLE>
<TABLE>
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Page
<S> <C>
ADDITIONAL WITHDRAWAL OPTIONS.............................................. 22
General................................................................... 22
Estate Conservation Option................................................ 23
Systematic Withdrawal Option.............................................. 23
ANNUITY PERIOD
Annuity Period Elections.................................................. 24
Annuity Options........................................................... 25
DEATH BENEFIT.............................................................. 26
Accumulation Period....................................................... 26
Annuity Period............................................................ 26
TAX STATUS
Introduction.............................................................. 27
Taxation of the Company................................................... 27
Tax Status of the Contract................................................ 28
Contracts Used with Certain
Retirement Plans.......................................................... 28
Possible Changes in Taxation.............................................. 29
Other Tax Consequences.................................................... 29
MISCELLANEOUS
Modification of the Contract.............................................. 30
Contract Holder Inquiries................................................. 30
Telephone Transfers....................................................... 30
Transfer of Ownership;
Assignment............................................................... 30
Legal Proceedings......................................................... 30
Legal Matters............................................................. 30
STATEMENT OF ADDITIONAL INFORMATION --
TABLE OF CONTENTS......................................................... 31
APPENDIX I--Guaranteed Accumulation
Account................................................................... 32
APPENDIX II--Fixed Account................................................. 33
APPENDIX III--Guaranteed Interest
Account................................................................... 35
APPENDIX IV--Federal Income Tax
Summary for IRAs.......................................................... 36
HYPOTHETICAL TABLES........................................................ 38
</TABLE>
2
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DEFINITIONS
As used in this Prospectus, the following terms have the meanings shown:
ACCOUNT VALUE: The dollar value of amounts held in an Account as of any
Valuation Period, including the value of the Accumulation Units in the Funds,
the amounts held in GAA, and any amounts invested in the Fixed Account, plus
interest earned on those amounts, less any maintenance fees due, but excluding
amounts used for Annuity Options.
ACCUMULATION PERIOD: The period during which Purchase Payment(s) credited to an
Account are invested to fund future annuity payments.
ACCUMULATION UNIT: A measure of the value of the Separate Account assets
attributable to each Fund used as a variable funding option.
ANNUITANT: A natural person on whose life an Annuity payment is based.
ANNUITY: A series of payments for life, for a definite period or a combination
of the two.
ANNUITY PERIOD: The period during which annuity payments are made.
ANNUITY UNIT: A unit of measure used to calculate the amount of each variable
annuity payment.
CODE: Internal Revenue Code of 1986, as amended.
COMPANY: Aetna Life Insurance and Annuity Company, sometimes referred to as
"we" or "us."
CONTRACT: The flexible Purchase Payment individual variable annuity contracts
offered by this Prospectus.
CONTRACT HOLDER: The individual to whom the Contract is issued, referred to as
"you."
CONTRACT YEAR: The period of 12 months measured from the date the first
Purchase Payment is applied to the Contract or from any anniversary of such
date.
DISTRIBUTOR(S): The registered broker-dealer(s) which have entered into selling
agreements with the Company to offer and sell the Contracts. The Company may
also serve as a Distributor.
FUNDS: The mutual funds offered as variable funding options for the investment
of assets of the Separate Account under the Contracts.
GIA: Guaranteed Interest Account, the credited interest option available in
most jurisdictions for deposits under the Contract.
HOME OFFICE: The Company's principal executive offices located at 151
Farmington Avenue, Hartford, Connecticut 06156.
MARKET VALUE ADJUSTMENT: An amount deducted or added to amounts withdrawn early
from the Guaranteed Accumulation Account to reflect changes in the market value
of the investment since the date of deposit. See Appendix I and the Prospectus
for the Guaranteed Accumulation Account for a discussion of how the market
value adjustment is actually calculated.
NET PURCHASE PAYMENT(S): The Purchase Payment(s) less premium taxes, if
applicable.
PURCHASE PAYMENT(S): The gross payment(s) made to the Company under a Contract.
SEC: Securities and Exchange Commission.
SEPARATE ACCOUNT: Variable Annuity Account C, an account whose assets are
segregated from other assets of the Company. The Separate Account holds shares
of the Funds acquired for the Contracts. The Company holds title to the assets
held in the Separate Account.
3
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UNDERWRITER: The registered broker-dealer which contracts with other registered
broker-dealers on behalf of the Separate Accounts to offer and sell the
Contracts.
VALUATION PERIOD: The period of time from when a Fund determines its net asset
value until the next time it determines its net asset value, usually from 4:15
p.m. Eastern time each day the New York Stock Exchange is open until 4:15 p.m.
the next such business day.
VALUATION RESERVE: A reserve established pursuant to the insurance laws of
State of Connecticut to measure voting rights during the Annuity Period and the
value of a commutation right available under the "Payments for Specified
Period" nonlifetime Annuity option when elected on a variable basis.
VARIABLE ANNUITY CONTRACT: An Annuity Contract providing for the accumulation
of values and/or for Annuity payments that vary in dollar amount with
investment results.
4
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PROSPECTUS SUMMARY
PURCHASE
The Contracts described in this Prospectus are available in connection with
Individual Retirement Annuities and Simplified Employee Pension Plans. The
Contracts are designed to provide retirement benefits to you when you transfer
(roll over) funds from an existing Contract issued by the Company or by Aetna
Life Insurance Company to an Individual Retirement Annuity ("IRA") and to IRA
plans pursuant to the provisions of a Simplified Employee Pension Plan ("SEP").
The Contracts can also accept transfers from plans that are considered
qualified under federal income tax laws and from other Individual Retirement
Account custodians. You also have the option of making IRA contributions on an
ongoing basis.
These Contracts may be established by completing the proper application form
and submitting it to the Distributor. See "Contract Purchase."
REDEMPTION
You may withdraw all or a portion of the Contract value during the Accumulation
Period by properly completing and submitting a disbursement form to the
Company. Certain charges and deductions may be assessed upon withdrawal. See
"Charges and Deductions" and "Contract Rights--Withdrawals."
DEFERRED SALES CHARGE
A deferred sales charge may apply to amounts withdrawn. The maximum deferred
sales charge that could be assessed on a full or partial withdrawal is 6% of
the amount withdrawn. See "Deferred Sales Charge."
TAXES AND WITHHOLDING
A 10% federal penalty tax may be imposed on the taxable portion of a
distribution paid. Withholding for income tax also may be imposed on certain
withdrawals. (See "Tax Status.")
CONTRACT CHARGES
Certain other charges are associated with these Contracts such as the
maintenance fee, mortality and expense risk charges, administrative expense
charge, fund expenses, allocation and transfer fees and premium tax. See
"Charges and Deductions" for a complete explanation of these charges.
FREE LOOK PROVISION
You may cancel the Contract no later than ten days after receiving it (or as
otherwise allowed by state law) by returning it along with a written notice of
cancellation. Unless state law requires otherwise, the amount you will receive
on cancellation under this provision may reflect the investment performance of
the Purchase Payments deposited in the separate account while invested. In
certain cases, this may be less than the amount of your Purchase Payments. (See
"Right to Cancel.")
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FEE TABLE
(Based on year ended December 31, 1994)
THE PURPOSE OF THE FEE TABLE IS TO ASSIST CONTRACT HOLDERS IN UNDERSTANDING THE
VARIOUS COSTS AND EXPENSES THAT WILL BE BORNE, DIRECTLY OR INDIRECTLY, UNDER
THE CONTRACT. THE INFORMATION LISTED REFLECTS THE CHARGES DUE UNDER THE
CONTRACT AS WELL AS THE FEES AND EXPENSES DEDUCTED FROM THE FUNDS. ADDITIONAL
INFORMATION REGARDING THE CHARGES AND DEDUCTIONS ASSESSED UNDER THE CONTRACT
CAN BE FOUND UNDER "CHARGES AND DEDUCTIONS" IN THIS PROSPECTUS. CHARGES AND
EXPENSES SHOWN DO NOT TAKE INTO ACCOUNT PREMIUM TAXES THAT MAY BE APPLICABLE.
<TABLE>
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CONTRACT HOLDER TRANSACTION EXPENSES
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DEFERRED SALES CHARGE (as a percentage of amount withdrawn)(/1/)
SCHEDULE A(/2/)
Completed Contract Years Deduction
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<S> <C>
Less than 1 1%
1 or more 0%
<CAPTION>
SCHEDULE B(/3/)
Completed Contract Years Deduction
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<S> <C>
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>
<TABLE>
<S> <C>
Allocation and Transfer Fees(/4/) $0.00
ANNUAL CONTRACT MAINTENANCE FEE(/5/) $25.00
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</TABLE>
<TABLE>
<CAPTION>
SEPARATE ACCOUNT ANNUAL EXPENSES
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(Daily deductions, equal to the percentage shown on an annual basis, made from
amounts allocated to the variable options)
<S> <C>
Mortality and Expense Risk Fees(/6/) 1.25%
Administrative Expense Charge(/7/) 0%
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Total Separate Account Annual Expenses 1.25%
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</TABLE>
(/1/) The total amount deducted for the deferred sales charge will not exceed
8.5% of the Purchase Payments made to the Contract. The deferred sales
charge may be referred to in the Contract as "surrender fee." See
"Deferred Sales Charge" for instances in which this charge is not
deducted.
(/2/) Schedule A applies to Contracts established with funds that were
transferred from an existing Contract issued by the Company (except
exchanges from IRA and SEP Contracts issued by the Company) or by Aetna
Life Insurance and Annuity Company. The deferred sales charge is based on
the number of completed contract years since the date of initial payment
to the new Contract.
(/3/) Schedule B applies to Contracts established with funds that were exchanged
from IRA and SEP Contracts issued by the Company where the Contract Holder
has been, or still is, subject to a deferred sales charge. The Contract
Holder enters the deferred sales charge schedule at the percentage point
corresponding to the deferred sales charge applicable under the
predecessor contract at the time of the exchange, and continues from that
point in the Schedule.
(/4/) The Company currently allows an unlimited number of transfers or
allocation changes without charge. However, we reserve the right to assess
a fee of $10.00 for each transfer in excess of 12 made during each
Contract year. See "Transfers and Allocation Changes."
(/5/) This represents the maximum annual maintenance fee that will be deducted
under the Contract. See "Maintenance Fee" for instances when this charge
may be waived.
(/6/) This represents the maximum charge that will be deducted for mortality and
expense risk charges under the Contract. See "Mortality and Expense Risk
Charges."
(/7/) We currently do not impose an Administrative Expense Charge. However, we
reserve the right to deduct a daily charge of not more than 0.25% per year
from the portion of contract values held in the Separate Account.
6
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MUTUAL FUND ANNUAL EXPENSES
(Except as noted, the following figures are a percentage of average net assets
and, except where otherwise indicated, are based on figures for the year ended
December 31, 1994)
<TABLE>
<CAPTION>
INVESTMENT OTHER TOTAL
ADVISORY FEES(/1/) EXPENSES(/2/) MUTUAL FUND
(AFTER EXPENSE (AFTER EXPENSE ANNUAL
REIMBURSEMENT) REIMBURSEMENT) EXPENSES
------------------ -------------- -----------
<S> <C> <C> <C>
Aetna Variable Fund 0.25% 0.05% 0.30%
Aetna Income Shares 0.25% 0.08% 0.33%
Aetna Variable Encore Fund 0.25% 0.07% 0.32%
Aetna Investment Advisers Fund, Inc. 0.25% 0.07% 0.32%
Aetna Ascent Variable Portfolio(/3/) 0.50% 0.20% 0.70%
Aetna Crossroads Variable Portfolio(/3/) 0.50% 0.20% 0.70%
Aetna Legacy Variable Portfolio(/3/) 0.50% 0.20% 0.70%
Alger American Growth Portfolio 0.75% 0.11% 0.86%
Alger American Small Cap Portfolio 0.85% 0.11% 0.96%
Fidelity Contrafund Portfolio(/3/) 0.62% 0.27% 0.89%
Fidelity Equity-Income Portfolio 0.52% 0.06% 0.58%
Fidelity Growth Portfolio 0.62% 0.07% 0.69%
Fidelity Overseas Portfolio 0.77% 0.14% 0.91%
Janus Aspen Aggressive Growth Portfolio(/4/) 0.77% 0.28% 1.05%
Janus Aspen Balanced Portfolio(/4/) 0.83% 0.74% 1.57%
Janus Aspen Growth Portfolio(/4/) 0.66% 0.22% 0.88%
Janus Aspen Short-Term Bond Portfolio(/4/) 0.00% 0.65% 0.65%
Janus Aspen Worldwide Growth Portfolio(/4/) 0.69% 0.49% 1.18%
Scudder International Portfolio 0.88% 0.20% 1.08%
TCI Growth(/5/) 1.00% 0.00% 1.00%
</TABLE>
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(/1/) Certain of the unaffiliated Fund advisers reimburse the Company for
administrative costs incurred in connection with administering the Funds
as variable funding options under the Contract. These reimbursements are
paid out of the investment advisory fees and are not charged to investors.
(/2/) A Fund's "Other Expenses" include operating costs of the Fund. The
deduction of the above expenses are reflected in the Fund's net asset
value and are not deducted from the Account Value under the Contract.
(/3/) These Funds have only limited operating history; therefore the expenses
are estimated for the current fiscal year.
(/4/) The expense figures shown are net of certain expense waivers from Janus
Capital Corporation. Without such waivers, the Investment Advisory Fees,
Other Expenses and Total Mutual Fund Annual Expenses for the Portfolios
for the fiscal year ended December 31, 1994 would have been: 1.00%, 0.28%
and 1.28%, respectively, for Janus Aspen Aggressive Growth Portfolio;
1.00%, 0.74% and 1.74%, respectively, for Janus Aspen Balanced Portfolio;
0.65%, 0.70% and 1.35%, respectively, for Janus Aspen Growth Portfolio;
0.65%, 0.75% and 1.40%, respectively, for Janus Aspen Short-Term Bond
Portfolio; and 1.00%, 0.49% and 1.49%, respectively, for Janus Aspen
Worldwide Growth Portfolio.
(/5/) The Portfolio investment adviser pays all expenses of the Portfolio except
brokerage commissions, taxes, interest, fees and expenses the non-
interested directors (including counsel fees) and extraordinary expenses.
7
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HYPOTHETICAL ILLUSTRATION (EXAMPLE)
THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURNS MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.
Assuming a 5% annual return on assets, you would have paid the following
expenses on a $1,000 investment:(1)
<TABLE>
<CAPTION>
If you withdraw your entire If you do not withdraw your
Account Value at the end of the entire Account Value contract,
applicable time period: or if you annuitize:
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund $79 $98 $116 $200 $17 $53 $92 $200
Aetna Income Shares $80 $98 $117 $204 $18 $54 $94 $204
Aetna Variable Encore
Fund $79 $98 $117 $203 $17 $54 $93 $203
Aetna Investment
Advisers Fund, Inc. $79 $98 $117 $203 $17 $54 $98 $203
Aetna Ascent Variable
Portfolio $88 $109 $136 $243 $21 $66 $113 $243
Aetna Crossroads
Variable Portfolio $83 $109 $136 $243 $21 $66 $113 $243
Aetna Legacy Variable
Portfolio $83 $109 $136 $243 $21 $66 $113 $243
Alger American Growth
Portfolio $85 $114 $144 $259 $25 $71 $121 $259
Alger American Small Cap
Portfolio $85 $117 $149 $269 $24 $74 $126 $269
Fidelity Contrafund
Portfolio $85 $115 $145 $262 $23 $71 $122 $262
Fidelity Equity-Income
Portfolio $82 $106 $130 $230 $20 $62 $107 $230
Fidelity Growth
Portfolio $83 $109 $135 $242 $21 $65 $112 $242
Fidelity Overseas
Portfolio $85 $115 $146 $264 $23 $72 $123 $204
Janus Aspen Aggressive
Growth Portfolio $86 $119 $153 $278 $25 $76 $130 $278
Janus Aspen Balanced
Portfolio $91 $184 $178 $329 $30 $92 $156 $329
Janus Aspen Growth
Portfolio $85 $114 $145 $261 $23 $71 $122 $261
Janus Aspen Short-Term
Bond Portfolio $83 $108 $183 $238 $21 $61 $110 $238
Janus Aspen Worldwide
Growth Portfolio $88 $123 $159 $291 $26 $80 $137 $291
Scudder International
Portfolio $87 $120 $155 $281 $25 $77 $132 $281
TCI Growth $86 $118 $151 $273 $24 $75 $128 $273
</TABLE>
(1)The illustration reflects the $25.00 maintenance fee as an annual charge of
0.146% of assets.
8
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CONDENSED FINANCIAL INFORMATION
(FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES OF 1.25%)
(SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR THE YEAR OR PERIOD
ENDED DECEMBER 31, 1994 (AS APPLICABLE), IS DERIVED FROM THE FINANCIAL
STATEMENTS OF THE ACCOUNT, WHICH FINANCIAL STATEMENTS HAVE BEEN AUDITED BY
KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS. THE FINANCIAL STATEMENTS AS OF
AND FOR THE YEAR ENDED DECEMBER 31,1994 AND THE INDEPENDENT AUDITORS' REPORT
THEREON, ARE INCLUDED IN THE STATEMENT OF ADDITIONAL INFORMATION.
<TABLE>
<CAPTION>
1994
----
<S> <C>
AETNA VARIABLE FUND
Value at beginning of period $11.020
Value at end of period $10.778
Increase (decrease) in value of accumulation unit(/1/) (2.20)%(/2/)
Number of accumulation units outstanding at end of period 602,838
AETNA INCOME SHARES
Value at beginning of period $10.905
Value at end of period $10.360
Increase (decrease) in value of accumulation unit(/1/) (5.00)%(/2/)
Number of accumulation units outstanding at end of period 148,193
AETNA VARIABLE ENCORE FUND
Value at beginning of period $10.241
Value at end of period $10.528
Increase (decrease) in value of accumulation unit(/1/) 2.80%(/2/)
Number of accumulation units outstanding at end of period 334,746
AETNA INVESTMENT ADVISERS FUND, INC.
Value at beginning of period $11.057
Value at end of period $10.868
Increase (decrease) in value of accumulation unit(/1/) (1.71)%(/2/)
Number of accumulation units outstanding at end of period 261,895
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at beginning of period $ 9.959
Value at end of period $ 9.437
Increase (decrease) in value of accumulation unit(/1/) (5.24)%(/2/)
Number of accumulation units outstanding at end of period 208,784
FIDELITY EQUITY-INCOME PORTFOLIO
Value at beginning of period $10.00
Value at end of period $10.403
Increase (decrease) in value of accumulation unit(/1/) 4.03%(/3/)
Number of accumulation units outstanding at end of period 100,574
FIDELITY GROWTH PORTFOLIO
Value at beginning of period $10.00
Value at end of period $10.472
Increase (decrease) in value of accumulation unit(/1/) 4.72%(/3/)
Number of accumulation units outstanding at end of period 121,070
FIDELITY OVERSEAS PORTFOLIO
Value at beginning of period $10.00
Value at end of period $ 9.474
Increase (decrease) in value of accumulation unit(/1/) (5.26)%(/3/)
Number of accumulation units outstanding at end of period 54,387
SCUDDER INTERNATIONAL PORTFOLIO
Value at beginning of period $12.957
Value at end of period $12.687
Increase (decrease) in value of accumulation unit(/1/) (2.08)%(/2/)
Number of accumulation units outstanding at end of period 187,169
TCI GROWTH
Value at beginning of period $12.069
Value at end of period $11.781
Increase (decrease) in value of accumulation unit(/1/) (2.39)%(/2/)
Number of accumulation units outstanding at end of period 139,235
</TABLE>
(/1/) The above figures are calculated by subtracting the beginning Accumulation
Unit value from the ending Accumulation Unit value during a calendar year,
and dividing the result by the beginning Accumulation Unit value. These
figures do not reflect the deferred sales charge or the fixed dollar
annual maintenance fee, if any. Inclusion of these charges would reduce
the investment results shown.
(/2/) Reflects less than a full year of performance activity. Funds were first
received in this option during April 1994.
(/3/) Reflects less than a full year of performance activity. Funds were first
received in this option during May 1994.
9
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CONDENSED FINANCIAL INFORMATION
(FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT ANNUAL EXPENSES OF 1.15%)
(SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR THE YEAR OR PERIOD
ENDED DECEMBER 31, 1994 (AS APPLICABLE), IS DERIVED FROM THE FINANCIAL
STATEMENTS OF THE SEPARATE ACCOUNT, WHICH FINANCIAL STATEMENTS HAVE BEEN
AUDITED BY KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS. THE FINANCIAL
STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31,1994 AND THE INDEPENDENT
AUDITORS' REPORT THEREON, ARE INCLUDED IN THE STATEMENT OF ADDITIONAL
INFORMATION.
<TABLE>
<CAPTION>
1994
----
<S> <C>
AETNA VARIABLE FUND
Value at beginning of period $10.875
Value at end of period $10.791
Increase (decrease) in value of accumulation unit(/1/) (0.77)%(/3/)
Number of accumulation units outstanding at end of period 110,410
AETNA INCOME SHARES
Value at beginning of period $10.367
Value at end of period $10.373
Increase (decrease) in value of accumulation unit(/1/) 0.06%(/3/)
Number of accumulation units outstanding at end of period 16,110
AETNA VARIABLE ENCORE FUND
Value at beginning of period $10.484
Value at end of period $10.541
Increase (decrease) in value of accumulation unit(/1/) 0.54%(/4/)
Number of accumulation units outstanding at end of period 9,736
AETNA INVESTMENT ADVISERS FUND, INC.
Value at beginning of period $10.951
Value at end of period $10.880
Increase (decrease) in value of accumulation unit(/1/) (0.65)%(/4/)
Number of accumulation units outstanding at end of period 49,333
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at beginning of period $ 9.202
Value at end of period $ 9.450
Increase (decrease) in value of accumulation unit(/1/) 2.70%(/2/)
Number of accumulation units outstanding at end of period 22,052
FIDELITY EQUITY-INCOME PORTFOLIO
Value at beginning of period $10.00
Value at end of period $10.409
Increase (decrease) in value of accumulation unit(/1/) 4.09%(/2/)
Number of accumulation units outstanding at end of period 43,852
FIDELITY GROWTH PORTFOLIO
Value at beginning of period $10.00
Value at end of period $10.479
Increase (decrease) in value of accumulation unit(/1/) 4.79%(/4/)
Number of accumulation units outstanding at end of period 32,592
FIDELITY OVERSEAS PORTFOLIO
Value at beginning of period $10.00
Value at end of period $9.480
Increase (decrease) in value of accumulation unit(/1/) (5.20)%(/4/)
Number of accumulation units outstanding at end of period 5,098
SCUDDER INTERNATIONAL PORTFOLIO
Value at beginning of period $13.433
Value at end of period $12.701
Increase (decrease) in value of accumulation unit(/1/) (5.45)%(/2/)
Number of accumulation units outstanding at end of period 23,840
TCI GROWTH
Value at beginning of period $11.910
Value at end of period $11.794
Increase (decrease) in value of accumulation unit(/1/) (0.97)%(/3/)
Number of accumulation units outstanding at end of period 4,486
</TABLE>
(/1/) The above figures are calculated by subtracting the beginning Accumulation
Unit value from the ending Accumulation Unit value during a calendar year,
and dividing the result by the beginning Accumulation Unit value. These
figures do not reflect the deferred sales charge or the fixed dollar
annual maintenance fee, if any. Inclusion of these charges would reduce
the investment results shown.
(/2/) Reflects less than a full year of performance activity. Funds were first
received in this option during September 1994.
(/3/) Reflects less than a full year of performance activity. Funds were first
received in this option during October 1994.
(/4/) Reflects less than a full year of performance activity. Funds were first
received in this option during November 1994.
10
<PAGE>
PERFORMANCE DATA
From time to time, the Company may advertise different types of historical
performance for the variable funding options of the Separate Account available
under the Contracts described in this Prospectus. The Company may advertise the
"standardized average annual total returns" of the variable funding options,
calculated in a manner prescribed by the SEC, as well as the "non-standardized
return." Both methods are described below. Further information is contained in
the SAI.
"Standardized average annual total returns" are computed according to a formula
in which a hypothetical investment of $1,000 is applied to the variable funding
options under the Contract and then related to the ending redeemable values
over the most recent one, five and ten-year periods (or since inception if less
than 10 years). Standardized returns will reflect the deduction of all
recurring charges during each period (e.g., mortality and expense risk charges,
the annual maintenance fees, the administrative expense charge and any
applicable deferred sales charge).
"Non-standardized return" will be calculated in a similar manner, except that
non-standardized figures will not reflect the deduction of any applicable
deferred sales charge (which would decrease the level of performance shown if
reflected in these calculations). The non-standardized figures may also include
a three-year period.
For Funds that were in existence prior to the date that the Fund became
available under the Contract, the performance data will show the investment
performance that such Fund would have achieved (reduced by the applicable
charges) had it been available under the Contract for the period quoted.
We may distribute sales literature that compares the percentage change in
Accumulation Unit values for any of the Funds to established market indexes
such as the Standard & Poor's 500 Stock Index and the Dow Jones Industrial
Average or to the percentage change in values of other mutual funds that have
investment objectives similar to the Fund being compared.
We may publish in advertisements and reports to you, the ratings and other
information assigned to us by one or more independent rating organizations such
as A.M. Best Company, Standard & Poor's Corporation, Duff & Phelps and Moody's
Investors Service, Inc. The purpose of the ratings is to reflect the financial
strength and/or claims-paying ability of the Company. From time to time, we
will quote articles from newspapers and magazines or other publications or
reports, including, but not limited to The Wall Street Journal, Money magazine,
USA Today, and The VARDS Report. 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.
11
<PAGE>
THE COMPANY
Aetna Life Insurance and Annuity Company (the "Company"), is a stock life
insurance company organized in 1976 under the insurance laws of the State of
Connecticut; it is the depositor for Variable Annuity Account C. As of December
31, 1994, we managed over $20.4 billion of assets. As of December 31, 1993, we
ranked among the top 2% of all U.S. life insurance companies by size. We are a
wholly owned subsidiary of Aetna Life and Casualty Company which, with its
subsidiaries, constitutes one of the nation's largest diversified financial
services organizations. Our Home Office is located at 151 Farmington Avenue,
Hartford, Connecticut 06156.
VARIABLE ANNUITY ACCOUNT C
Variable Annuity Account C is a separate account established by us in 1976
pursuant to the insurance laws of the State of Connecticut. The Separate
Account was formed for the purpose of segregating assets attributable to the
variable portions of Contracts from our other assets. The Separate Account is
registered as a unit investment trust under the Investment Company Act of 1940,
and meets the definition of "separate account" under the federal securities
laws.
Although the Company holds title to the assets of the Separate Account, such
assets are not chargeable with liabilities arising out of any other business we
may conduct. Income, gains or losses of the Separate Account are credited to or
charged against the assets of the Separate Account without regard to our other
income, gains or losses. All obligations arising under the Contracts are our
general corporate obligations.
THE FUNDS
The Contract Holder will designate some or all of the mutual funds described
below as variable funding options under the Contract. The Contract Holder or
you may select one or more of the Funds for investment of the Purchase Payments
made on your behalf. Except where noted, all of the Funds are diversified as
defined in the Investment Company Act of 1940. The availability of the above
Funds is subject to applicable regulatory authorization. Not all Funds are
available in all jurisdictions or under all Contracts.
. AETNA VARIABLE FUND (sometimes called the "Growth and Income Fund") seeks
to maximize total return through investments in a diversified portfolio
of common stocks and securities convertible into common stock.
. AETNA INCOME SHARES (sometimes called the "Bond Fund") seeks to maximize
total return, consistent with reasonable risk, through investments in a
diversified portfolio consisting primarily of debt securities.
. AETNA VARIABLE ENCORE FUND (sometimes called the "Money Market Fund")
seeks to provide high current return, consistent with preservation of
capital and liquidity, through investment in high-quality money market
instruments. An investment in the Fund is neither insured nor guaranteed
by the U.S. Government.
. AETNA INVESTMENT ADVISERS FUND, INC. (sometimes called the "Managed
Fund") is a managed mutual fund which seeks to maximize investment return
consistent with reasonable safety of principal by investing in one or
more of the following asset classes: stocks, bonds and cash equivalents
based on the Company's judgment of which of those sectors or mix thereof
offers the best investment prospects.
12
<PAGE>
. AETNA GENERATION PORTFOLIOS, INC. -- AETNA ASCENT VARIABLE PORTFOLIO
seeks to provide capital appreciation by allocating its investments among
equities and fixed income securities. Aetna Ascent is managed for
investors who generally have an investment horizon exceeding 15 years,
and who have a high level of risk tolerance. See the Fund's prospectus
for a discussion of the risks involved.
. AETNA GENERATION PORTFOLIOS, INC. -- AETNA CROSSROADS VARIABLE PORTFOLIO
seeks to provide total return (i.e., income and capital appreciation,
both realized and unrealized) by allocating its investments among
equities and fixed income securities, Aetna Crossroads is managed for
investors who generally have an investment horizon exceeding 10 years and
who have a moderate level of risk tolerance. See the Fund's prospectus
for a discussion of the risks involved.
. AETNA GENERATION PORTFOLIOS, INC. -- AETNA LEGACY VARIABLE PORTFOLIO
seeks to provide total return consistent with preservation of capital by
allocating its investments among equities and fixed income securities.
Aetna Legacy is managed for investors who generally have an investment
horizon exceeding five years and who have a low level of risk tolerance.
. ALGER AMERICAN FUND -- ALGER AMERICAN GROWTH PORTFOLIO seeks long-term
capital appreciation by investing in a diversified, actively manager
portfolio of equity securities, primarily of companies with total market
capitalization -- present market value per share multiplied by the total
number of shares outstanding -- of $1 billion or greater. Income is a
consideration in the selection of investments but is not an investment
objective.
. ALGER AMERICAN FUND -- ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
("Alger American Small Cap Portfolio") seeks capital return through
investment in the common stock of smaller companies offering the
potential for significant price gain. It invests at least 85% of its net
assets in equity securities and at least 65% of its net assets in equity
securities of companies that, at the time of purchase, have "total market
capitalization" -- present market value per share multiplied by the total
number of shares outstanding -- of less than $1 billion. Investing in
smaller companies may present risks not present in investments in larger
companies. See the Fund's prospectus for a discussion of these risks.
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND II -- CONTRAFUND
PORTFOLIO ("Fidelity Contrafund Portfolio") seeks maximum total return
over the long term by investing its assets mainly in equity securities of
companies that are undervalued or out-of-favor.
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND -- EQUITY-INCOME
PORTFOLIO ("Fidelity Equity-Income Portfolio") seeks reasonable income by
investing primarily in income-producing equity securities. In choosing
these securities, the Fund will also consider the potential for capital
appreciation.
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND -- GROWTH
PORTFOLIO ("Fidelity Growth Portfolio") seeks to achieve capital
appreciation by investing primarily in common stock, although the Fund is
not limited to any one type of security.
. FIDELITY INVESTMENTS' VARIABLE INSURANCE PRODUCTS FUND -- OVERSEAS
PORTFOLIO ("Fidelity Overseas Portfolio") seeks long-term growth of
capital primarily through investments in foreign securities (at least 65%
from at least three countries outside of North America). International
Investments such as these involve greater risks than U.S. Investments.
. JANUS ASPEN SERIES -- AGGRESSIVE GROWTH PORTFOLIO ("Janus Aspen
Aggressive Growth Portfolio") is a nondiversified portfolio that seeks
long-term growth of capital by emphasizing investments in common stocks
of companies with market capitalizations between $1 billion and $5
billion.
. JANUS ASPEN SERIES -- BALANCED PORTFOLIO ("Janus Aspen Balanced
Portfolio") seeks both long-term growth of capital and current income.
The Portfolio is designed for investors who want to participate in the
equity markets through a more moderate investment than a pure growth
fund.
13
<PAGE>
Investments in income-producing securities are intended to result in a
portfolio that provides a more consistent total return than may be
attainable through investing solely in growth stocks. The Portfolio is not
designed for investors who desire a consistent level of income. There can
be no assurance that the Portfolio will achieve its objective.
. JANUS ASPEN SERIES -- GROWTH PORTFOLIO ("Janus Aspen Growth Portfolio")
seeks long-term growth of capital by investing primarily in a
diversified portfolio of common stocks of a large number of issuers of
any size. The Portfolio generally emphasizes issuers with large market
capitalizations.
. JANUS ASPEN SERIES -- SHORT-TERM BOND PORTFOLIO ("Janus Aspen Short-Term
Bond Portfolio") seeks as high a level of current income as is consistent
with preservation of capital by investing primarily in short- and
intermediate-term fixed income securities. The Portfolio will normally
maintain a dollar-weighted average portfolio maturity of less than three
years, but not to exceed five years depending upon its portfolio
manager's opinion of prevailing market, financial and economic
conditions.
. JANUS ASPEN SERIES -- WORLDWIDE GROWTH PORTFOLIO ("Janus Aspen Worldwide
Growth Portfolio") seeks long-term growth of capital by investing
primarily in common stocks of companies of foreign and domestic issuers
of any size. The Portfolio normally invests in issuers from at least five
different countries including the United States. International
investments involve risks not present in U.S. Securities.
. SCUDDER VARIABLE LIFE INVESTMENT FUND -- INTERNATIONAL PORTFOLIO
("Scudder International Portfolio") seeks long-term growth of capital
primarily through diversified holdings of marketable foreign equity
investments. Investing in foreign securities may involve a greater degree
of risk than investing in domestic securities. See the Fund's prospectus
for a discussion of the risks involved.
. TCI PORTFOLIOS, INC. -- TCI GROWTH (a Twentieth Century Fund) seeks
capital growth by investing in common stocks (including securities
convertible into common stocks) and other securities that meet certain
fundamental and technical standards of selection and, in the opinion of
TCI Growth's management, have better than average potential for
appreciation. TCI Growth tries to stay fully invested in such securities,
regardless of the movement of prices generally. The fund may invest in
foreign securities. Foreign investing involves risks that differ from
those involved in domestic investing. See the Fund's prospectus for a
discussion of these risks.
There is no assurance that the Funds will achieve their investment objectives.
Contract Holders bear the full investment risk of investments in the Funds
selected.
Some of the above funds may use instruments known as derivatives as part of
their investment strategies as described in their respective prospectuses. The
use of certain derivatives such as inverse floaters and principal only debt
instruments may involve higher risk of volatility to a Fund. The use of
leverage in connection with derivatives can also increase risk of losses. See
the prospectus for the Funds for a discussion of the risks associated with an
investment in those funds.
More comprehensive information, including a discussion of potential risks, is
found in the current prospectus for each Fund which is distributed with and
must accompany this Prospectus. Contract Holders should read the accompanying
prospectuses carefully before investing. Additional prospectuses and the
Statements of Additional Information for this Prospectus and each of the Funds
can be obtained from the Company's Home Office at the address and telephone
number listed on the cover of this Prospectus.
14
<PAGE>
FUND INVESTMENT ADVISERS
The following identifies the investment adviser for each Fund.
<TABLE>
<CAPTION>
FUND INVESTMENT ADVISER
---- ------------------
<S> <C>
Aetna Variable Fund Aetna Life Insurance
and Annuity Company (ALIAC)
Aetna Income Shares ALIAC
Aetna Variable Encore Fund ALIAC
Aetna Investment Advisers Fund, Inc. ALIAC
Aetna Ascent Variable Portfolio ALIAC
Aetna Crossroads Variable Portfolio ALIAC
Aetna Legacy Variable Portfolio ALIAC
Alger American Small Cap Portfolio Fred Alger Management, Inc.
Alger American Growth Portfolio Fred Alger Management, Inc.
Fidelity Contrafund Portfolio Fidelity Management & Research Company
Fidelity Equity-Income Portfolio Fidelity Management & Research Company
Fidelity Growth Portfolio Fidelity Management & Research Company
Fidelity Overseas Portfolio Fidelity Management & Research Company
Janus Aspen Aggressive Growth Portfolio Janus Capital Corporation
Janus Aspen Balanced Portfolio Janus Capital Corporation
Janus Aspen Growth Portfolio Janus Capital Corporation
Janus Aspen Short-Term Bond Portfolio Janus Capital Corporation
Janus Aspen Worldwide Growth Portfolio Janus Capital Corporation
Scudder International Portfolio Scudder, Stevens & Clark, Inc.
TCI Growth Investors Research Corporation
</TABLE>
MIXED AND SHARED FUNDING
Shares of the Funds are sold to us for funding variable annuities. The Funds
may be sold to other companies for the same purpose. This is referred to as
"shared funding." Shares of the Funds may also be used for funding variable
life insurance policies through variable life separate accounts sponsored by us
or by third parties. This is referred to as "mixed funding."
It is conceivable that, in the future, it may be disadvantageous for variable
annuity separate accounts and variable life separate accounts of the same or of
an unaffiliated insurance company to invest in these Funds simultaneously,
since the interests of the contract holders or policy owners or insurance
companies may differ. Each Fund's Board of Trustees or Directors has agreed to
monitor events in order to identify any material irreconcilable conflicts which
may possibly arise and to determine what action, if any, should be taken in
response thereto. If such a conflict were to occur, one of the separate
accounts might withdraw its investment in a Fund. This might force that Fund to
sell portfolio securities at disadvantageous prices.
FUND ADDITIONS AND LIMITATIONS
We may, from time to time, add additional mutual funds as eligible variable
funding options under the Contracts. In such event, you will be permitted to
select from these other funds, subject to any conditions that may be imposed in
connection with those options. No more than 18 different investment choices may
be made over the Life of the Account, and the Contract provides that no more
than 10 options may be selected at any one time. See "Transfers and Allocation
Changes." The Company's current policy is to allow only the Aetna Variable
Fund, Aetna Income Shares, and Aetna Investment Advisers Fund, Inc. to be used
as variable investment options during the Annuity Period. See "Transfers and
Allocation Changes."
15
<PAGE>
THE CONTRACT
CONTRACT PURCHASE
The Contract application form, completed by you, is forwarded together with
the initial Purchase Payment, if any, to the Company's Home Office. Upon
acceptance, we issue the Contract and forward it to you. The Company must
accept or reject an application within two business days of its receipt. If
the application is incomplete, the Company may hold it and any accompanying
Purchase Payment for five days. Purchase Payments may be held for longer
periods only with the consent of the Contract Holder, pending acceptance of
the application. If the application is accepted, a Contract will be issued to
the Contract Holder. Any Purchase Payment accompanying the application, or
received prior to acceptance of the application, will be invested as of the
date of acceptance. If the application is rejected, the application and any
Purchase Payments will be returned to the Contract Holder. Initial payments
held for longer than the five business days will be deposited in the Aetna
Variable Encore Fund until the forms are completed.
The initial Purchase Payment is credited at the Accumulation Unit value for
the Valuation Period in which the Purchase Payment is received at the Home
Office. Subsequent Purchase Payments, if any, are credited to the Contract at
the Accumulation Unit value(s) determined for the applicable Valuation Period
during which they are received.
You may cancel the Contract within 10 days after receiving it. See "Right to
Cancel" for more information.
The minimum initial rollover amount required to establish a Contract is
$1,500. The Contract may accept additional rollovers and/or Purchase Payments
as long as they meet the minimum amount established from time to time by us.
Installment Purchase Payments must be at least $85 per month or $1,000
annually. (Monthly installments must be made via Automatic Bank Check Plan.)
The Code imposes a maximum limit on the amount that may be contributed to an
IRA. Such maximum contribution is the lesser of $2,000 or 100% of
compensation. All individuals may make IRA contributions up to these limits.
However, eligibility to claim a tax deduction for all or part of the
contribution depends upon active participation in an employer-sponsored
retirement plan, adjusted gross income, and marital status. For SEP Plans, the
overall limit is calculated in accordance with Sections 219 and 415 of the
Code, but in no event may your elective deferrals under a SEP Plan exceed
$9,240 (1995 limitations) per year.
NET PURCHASE PAYMENTS
Each Purchase Payment is forwarded to us through a Distributor. Each Net
Purchase Payment, to the extent it is to be accumulated on a variable basis,
is placed in the Separate Account and credited to the Contract.
You may elect to have the Net Purchase Payment(s) accumulate (a) on a variable
basis by allocation to one or more of the available Funds; (b) on a fixed
basis under one or more of the available credited interest options; or (c) in
a combination of any of the available investment options. The Net Purchase
Payment(s) must be allocated to the respective options in increments of whole
percentage amounts. No more than 10 variable funding options are permitted
under the Contract at any given time.
Under a Contract to which installment Purchase Payments are made, you may
elect to change the allocation of future Net Purchase Payments to any
accumulation option described above.
16
<PAGE>
DISTRIBUTION
The Company will serve as Underwriter for the securities sold by this
Prospectus. The Company is registered as a broker-dealer with the Securities
and Exchange Commission and is a member of the National Association of
Securities Dealers, Inc. (NASD). As Underwriter, the Company will contract with
one or more registered broker dealers ("Distributors"), including at least one
affiliate of the Company, to offer and sell the Contracts. All persons offering
and selling the Contracts must be registered representatives of the
Distributors and must also be licensed as insurance agents to sell Variable
Annuity Contracts.
Persons offering and selling the Contracts may receive commissions in
connection with the sale of the Contracts. The maximum percentage amount that
the Company will ever pay as commission with respect to any given Purchase
Payment is with respect to those made during the first year of Purchase
Payments under a Contract. That percentage amount will be 1.5% of those
Purchase Payments. The Company may also pay renewal commissions on Purchase
Payments made after the first year and service fees. In limited circumstances,
we also pay certain of these professionals profit-sharing and compensation,
overrides or reimbursement for expenses. The average of all payments made by
the Company is 1.5% of the total Purchase Payments made over the life of an
average Contract. The Company may also reimburse the Distributor for certain
expenses. The name of the Distributor and the registered representative
responsible for your Contract are set forth on your application. Commissions
and sales related expenses are paid by the Company and are not deducted from
Purchase Payments. See "Charges and Deductions--Deferred Sales Charge."
DETERMINING CONTRACT VALUE
ACCUMULATION UNITS
A Purchase Payment that is directed to one or more of the Funds is deposited in
the Separate Account and credited to the Account in the form of Accumulation
Units for each Fund selected. The number of Accumulation Units credited is
determined by dividing the applicable portion of the Purchase Payment by that
Contract's Accumulation Unit value of the appropriate Fund. The Accumulation
Unit value used is that next-computed following the date on which a Purchase
Payment is received, unless the application has not been accepted. In that
event, Purchase Payments will be credited at the Accumulation Unit Value next
determined after acceptance of the application. Shares of the Funds are
purchased by the Separate Account at the net asset value next determined by the
Fund following receipt of Purchase Payments by the Separate Account. The value
of Accumulation Units attributable to the Funds will be affected by the
investment performance, expenses and charges of those Funds. Generally, if the
net asset value of the fund increases, so does the Accumulation Unit value;
however, performance of the Separate Account is reduced by charges and
deductions under the Contract.
Accumulation Units are valued separately for each Fund. Therefore, if you elect
to have a Purchase Payment invested in a combination of Funds, you will have
Accumulation Units credited from more than one source. The value of your
Account as of the most recent Valuation Period, is determined by adding the
value of any Accumulation Units attributed to the Fund(s) you have selected to
the value of any amounts invested in any of the Credited Interest Options.
17
<PAGE>
NET INVESTMENT FACTOR
A Valuation Period is the period of time for which a Fund determines its net
asset, usually from 4:15 p.m. Eastern time each day the New York Stock Exchange
is open until 4:15 p.m. the next such business day. The value of an
Accumulation Unit for any Valuation Period is calculated by multiplying the
Accumulation Unit value for the immediately preceding Valuation Period by the
net investment factor of the appropriate investment option for the current
period.
The net investment factor is calculated separately for each Fund in which
assets of the Separate Account are invested. It is determined by adding
1.0000000 to the net investment rate.
The net investment rate equals (a) the net assets of the Fund held by the
Separate Account at the end of a Valuation Period, minus (b) the net assets of
the Fund held by the Separate Account at the beginning of a Valuation Period,
plus or minus (c) taxes or provision for taxes, if any, attributable to the
operation of the Separate Account, divided by (d) the value of the Fund's
Accumulation and Annuity Units held by the Separate Account at the beginning of
the Valuation Period, minus (e) a daily charge at an annual rate of 1.25% for
the Annuity mortality and expense risks; and a daily administrative expense
charge that will not exceed 0.25% (0% through April 30, 1996) on an annual
basis. The net investment rate may be more or less than zero. See "Charges and
Deductions."
CONTRACT RIGHTS
RIGHT TO CANCEL
You may cancel the Contract no later than ten days after receiving it (or as
otherwise allowed by state law) by returning it along with a written notice of
cancellation to us. We will produce a refund not later than seven days after we
receive the Contract and the written notice at our Home Office. Cancellations
requested after a customer receives the Contract will consist of a refund of
the Purchase Payment.
TRANSFERS AND ALLOCATION CHANGES
During each calendar year, you may change the allocation of future Net Purchase
Payments and/or transfer account values among the funding options available
under the Contract. However, you may not make allocations or transfers to new
funding options if the total number of funding options you have selected would
exceed 18, since the time that you acquired an interest in the Contract.
Additionally, the Contract provides that no more then ten investment choices
may be selected at any given time. Each variable funding option, the Fixed
Account, and each guaranteed term of the Guaranteed Accumulation Account or the
Guaranteed Interest Account selected counts as one option, even if you no
longer have amounts allocated to that option. (See "Fund Additions and
Limitations").
We currently allow unlimited transfers without charge of accumulated amounts to
available investment options during the Accumulation Period; however, we
reserve the right to charge $10 for each transfer after the first 12 in any
calendar year. Transfers of not less than $500 may be made among the available
Funds or from any of the Funds to a credited interest option. Any transfer will
be based on the Accumulation Unit value next determined after a proper request
is received by us at our Home Office. See Appendices I, II and III for
information on transfers from credited interest options.
You can transfer a lump sum amount from one of the funds to another in
substantially equal monthly installments. This permits shares of the second
fund to be purchased using the "dollar-cost-averaging" method. The amount
applied to a Systematic Allocation must be no less than $100 per month over a
period of at least 12 months. Systematic Allocations for a period longer than
24 months must be consented to by the Company. You may only have one Systematic
Allocation in effect at any time, and you may revoke this option at any time.
Allocations may not be made from or to the interest crediting options in the
Contract.
During the Annuity Period, no transfers of accumulated value are allowed.
18
<PAGE>
WITHDRAWALS
You may withdraw all or a portion of the Contract Value during the Accumulation
Period. To do so, you must properly complete a disbursement form and send it to
our Home Office. Disbursement forms are available from us and our
representatives. Withdrawals may be requested in one of the following ways:
. Full Withdrawal of the Contract: The amount paid will be the full
Contract value minus any applicable deferred sales charge and maintenance
fee due.
. Partial Withdrawal -- Percentage: The amount paid will be the percentage
of the Contract value requested minus any applicable deferred sales
charge.
. Partial Withdrawal -- Specific Dollar Amount: The amount paid will be the
dollar amount requested. However, the amount withdrawn from the Contract
will equal the dollar amount requested plus any applicable deferred sales
charge.
All amounts paid will be based on Contract Values as of the end of the
Valuation Period in which the request is received in our Home Office, or on
such later date as the disbursement form may specify. For any partial
withdrawal, unless you request otherwise, the value of the Accumulation Units
cancelled will be withdrawn proportionately from each investment option used
under the Contract.
Payments for withdrawal requests will be made in accordance with SEC
requirements, but not normally later than seven calendar days after a properly
completed disbursement form is received at our Home Office or within seven
calendar days of the date the disbursement form may specify. Payments may be
delayed for: (a) any period in which the New York Stock Exchange ("Exchange")
is closed (other than customary weekend and holiday closings) or in which
trading on the Exchange is restricted; (b) any period in which an emergency
exists where disposal of securities held by the funds is not reasonably
practicable or it is not reasonably practicable for the value of the assets of
the Funds to be fairly determined; or (c) such other periods as the SEC may by
order permit for your protection. The conditions under which restricted trading
or an emergency exists shall be determined by the rules and regulations of the
SEC.
REINVESTMENT PRIVILEGE
You may elect to reinvest all or a portion of the proceeds received for the
full withdrawal of the Contract within 30 days after such withdrawal.
Accumulation Units will be credited to the Contract for the amount reinvested,
as well as for any appropriate portion of any deferred sales charge imposed at
the time of withdrawal. Any maintenance fee that falls due after the withdrawal
and before the reinvestment will be deducted from the amount reinvested.
Reinvested amounts will be reallocated to the applicable investment options in
the same proportion as they were allocated at the time of withdrawal.
The number of Accumulation Units credited will be based upon the Accumulation
Unit value(s) next computed following receipt at our Home Office of the
reinvestment request along with the amount to be reinvested. The reinvestment
privilege may be used only once. If you are contemplating reinvestment, you
should seek competent advice regarding the tax consequences associated with
such a transaction.
CHARGES AND DEDUCTIONS
MAINTENANCE FEE
An annual maintenance fee is deducted from each Contract during the
Accumulation Period. This fee is to reimburse us for some of our administrative
expenses relating to the establishment and maintenance of the Contract. The
maintenance fee is determined annually based on the Contract Value on the last
day of the Contract year. If the Contract Value is $10,000 or greater, the
annual maintenance
19
<PAGE>
fee is zero. If the Contract Value is less than $10,000, the annual maintenance
fee is $25. The maintenance fee is deducted on the Contract anniversary date
(or, if not a Valuation Date, on the next Valuation Date). We deduct this fee
from each investment option in the same proportion as the values held under
each option bear to the total value of the Contract.
MORTALITY AND EXPENSE RISK CHARGES
We make a daily deduction from the variable portion of Contract values for
mortality and expense risks. This deduction, made as part of the calculation of
Accumulation and Annuity Unit value(s), is equivalent to 1.25% per year.
The Company will reduce the charge to 1.15% provided one of the following
conditions are met:
1) The Contract has remained in the accumulation period for 10 years
following the initial Purchase Payment; or
2) If $250,000 or more is applied as the initial Purchase Payment or if the
Contract's Current Value at the Contract Year anniversary is at least
$250,000.
The mortality risk charge is to compensate us for the risk we assume when we
promise to continue making payments to individual Annuitants for their
lifetimes according to Annuity rates specified in the Contract at issue. The
expense risk charge is to compensate us for the risk that actual expenses for
costs incurred under the Contract will exceed the maximum costs that can be
charged under the Contract. During 1994, the Company received $59,320,898 for
mortality and expense risks from Contracts under the Separate Account.
ADMINISTRATIVE EXPENSE CHARGE
We reserve the right to deduct a daily charge equivalent to not more than 0.25%
per year from the variable portion of Contract values to reimburse us for some
of the expenses incurred by us for administering the Contract. This charge will
be established by us on an annual basis effective each May 1 and continue until
April 30 of the following year. During the Accumulation Period, the charge may
fluctuate annually. Once an Annuity option is elected, the charge will be
established and will be effective during the entire annuity period. Through
April 30, 1996, we have established the charge to be zero. Since the
administrative expense charge is a percentage of the variable portion of
Contract values, there may be no relationship between the amount so deducted
and the amount of expenses attributable to the Contract.
FUND EXPENSES
Each Fund has an investment adviser. An investment advisory fee, based on the
Funds average net assets, is deducted from each Fund's net assets.
Most expenses incurred in the operations of the Funds are borne by that Fund.
Fund advisers may reimburse the Funds they advise for some or all of these
expenses. For further details on each Fund's expenses, you should read the
accompanying prospectus for each Fund and refer to the Fee Table in this
prospectus.
ALLOCATION AND TRANSFER FEES
Once 12 allocation changes or 12 transfers have been made in a calendar year,
we reserve the right to charge a fee of not more than $10, deducted from the
Contract value, for each additional change or transfer. We currently do not
impose a fee.
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DEFERRED SALES CHARGE
There are no deductions from Purchase Payments for sales commissions or related
expenses. Sales commissions and expenses are advanced by the Company and
recovered out of any deferred sales charges or, if deferred sales charges are
insufficient, out of its profits from investment activities, including the
mortality and expense risk charges under the Contract. For sales commissions
paid in connection with the sale of the Contracts, see "Contract Purchase--
Distribution." Deferred sales charges may be deducted from amounts withdrawn
during the first Contract Year under Schedule A or during the first seven
Contract Years under Schedule B, as set forth in the tables below. The deferred
sales charge will apply to withdrawals during the Accumulation Period. It will
apply during the Annuity Period if the nonlifetime Annuity Option is elected on
a variable basis and the remaining value is withdrawn before three years of
Annuity payments have been completed. See "Annuity Period--Annuity Options."
There are additional restrictions and deductions on withdrawals. See "Contract
Rights--Withdrawals."
The tables below reflect the deferred sales charge deduction as a percentage of
the amount withdrawn:
Schedule A applies to Contracts established with funds that were transferred
(rolled over) from an existing Contract issued by us where you have
participated under a pension or profit sharing retirement plan or a tax-
deferred annuity plan. It also applies to all Contracts established with funds
that were transferred from an existing contract issued by Aetna Life Insurance
Company. The deferred sales charge is based on the number of completed years
since the date of initial payment to the new Contract.
SCHEDULE A
<TABLE>
<CAPTION>
COMPLETED CONTRACT YEARS DEDUCTION
------------------------ ---------
<S> <C>
Less than 1 1%
1 or more 0%
</TABLE>
Schedule B applies to Contracts established with funds that were transferred
from an IRA or SEP Contract issued by us where you have been, or still are,
subject to a deferred sales charge. The Contract Holder enters the deferred
sales charge schedule at the percentage point corresponding to the deferred
sales charge applicable under the predecessor contract at the time of the
exchange, and continues from that point in the Schedule.
SCHEDULE B
<TABLE>
<CAPTION>
COMPLETED CONTRACT YEARS DEDUCTION
------------------------ ---------
<S> <C>
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>
The deduction for the deferred sales charge will not exceed 8.5% of the total
Purchase Payments actually made to the Contract.
A deferred sales charge is not deducted from any portion of the Contract value
that is:
(a) applied to provide Annuity benefits,
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(b) paid due to your death,
(c) withdrawn due to the election of ECO or SWO;
(d) paid due to the full withdrawal of a Contract in which the value is
$2,500 or less and no withdrawals have been made from that Contract
within the prior 12 months, or
(e) paid in an amount of 10% or less of the current Contract value. This
applies only to the first partial withdrawal in each calendar year. The
10% amount will be calculated using the Contract value on the date the
request is received, in good order, at our Home Office. When a
distribution option (ECO or SWO) is elected, this provision includes
any amounts paid under that election. This provision is available only
if you are at least 59 1/2. It does not apply to full withdrawals,
unless required by state law; or
(f) withdrawn under Contracts issued in those states where we are required
by law to allow for the first 10% of the first withdrawal request in a
calendar year to be free of any deferred sales charge if you are 59 1/2
years old or older.
In the instances cited in the above paragraphs, no deferred sales charge is
deducted. However, the amount withdrawn may be subject to the 10% federal
penalty tax. See "Tax Status of Amounts Distributed Under the Contract."
Based on our actuarial determination, we do not anticipate that the deferred
sales charge will cover all sales and administrative expenses which we will
incur in connection with the Contract. Also, we do not intend to profit from
either the annual maintenance fee or the administrative expense charge, if
imposed. We do hope to profit from the daily deduction for mortality and
expense risks. Any such profit, as well as any other profit realized by us and
held in the general account (which supports insurance and annuity obligations),
would be available for any proper corporate purpose, including, but not limited
to, payment of sales and distribution expenses.
PREMIUM TAX
Several states and municipalities impose a premium tax on Annuities. Currently
such taxes range up to 4%. Ordinarily, any state premium tax will be deducted
from the amount applied to an Annuity option. However, we reserve the right to
deduct a state premium tax at any time from the Purchase Payment(s) or from the
Contract value based upon our determination when such tax is due.
Any municipal premium tax assessed at a rate in excess of 1% will be deducted
from the Purchase Payment(s) or from the amount applied to an Annuity option
based upon our determination of when such tax is due. We will absorb any
municipal premium tax that is assessed at 1% or less. We reserve the right,
however, to reflect this added expense in our annuity purchase rates for
residents of such municipalities.
ADDITIONAL WITHDRAWAL OPTIONS
GENERAL
We offer two additional withdrawal options that are not considered Annuity
options: the Estate Conservation Option ("ECO") and the Systematic Withdrawal
Option ("SWO"). These options are available to you with Contract values of at
least $25,000 at the time of election and are available at certain ages as
described below. Under SWO, you receive a series of partial withdrawals from
your account based on a payment method you select. It is designed for those who
want a periodic income while retaining investment flexibility for amounts
accumulating under the Contract. ECO offers the same investment flexibility as
SWO, but is designed for those who want to receive only the minimum
distribution that the Code required each year. Under ECO, the Company
calculates the minimum distribution amount required by law and pays you that
amount once a year.
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<PAGE>
Amounts withdrawn for ECO and SWO will be deducted from the Contract in the
same manner as for any other withdrawals during the Accumulation Period, except
that no deferred sales charge will be applied. (See "Withdrawals" and "Deferred
Sales Charge.") Since ECO and SWO are not Annuity options, the Contract remains
in the Accumulation Period, retains all the rights and flexibility described in
this prospectus, and is subject to all other Contract charges. The value of the
Accumulation Units cancelled will be withdrawn proportionately from the
investment options used under the Contract. We reserve the right to discontinue
the availability of these options and to change the terms for future elections.
Once you elect a distribution option, you may revoke it at any time, by
submitting a written request to our Home Office. Any revocation will apply only
to the amounts not yet paid. Once ECO or SWO is revoked, it may not be elected
again.
SWO is different from ECO in the following ways: (1) SWO payments are made for
a fixed dollar amount, fixed time period or fixed percentage, whereas ECO
payments vary in dollar amount and can continue indefinitely during your
lifetime, and (2) generally, SWO payments will be higher than expected ECO
payments. You should carefully assess your future income needs when considering
the election of these options.
You should consult your tax adviser before requesting the election of one of
these options due to the potential for adverse tax consequences.
In the event of your death, payments may be continued to your designated
beneficiary.
ESTATE CONSERVATION OPTION
We will calculate and distribute an annual amount using the method contained in
the Code's minimum distribution regulations. The annual distribution is
determined by dividing the prior December 31 value of the Contract by a life
expectancy factor. The factor will be based on either your life expectancy or
the joint life expectancies of you and your designated beneficiary, as directed
by you, and based on tables in IRS regulations. If ECO is elected based on your
life expectancy only, the full Contract value must be distributed in the year
following your death, as required by current IRS regulations. Factors will be
redetermined for each year's distribution. The value of the Contract to be used
in this calculation is the value on the December 31st prior to the year for
which payment is being made. This calculation will be changed, if necessary, to
conform to changes in the Code or applicable regulations. The first
distribution may not be made before the calendar year in which you attain age
70 1/2.
SYSTEMATIC WITHDRAWAL OPTION
The annual minimum SWO distribution (or maximum SWO time period) will be
determined, as directed by you, by a life expectancy factor from tables
designated by the IRS. The factor will be based on either your life expectancy
or the joint life expectancies of you and your designated beneficiary. Factors
will be reduced by one for each distribution year. The first distribution may
not be made before you attain age 59 1/2.
One of the following distribution methods may be elected:
(a) Specified Payment -- payments of a designated amount. The annual dollar
amount chosen cannot be greater than 10% of the cash value applied to
SWO. The specified payment minimum distribution is determined by
dividing the value of the Contract by the life expectancy factor. The
value of the Contract to be used in this calculation is the value on
the December 31st prior to the year for which the payment is being
made. The specified payment amount will remain constant unless a higher
amount is required under Code distribution requirements. If the dollar
amount chosen is less than the Code's minimum distribution, we will
calculate and pay the minimum distribution amount.
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<PAGE>
(b) Specified Period -- payments for a designated time period. The
specified period must be at least 10 years but not greater than your
life expectancy factor. Each annual distribution is determined by
dividing the Contract value by the number of years remaining in the
elected period. The value to be used in this calculation is the value
on the December 31st prior to the year for which the payment is being
made. For payments made more often than annually, the annual payment
result (calculated above) is divided by the number of payments due each
year.
(c) Specified Percentage -- payments of a designated percentage. The
specified percentage chosen cannot be greater than 10% of the amount
applied to SWO. You may change the specified percentage elected every 6
months. Each annual distribution is determined by multiplying the
Contract value by the percentage chosen. The value to be used in this
calculation is the value on the December 31st prior to the year for
which the payment is being made. For payments made more often than
annually, the annual payment result (calculated above) is divided by
the number of payments due each year. Payments will be made each year
until the year during which you attain age 70 1/2.
SWO payments are available monthly, quarterly, semiannually and annually. No
election may be made that would result in a payment of less than $250.
ANNUITY PERIOD
ANNUITY PERIOD ELECTIONS
You must notify us in writing of the annuity start date and Annuity option
elected. (For more details, see the Statement of Additional Information.) Until
a date and option are elected, the Contract will continue in the Accumulation
Period.
You may give written notice to us at least 30 days before Annuity payments
begin by electing or changing (a) the date on which Annuity payments are to
start, (b) the annuity option, (c) whether the payments are to be made monthly,
quarterly, semiannually or annually, and (d) the investment option(s) used to
provide Annuity payments (i.e., a fixed annuity using the general account,
Aetna Variable Fund, Aetna Income Shares, Aetna Investment Advisers Fund, Inc.,
or any combination thereof). No other variable Funds may currently be used as
investment options during the Annuity Period. Once Annuity Payments begin, the
Annuity Option may not be changed, nor may transfers be made among funding
options.
If Annuity payments are to be made on a variable basis, the first and
subsequent payments will vary depending on the assumed net investment rate (3
1/2% per annum, unless a 5% annual rate is elected). Selection of a 5% rate
causes a higher first payment, but Annuity payments will increase thereafter
only to the extent the net investment rate exceeds 5% on an annualized basis.
Annuity payments would decline if the rate were below 5%. Use of the 3 1/2%
assumed rate causes a lower first payment, but subsequent payments would
increase more rapidly or decline more slowly as changes occur in the net
investment rate.
No election may be made that would result in a first Annuity payment of less
than $50 or total yearly Annuity payments of less than $250. If the Contract
value is insufficient to elect an option for the minimum amount specified, a
lump-sum payment must be elected.
When payments start, the age of the Annuitant plus the number of years for
which payments are guaranteed must not exceed 95.
Annuity payments may not extend beyond (a) the life of the Annuitant, (b) the
joint lives of the Annuitant and beneficiary, (c) a period certain greater than
the Annuitant's life expectancy, or (d) a period certain greater than the joint
life expectancies of the Annuitant and beneficiary.
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<PAGE>
Section 401(a)(9) of the Code has required minimum distribution rules for
Section 408(b) and 408(k) plans. Under such rules, distributions must generally
begin no later than April 1st of the calendar year following the calendar year
in which you attain age 70 1/2. This distribution date may be further deferred
if allowed under federal law or regulations. In addition, distributions must be
in a form and amount sufficient to satisfy the Code requirements.
In determining the amount of benefit payments, the minimum distribution
incidental death benefit rule described in IRS regulations must be satisfied.
This rule assures that any death benefits payable are incidental to the primary
purpose of the Contract, which is to provide retirement benefits to you. The
amount to be distributed under this rule is determined based on your age and
tables contained in the IRS regulations.
You will be subject to a 50% federal penalty tax on the amount of distribution
required each year that is not distributed under the Code's minimum
distribution rules.
ANNUITY OPTIONS
LIFETIME:
(a) Life Annuity -- an Annuity with payments guaranteed to the date of the
Annuitant's death. This option may be elected with payments guaranteed
for 5, 10, 15 or 20 years. Because it provides a specified minimum
number of Annuity payments, the election of a guaranteed payment period
results in somewhat lower payments.
(b) Life Income Based Upon the Lives of Two Payees -- An Annuity will be
paid during the lives of the Annuitant and a second Annuitant. Payments
will continue until both Annuitants have died. When this option is
chosen, a choice must be made of:
(i) 100% of the payment to continue after the first death;
(ii) 66 2/3% of the payment to continue after the first death;
(iii) 50% of the payment to continue after the first death;
(iv) Payments for a minimum of 120 months, with 100% of the payment to
continue after the first death; or
(v) 100% of the payment to continue at the death of the second
Annuitant and 50% of the payment to continue at the death of the
Annuitant;
Because (iv) provides a specified minimum number of Annuity payments, the
election of the guaranteed payment period results in somewhat lower
payments.
If a lifetime option is elected without a guaranteed minimum payment period, it
is possible that only one Annuity payment will be made if the Annuitant under
(a), or the surviving Annuitant under (b)(i), (ii), (iii) or (v), should die
before the due date of the second Annuity payment.
Once lifetime Annuity payments begin, the Annuitant cannot elect to receive a
lump-sum settlement.
NONLIFETIME:
Payments for a Specified Period -- an Annuity with payments to be made for
5 to 30 years, as selected. If this option is elected on a variable basis,
the Annuitant may request at any time during the payment period that the
present value of all or any portion of the remaining variable payments be
paid in one sum. However, any lump sum elected before 5 years of payments
have been completed will be treated as a withdrawal during the Accumulation
Period and any applicable deferred sales charge will be assessed. See
"(Deferred Sales Charge)." This option is not available on a variable basis
under a Contract that provides for immediate Annuity benefits.
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<PAGE>
We make a daily deduction for mortality and expense risks from any Contract
values held on a variable basis. See "Mortality and Expense Risk Charges."
Therefore, electing the nonlifetime option on a variable basis will result in a
deduction being made even though we assume no mortality risk.
In addition to the Annuity options described, we may make other payment options
available to you and other payees.
DEATH BENEFIT
ACCUMULATION PERIOD
A portion or all of any death proceeds may be (a) paid to the beneficiary in a
lump sum; (b) applied to any of the Annuity Options; (c) subject to applicable
provisions of the Code, left in the variable investment options; (d) if the
beneficiary is your spouse, paid under SWO or ECO; or (e) subject to applicable
provisions of the Code, left on deposit in our general account with the
beneficiary electing to receive monthly, quarterly, semiannual or annual
interest payments at the interest rate then currently being credited on such
deposits. The balance on deposit can be withdrawn at any time or applied under
any Annuity Options. Any lump-sum payment paid during the Accumulation Period
will normally be made within seven calendar days after proof of death
acceptable to us and a request for payment are received at our Home Office.
Until the election of method of payment, amounts will remain invested as they
were before the death, and the beneficiary will assume all rights under the
Contract. The Code requires that distribution begun within a certain time
period. If your beneficiary is your surviving spouse, he or she has until you
would have attained age 70 1/2 to begin Annuity payments, to receive a lump-sum
distribution, or to begin receiving distributions under ECO or SWO. If your
beneficiary is not your spouse, Annuity payments must begin by December 31 of
the year following the year of your death, or the entire value must be
distributed by December 31 of the fifth year following the year of your death.
In no event may payments to any beneficiary extend beyond the life of the
beneficiary or any period certain greater than the beneficiary's life
expectancy. If no elections are made concerning distribution, no distributions
will be made. Failure to commence distribution within the above time periods
can result in tax penalties.
If a lump-sum distribution is elected, the beneficiary will receive the value
of the Contract determined as of the Valuation Period in which proof of death
acceptable to us and a request for payment are received at our Home Office. If
an Annuity Option is elected, the value applied to the Annuity Option is
determined in the same manner as a lump-sum distribution; the amount of payout
will depend on the annuity option elected and the investment option(s) used to
provide such payments. See "Annuity Period." If amounts are left in the
variable investment options, the account value will continue to be affected by
the investment performance of the investment option(s) selected. If amounts are
left on deposit in the general account, the principal amount is guaranteed but
interest payments may vary. In general, regardless of the method of payment,
payments received by your beneficiaries after your death are taxed in the same
manner as if you had received those payments. (See "Tax Status.")
ANNUITY PERIOD
If an Annuitant dies after annuity payments have begun, any death benefit
payable will depend upon the terms of the Contract and the Annuity option
selected.
If lifetime option (a) or (b) was elected without a guaranteed minimum payment
period under the Contract, Annuity payments will cease upon the death of the
Annuitant under a Life Annuity or the death of the Second Annuitant under
options (b)(i), (ii), (iii) or (v).
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Under the Contract, if lifetime option (a) or (b) was elected with a guaranteed
minimum payment period and the death of the Annuitant under option (a) or the
surviving Annuitant under option (b)(iv) occurs before the end of the period,
we will pay to the designated beneficiary in a lump sum, unless otherwise
requested, the present value of the guaranteed Annuity payments remaining. Such
value will be determined as of the Valuation Period in which proof of death
acceptable to us and a request for payment are received at our Home Office. The
value will be reduced by any payments made after the date of death.
If the nonlifetime option was elected under the Contract and the Annuitant dies
before all payments are made, the value of any remaining payments may be paid
in a lump sum to the beneficiary and no deferred sales charge will be imposed.
Such value will be determined as of the Valuation Period in which proof of
death acceptable to us and a request for payment are received at our Home
Office. The value will be reduced by any payments made after the date of death.
Any lump sum payment paid under the applicable lifetime or nonlifetime Annuity
options will normally be made within seven calendar days after proof of death,
acceptable to us, and a request for payment are received at our Home Office.
If the Annuitant dies after Annuity payments have begun and if there is a death
benefit payable under the Annuity option elected, the remaining values must be
distributed to the beneficiary at least as rapidly as under the original method
of distribution.
TAX STATUS
INTRODUCTION
The following discussion is a general discussion of federal income tax
considerations relating to the Contract and is not intended as tax advice. This
discussion is not intended to address the tax consequences resulting from all
of the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction. This discussion is based upon the Company's understanding of the
present federal income tax laws as they are currently interpreted by the
Internal Revenue Service ("IRS"). No representation is made as to the
likelihood of the continuation of the present federal income tax laws or of the
current interpretation by the IRS. Moreover, no attempt has been made to
consider any applicable state or other tax laws.
The Contract may be purchased and used in connection with certain retirement
arrangements entitled to special income tax treatment under Section 408(b) or
Section 408(k) of the Code. The ultimate effect of federal income taxes on the
amounts held under a Contract, or Annuity Payments, and on the economic benefit
to the Contract Owner, the Annuitant, or the Beneficiary may depend on the tax
status of the individual concerned. Contract Owners should refer to Appendix IV
of this Prospectus for additional discussion of limits on contributions and
federal income tax deductions.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under Part I of Subchapter L
of the Code. Since the Separate Account is not an entity separate from the
Company, and its operation forms a part of the Company, it will not be taxed
separately as a "regulated investment company" under Subchapter M of the Code.
Investment income and realized capital gains are automatically applied to
increase reserves under the Contracts. Under existing federal income tax law,
the Company believes that the Separate Account investment income and realized
net capital gains will not be taxed to the extent that such income and gains
are applied to increase the reserves under the Contracts.
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Accordingly, the Company does not anticipate that it will incur any federal
income tax liability attributable to the Separate Account and, therefore, the
Company does not intend to make provisions for any such taxes. However, if
changes in the federal tax laws or interpretations thereof result in the
Company being taxed on income or gains attributable to the Separate Account,
then the Company may impose a charge against the Separate Account (with respect
to some or all Contracts) in order to set aside provisions to pay such taxes.
TAX STATUS OF THE CONTRACT
In certain circumstances, owners of variable annuity contracts may be
considered the owners, for federal income tax purposes, of the assets of the
separate accounts used to support their contracts. In those circumstances,
income and gains from the separate account assets would be includible in the
variable contract owner's gross income. One of the circumstances that has
raised this issue is the number of funding options available under the
Contract. The Company reserves the right to modify the Contract as necessary to
attempt to prevent an Owner from being considered the owner of a pro rata share
of the assets of the Separate Account.
CONTRACTS USED WITH CERTAIN RETIREMENT PLANS
IN GENERAL. The Contract is designed for use with retirement plans qualified
under Sections 408(b) or 408(k) of the Code. The tax rules applicable to
participants and beneficiaries in retirement plans vary according to the type
of plan and the terms and conditions of the plan. Special favorable tax
treatment may be available for certain types of contributions and
distributions. Adverse tax consequences may result from contributions in excess
of specified limits; distributions prior to age 59 1/2 (subject to certain
exceptions); distributions that do not conform to specified commencement and
minimum distribution rules; aggregate distributions in excess of a specified
annual amount; and in other specified circumstances.
The Company makes no attempt to provide more than general information about use
of the Contracts with the various types of retirement plans. Owners and
participants under retirement plans as well as annuitants and beneficiaries are
cautioned that the rights of any person to any benefits under the Contracts may
be subject to the terms and conditions of the plans themselves, regardless of
the terms and conditions of the Contract issued in connection with such a plan.
Some retirement plans are subject to distribution and other requirements that
are not incorporated in the administration of the Contracts. Owners are
responsible for determining that contributions, distributions and other
transactions with respect to the Contracts satisfy applicable law. Purchasers
of Contracts for use with any retirement plan should consult their legal
counsel and tax adviser regarding the suitability of the Contract.
INDIVIDUAL RETIREMENT ANNUITIES AND SIMPLIFIED EMPLOYEE PENSION PLANS. Section
408 of the Code permits eligible individuals to contribute to an individual
retirement program known as an Individual Retirement Annuity or Individual
Retirement Account, each hereinafter referred to as an "IRA". Also,
distributions from certain other types of qualified plans may be "rolled over"
on a tax-deferred basis into an IRA. Employers may establish Simplified
Employee Pension (SEP) Plans to provide IRA contributions on behalf of their
employees. The sale of a Contract for use with an IRA may be subject to special
disclosure requirements of the Internal Revenue Service. Purchasers of a
Contract for use with IRAs will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency. Such
purchasers will have the right to revoke their purchase within 7 days of the
earlier of the establishment of the IRA or their purchase. A Contract issued in
connection with an IRA will be amended as necessary to conform to the
requirements of the Code. Purchasers should seek competent advice as to the
suitability of the Contract for use with IRAs.
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All distributions will be taxed as ordinary income unless nondeductible
contributions were made to the IRA or the distribution is "rolled over" to
another retirement plan in accordance with the terms of the Code. If funds are
withdrawn before age 59 1/2, the payment is subject to a 10% penalty tax unless
the payment is due to disability, is rolled over to another IRA or is part of a
series of payments over your (or your beneficiary's) life or life expectancy.
Distributions generally are subject to withholding for the recipient's federal
income tax liability at rates that vary according to the type of distribution
and the recipient's tax status. Recipients generally are provided the
opportunity to elect not have tax withheld from distributions.
If nondeductible contributions were made, in the case of a withdrawal, a
ratable portion of the amount received is taxable, generally based on the ratio
of the "investment in the contract" to the individual's total accrued benefit
under the retirement plan. The "investment in the contract" generally equals
the amount of any non-deductible purchase payments paid by or on behalf of any
individual and can be zero. In the case of annuity payments, although the tax
consequences may vary depending on the form of payment elected under the
contract, only the portion of the annuity payment that represents the amount by
which the account value exceeds the "investment in the contract" generally will
be taxed. For variable annuity payments, the taxable portion is generally
determined by an equation that establishes 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.
For fixed annuity 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 expected value of the annuity payments for the term of the
payments; however, the remainder of each Annuity payment is taxable. In either
case, after the "investment in the contract" is recovered, the full amount of
any additional annuity payments is taxable.
In general, payments received by your beneficiaries after your death are taxed
in the same manner as if you had received those payments. There is no exclusion
for death benefits from IRA's. If annuity payments cease as a result of an
annuitant's death before full recovery of the "investment in the contract,"
consult a competent tax adviser regarding deductibility of the unrecovered
amount.
This Contract has been approved by the IRS as a prototype IRA. The IRS
approval, however, only pertains to whether the Contract meets the Code
requirements for IRA's and is not a determination of the merits of the Annuity
Contract.
POSSIBLE CHANGES IN TAXATION
In past years, legislation has been proposed that would have adversely modified
the federal taxation of certain annuities. Although as of the date of this
Prospectus Congress is not actively considering any legislation regarding the
taxation of annuities, there is always the possibility that the tax treatment
of annuities could change by legislation or other means (such as IRS
regulations, revenue rulings, judicial decisions, etc.). Moreover, it is also
possible that any change could be retroactive (that is, effective prior to the
date of the change).
OTHER TAX CONSEQUENCES
As noted above, the foregoing discussion of the federal income tax consequences
is not exhaustive and special rules are provided with respect to other tax
situations not discussed in this Prospectus. Further, the federal income tax
consequences discussed herein reflect the Company's understanding of the
current law and the law may change. Federal estate and gift tax consequences of
ownership or receipt of distributions under the Contract depend on the
individual circumstances of each Owner or recipient of a distribution. A
competent tax adviser should be consulted for further information.
29
<PAGE>
MODIFICATION OF THE CONTRACT
The Company may modify the Contract when it deems an amendment appropriate,
subject to the limitations described below, by given written notice to you 30
days before the effective date of the change. The most likely reason for a
change to the Contract would be to ensure compliance with applicable law. The
following Contract provisions are considered material by us and cannot be
changed without the approval of appropriate state or federal regulatory
authorities:
(a) transfers among investment options;
(b) notification to you;
(c) conditions governing payments of withdrawal values;
(d) terms of Annuity options;
(e) death benefit payments;
(f) maintenance fee provisions.
In addition, no change will be made to the following Contract provisions:
(a) the Annuity options;
(b) the contractual promise that no deduction will be made from the
Purchase Payment(s) for sales or administrative expenses;
(c) the deferred sales charge;
(d) the mortality and expense risk charges;
(e) the administrative expense charge provision, if applicable;
(f) the annual maintenance fee charge; and
(g) the maximum allocation and transfer fees.
No change may affect any Annuity beginning before the effective date of such
modification unless deemed necessary for the Contract to comply with the
requirements of the Code or other laws and regulations affecting the Contract.
CONTRACT HOLDER INQUIRIES
You may direct inquiries to a local representative of the Distributor or may
write directly to us at the address shown on the cover page of this prospectus.
TELEPHONE TRANSFERS
You automatically have the right to make transfers among Funds by telephone. We
have enacted procedures to prevent abuses of transactions via the 800 number.
The procedures include requiring the use of a personal identification number
(PIN) to execute transactions. You are responsible for safeguarding your PIN,
and for keeping account information confidential. If the Company fails to
follow its procedures, it would be liable for any losses to your Contract
resulting from the failure. To ensure authenticity, we record all calls on the
800 line.
TRANSFER OF OWNERSHIP; ASSIGNMENT
Ownership of a Contract may not be transferred to any person other than the
Annuitant nor may it be assigned or pledged to anyone other than us. A transfer
of ownership or assignment of the Contract, under the conditions described
above, will not be binding on us until filed at our Home Office.
LEGAL PROCEEDINGS
We know of no material legal proceedings pending to which the Separate Account
is a party or which would materially affect the Separate Account.
LEGAL MATTERS
The validity of the securities being offered by this Prospectus has been passed
upon by Susan E. Bryant, Esq., Counsel to the Company.
30
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION -- TABLE OF CONTENTS
The following items are the contents of the Statement of Additional
Information:
<TABLE>
<S> <C>
General Information and History............................................. 2
Variable Annuity Account C.................................................. 2
Offering and Purchase of Contracts.......................................... 3
Performance Data............................................................ 3
General.................................................................... 3
Average Annual Total Return Quotations..................................... 4
Annuity Payments............................................................ 5
Dollar-Cost Averaging....................................................... 6
Sales Material.............................................................. 7
Independent Auditors........................................................ 7
Financial Statements of the Separate Account................................ S-1
Financial Statements of Aetna Life Insurance and Annuity Company............ F-1
</TABLE>
31
<PAGE>
APPENDIX I
GUARANTEED ACCUMULATION ACCOUNT (AVAILABLE IN NEW YORK ONLY)
THE GUARANTEED ACCUMULATION ACCOUNT ("GAA") IS A CREDITED INTEREST OPTION
AVAILABLE DURING THE ACCUMULATION PERIOD UNDER THE CONTRACTS DESCRIBED IN THIS
PROSPECTUS. YOU SHOULD READ THE ACCOMPANYING GAA PROSPECTUS CAREFULLY BEFORE
INVESTING. THIS APPENDIX IS A SUMMARY OF GAA AND IS NOT INTENDED TO REPLACE
THE GAA PROSPECTUS. AMOUNTS ALLOCATED TO GAA ARE HELD IN A NONINSULATED,
NONUNITIZED SEPARATE ACCOUNT.
GAA is a credited interest option in which we guarantee stipulated rates of
interest for stated periods of time on amounts directed to GAA. The interest
rate stipulated is an annual effective yield; that is, it reflects a full
year's interest. Interest is credited daily at a rate that will provide the
guaranteed annual effective yield over the period of 1 year. This option
guarantees the minimum interest rate specified in the Contract.
During a specified period of time, amounts may be applied to any or all of
available Guaranteed Terms within the Short-Term and Long-Term
Classifications. The Short-Term Classification consists of all Guaranteed
Terms of 3 years or less and the Long-Term Classification consists of all
Guaranteed Terms of 10 years or less, but greater than 3 years.
Withdrawals or transfers from a Guaranteed Term prior to the end of that
Guaranteed Term may be subject to a Market Value Adjustment ("MVA"). An MVA
reflects the change in the value of the investment due to changes in interest
rates since the date of deposit. When interest rates increase after the date
of deposit, the value of the investment decreases, and the MVA is negative.
Conversely, when interest rates decrease after the date of deposit, the value
of the investment increases, and the MVA is positive. It is possible that a
negative MVA could result in you receiving an amount that is less than the
amount paid into GAA.
As a Guaranteed Term matures, assets accumulating under GAA may be (a)
transferred to a new Guaranteed Term, (b) transferred to the other available
investment options or (c) withdrawn. Amounts withdrawn may be subject to a
deferred sales charge, tax penalties and/or withholding.
By notifying us at our Home Office at least 30 days before Annuity payments
begin, you may elect to have amounts that have been accumulating under GAA
transferred to one or more of the Funds available during the Annuity Period,
to provide variable Annuity payments. GAA cannot be used as an investment
option during the Annuity Period.
MORTALITY AND EXPENSE RISK CHARGES
We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited rate.
TRANSFERS
Amounts applied to a Guaranteed Term during a deposit period may not be
transferred to any other funding option or to another Guaranteed Term during
that deposit period or for 90 days after the close of that deposit period.
Transfers are permitted from Guaranteed Terms of one Classification to
available Guaranteed Terms of another Classification. We will apply an MVA to
GAA transfers made prior to the end of a Guaranteed Term. Transfers of GAA
values due to a maturity are not subject to an MVA and are not counted as one
of the 12 free transfers of accumulated values in the Contract.
REINVESTMENT PRIVILEGE
Any amounts reinvested in GAA will be applied to the current deposit period.
Amounts are proportionately reinvested to the Classifications in the same
manner as they were allocated before the withdrawal. Any negative MVA amount
applied to a withdrawal is not included in the reinvestment.
32
<PAGE>
APPENDIX II
FIXED ACCOUNT
THE FIXED ACCOUNT IS AN INVESTMENT OPTION AVAILABLE DURING THE ACCUMULATION
PERIOD UNDER THE CONTRACTS. THE FOLLOWING SUMMARIZES MATERIAL INFORMATION
CONCERNING THE FIXED ACCOUNT THAT IS OFFERED AS AN OPTION UNDER THE CONTRACT.
ADDITIONAL INFORMATION MAY BE FOUND IN YOUR CONTRACT. AMOUNTS ALLOCATED TO THE
FIXED ACCOUNT ARE HELD IN THE COMPANY'S GENERAL ACCOUNT THAT 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,
HOWEVER, 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.
CREDITED INTEREST OPTION -- FIXED ACCOUNT
This option guarantees that amounts allocated to this option will earn the
minimum interest rates specified in the Contract. (These minimum interest rates
cannot be changed by us.) We may credit a higher interest rate from time to
time. The Company's determination of interest rates reflects the investment
income earned on invested assets and the amortization of any capital gains
and/or losses realized on the sale of invested assets. Under this option, we
assume the risk of investment gain or loss by guaranteeing Net Purchase Payment
values and promising a minimum interest rate and Annuity payment.
Under certain emergency conditions, we may defer payment of a Fixed Account
withdrawal value (a) for a period of up to six months or (b) as provided by
federal law.
In addition, if allowed by state law, we may pay any Fixed Account withdrawal
value in equal payments, with interest, over a period not to exceed 60 months,
when:
(a) the amount held in the Fixed Account under this Contract exceeds
$100,000 on the day prior to the current withdrawal; and
(b) the sum of the current Fixed Account withdrawal and the total of all
Fixed Account withdrawals from the Contract within the past 12 calendar
months exceeds 20% of the amount in the Fixed Account on the day prior
to the current withdrawal.
Interest, as used above, will not be more than two percentage points below any
rate determined prospectively by the Board of Directors for this class of
Contract. In no event will the interest rate be less than the minimum interest
rate specified in the Contract.
Amounts applied to the Fixed Account will earn the interest rate in effect when
actually applied to the Fixed Account.
MORTALITY AND EXPENSE RISK CHARGES
The Fixed Account will reflect a compound interest rate credited by us. The
interest rate quoted is an annual effective yield. We make no deductions from
the credited interest rate for mortality and expense risks; these risks are
considered in determining the credited rate.
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers from the Fixed Account to any other available investment option(s)
are allowed in each calendar year during the Accumulation Period. The amount
that may be transferred may vary at our discretion; however, it will never be
less than 10% of the amount held under the Fixed Account.
33
<PAGE>
Additionally, any remaining balance in the Fixed Account under the Contract may
be transferred by you in its entirety to any other investment option(s) if:
(a) the Current Value in the Fixed Account is $2,000 or less; or
(b) the maximum percentage allowed was transferred from the Fixed Account
in each of the four consecutive calendar years and no additional Net
Purchase Payment(s) to the Contract have been allocated to the Fixed
Account during that same time period.
ANNUITIZATIONS
By notifying us at our Home Office at least 30 days before Annuity payments
begin, you may elect to have amounts that have been accumulating under the
Fixed Account transferred to one or more of the Funds available during the
Annuity Period, to provide variable Annuity payments.
34
<PAGE>
APPENDIX III
GUARANTEED INTEREST ACCOUNT (AVAILABLE IN ALL STATES EXCEPT WASHINGTON AND NEW
YORK)
THE GUARANTEED INTEREST ACCOUNT IS AN INVESTMENT OPTION AVAILABLE DURING THE
ACCUMULATION PERIOD UNDER THE CONTRACTS. THE FOLLOWING SUMMARIZES MATERIAL
INFORMATION CONCERNING THE GUARANTEED INTEREST ACCOUNT THAT IS OFFERED AS AN
OPTION UNDER THE CONTRACT. ADDITIONAL INFORMATION MAY BE FOUND IN YOUR
CONTRACT. AMOUNTS ALLOCATED TO THE GUARANTEED INTEREST ACCOUNT ARE HELD IN THE
COMPANY'S GENERAL ACCOUNT THAT SUPPORTS INSURANCE AND ANNUITY OBLIGATIONS.
INTERESTS IN THE GUARANTEED INTEREST 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 GUARANTEED INTEREST ACCOUNT, MAY,
HOWEVER, BE SUBJECT TO CERTAIN GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL
SECURITIES LAWS RELATING TO THE ACCURACY AND COMPLETENESS OF THE STATEMENTS.
DISCLOSURE IN THIS APPENDIX REGARDING THE GUARANTEED INTEREST ACCOUNT HAS NOT
BEEN REVIEWED BY THE SEC.
GIA is the guaranteed interest option in which we guarantee stipulated rates of
interest for stated periods of time on amounts directed to GIA. Interest is
credited daily at a rate that will provide the guaranteed effective yield by
the end of the stated period of time. This option guarantees the minimum
interest rate specified in the Contract.
During a stated period of time, amounts may be applied to any or all available
Guaranteed Terms within the Short-Term and Long-Term Classifications. The
Short-Term Classification consists of all Guaranteed Terms of 3 years or less
and the Long-Term Classification consists of all Guaranteed Terms of 10 years
or less, but greater than 3 years.
As long as funds are not withdrawn before the end of a stated term, we will pay
the guaranteed rate of interest. If funds are withdrawn or transferred before
the end of a stated period of time, we will pay a reduced rate of interest, but
never less than the minimum stated in the Contract.
As a Guaranteed Term matures, assets accumulating under GIA may be (a)
transferred to a new Guaranteed Term, (b) transferred to the other available
investment options, or (c) withdrawn. Amounts withdrawn may be subject to a
deferred sales charge and/or tax liabilities.
This option is not available in New York and Washington.
MORTALITY AND EXPENSE RISK CHARGES
We make no deductions from the credited interest rate for mortality and expense
risks; these risks are considered in determining the credited rate.
TRANSFERS
Transfers are permitted from Guaranteed Terms of one Classification to
available Guaranteed Terms of another Classification. We will apply a reduced
rate of interest to amounts transferred prior to the end of a Guaranteed Term.
Transfers of GIA values due to a maturity are not subject to a reduced rate of
interest and are not counted as one of the 12 free transfers of accumulated
values in the Contract.
By notifying us at our Home Office at least 30 days before Annuity payments
begin, you may elect to have amounts that have been accumulating under GIA
transferred to one or more of the variable Funds available during the Annuity
Period to provide variable annuity payments. GIA cannot be used as an
investment option during the Annuity Period.
REINVESTMENT PRIVILEGE
Any amounts reinvested in GIA will be applied to the current deposit period.
Amounts are proportionately reinvested to the Classifications in the same
manner as they were allocated before the withdrawal.
35
<PAGE>
APPENDIX IV
FEDERAL INCOME TAX SUMMARY FOR IRAS
This notice summarizes the federal income tax rules that apply to individual
retirement annuity (IRA) contracts. Please remember that this information is
subject to change at any time, special rules apply to many of the items
summarized here and Aetna Life Insurance and Annuity Company (ALIAC) is not
allowed to give you tax advice.
For more information about federal income taxes and how they affect your IRA we
suggest that you call the IRS (at the IRS Tax Forms number in your phone book)
and ask for Publication 590 each year. This free publication will give you
current information about the federal income tax aspects of payments to and
from your IRA. You can also call your local IRS district office for general
information.
For specific advice about your income and estate taxes you should contact a
qualified tax specialist.
REVOCATION
Federal tax regulations allow you to revoke the contract within 7 days from
when you receive it and have your contributions returned to you. If you want to
revoke your contract within this time period, you may call ALIAC at 1-800-531-
4547 or write to Aetna Life Insurance and Annuity Company, 151 Farmington
Avenue, Hartford, Connecticut 06156-1258, Attention: IRA Customer Service.
STATUTORY REQUIREMENTS
The contract is an individual retirement annuity contract as described in
section 408(b) of the Internal Revenue Code. The contract can be used for tax
deduction purposes as an IRA and as part of a simplified employee pension (SEP)
plan. The money in your IRA is always fully vested, the contract may not be
transferred to anyone, you may not borrow money from it and you have full
flexibility in making contributions. The contract has been approved by the
Internal Revenue Service as a prototype IRA. However, IRS approval only means
that the contract meets the federal tax requirements for an IRA and is not a
determination of the merits of the contract.
CONTRIBUTION AND FEDERAL INCOME TAX DEDUCTION LIMITS
As long as you have compensation for the year and will not be 70 1/2 years old
or later during any part of the year, you may contribute up to the lesser of
$2,000 or your taxable compensation to this or any other IRA each year. (You
can set up another IRA for your non-working spouse and contribute as much as
$2,250 in total, but no more than $2,000 to either IRA.) Contributions must be
in the form of money (check or money order). You can't contribute stock or
other property to the contract.
Contributions for a year can be made up to the due date for filing your federal
tax return for the year, not including extensions. If you contribute an amount
between January 1 and April 15 of any year, you must tell ALIAC which year the
contribution is for. If you do not say otherwise, ALIAC must report the
contribution to the IRS on behalf of the year in which it is received.
Generally, you may take a deduction for the contributions you make to your IRA.
However, if you or your spouse is covered by an employer retirement plan, your
ability to deduct IRA contributions will depend on your income and filing
status. IRS Publication 590 includes worksheets to help you figure the amount
of your deductible contributions.
If you cannot deduct any part of your contribution, you can still make the
contribution on a nondeductible basis. But you will have to keep separate
records if you make any nondeductible IRA contributions. ALIAC does not keep
such records on your behalf.
36
<PAGE>
If you contribute more than the allowable limit for the year or make any
contribution for the year in which you reach age 70 1/2 or any later year, you
are subject to a penalty tax of 6% on the over-contributions for the year
contributed and each following year that the excess contributions stay in the
IRA. To avoid the penalty tax, you must withdraw the excess contributions and
their earnings by the due date of your tax return for that year (including
extensions). You can also withdraw any nondeductible contributions and earnings
by such date.
Special contribution and deduction rules apply if your IRA is used as part of a
SEP. Since a SEP is an employer-sponsored retirement arrangement, the maximum
deductible contribution is the lesser of $30,000 or 15% of your compensation
for the year.
TAX STATUS OF CONTRACT EARNINGS
Unless you engage in a prohibited transaction, the earnings in your IRA are not
taxable until you receive them. But if you use the IRA to secure a loan or
engage in any other prohibited transaction, the value of the IRA will lose its
tax privileges and become taxable income for that year. In that case, you will
owe regular taxes plus penalties on the amount involved in the prohibited
transaction.
DISTRIBUTIONS FROM YOUR IRA
You can withdraw funds from your IRA any time subject to the terms of the
contract. Unless you have any nondeductible contributions in your IRA and
records to back them up, all payments are subject to regular income tax in the
year received. If you withdraw funds before age 59 1/2, the payment is also
subject to a 10% penalty tax unless the payment is due to your disability,
rolled-over to another IRA or is part of a series of payments over your (or you
and your beneficiary's) life or life expectancy. There is no "averaging" or
other special tax treatment available for payments from your IRA. And if the
total retirement-type payments made to you in a given year exceed certain
"Excess Accumulation" levels set by the IRS, you may owe an excise tax as well.
You must start receiving "minimum distributions" once you reach age 70 1/2.
These payments must start no later than the April 1st of the year after you
reach age 70 1/2. Special rules are used to calculate the minimum distribution
but such payment is roughly equivalent to the amount determined by dividing
your IRA account balance by IRS factors for your estimated life expectancy. If
you do not take the minimum distribution once you reach age 70 1/2, you are
subject to an excise tax of 50% of the funds you should have received but
didn't.
ROLLOVERS
You can roll-over funds from another IRA to this IRA or from this IRA to
another IRA and defer paying federal income taxes on such payment. However,
rollovers must be completed within 60 days of receipt of funds and funds rolled
over may not be re-rolled to another IRA for 12 months.
SPECIAL FORMS TO FILE
If you make any nondeductible contributions to the IRA, you will have to file
IRS Form 8606 for such year and in the year in which you receive payments from
the IRA (to calculate the amount of such previously taxed funds being withdrawn
as part of the distribution).
If any excess contributions are made, you engage in a prohibited transaction,
have an "excess accumulation" or do not receive any minimum required
distributions, you must file IRS Form 5329 to pay the applicable excise and
penalty taxes.
ALIAC does not prepare or file these forms on your behalf.
37
<PAGE>
HYPOTHETICAL TABLES
The following tables represent hypothetical values for the periods indicated
that would have resulted under a Contract described in this Prospectus had you
made contributions to the Contract during the periods indicated. Each set of
hypothetical results is based exclusively on the investment performance of a
particular Fund during the periods shown. The Fund performance is based on the
actual net asset values of the various Funds which would be net of advisory
fees and expenses actually charged for those periods. Some of the Fund's
advisers have reimbursed the Funds for a portion of those fees. Reimbursement
may not continue in the future. The hypothetical returns also assume deduction
of all charges and expenses under the Contracts which include 1.25% mortality
and expense risk charges and a $25.00 maintenance fee which is assumed to be
deducted on the last day of each Contract Year. The Accumulation Value is net
of all applicable fees and expenses of the Fund and under the Contract, except
the deferred sales charges. The Withdrawal Value is net of all applicable fees
and expenses of the Fund and under the Contract, including deferred sales
charges as shown in Schedule B on page 6 of the Prospectus.
Since the Contracts are designed to fund variable retirement benefits through
long-term investments, "active" Contracts will, on the average, involve a long-
term relationship between the Company and the Contract Holder during both the
Accumulation and Annuity Periods. Accordingly, the Tables are intended to
illustrate the hypothetical values of each Fund since that Fund became
available under the Contract. For those Funds not available under the Contract
as of December 31, 1994, no histories are shown.
Generally, Table 1 for each Fund shows the accumulation value at annual
intervals following contract issuance on the date indicated, and Table 2 shows
the accumulation value at quarterly intervals following contract issuance.
Table 1 assumes that monthly purchase payments of $100 were made during each
Contract Year following contract issuance, and illustrates the accumulation
value of such payment over a period of time, as well as the actual withdrawal
value of your account following the deduction of any applicable deferred sales
charge that would have been assessed had a withdrawal been made during that
period. Table 2 assumes that a single net purchase payment of $100 was made at
contract issuance, and illustrates the accumulation value of that payment at
quarterly intervals thereafter.
For those Funds available during annuity payout (e.g., Aetna Variable Fund,
Aetna Income Shares and Aetna Investment Advisers Fund, Inc.), Table 3
illustrates the value of hypothetical monthly variable annuity payments at
quarterly intervals following the commencement of annuity payments on the date
indicated. Table 3 assumes an initial annuity payment of $100. For those funds
not available as funding options during the Annuity Period, no annuity payout
information is provided.
PLEASE NOTE THAT AMOUNTS WITHDRAWN BEFORE YOU REACH AGE 59 1/2 MAY BE SUBJECT
TO A 10% FEDERAL PENALTY TAX. (SEE THE SECTION ENTITLED "TAX STATUS" IN THIS
PROSPECTUS.)
PLEASE ALSO NOTE THAT WHILE THESE HYPOTHETICAL CHARTS REFLECT ACTUAL HISTORICAL
PERFORMANCE, THEY ARE NOT INDICATIVE OF FUTURE RESULTS. A PROGRAM OF THE TYPE
ILLUSTRATED IN THE TABLES DOES NOT ASSURE A PROFIT OR PROTECT AGAINST
DEPRECIATION IN DECLINING MARKETS.
38
<PAGE>
AETNA VARIABLE FUND
HYPOTHETICAL PERIODIC ACCUMULATION VALUES AND ANNUITY PAYMENTS
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1984
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
CUMULATIVE CUMULATIVE
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION DEFERRED WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) SALES CHARGE VALUE(/2/)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1985 $ 1,200.00 $ 25.00 $ 1,362.23 $ 81.73 $ 1,280.50
- ----------------------------------------------------------------------------
December 1986 2,400.00 50.00 2,836.12 141.81 2,694.31
- ----------------------------------------------------------------------------
December 1987 3,600.00 75.00 4,023.16 160.93 3,862.23
- ----------------------------------------------------------------------------
December 1988 4,800.00 100.00 5,788.24 173.65 5,614.59
- ----------------------------------------------------------------------------
December 1989 6,000.00 125.00 8,696.90 173.94 8,522.96
- ----------------------------------------------------------------------------
December 1990 7,200.00 125.00 10,114.87 101.15 10,013.72
- ----------------------------------------------------------------------------
December 1991 8,400.00 125.00 13,973.40 0.00 13,973.40
- ----------------------------------------------------------------------------
December 1992 9,600.00 125.00 15,985.23 0.00 15,985.23
- ----------------------------------------------------------------------------
December 1993 10,800.00 125.00 18,097.43 0.00 18,097.43
- ----------------------------------------------------------------------------
December 1994 12,000.00 125.00 18,889.30 0.00 18,889.30
- ----------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1984
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1985 $107.70 September 1988 $176.76 March 1992 $284.68
- --------------------------------------------------------------------------------------
June 1985 116.79 December 1988 179.67 June 1992 286.43
- --------------------------------------------------------------------------------------
September 1985 112.94 March 1989 191.77 September 1992 296.11
- --------------------------------------------------------------------------------------
December 1985 129.66 June 1989 204.95 December 1992 307.24
- --------------------------------------------------------------------------------------
March 1986 145.11 September 1989 222.25 March 1993 312.71
- --------------------------------------------------------------------------------------
June 1986 153.04 December 1989 229.00 June 1993 309.99
- --------------------------------------------------------------------------------------
September 1986 144.06 March 1990 223.82 September 1993 316.15
- --------------------------------------------------------------------------------------
December 1986 152.32 June1990 240.28 December 1993 323.87
- --------------------------------------------------------------------------------------
March 1987 179.56 September 1990 215.93 March 1994 313.24
- --------------------------------------------------------------------------------------
June 1987 184.52 December 1990 233.61 June 1994 311.15
- --------------------------------------------------------------------------------------
September 1987 193.77 March 1991 261.74 September 1994 317.75
- --------------------------------------------------------------------------------------
December 1987 158.70 June 1991 258.45 December 1994 316.77
- --------------------------------------------------------------------------------------
March 1988 168.39 September 1991 268.21
- --------------------------------------------------------------------------------------
June 1988 176.03 December 1991 291.58
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
39
<PAGE>
TABLE 3 - ANNUITY PERIOD
VALUE AT QUARTERLY INTERVALS OF HYPOTHETICAL MONTHLY
VARIABLE ANNUITY PAYMENTS
(Assumes Initial Annuity Payment of $100 beginning on December 31, 1984)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
PAYMENT PAYMENT PAYMENT
MONTH FOR MONTH(/1/) MONTH FOR MONTH(/1/) MONTH FOR MONTH(/1/)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March
1985 $106.78 September 1988 $155.37 March 1992 $221.84
- ---------------------------------------------------------------------------------------
June 1985 114.80 December 1988 156.57 June 1992 221.29
- ---------------------------------------------------------------------------------------
September
1985 110.07 March 1989 165.69 September 1992 226.82
- ---------------------------------------------------------------------------------------
December
1985 125.27 June 1989 175.55 December 1992 233.32
- ---------------------------------------------------------------------------------------
March
1986 139.00 September 1989 188.74 March 1993 235.44
- ---------------------------------------------------------------------------------------
June 1986 145.34 December 1989 192.81 June 1993 231.40
- ---------------------------------------------------------------------------------------
September
1986 135.64 March 1990 186.84 September 1993 233.97
- ---------------------------------------------------------------------------------------
December
1986 142.20 June 1990 198.86 December 1993 237.64
- ---------------------------------------------------------------------------------------
March
1987 166.19 September 1990 177.18 March 1994 227.87
- ---------------------------------------------------------------------------------------
June 1987 169.31 December 1990 190.04 June 1994 224.41
- ---------------------------------------------------------------------------------------
September
1987 176.28 March 1991 211.10 September 1994 227.21
- ---------------------------------------------------------------------------------------
December
1987 143.14 June 1991 206.66 December 1994 224.56
- ---------------------------------------------------------------------------------------
March
1988 150.58 September 1991 212.63
- ---------------------------------------------------------------------------------------
June 1988 156.06 December 1991 229.18
- ---------------------------------------------------------------------------------------
</TABLE>
AETNA INCOME SHARES
HYPOTHETICAL PERIODIC ACCUMULATION VALUES AND ANNUITY PAYMENTS
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1984
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
CUMULATIVE CUMULATIVE
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION DEFERRED WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/2/) SALES CHARGE VALUE(/3/)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1985 $ 1,200.00 $ 25.00 $ 1,321.68 $ 79.30 $ 1,242.38
- ----------------------------------------------------------------------------
December 1986 2,400.00 50.00 2,732.88 136.64 2,596.24
- ----------------------------------------------------------------------------
December 1987 3,600.00 75.00 4,032.62 161.30 3,871.32
- ----------------------------------------------------------------------------
December 1988 4,800.00 100.00 5,481.97 164.46 5,317.51
- ----------------------------------------------------------------------------
December 1989 6,000.00 125.00 7,458.35 149.17 7,309.18
- ----------------------------------------------------------------------------
December 1990 7,200.00 150.00 9,285.95 92.86 9,193.09
- ----------------------------------------------------------------------------
December 1991 8,400.00 150.00 12,288.86 0.00 12,288.86
- ----------------------------------------------------------------------------
December 1992 9,600.00 150.00 14,289.26 0.00 14,289.26
- ----------------------------------------------------------------------------
December 1993 10,800.00 150.00 16,720.12 0.00 16,720.12
- ----------------------------------------------------------------------------
December 1994 12,000.00 150.00 17,068.41 0.00 17,068.41
- ----------------------------------------------------------------------------
</TABLE>
(/1/) The amounts above assume deductions of all fees and expenses of the Funds
and under the Contracts during the Annuity Period. The Payments are based
on the standard assumed net investment rate of 3 1/2% per annum. See the
narrative preceding these Tables.
(/2/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/3/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
40
<PAGE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1984
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1985 $101.98 September 1988 $150.13 March 1992 $212.59
- --------------------------------------------------------------------------------------
June 1985 110.57 December 1988 149.16 June 1992 219.50
- --------------------------------------------------------------------------------------
September 1985 112.83 March 1989 151.53 September 1992 226.46
- --------------------------------------------------------------------------------------
December 1985 120.75 June 1989 161.56 December 1992 227.69
- --------------------------------------------------------------------------------------
March 1986 128.07 September 1989 164.21 March 1993 234.12
- --------------------------------------------------------------------------------------
June 1986 129.28 December 1989 168.81 June 1993 239.72
- --------------------------------------------------------------------------------------
September 1986 131.86 March 1990 167.74 September 1993 245.09
- --------------------------------------------------------------------------------------
December 1986 135.95 June 1990 173.10 December 1993 246.62
- --------------------------------------------------------------------------------------
March 1987 138.44 September 1990 174.39 March 1994 237.69
- --------------------------------------------------------------------------------------
June 1987 135.48 December 1990 181.93 June 1994 232.55
- --------------------------------------------------------------------------------------
September 1987 133.97 March 1991 187.56 September 1994 234.67
- --------------------------------------------------------------------------------------
December 1987 140.34 June 1991 191.12 December 1994 234.31
- --------------------------------------------------------------------------------------
March 1988 145.12 September 1991 202.49
- --------------------------------------------------------------------------------------
June 1988 147.55 December 1991 214.57
- --------------------------------------------------------------------------------------
</TABLE>
TABLE 3 - ANNUITY PERIOD
VALUE AT QUARTERLY INTERVALS OF HYPOTHETICAL MONTHLY
VARIABLE ANNUITY PAYMENTS
(Assumes Initial Annuity Payment of $100 beginning on December 31, 1984)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
PAYMENT PAYMENT PAYMENT
MONTH FOR MONTH(/2/) MONTH FOR MONTH(/2/) MONTH FOR MONTH(/2/)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March
1985 $101.10 September 1988 $131.96 March 1992 $165.66
- ---------------------------------------------------------------------------------------
June 1985 108.68 December 1988 129.99 June 1992 169.58
- ---------------------------------------------------------------------------------------
September
1985 109.95 March 1989 130.92 September 1992 173.46
- ---------------------------------------------------------------------------------------
December
1985 116.67 June 1989 138.39 December 1992 172.91
- ---------------------------------------------------------------------------------------
March
1986 122.68 September 1989 139.45 March 1993 176.28
- ---------------------------------------------------------------------------------------
June 1986 122.77 December 1989 142.14 June 1993 178.94
- ---------------------------------------------------------------------------------------
September
1986 124.16 March 1990 140.02 September 1993 181.39
- ---------------------------------------------------------------------------------------
December
1986 126.91 June 1990 143.26 December 1993 180.95
- ---------------------------------------------------------------------------------------
March
1987 128.13 September 1990 143.09 March 1994 172.91
- ---------------------------------------------------------------------------------------
June 1987 124.32 December 1990 148.00 June 1994 167.72
- ---------------------------------------------------------------------------------------
September
1987 121.87 March 1991 151.28 September 1994 167.80
- ---------------------------------------------------------------------------------------
December
1987 126.58 June 1991 152.82 December 1994 166.11
- ---------------------------------------------------------------------------------------
March
1988 129.77 September 1991 160.53
- ---------------------------------------------------------------------------------------
June 1988 130.81 December 1991 168.65
- ---------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The amounts above assume deductions of all fees and expenses of the Funds
and under the Contracts during the Annuity Period. The Payments are based
on the standard assumed net investment rate of 3 1/2% per annum. See the
nararative preceding these Tables.
41
<PAGE>
AETNA VARIABLE ENCORE FUND
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1984
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
CUMULATIVE CUMULATIVE
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION DEFERRED WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) SALES CHARGE VALUE(/2/)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1985 $ 1,200.00 $ 25.00 $ 1,220.45 $ 73.23 $ 1,147.22
- ----------------------------------------------------------------------------
December 1986 2,400.00 50.00 2,496.90 124.85 2,372.05
- ----------------------------------------------------------------------------
December 1987 3,600.00 75.00 3,845.775 153.83 3,691.94
- ----------------------------------------------------------------------------
December 1988 4,800.00 100.00 5,298.766 158.96 5,139.80
- ----------------------------------------------------------------------------
December 1989 6,000.00 125.00 6,949.34 138.99 6,810.35
- ----------------------------------------------------------------------------
December 1990 7,200.00 150.00 8,661.92 86.62 8,575.30
- ----------------------------------------------------------------------------
December 1991 8,400.00 150.00 10,345.35 0.00 10,345.35
- ----------------------------------------------------------------------------
December 1992 9,600.00 150.00 11,806.35 0.00 11,806.35
- ----------------------------------------------------------------------------
December 1993 10,800.00 150.00 13,244.70 0.00 13,244.70
- ----------------------------------------------------------------------------
December 1994 12,000.00 150.00 14,836.70 0.00 14,836.70
- ----------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1984
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1985 $101.71 September 1988 $124.54 March 1992 $155.16
- --------------------------------------------------------------------------------------
June 1985 103.59 December 1988 126.62 June 1992 156.20
- --------------------------------------------------------------------------------------
September 1985 105.29 March 1989 129.10 September 1992 157.11
- --------------------------------------------------------------------------------------
December 1985 107.12 June 1989 131.82 December 1992 157.77
- --------------------------------------------------------------------------------------
March 1986 108.88 September 1989 134.34 March 1993 158.56
- --------------------------------------------------------------------------------------
June 1986 110.34 December 1989 136.78 June 1993 159.30
- --------------------------------------------------------------------------------------
September 1986 111.79 March 1990 139.10 September 1993 160.10
- --------------------------------------------------------------------------------------
December 1986 113.08 June 1990 141.55 December 1993 160.79
- --------------------------------------------------------------------------------------
March 1987 114.44 September 1990 143.96 March 1994 161.48
- --------------------------------------------------------------------------------------
June 1987 115.90 December 1990 146.46 June 1994 162.48
- --------------------------------------------------------------------------------------
September 1987 117.45 March 1991 148.53 September 1994 163.73
- --------------------------------------------------------------------------------------
December 1987 119.27 June 1991 150.40 December 1994 165.30
- --------------------------------------------------------------------------------------
March 1988 121.00 September 1991 152.32
- --------------------------------------------------------------------------------------
June 1988 122.63 December 1991 154.09
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
42
<PAGE>
AETNA INVESTMENT ADVISERS FUND, INC.
HYPOTHETICAL PERIODIC ACCUMULATION VALUES AND ANNUITY PAYMENTS
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1989
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
CUMULATIVE CUMULATIVE DEFERRED
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION SALES WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) CHARGE VALUE(/2/)
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1990 $1,200.00 $25.00 $1,217.33 $ 73.04 $1,144.29
- ------------------------------------------------------------------------
December 1991 2,400.00 50.00 2,711.61 135.58 2,576.03
- ------------------------------------------------------------------------
December 1992 3,600.00 75.00 4,064.13 162.57 3,901.56
- ------------------------------------------------------------------------
December 1993 4,800.00 100.00 5,647.00 169.41 5,477.59
- ------------------------------------------------------------------------
December 1994 6,000.00 125.00 6,727.76 134.56 6,593.20
- ------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1989
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1990 $100.50 December 1991 $122.03 September 1993 $135.87
- --------------------------------------------------------------------------------------
June 1990 104.24 March 1992 121.57 December 1993 139.11
- --------------------------------------------------------------------------------------
September 1990 98.48 June 1992 124.32 March 1994 135.05
- --------------------------------------------------------------------------------------
December 1990 104.40 September 1992 126.08 June 1994 133.48
- --------------------------------------------------------------------------------------
March 1991 110.45 December 1992 128.19 September 1994 137.27
- --------------------------------------------------------------------------------------
June 1991 110.48 March 1993 131.17 December 1994 136.90
- --------------------------------------------------------------------------------------
September 1991 115.28 June 1993 132.20
- --------------------------------------------------------------------------------------
</TABLE>
TABLE 3 - ANNUITY PERIOD
VALUE AT QUARTERLY INTERVALS OF HYPOTHETICAL MONTHLY VARIABLE ANNUITY PAYMENTS
(Assumes Initial Annuity Payment of $100 beginning on December 31, 1990)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
PAYMENT PAYMENT PAYMENT
MONTH FOR MONTH(/3/) MONTH FOR MONTH(/3/) MONTH FOR MONTH(/3/)
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March
1991 $104.89 September 1992 $113.71 March 1994 $115.67
- ---------------------------------------------------------------------------------------
June 1991 104.02 December 1992 114.62 June 1994 113.35
- ---------------------------------------------------------------------------------------
September
1991 107.61 March 1993 116.28 September 1994 115.57
- ---------------------------------------------------------------------------------------
December
1991 112.93 June 1993 116.19 December 1994 114.27
- ---------------------------------------------------------------------------------------
March
1992 111.54 September 1993 118.39
- ---------------------------------------------------------------------------------------
June 1992 113.10 December 1993 120.18
- ---------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
(/3/) The amounts above assume deductions of all fees and expenses of the Funds
and under the Contracts during the Annuity Period. The Payments are based
on the standard assumed net investment rate of 3 1/2% per annum. See the
narrative preceding these Tables.
43
<PAGE>
ALGER AMERICAN GROWTH PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1989
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
CUMULATIVE CUMULATIVE DEFERRED
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION SALES WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) CHARGE VALUE(/2/)
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1990 $1,200.00 $ 25.00 $1,242.30 $ 74.54 $1,167.76
- ------------------------------------------------------------------------
December 1991 2,400.00 50.00 3,113.18 155.66 2,957.52
- ------------------------------------------------------------------------
December 1992 3,600.00 75.00 4,786.46 191.46 4,595.00
- ------------------------------------------------------------------------
December 1993 4,800.00 100.00 7,139.34 214.18 6,925.16
- ------------------------------------------------------------------------
December 1994 6,000.00 125.00 8,356.71 167.13 8,189.58
- ------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1989
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1990 $ 94.31 December 1991 $142.59 September 1993 $181.33
- --------------------------------------------------------------------------------------
June 1990 109.69 March 1992 138.75 December 1993 191.39
- --------------------------------------------------------------------------------------
September 1990 91.62 June 1992 130.58 March 1994 182.84
- --------------------------------------------------------------------------------------
December 1990 102.84 September 1992 138.99 June 1994 172.52
- --------------------------------------------------------------------------------------
March 1991 122.22 December 1992 158.25 September 1994 186.62
- --------------------------------------------------------------------------------------
June 1991 116.94 March 1993 161.04 December 1994 191.75
- --------------------------------------------------------------------------------------
September 1991 131.83 June 1993 165.51
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
44
<PAGE>
ALGER AMERICAN SMALL CAPITALIZATION PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1988
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
CUMULATIVE CUMULATIVE
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION DEFERRED SALES WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) CHARGE VALUE(/2/)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1989 $1,200.00 $ 25.00 $1,431.08 $ 85.86 $ 1,345.22
- ------------------------------------------------------------------------------
December 1990 2,400.00 50.00 2,798.49 139.92 2,658.57
- ------------------------------------------------------------------------------
December 1991 3,600.00 75.00 5,864.66 234.59 5,630.07
- ------------------------------------------------------------------------------
December 1992 4,800.00 100.00 7,345.57 220.37 7,125.20
- ------------------------------------------------------------------------------
December 1993 6,000.00 125.00 9,454.17 189.08 9,265.09
- ------------------------------------------------------------------------------
December 1994 7,200.00 125.00 10,188.09 101.88 10,086.21
- ------------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1988
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1989 $121.70 March 1991 $218.56 March 1993 $253.23
- --------------------------------------------------------------------------------------
June 1989 135.80 June 1991 205.53 June 1993 270.26
- --------------------------------------------------------------------------------------
September 1989 167.68 September 1991 230.08 September 1993 304.19
- --------------------------------------------------------------------------------------
December 1989 162.44 December 1991 271.28 December 1993 306.96
- --------------------------------------------------------------------------------------
March 1990 164.48 March 1992 244.58 March 1994 279.42
- --------------------------------------------------------------------------------------
June 1990 188.05 June 1992 217.20 June 1994 260.35
- --------------------------------------------------------------------------------------
September 1990 148.59 September 1992 233.48 September 1994 283.36
- --------------------------------------------------------------------------------------
December 1990 174.35 December 1992 277.41 December 1994 290.89
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
45
<PAGE>
FIDELITY EQUITY-INCOME PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1986
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
CUMULATIVE CUMULATIVE DEFERRED
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION SALES WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) CHARGE VALUE(/2/)
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1987 $1,200.00 $ 25.00 $ 1,030.65 $ 61.84 $ 968.81
- ------------------------------------------------------------------------
December 1988 2,400.00 50.00 2,499.32 124.97 2,374.35
- ------------------------------------------------------------------------
December 1989 3,600.00 75.00 4,107.14 164.29 3,942.85
- ------------------------------------------------------------------------
December 1990 4,800.00 100.00 4,536.78 136.10 4,400.68
- ------------------------------------------------------------------------
December 1991 6,000.00 125.00 7,203.02 144.06 7,058.96
- ------------------------------------------------------------------------
December 1992 7,200.00 150.00 9,598.25 95.98 9,502.27
- ------------------------------------------------------------------------
December 1993 8,400.00 150.00 12,493.24 0.00 12,493.24
- ------------------------------------------------------------------------
December 1994 9,600.00 150.00 14,439.23 0.00 14,439.23
- ------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1986
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1987 $116.62 December 1989 $137.18 September 1992 $160.07
- --------------------------------------------------------------------------------------
June 1987 116.44 March 1990 128.48 December 1992 171.94
- --------------------------------------------------------------------------------------
September 1987 121.21 June 1990 130.51 March 1993 185.89
- --------------------------------------------------------------------------------------
December 1987 97.65 September 1990 107.71 June 1993 190.09
- --------------------------------------------------------------------------------------
March 1988 107.54 December 1990 114.75 September 1993 198.67
- --------------------------------------------------------------------------------------
June 1988 116.73 March 1991 131.50 December 1993 200.88
- --------------------------------------------------------------------------------------
September 1988 117.55 June 1991 133.25 March 1994 195.17
- --------------------------------------------------------------------------------------
December 1988 118.35 September 1991 142.34 June 1994 201.93
- --------------------------------------------------------------------------------------
March 1989 127.35 December 1991 148.95 September 1994 215.14
- --------------------------------------------------------------------------------------
June 1989 135.87 March 1992 153.48 December 1994 212.40
- --------------------------------------------------------------------------------------
September 1989 144.01 June 1992 157.65
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
46
<PAGE>
FIDELITY GROWTH PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1986
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
CUMULATIVE CUMULATIVE
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION DEFERRED SALES WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) CHARGE VALUE(/2/)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1987 $1,200.00 $ 25.00 $ 1,055.37 $ 63.32 $ 992.05
- ------------------------------------------------------------------------------
December 1988 2,400.00 50.00 2,425.01 121.25 2,303.76
- ------------------------------------------------------------------------------
December 1989 3,600.00 75.00 4,469.80 178.79 4,291.01
- ------------------------------------------------------------------------------
December 1990 4,800.00 100.00 5,000.80 150.02 4,850.78
- ------------------------------------------------------------------------------
December 1991 6,000.00 125.00 8,609.21 172.18 8,437.03
- ------------------------------------------------------------------------------
December 1992 7,200.00 125.00 10,602.72 106.03 10,496.69
- ------------------------------------------------------------------------------
December 1993 8,400.00 125.00 13,803.79 0.00 13,803.79
- ------------------------------------------------------------------------------
December 1994 9,600.00 125.00 14,853.65 0.00 14,853.65
- ------------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1986
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1987 $117.68 December 1989 $151.80 September 1992 $180.29
- --------------------------------------------------------------------------------------
June 1987 121.59 March 1990 145.68 December 1992 205.27
- --------------------------------------------------------------------------------------
September 1987 128.33 June 1990 156.68 March 1993 212.52
- --------------------------------------------------------------------------------------
December 1987 102.38 September 1990 123.70 June 1993 227.57
- --------------------------------------------------------------------------------------
March 1988 111.73 December 1990 132.33 September 1993 242.00
- --------------------------------------------------------------------------------------
June 1988 117.41 March 1991 155.77 December 1993 241.96
- --------------------------------------------------------------------------------------
September 1988 116.84 June 1991 150.85 March 1994 233.61
- --------------------------------------------------------------------------------------
December 1988 116.87 September 1991 173.36 June 1994 217.27
- --------------------------------------------------------------------------------------
March 1989 125.98 December 1991 190.18 September 1994 233.94
- --------------------------------------------------------------------------------------
June 1989 135.15 March 1992 192.77 December 1994 238.96
- --------------------------------------------------------------------------------------
September 1989 150.59 June 1992 175.96
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
47
<PAGE>
FIDELITY OVERSEAS PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1987
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
CUMULATIVE CUMULATIVE DEFERRED
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION SALES WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) CHARGE VALUE(/2/)
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1988 $1,200.00 $ 25.00 $ 1,240.57 $ 74.43 $ 1,166.14
- ------------------------------------------------------------------------
December 1989 2,400.00 50.00 2,912.28 145.61 2,766.67
- ------------------------------------------------------------------------
December 1990 3,600.00 75.00 3,954.47 158.18 3,796.29
- ------------------------------------------------------------------------
December 1991 4,800.00 100.00 5,441.63 163.25 5,278.38
- ------------------------------------------------------------------------
December 1992 6,000.00 125.00 5,859.74 117.19 5,742.55
- ------------------------------------------------------------------------
December 1993 7,200.00 150.00 9,311.65 93.12 9,218.53
- ------------------------------------------------------------------------
December 1994 8,400.00 150.00 10,518.69 0.00 10,518.69
- ------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1987
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1988 $103.32 September 1990 $123.39 March 1993 $136.03
- --------------------------------------------------------------------------------------
June 1988 100.97 December 1990 129.35 June 1993 144.09
- --------------------------------------------------------------------------------------
September 1988 100.55 March 1991 130.66 September 1993 156.48
- --------------------------------------------------------------------------------------
December 1988 106.79 June 1991 126.13 December 1993 165.04
- --------------------------------------------------------------------------------------
March 1989 111.42 September 1991 137.78 March 1994 167.91
- --------------------------------------------------------------------------------------
June 1989 109.71 December 1991 137.99 June 1994 168.99
- --------------------------------------------------------------------------------------
September 1989 126.12 March 1992 133.57 September 1994 170.38
- --------------------------------------------------------------------------------------
December 1989 133.19 June 1992 144.83 December 1994 165.82
- --------------------------------------------------------------------------------------
March 1990 132.79 September 1992 128.61
- --------------------------------------------------------------------------------------
June 1990 144.96 December 1992 121.66
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
48
<PAGE>
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1993
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
CUMULATIVE CUMULATIVE DEFERRED
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION SALES WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) CHARGE VALUE(/2/)
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1994 $1,200.00 $25.00 $1,341.33 $80.48 $1,260.85
- ------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1993
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- ----------------------------------------------------------------
<S> <C> <C> <C>
March 1994 $95.38 September 1994 $109.21
- ----------------------------------------------------------------
June 1994 93.78 December 1994 114.91
- ----------------------------------------------------------------
</TABLE>
JANUS ASPEN BALANCED PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1993
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
CUMULATIVE CUMULATIVE DEFERRED
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION SALES WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) CHARGE VALUE(/2/)
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1994 $1,200.00 $25.00 $1,150.86 $69.05 $1,081.81
- ------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1993
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- ----------------------------------------------------------------
<S> <C> <C> <C>
March 1994 $101.75 September 1994 $100.92
- ----------------------------------------------------------------
June 1994 100.50 December 1994 99.58
- ----------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
49
<PAGE>
JANUS ASPEN GROWTH PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1993
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
CUMULATIVE CUMULATIVE
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION DEFERRED SALES WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) CHARGE VALUE(/2/)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1994 $1,200.00 $25.00 $1,171.15 $70.27 $1,100.88
- ------------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1993
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- ----------------------------------------------------------------
<S> <C> <C> <C>
March 1994 $100.85 September 1994 $101.74
- ----------------------------------------------------------------
June 1994 99.05 December 1994 101.62
- ----------------------------------------------------------------
</TABLE>
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1993
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
CUMULATIVE CUMULATIVE
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION DEFERRED SALES WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) CHARGE VALUE(/2/)
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1994 $1,200.00 $25.00 $1,178.58 $70.71 $1,107.87
- ------------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1993
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- ----------------------------------------------------------------
<S> <C> <C> <C>
March 1994 $99.19 September 1994 $99.39
- ----------------------------------------------------------------
June 1994 98.49 December 1994 99.67
- ----------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
50
<PAGE>
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1993
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
CUMULATIVE CUMULATIVE
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION DEFERRED WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) SALES CHARGE VALUE(/2/)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1994 $1,200.00 $25.00 $1,161.66 $69.70 $1,091.96
- ----------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1993
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- ----------------------------------------------------------------
<S> <C> <C> <C>
March 1994 $99.69 September 1994 $101.58
- ----------------------------------------------------------------
June 1994 97.48 December 1994 100.26
- ----------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
51
<PAGE>
SCUDDER INTERNATIONAL PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1987
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
CUMULATIVE CUMULATIVE
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION DEFERRED WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) SALES CHARGE VALUE(/2/)
- ----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1988 $1,200.00 $ 25.00 $ 1,267.70 $ 76.06 $1,191.64
- ----------------------------------------------------------------------------
December 1989 2,400.00 50.00 3,120.86 156.04 2,964.82
- ----------------------------------------------------------------------------
December 1990 3,600.00 75.00 3,926.66 157.07 3,769.59
- ----------------------------------------------------------------------------
December 1991 4,800.00 100.00 5,537.56 166.13 5,371.43
- ----------------------------------------------------------------------------
December 1992 6,000.00 125.00 6,448.79 128.98 6,319.81
- ----------------------------------------------------------------------------
December 1993 7,200.00 125.00 10,152.09 101.52 10,050.57
- ----------------------------------------------------------------------------
December 1994 8,400.00 125.00 11,097.29 0.00 11,097.29
- ----------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE AT DECEMBER 31, 1987
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1988 $108.22 September 1990 $137.61 March 1993 $164.56
- --------------------------------------------------------------------------------------
June 1988 110.15 December 1990 143.07 June 1993 171.18
- --------------------------------------------------------------------------------------
September 1988 104.91 March 1991 154.45 September 1993 189.68
- --------------------------------------------------------------------------------------
December 1988 115.28 June 1991 148.17 December 1993 204.23
- --------------------------------------------------------------------------------------
March 1989 125.78 September 1991 156.84 March 1994 202.46
- --------------------------------------------------------------------------------------
June 1989 130.06 December 1991 157.46 June 1994 204.44
- --------------------------------------------------------------------------------------
September 1989 147.69 March 1992 150.63 September 1994 208.68
- --------------------------------------------------------------------------------------
December 1989 156.87 June 1992 159.33 December 1994 199.98
- --------------------------------------------------------------------------------------
March 1990 158.34 September 1992 156.39
- --------------------------------------------------------------------------------------
June 1990 166.92 December 1992 150.97
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
52
<PAGE>
TCI GROWTH
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1987
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
CUMULATIVE CUMULATIVE DEFERRED
VALUE AT END PURCHASE MAINTENANCE ACCUMULATION SALES WITHDRAWAL
OF MONTH PAYMENTS FEES VALUE(/1/) CHARGE VALUE(/2/)
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
December 1988 $1,200.00 $25.00 $ 1,196.10 $ 71.77 $ 1,124.33
- ------------------------------------------------------------------------
December 1989 2,400.00 50.00 2,803.20 140.16 2,663.04
- ------------------------------------------------------------------------
December 1990 3,600.00 75.00 3,897.43 155.90 3,741.53
- ------------------------------------------------------------------------
December 1991 4,800.00 100.00 6,848.91 205.47 6,643.44
- ------------------------------------------------------------------------
December 1992 6,000.00 125.00 7,910.20 158.20 7,752.00
- ------------------------------------------------------------------------
December 1993 7,200.00 125.00 10,210.24 102.10 10,108.14
- ------------------------------------------------------------------------
December 1994 8,400.00 125.00 11,159.18 0.00 11,159.18
- ------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1987
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION VALUE AT END ACCUMULATION
OF MONTH VALUE(/1/) OF MONTH VALUE(/1/) OF MONTH VALUE(/1/)
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1988 $ 91.40 September 1990 $113.00 March 1993 $166.85
- --------------------------------------------------------------------------------------
June 1988 100.13 December 1990 119.63 June 1993 175.10
- --------------------------------------------------------------------------------------
September 1988 94.39 March 1991 145.88 September 1993 184.11
- --------------------------------------------------------------------------------------
December 1988 96.51 June 1991 136.27 December 1993 184.72
- --------------------------------------------------------------------------------------
March 1989 104.63 September 1991 151.98 March 1994 180.04
- --------------------------------------------------------------------------------------
June 1989 110.48 December 1991 167.60 June 1994 170.61
- --------------------------------------------------------------------------------------
September 1989 124.71 March 1992 159.19 September 1994 178.52
- --------------------------------------------------------------------------------------
December 1989 122.65 June 1992 148.65 December 1994 180.31
- --------------------------------------------------------------------------------------
March 1990 123.51 September 1992 152.80
- --------------------------------------------------------------------------------------
June 1990 134.26 December 1992 163.65
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract, except the deferred sales charges. See the
narrative preceding these Tables.
(/2/) The Withdrawal Value is net of all applicable fees and expenses of the
Fund and under the Contract, including deferred sales charges. See the
narrative preceding these Tables.
53
<PAGE>
PLEASE ATTACH TO APPLICATION
I hereby acknowledge receipt of the Account C
Individual Variable Annuity Contract Prospectus
for Individual Retirement Annuities (Section
408(b)), Internal IRA Rollover and Simplified
Employee Pension Plans (Section 408(k)) prospectus
dated May 1, 1995 and the current prospectuses for
the underlying funds and the Guaranteed
Accumulation Account (NY only) or the disclosure
brochure for the Guaranteed Interest Account
(except WA and NY).
[_] Please send a Statement of Additional
Information pertaining to the contract described
above.
---------------------------------------------------
CONTRACT HOLDER'S SIGNATURE
---------------------------------------------------
DATE
75972-1 (5/95)
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT C
- --------------------------------------------------------------------------------
INDIVIDUAL VARIABLE ANNUITY CONTRACTS FOR
INDIVIDUAL RETIREMENT ANNUITIES (SECTION 408(b)), INTERNAL IRA ROLLOVER AND
SIMPLIFIED EMPLOYEE PENSION PLANS (Section 408(k))
DATED MAY 1, 1995
[LOGO OF 1994 IRA/SEP APPEARS HERE]
1994 IRA/SEP
[LOGO OF AETNA LIFE INSURANCE AND ANNUITY COMPANY APPEARS HERE]
AETNA LIFE INSURANCE AND ANNUITY COMPANY
IRA Customer Service
151 Farmington Avenue Hartford, Connecticut 06156-1258
Telephone: 1-800-531-4547
75972-1 (5/95)
[LOGO OF RECYCLED PAPER APPEARS HERE]
<PAGE>
VARIABLE ANNUITY ACCOUNT C
Individual Variable Annuity Contracts for Individual Retirement Annuities
(Section 408(b)), Internal IRA Rollover and
Simplified Employee Pension Plans (Section 408(k))
Individual Variable Annuity Contract for Individual Retirement Annuities
(Section 408(b)) and Simplified Employee Pension Plans (Section 408(k))
Supplement dated October 12, 1995 to the Prospectuses dated May 1, 1995
The Company has made the following changes to the Contracts described in these
prospectuses so that they may be issued in the State of New Jersey.
The Guaranteed Interest Account, a credited interest option, is not available
for Contracts issued in the State of New Jersey. Please disregard all
references made to this funding option in these prospectuses.
Form XNJIRA.00.1
