<PAGE>
As filed with the Securities and Exchange Registration No. 33-81216
Commission on August 21, 1995 Registration No. 811-2513
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
- --------------------------------------------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 2 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment To
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
- --------------------------------------------------------------------------------
Variable Annuity Account C of Aetna Life Insurance and Annuity Company
(Exact Name of Registrant)
Aetna Life Insurance and Annuity Company
(Name of Depositor)
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (203) 273-7834
Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RE4C, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective (Check appropriate space):
--- immediately upon filing pursuant to paragraph (b) of Rule 485
X
--- on September 1, 1995 pursuant to paragraph (b) of Rule 485
--- 60 days after filing pursuant to paragraph (a)(i) of Rule 485
--- on _______________________ pursuant to paragraph (a)(i) of Rule 485
--- 75 days after filing pursuant to paragraph (a)(ii) of Rule 485
--- on _______________________ pursuant to (a)(ii) of Rule 485
If appropriate check the following space:
--- This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
Registrant filed a Rule 24f-2 Notice for the fiscal year ended December 31, 1994
on February 28, 1995.
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CROSS REFERENCE SHEET
Form N-4
- --------
Item No. Part A (Prospectus) Location
- -------- ------------------- --------
1 Cover Page................. Cover Page
2 Definitions................ Definitions
3 Synopsis or Highlights..... Prospectus Summary; Fee Table
4 Condensed Financial
Information................ Condensed Financial Information
5 General Description of
Registrant, Depositor, and
Portfolio Companies........ The Company; Variable Annuity Account C;
The Funds
6 Deductions and Expenses.... Charges and Deductions; Distribution
7 General Description of
Variable Annuity Contracts. Contract Rights; Miscellaneous
8 Annuity Period............. Annuity Period
9 Death Benefit.............. Death Benefit
10 Purchases and Contract
Value...................... Purchase;
Determining Contract Value
11 Redemptions................ Contract Rights - Withdrawals; Right to
Cancel
12 Taxes...................... Tax Status
13 Legal Proceedings.......... Miscellaneous - Legal Proceedings
14 Table of Contents of the
Statement of Additional
Information................ Statement of Additional Information -
Table of Contents
<PAGE>
<TABLE>
Form N-4
- --------
Item No. Part B (Statement of Additional Information) Location
- -------- -------------------------------------------- --------
<C> <S> <C>
15 Cover Page.......................................................... Cover page
16 Table of Contents................................................... Table of Contents
17 General Information and History..................................... General Information and History
18 Services............................................................ General Information and
History;Independent Auditors
19 Purchase of Securities Being Offered................................ Offering and Purchase of
Contracts
20 Underwriters........................................................ Offering and Purchase of
Contracts
21 Calculation of Performance Data..................................... Performance Data;
Average Annual Total Return
Quotations
22 Annuity Payments.................................................... Annuity Payments
23 Financial Statements................................................ Financial Statements
</TABLE>
Part C (Other Information)
--------------------------
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
VARIABLE ANNUITY ACCOUNT C
STATE UNIVERSITY OF NEW YORK (SUNY)
DEFINED CONTRIBUTION PLAN
Supplement dated September 1, 1995
to Prospectus dated May 1, 1995
The information in this supplement updates and amends the information contained
in the Prospectus dated May 1, 1995 and should be read with that Prospectus.
Effective September 1, 1995, the following new funds will be added as investment
options under the variable annuity contracts described in the Prospectus:
Alger American Growth Portfolio Fidelity Index 500 Portfolio
Fidelity Asset Manager Portfolio Janus Aspen Growth Portfolio
Fidelity Contrafund Portfolio Janus Aspen Short-Term Bond Portfolio
Fidelity Equity-Income Portfolio Janus Aspen Worldwide Growth Portfolio
The descriptions of the above funds are as follows:
. Alger American Fund - Alger American Growth Portfolio ("Alger American
Growth Portfolio") seeks long-term capital appreciation by investing in a
diversified, actively managed 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.
. Fidelity Investments Variable Insurance Products Fund II - Asset Manager
Portfolio ("Fidelity Asset Manager Portfolio") seeks high total return with
reduced risk over the long-term by allocating its assets among stocks,
bonds and short-term fixed-income instruments.
. 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 II - Index 500
Portfolio ("Fidelity Index 500 Portfolio") seeks to provide investment
results that correspond to the total return of common stocks publicly
traded in the United States by duplicating the composition and total return
of the Standard & Poor's 500 Composite Stock Price Index.
. 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 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.
<PAGE>
FEE TABLE
The following information relates to the Mutual Fund Annual Expenses and
Hypothetical Illustration for the new investment options. Please also refer to
the table of Separate Account Annual Expenses in the fee table in the May 1,
1995 prospectus which also applies to each new investment option. 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>
Alger American Growth Portfolio 0.75% 0.11% 0.86%
Fidelity Asset Manager Portfolio/(3)/ 0.72% 0.08% 0.80%
Fidelity Contrafund Portfolio/(4)/ 0.62% 0.27% 0.89%
Fidelity Equity-Income Portfolio/(3)/ 0.52% 0.06% 0.58%
Fidelity Index 500 Portfolio/(5)/ 0.00% 0.28% 0.28%
Janus Aspen Growth Portfolio/(6)/ 0.66% 0.22% 0.88%
Janus Aspen Short-Term Bond Portfolio/(6)/ 0.00% 0.65% 0.65%
Janus Aspen Worldwide Growth Portfolio/(6)/ 0.69% 0.49% 1.18%
</TABLE>
/(1)/ Certain of the unaffiliated Fund advisers reimburse us for administrative
costs incurred in connection with administering the Funds as variable
funding options under the Contract. These reimbursements are paid out of
investment advisory fees and are not charged to investors.
/(2)/ A Fund's "Other Expenses" include operating costs of the Fund. The
deductions 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)/ A portion of the brokerage commissions the fund paid was used to reduce
its expenses. Without this reduction total operating expenses would have
been (for Fidelity Equity-Income Portfolio--0.60%; and for Fidelity
Asset Manager Portfolio--0.81%)
/(4)/ This Fund has only limited operating history, and therefore the expenses
are estimated for the current fiscal year.
/(5)/ The fund's expenses were voluntarily reduced by the fund's investment
adviser. Absent reimbursement, management fee, expenses and total
expenses would have been 0.28%, 0.53% and 0.81%, respectively.
/(6)/ 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 were: 1.00%, 0.22%, and
1.22%, 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.
Hypothetical Illustration (Example)
- -----------------------------------
THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.
Assuming a 5% annual return on assets, you would have paid the following
expenses on a $1,000 investment whether or not you withdraw or if you annuitize
your Individual Account Value at the end of the applicable time period:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Alger American Growth Portfolio $21 $66 $113 $244
Fidelity Asset Manager Portfolio $21 $64 $110 $238
Fidelity Contrafund Portfolio $22 $67 $115 $247
Fidelity Equity-Income Portfolio $19 $58 $ 99 $215
Fidelity Index 500 Portfolio $16 $48 $ 83 $182
Janus Aspen Growth Portfolio $21 $63 $105 $210
Janus Aspen Short-Term Bond Portfolio $19 $56 $ 94 $187
Janus Aspen Worldwide Growth Portfolio $24 $72 $120 $240
</TABLE>
<PAGE>
CONDENSED FINANCIAL INFORMATION
(Selected data for accumulation units outstanding throughout each period)
The condensed financial information presented below for each of the years in the
one-year 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>
FIDELITY ASSET MANAGER PORTFOLIO
Value at beginning of period $10.000/(1)/
Value at end of period $ 9.447
Increase (decrease) in value of
accumulation unit/(2)/ (5.53)%
Number of accumulation units
outstanding at end of period 1,254,504
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $10.000/(3)/
Value at end of period $12.169
Increase (decrease) in value of
accumulation unit/(2)/ 21.69%
Number of accumulation units
outstanding at end of period 393,553
</TABLE>
/(1)/ The initial Accumulation Unit value was established at $10.000 during
March 1994, when funds were first received under this option.
/(2)/ 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.
/(3)/ The initial accumulation Unit value was established at $10.000 during June
1994, when funds were first received in this option.
(Not all investment options referenced in this supplement have unit value
information since they were not available under contracts of this type as of
December 31, 1994.)
Fund Investment Advisers
The following identifies the investment adviser for each Fund.
Fund Investment Adviser
- ---- ------------------
Alger American Growth Portfolio Fred Alger Management, Inc.
Fidelity Asset Manager Portfolio Fidelity Management & Research Company
Fidelity Contrafund Portfolio Fidelity Management & Research Company
Fidelity Equity-Income Portfolio Fidelity Management & Research Company
Fidelity Index 500 Portfolio Fidelity Management & Research Company
Janus Aspen Growth Portfolio Janus Capital Corporation
Janus Aspen Short-Term Bond Portfolio Janus Capital Corporation
Janus Aspen Worldwide Growth Portfolio Janus Capital Corporation
<PAGE>
ALGER AMERICAN GROWTH PORTFOLIO
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)
Cumulative
Value at End Purchase Accumulation
of Month Payments Value(1)
December 1990 $ 1,200.00 $ 1,267.30
December 1991 2,400.00 3,172.84
December 1992 3,600.00 4,877.71
December 1993 4,800.00 7,274.64
December 1994 6,000.00 8,517.26
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)
Value at End Accumulation Value at End Accumulation Value at End Accumulation
of Month Value(1) of Month Value(1) of Month Value(1)
March 1990 $94.31 Dec. 1991 $142.59 Sept. 1993 $181.33
June 109.69 March 1992 138.75 Dec. 191.39
Sept. 91.62 June 130.58 March 1994 182.84
Dec. 102.84 Sept. 138.99 June 172.52
March 1991 122.22 Dec. 158.25 Sept. 186.62
June 116.94 March 1993 161.04 Dec. 191.75
Sept. 131.83 June 165.51
(1) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal. Please
refer to the narrative preceding the hypothetical tables in the May 1, 1995
prospectus.
<PAGE>
FIDELITY ASSET MANAGER 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)
Cumulative
Value at End Purchase Accumulation Withdrawal
of Month Payments Value(1) Value
December 1990 $ 1,200.00 $ 1,264.91 $ 1,264.91
December 1991 2,400.00 2,829.12 2,829.12
December 1992 3,600.00 4,387.80 4,387.80
December 1993 4,800.00 6,586.48 6,586.48
December 1994 6,000.00 7,260.90 7,260.90
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)
Value at End Accumulation Value at End Accumulation Value at End Accumulation
of Month Value(1) of Month Value(1) of Month Value(1)
March 1990 $99.29 Dec. 1991 $127.55 Sept. 1993 $158.40
June 103.47 March 1992 130.95 Dec. 168.51
Sept. 97.48 June 133.74 March 1994 159.96
Dec. 105.39 Sept. 135.97 June 157.88
March 1991 116.25 Dec. 140.74 Sept. 161.94
June 118.13 March 1993 148.25 Dec. 156.33
Sept. 123.88 June 152.41
(1) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal. Please
refer to the narrative preceding the hypothetical tables in the May 1, 1995
prospectus.
<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)
Cumulative
Value at End Purchase Accumulation
of Month Payments Value(1)
December 1987 $ 1,200.00 $ 1,055.58
December 1988 2,400.00 0.00 2,554.37 0.00 2,554.37
December 1989 3,600.00 0.00 4,195.47 0.00 4,195.47
December 1990 4,800.00 0.00 4,636.08 0.00 4,636.08
December 1991 6,000.00 0.00 7,356.77 0.00 7,356.77
December 1992 7,200.00 0.00 9,800.80 0.00 9,800.80
December 1993 8,400.00 0.00 12,729.19 0.00 12,729.19
December 1994 9,600.00 0.00 14,678.92 0.00 14,678.92
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)
Value at End Accumulation Value at End Accumulation Value at End Accumulation
of Month Value(1) of Month Value(1) of Month Value(1)
March 1987 $116.61 Dec. 1989 $137.12 Sept. 1992 $160.03
June 116.43 March 1990 128.44 Dec. 171.89
Sept. 121.20 June 130.46 March 1993 185.82
Dec. 97.64 Sept. 107.69 June 190.02
March 1988 107.52 Dec. 114.72 Sept. 198.58
June 116.71 March 1991 131.47 Dec. 200.82
Sept. 117.52 June 133.22 March 1994 195.11
Dec. 118.33 Sept. 142.30 June 201.87
March 1989 127.30 Dec. 148.91 Sept. 215.06
June 135.82 March 1992 153.43 Dec. 212.19
Sept. 143.95 June 157.62
(1) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal. Please
refer to the narrative preceding the hypothetical tables in the May 1, 1995
prospectus.
<PAGE>
FIDELITY INDEX 500 PORTFOLIO
Hypothetical Periodic Accumulation Values
TABLE 1 -- ACCUMULATION PERIOD
Hypothetical Accumulation Values at Annual Intervals
Following Contract Issuance on December 31, 1992
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
Cumulative
Value at End Purchase Accumulation
of Month Payments Value(1)
December 1993 $ 1,200.00 $ 1,250.66
December 1994 2,400.00 0.00 2,452.86 0.00 2,452.86
TABLE 2 -- ACCUMULATION PERIOD
Hypothetical Accumulation Values at Quarterly Intervals
Following Contract Issuance on December 31, 1992
(Assumes Single $100 Net Purchase Payment made at Contract Issuance)
Value at End Accumulation Value at End Accumulation Value at End Accumulation
of Month Value(1) of Month Value(1) of Month Value(1)
March 1993 $104.05 Dec. 1993 $108.37 Sept. 1994 $108.54
June 104.07 March 1994 103.94 Dec. 108.14
Sept. 106.31 June 103.89
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)
Cumulative
Value at End Purchase Accumulation
of Month Payments Value(1)
December 1994 $ 1,200.00 $ 1,195.28
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)
Value at End Accumulation Value at End Accumulation Value at End Accumulation
of Month Value(1) of Month Value(1) of Month Value
March 1994 $100.85 Sept. 1994 $101.61
June 99.04 Dec. 101.49
(1) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal. Please
refer to the narrative preceding the hypothetical tables in the May 1, 1995
prospectus.
<PAGE>
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)
Cumulative
Value at End Purchase Accumulation
of Month Payments Value(1)
December 1994 $ 1,200.00 $ 1,203.61
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)
Value at End Accumulation Value at End Accumulation Value at End Accumulation
of Month Value(1) of Month Value(1) of Month Value
March 1994 $99.19 Sept. 1994 $99.38
June 98.48 Dec. 99.67
(1) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal. Please
refer to the narrative preceding the hypothetical tables in the May 1, 1995
prospectus.
<PAGE>
JANUS ASPEN WORLDWIDE 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)
Cumulative
Value at End Purchase Accumulation
of Month Payments Value(1)
December 1994 $ 1,200.00 $ 1,186.75
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)
Value at End Accumulation Value at End Accumulation Value at End Accumulation
of Month Value(1) of Month Value(1) of Month Value
March 1994 $99.69 Sept. 1994 $101.59
June 97.48 Dec. 100.28
(1) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal. Please
refer to the narrative preceding the hypothetical tables in the May 1, 1995
prospectus.
<PAGE>
[LOGO OF AETNA LIFE INSURANCE COMPANY APPEARS HERE]
VARIABLE ANNUITY
ACCOUNT C
[LOGO OF VARIABLE ANNUITY ACCOUNT C APPEARS HERE]
Aetna Life Insurance and
Annuity Company
Prospectus Dated:
May 1, 1995
Aetna Processing Office
P.O. Box 12894
Albany, NY 12212-2894
Telephone: 1-800-
677-4636
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STATE UNIVERSITY OF NEW YORK (SUNY) DEFINED CONTRIBUTION PLAN
- -------------------------------------------------------------------------------
This Prospectus describes group flexible premium deferred annuity contracts
("Contracts") issued by Aetna Life Insurance and Annuity Company (the
"Company").The Contracts are designed to fund the State University of New York
(SUNY) Defined Contribution Retirement Plan and to accept transfers from
amounts made to SUNY's program which is qualified under Section 403(b) of the
Internal Revenue Code of 1986, as amended ("Code"). The Contracts allow
individuals to accumulate values and elect payment of annuity benefits on a
fixed or variable basis. See "Prospectus Summary."
Two Contracts will be issued: one for assets transferred from SUNY's 403(b)
plan ("Rollover Contract") and one for ongoing contributions and transferred
assets under Code Sections 401(a) and 414(h) ("Modal Contract"). Purchase
payments received under the Contracts will be allocated at the Participant's
direction to variable funding options or to credited interest options for
accumulation of values for the Participant's Account. Amounts allocated to the
variable funding options will be deposited in a separate account, Variable
Annuity Account C, for investment in the variable funding options. See
"Contract Purchase."
This Prospectus is intended to describe the Contract provisions relating to
the variable funding options and the fees and expenses that may be charged in
connection with the Contract. Information with respect to the credited
interest options -- the Guaranteed Accumulation Account and the Fixed Plus
Account -- is included in Appendices I and II, respectively, to this
Prospectus and in the prospectus for the Guaranteed Accumulation Account which
should accompany this Prospectus. The Guaranteed Accumulation Account and the
Fixed Plus Account are offered only in those jurisdictions where they have
been qualified for sale.
The variable funding options currently available through the Separate Account
under the Contract described in this Prospectus are as follows:
. Aetna Variable Fund
. Aetna Income Shares
. Aetna Variable Encore Fund
. Aetna Investment Advisers Fund, Inc.
. Alger American Fund Small Cap
. Calvert Responsibly Invested Balanced Portfolio
. Franklin Government Securities Trust
. Janus Aspen Aggressive Growth Portfolio
. Lexington Emerging Markets Fund, Inc.
. Lexington Natural Resources Trust
. Neuberger & Berman Growth Portfolio
. Scudder International Portfolio
. TCI Growth (a Twentieth Century Fund)
The availability of the above Funds is subject to applicable regulatory
authorizations. Not all Funds are available in all jurisdictions or under all
Contracts.
Information about the Funds is found in "The Funds" and in each Fund's
prospectus, which must accompany this Prospectus.
This prospectus sets forth concisely the information about the Separate
Account that a prospective investor ought to know before investing. Additional
information 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 found in this prospectus. An SAI may be obtained without charge by
calling 1-800-677-4636.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT FUND
PROSPECTUSES AND THE CURRENT GUARANTEED ACCUMULATION ACCOUNT PROSPECTUS. ALL
PROSPECTUSES SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THE SECURITIES OFFERED BY THIS PROSPECTUS HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE INFORMATION OR TO MAKE ANY REP-
RESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH OFFERS OF THE SECURITIES DESCRIBED IN THIS PROSPECTUS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY
NOT LAWFULLY BE MADE.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
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........... 14
Mixed and Shared Funding........... 14
Fund Additions, Limitations and
Substitutions..................... 15
Aetna Processing Office............ 15
PURCHASE OF CONTRACT
Contract Purchase.................. 15
Net Purchase Payments.............. 16
Distribution....................... 16
DETERMINING CONTRACT VALUE
Accumulation Units................. 17
Net Investment Factor.............. 17
CONTRACT RIGHTS
Right to Cancel.................... 17
Rights Under the Contract.......... 17
Transfers and Allocation Changes .. 18
Withdrawals........................ 18
Reinstatement Privilege............ 19
CHARGES AND DEDUCTIONS
Mortality and Expense Risk Charges. 19
Administrative Charge.............. 19
Fund Expenses...................... 19
Premium Tax........................ 20
</TABLE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
ANNUITY PERIOD
Annuity Period Elections........... 20
Annuity Options.................... 21
DEATH BENEFIT
Accumulation Period................ 22
Annuity Period..................... 22
TAX STATUS
Introduction....................... 23
Taxation of the Company............ 23
Tax Status of the Contract......... 23
Contracts Used with Certain
Retirement Plans.................. 24
Possible Changes in Taxation....... 26
Other Tax Consequences............. 26
MISCELLANEOUS
Voting Rights...................... 26
Modification of the Contract....... 27
Contract Holder/Participant
Inquiries......................... 27
Telephone Transfers................ 27
Beneficiary Designations........... 28
Transfer of Ownership; Assign-
ment.............................. 28
Legal Proceedings.................. 28
Legal Matters...................... 28
STATEMENT OF ADDITIONAL
INFORMATION --
TABLE OF CONTENTS.................... 29
APPENDIX I -- Guaranteed Accumu-
lation Account....................... 30
APPENDIX II -- Fixed Plus Ac-
count................................ 31
HYPOTHETICAL TABLES.................. 33
</TABLE>
2
<PAGE>
DEFINITIONS
As used in this Prospectus, the following terms have the meanings shown:
ACCOUNT: A record established for each Participant to identify Contract values
accumulated on the Participant's behalf during the Accumulation Period.
Generally, two Accounts will be established for each Participant: the Employee
Account and the Employer Account.
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 Plus Account,
plus interest earned on those amounts, less any maintenance fees due, but
excluding amounts used for Annuity Options.
ACCOUNT YEAR: The period of 12 months measured from the Account's Effective
Date or from an anniversary of such Effective Date.
ACCUMULATION PERIOD: The period during which Net 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.
AETNA PROCESSING OFFICE: The administrative headquarters for the SUNY Defined
Contribution Plan. The mailing address is P.O. Box 12894, Albany, New York
12212-2894.
AGGREGATE PURCHASE PAYMENT(S): The sum of all Purchase Payment(s) made under a
Contract.
ANNUITANT: A natural person on whose life an Annuity payment is based.
ANNUITY: A series of payments for life, a definite period or a combination of
the two.
ANNUITY DATE: The date on which Annuity payments commence.
ANNUITY PERIOD: The period during which Annuity payments are made.
ANNUITY UNIT: A measure of the value attributable to each Fund selected during
the Annuity Period.
BENEFICIARY: The person(s) entitled to receive any death benefit under a
Participant's Account. See "Death Benefit."
CODE: The Internal Revenue Code of 1986, amended.
COMPANY: Aetna Life Insurance and Annuity Company.
CONTRACT: The group deferred, variable annuity contracts offered by this
Prospectus.
CONTRACT HOLDER: The entity to which the Contract is issued. The trustee of a
multiple employer trust approved by the Company to apply for and own the
Contract as authorized by SUNY.
DISTRIBUTOR: The registered broker-dealer which has entered into a selling
agreement with the Company to offer and sell the Contracts. The Company may
also serve as Distributor.
EFFECTIVE DATE: The date the Company accepts and approves the Contract
application or enrollment form, as applicable.
EMPLOYEE ACCOUNT: An Account established for each Participant. This Account
will be credited with employee (Participant) Net Purchase Payments made by the
Participant, specifically employee salary reduction contributions.
EMPLOYER ACCOUNT: An Account established for each Participant. This Account
will be credited with Net Purchase Payments made by the employer (Contract
Holder).
FUNDS: The mutual funds offered as variable funding options for the investment
of assets of the Separate Account under the Contracts.
3
<PAGE>
GAA: Guaranteed Accumulation Account, a credited interest option under the
Contracts.
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.
MODAL CONTRACT: A Contract that accepts Purchase Payments made pursuant to Code
Sections 401(a) and 414(h) and transferred funds attributable to Section 401(a)
and 414(h) contributions.
NET PURCHASE PAYMENT(S): The Purchase Payment(s) less premium taxes, if
applicable.
PARTICIPANT: An eligible person participating in the Plan.
PLAN: The SUNY Defined Contribution Plan (or any predecessor SUNY plan
qualified under Section 403(b) of the Code).
PLAN ADMINISTRATOR: The individual or entity designated under the Plan who is
responsible for the interpretation and administration of the Plan. We are not
the Plan Administrator.
PURCHASE PAYMENT(S): The gross payment(s) made to the Company under a Contract.
Purchase Payments may be transferred assets, or ongoing contributions.
ROLLOVER CONTRACT: A Contract that accepts Purchase Payments attributable to a
transfer of employer contributions and after-tax employee contributions made
pursuant to SUNY's qualified Section 403(b) optional retirement program.
SEC: Securities and Exchange Commission.
SEPARATE ACCOUNT: Variable Annuity Account C, an account that segregates assets
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.
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
Connecticut to measure voting rights during the Annuity Period. It also
measures the value of a commutation right available under the "Payments for a
Stated Period of Time" 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 which vary in dollar amount based on
investment results.
4
<PAGE>
PROSPECTUS SUMMARY
CONTRACTS OFFERED
The Contracts described in this prospectus are designed to fund the State
University of New York (SUNY) Defined Contribution Retirement Plan and to
accept transfers from SUNY's program which is qualified under Section 403(b) of
the Code. The Contracts are group flexible premium deferred annuity contracts
under which accounts are established for persons in the group.
Two contracts will be issued: one for transferred assets from SUNY's Section
403(b) program ("Rollover Contract") and one for ongoing contributions and
transferred assets from a plan qualified under Code Sections 401(a) and 414(h)
("Modal Contract").
PURCHASE
For each Contract, two Accounts will be established: an Employee Account, for
contributions made by an employee, and an Employer Account, for contributions
made by the employer on the employee's behalf. See "Contract Purchase."
A Contract is issued to the Contract Holder once we receive a completed master
application form. The Accounts under the Contracts are established when you, as
the Participant, complete an enrollment form (and any other required forms) and
forward them to us. See "Contract Purchase."
WITHDRAWAL
You may withdraw all or a portion of the Account value during the Accumulation
Period by properly completing our disbursement request form and submitting it
to the Aetna Processing Office. A distribution can be made only if the Plan
Administrator certifies in writing that you are eligible, both as to the timing
and form of distribution. See "Contract Rights -- Withdrawals." Limitations
apply to withdrawals from the Fixed Plus Account. See Appendix II.
TAXES AND WITHHOLDING
A 10% federal tax penalty and a 20% withholding for income tax may be imposed
on certain withdrawals. See "Tax Status of Amounts Distributed Under the
Contract."
CONTRACT CHARGES
Certain charges are associated with the Contracts, such as the mortality and
expense risk charge, administrative charges, fund expenses and premium taxes. A
complete explanation of these charges can be found in the Section "Charges and
Deductions."
FREE LOOK
The Contract Holder may cancel the Contract no later than 10 days after
receiving it (or as otherwise required by state law) by returning it to the
Company along with a written notice of cancellation. In addition, you may
request cancellation of your Accounts within 10 days of receiving your
certificate by returning the certificate (which represents your interest in the
Contract) and a written notice of cancellation to the Company. 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 "Contract Rights -- Right
to Cancel."
5
<PAGE>
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.
FOR MORE INFORMATION REGARDING EXPENSES PAID OUT OF THE ASSETS OF A PARTICULAR
FUND, SEE THE FUND'S PROSPECTUS.
SEPARATE ACCOUNT ANNUAL EXPENSES
- --------------------------------
Deductions are made from the Separate Account during the Accumulation Period
and the Annuity Period and are the daily equivalent of the annual effective
percentage shown in the following chart:
<TABLE>
<S> <C>
Administrative Charge(/1/) 0.00%
Mortality and Expense Risk Charge 1.25%
-----
Total Separate Account Annual Charges 1.25%
=====
</TABLE>
(/1/) 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 Account Values held in the Separate Account. See
"Charges and Deductions -- Administrative Expense Charge."
6
<PAGE>
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%
Alger American Small Cap
Portfolio 0.85% 0.11% 0.96%
Calvert Responsibly Invested
Balanced Portfolio 0.70% 0.10% 0.80%
Franklin Government Securities
Trust(/3/) 0.47% 0.16% 0.63%
Janus Aspen Aggressive Growth
Portfolio(/4/) 0.77% 0.28% 1.05%
Lexington Emerging Markets Fund,
Inc.(/5/) 0.85% 0.45% 1.30%
Lexington Natural Resources
Trust(/6/) 1.00% 0.55% 1.55%
Neuberger & Berman Growth
Portfolio(/7/) 0.79% 0.12% 0.91%
Scudder International Portfolio 0.88% 0.20% 1.08%
TCI Growth(/8/) 1.00% 0.00% 1.00%
</TABLE>
- --------
(/1/) Certain of the unaffiliated Fund advisers reimburse the Company for
administrative costs incurred in connection with administering the Funds
as variable funding options under the Contract. These reimbursements are
paid out of the investment advisory fees and are not charged to investors.
(/2/) 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/) The investment adviser for the Franklin Government Securities Trust has
agreed to reduce the investment advisory fee and to reimburse the Fund for
certain expenses. Without this agreement, the other expenses would have
been 0.63% and total annual expenses for the Franklin Government
Securities Trust would have been 0.78%.
(/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.
(/5/) The Fund's Adviser has agreed to reimburse the fund so that the total
expenses of the fund (excluding taxes, brokerage, and extraordinary
expenses) will not exceed an annual rate of 1.30% of the Fund's average
net assets. Without this agreement, it is estimated that the fund's
investment advisory fee, total other expenses and total mutual fund annual
expenses would have been 0.85%, 5.43% and 6.28%, respectively.
(/6/) These fees as a percentage of assets are higher than those for other
similar funds, although the amounts of the fees are not due to the limited
amount of assets in the Fund.
(/7/) Until May 1, 1995, the Portfolio had a Distribution Plan pursuant to Rule
12b-1 which provided for the reimbursement by Neuberger & Berman
Management of certain distribution expenses, up to a maximum of 0.25% on
an annual basis of the Portfolio's average daily net assets. The "Total
Annual Expenses" shown above would have been increased by 0.02% if the
12b-1 fees for the months of January through April, 1995 were taken into
account.
(/8/) The Portfolio's investment adviser pays all expenses of the Portfolio
except brokerage commissions, taxes, interest, fees and expenses of the
non-interested directors (including counsel fees) and extraordinary
expenses.
7
<PAGE>
HYPOTHETICAL ILLUSTRATION (EXAMPLE)
- ----------------------------------
THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.
Whether or not you completely withdraw your Account, assuming a 5% annual
return on assets, you would have paid the following expenses on a $1,000
investment:
<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
------ ------- ------- --------
<S> <C> <C> <C> <C>
Aetna Variable Fund $16 $49 $ 84 $185
Aetna Income Shares $16 $50 $ 86 $188
Aetna Variable Encore
Fund $16 $50 $ 86 $187
Aetna Investment
Advisers Fund, Inc. $16 $50 $ 86 $187
Alger American Small Cap
Portfolio $22 $69 $118 $254
Calvert Responsibly
Invested Balanced
Portfolio $21 $64 $110 $238
Franklin Government
Securities Trust $19 $59 $102 $220
Janus Aspen Aggressive
Growth Portfolio $22 $67 $114 $246
Lexington Emerging
Markets Fund, Inc. $26 $79 $136 $289
Lexington Natural
Resources Trust $28 $87 $148 $313
Neuberger & Berman
Growth Portfolio $22 $68 $116 $249
Scudder International
Portfolio $23 $70 $120 $258
TCI Growth $23 $70 $120 $258
</TABLE>
8
<PAGE>
CONDENSED FINANCIAL INFORMATION
(SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
THE CONDENSED FINANCIAL INFORMATION PRESENTED BELOW FOR EACH OF THE YEARS IN
THE TEN-YEAR PERIOD ENDED DECEMBER 31, 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 1993
---------- ----------
<S> <C> <C>
AETNA VARIABLE FUND
Value at
beginning of
period $107.925 $102.383
Value at end of
period $105.558 $107.925
Increase
(decrease) in
value of
accumulation
unit(/1/) (2.19)% 5.41%
Number of
accumulation
units
outstanding at
end of period 13,966,072 21,148,863
AETNA INCOME SHARES
Value at
beginning of
period $42.283 $39.038
Value at end of
period $40.173 $42.283
Increase
(decrease) in
value of
accumulation
unit(/1/) (4.99)% 8.31%
Number of
accumulation
units
outstanding at
end of period 5,108,720 8,210,666
AETNA VARIABLE ENCORE FUND
Value at
beginning of
period $35.282 $34.619
Value at end of
period $36.271 $35.282
Increase
(decrease) in
value of
accumulation
unit(/1/) 2.80% 1.92%
Number of
accumulation
units
outstanding at
end of period 3,679,802 5,086,515
AETNA INVESTMENT ADVISERS FUND, INC.
Value at
beginning of
period $14.519 $13.379
Value at end of
period $14.270 $14.519
Increase
(decrease) in
value of
accumulation
unit(/1/) (1.71)% 8.52%
Number of
accumulation
units
outstanding at
end of period 21,990,186 30,784,750
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at
beginning of
period $10.072 $10.000(/3/
Value at end of
period $ 9.513 $10.072
Increase
(decrease) in
value of
accumulation
units(/1/) (5.55)% 0.72%
Number of
accumulation
units
outstanding at
end of period. 665,518 51,327
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO*
Value at
beginning of
period $14.640 $13.726
Value at end of
period $13.990 $14.640
Increase
(decrease) in
value of
accumulation
unit(/1/) (4.44)% 6.66%
Number of
accumulation
units
outstanding at
end of period 743,464 705,415
</TABLE>
<TABLE>
<CAPTION>
1992 1991 1990 1989 1988 1987 1986 1985
---------- ---------- ---------- ---------- ---------- ---------- ---------- --------
<C> <C> <C> <C> <C> <C> <C> <C>
$ 97.165 $77.845 $76.311 $59.871 $52.885 $50.760 $43.205 $33.323
$102.383 $97.165 $77.845 $76.311 $59.871 $52.885 $50.760 $43.205
5.37% 24.82% 2.01% 27.46% 13.21% 4.19% 17.49% 29.66%
24,201,565 20,948,226 18,362,906 17,142,820 16,455,396 16,497,406 16,578,251 14,186,456
$ 36.789 $31.192 $28.943 $25.574 $24.061 $23.308 $20.703 $17.145
$ 39.038 $36.789 $31.192 $28.943 $25.574 $24.061 $23.308 $20.703
6.11% 17.94% 7.77% 13.17% 6.29% 3.23% 12.58% 20.75%
8,507,292 7,844,412 6,984,793 6,202,834 5,955,293 5,372,271 6,188,470 4,673,837
$ 33.812 $32.138 $30.012 $27.783 $26.171 $24.812 $23.504 $21.942
$ 34.619 $33.812 $32.138 $30.012 $27.783 $26.171 $24.812 $23.504
2.39% 5.21% 7.08% 8.02% 6.16% 5.48% 5.57% 7.12%
7,534,662 8,430,082 10,220,110 8,286,033 8,154,644 7,326,151 6,692,947 7,220,756
$ 12.736 $10.896 $10.437 $10.000(/2/)
$ 13.379 $12.736 $10.896 $10.437
5.05% 16.89% 4.40% 4.37%
34,802,433 22,898,099 17,078,985 9,535,986
)
$ 12.913 $11.233 $10.568 $10.000(/4/)
$ 13.726 $12.913 $11.233 $10.568
6.30% 14.96% 6.29% 5.68%
503,006 355,851 148,576 20,710
</TABLE>
9
<PAGE>
CONDENSED FINANCIAL INFORMATION (CONTINUED)
(SELECTED DATA FOR ACCUMULATION UNITS OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990 1989
--------- --------- --------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
FRANKLIN GOVERNMENT SECURITIES TRUST
Value at beginning of
period $14.929 $14.050 $13.219 $11.545 $10.581 $10.000(/5/)
Value at end of period $14.190 $14.929 $14.050 $13.219 $11.545 $10.581
Increase (decrease) in
value of accumulation
unit(/1/) (4.95)% 6.26% 6.29% 14.50% 9.11% 5.81%
Number of accumulation
units outstanding at
end of period 804,457 960,629 810,155 627,552 178,761 25,258
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of
period $10.000(/6/)
Value at end of period $12.169
Increase (decrease) in
value of accumulation
unit(/1/) 21.69%
Number of accumulation
units outstanding at
end of period 393,553
LEXINGTON EMERGING MARKETS FUND, INC.
Value at beginning of
period $10.000(/7/)
Value at end of period $ 8.772
Increase (decrease) in
value of accumulation
unit(/1/) (12.28)%
Number of accumulation
units outstanding at
end of period 144,750
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of
period $10.071 $ 9.193 $9.018 $9.608 $11.441 $10.000(/4/)
Value at end of period $ 9.412 $10.071 $9.193 $9.018 $ 9.608 $11.441
Increase (decrease) in
value of accumulation
unit(/1/) (6.54)% 9.55% 1.94% (6.14)% (16.02)% 14.41%
Number of accumulation
units outstanding at
end of period 533,016 341,771 198,338 144,139 75,052 11,481
NEUBERGER & BERMAN GROWTH PORTFOLIO
Value at beginning of
period $14.278 $13.536 $12.511 $ 9.769 $10.772 $10.000(/4/)
Value at end of period $13.398 $14.278 $13.536 $12.511 $ 9.769 $10.772
Increase (decrease) in
value of accumulation
unit(/1/) (6.16)% 5.48% 8.19% 28.07% (9.31)% 7.72%
Number of accumulation
units outstanding at
end of period 2,107,525 1,927,674 1,346,898 971,985 482,220 68,885
SCUDDER INTERNATIONAL PORTFOLIO**
Value at beginning of
period $13.508 $ 9.922 $10.239* $ 9.256 $10.306 $10.000(/8/)
Value at end of period $13.227 $13.508 $ 9.922 $10.239 $ 9.256 $10.306
Increase (decrease) in
value of accumulation
unit(/1/) (2.08)% 36.14% (3.10)% 10.62% (10.19)% 3.06%
Number of accumulation
units outstanding at
end of period 4,240,412 2,371,037 1,161,007 779,667 317,829 32,906
TCI GROWTH
Value at beginning of
period $11.443 $10.495 $10.000(/9/)
Value at end of period $11.172 $11.443 $10.495
Increase (decrease) in
value of accumulation
unit(/1/) (2.37)% 9.03% 4.95%
Number of accumulation
units outstanding at
end of period 1,608,362 1,016,894 232,832
</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.
(/2/) The initial Accumulation Unit value was established at $10.000 on June 23,
1989, the date on which the Fund commenced operations.
(/3/) The initial Accumulation Unit value was established at $10.000 on Septem-
ber 17, 1993.
(/4/) The initial Accumulation Unit value was established at $10.000 on May 31,
1989.
(/5/) The initial Accumulation Unit value was established at $10.000 on June 7,
1989.
(/6/) The initial Accumulation Unit value was established at $10.000 during June
1994, when funds were first received in this option.
(/7/) The initial Accumulation Unit value was established at $10.000 during Oc-
tober 1994, when funds were first received in this option.
(/8/) The initial Accumulation Unit value was established at $10.000 on July 5,
1989.
(/9/) The initial Accumulation Unit value was established at $10.000 on Septem-
ber 21, 1992.
* Formerly Calvert Socially Responsible Series.
** Formerly T. Rowe Price International Equity Fund. On April 27, 1992, the
Fund's assets were liquidated and merged into Scudder Variable Life Invest-
ment Fund-Managed International Portfolio. The Accumulation Unit value fol-
lowing the merger was $10.051.
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" and "non-standardized 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). Such returns will reflect
the deduction of all recurring charges during each period, (e.g., mortality and
expense risk charges, and the administrative expense charge). "Non-standardized
return" may also include a three-year period in addition to the one, five and
ten-year periods.
For Funds that were in existence prior to the date 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 change in values of other management investment companies
that have investment objectives similar to the Fund being compared.
We may publish in advertisements and reports to you and to the Contract Holder
the ratings and other information assigned to us by one or more independent
rating organizations such as A.M. Best Company, Duff & Phelps, Standard &
Poor's Corporation and Moody's Investors Service, Inc. The purpose of the
ratings is to reflect our financial strength and/or claims-paying ability. We
may also quote ranking services such as Morningstar's Variable Annuity/Life
Performance Report and Lipper's Variable Insurance Products Performance
Analysis Service (VIPPAS), which rank variable annuity or life subaccounts or
their underlying Funds by performance and/or investment objective. 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.
11
<PAGE>
THE COMPANY
Aetna Life Insurance and Annuity Company, the depositor for Variable Annuity
Account C, is a stock life insurance company organized in 1976 under the
insurance laws of the State of Connecticut. As of December 31, 1994, the
Company 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. It is 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. The Company's Home Office is located at 151 Farmington
Avenue, Hartford, Connecticut 06156. The Company also maintains an
administrative office in Albany, New York. See "Aetna Processing Office"
below.
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
general corporate obligations of the Company.
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 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.
. 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.
12
<PAGE>
. CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO is a nondiversified
portfolio seeks growth of capital through investment in stocks, bonds and
money market instruments issued by enterprises that make a significant
contribution to society through their products and services and through
the way they do business. Prior to May 1, 1995, the Fund was known as the
Calvert Socially Responsible Series.
. FRANKLIN GOVERNMENT SECURITIES TRUST seeks income through investments in
obligations of the U.S. Government or its agencies or instrumentalities,
primarily GNMA obligations.
. 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.
. LEXINGTON EMERGING MARKETS FUND, INC. seeks long-term growth of capital
primarily through investment in equity securities of companies domiciled
in, or doing business in emerging countries and emerging markets.
Investments in emerging markets involve risks not present in domestic
markets. See the discussion under "Risk Considerations" in the Fund's
prospectus for information on risks inherent in this investment.
. LEXINGTON NATURAL RESOURCES TRUST is a nondiversified portfolio that
seeks long-term growth of capital through investment primarily in common
stocks of companies which own or develop natural resources and other
basic commodities or supply goods and services to such companies. Current
income will not be a factor. Total return will consist primarily of
capital appreciation. The Fund may invest up to 25% of its total assets
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.
. NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST -- GROWTH PORTFOLIO
("Neuberger & Berman Growth Portfolio") seeks capital growth through
investments in common stocks of companies that the investment adviser
believes will have above-average earnings or otherwise provide investors
with above-average potential for capital appreciation.
. 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
the 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.
This is no assurance that the Funds will achieve their investment objectives.
Participants bear the full investment risk of investments in the Funds
selected.
Some of the Funds may use in 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.
13
<PAGE>
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 and Participants 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.
FUND INVESTMENT ADVISERS
The following identifies the investment adviser and the subadviser, if any, for
each Fund.
<TABLE>
<CAPTION>
FUND INVESTMENT ADVISER SUBADVISER
---- ------------------ ----------
<S> <C> <C>
Aetna Variable Fund Aetna Life Insurance --
and Annuity Company (ALIAC)
Aetna Income Shares ALIAC --
Aetna Variable Encore ALIAC --
Fund
Aetna Investment ALIAC --
Advisers Fund, Inc.
Alger American Small Cap Fred Alger Management, Inc. --
Portfolio
Calvert Responsibly Calvert Asset Management NCM Capital Management Group, Inc.
Invested Balanced Company, Inc.
Portfolio
Franklin Government Franklin Advisers, Inc. --
Securities Trust
Janus Aspen Aggressive Janus Capital Corporation --
Growth Portfolio
Lexington Emerging Lexington Management --
Markets Fund, Inc. Corporation
Lexington Natural Lexington Management Market Systems Research Advisors, Inc.
Resources Trust Corporation
Neuberger & Berman Neuberger & Berman Neuberger & Berman
Growth Portfolio Management Incorporated
Scudder International Scudder, Stevens & Clark, Inc. --
Portfolio
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 insurance separate accounts of the
same or of an unaffiliated insurance company to invest in these Funds
simultaneously, since the interests of contract holders or policy owners or
insurance companies may differ. Each Fund's Board of Trustees or Directors has
agreed to monitor
14
<PAGE>
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, LIMITATIONS AND SUBSTITUTIONS
We may, from time to time, add additional mutual funds as eligible variable
funding options under the Contracts. In such event, the Contract Holder or you,
if permitted by the Contract Holder, may be permitted to select from these
other funds, subject to any conditions that may be imposed in connection with
those options.
The Company's current policy is to allow only Aetna Variable Fund, Aetna Income
Shares and Aetna Investment Advisers Fund, Inc. to be used as variable
investment options during the Annuity Period. See "Annuity Period Elections."
The Contract Holder may decide to offer only a select number of Funds as
funding options under its Plan, or may decide to substitute shares of one Fund
for shares of another Fund currently held by the Separate Account.
AETNA PROCESSING OFFICE
The Company has established the Aetna Processing Office to provide
administrative support to SUNY Participants. This office will handle
enrollments, billing, transfers, redemptions, and inquiries for all SUNY
Participants. All forms and correspondence should be sent to:
Aetna Processing Office
P.O. Box 12894
Albany, New York 12212-2894
Telephone number: 1-800-677-4636
PURCHASE OF CONTRACT
CONTRACT PURCHASE
Employees of the Contract Holder may fill out an enrollment form or forms and
return them to the Company or to a Distributor for delivery to the Company for
review, acceptance or rejection. The Company must accept or reject an
application or enrollment form within two business days of its receipt. If the
application or enrollment form 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 or Participant,
pending acceptance of the application or enrollment form. If the application or
enrollment form is accepted, a Contract will be issued to the Contract Holder
or the Purchase Payment will be accepted. Any Purchase Payment accompanying the
application or enrollment form or received prior to acceptance of the
application or enrollment form, will be invested as of the date of acceptance.
If the application or enrollment form is rejected, the application or
enrollment form 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.
A Modal Contract and a Rollover Contract are issued to cover all present and
future Participants. Contracts are issued in allocated form which provides for
the establishment of two Accounts for each Participant: an Employer Account and
an Employee Account.
Under a Rollover Contract, the Employee Account accepts Purchase Payments
attributable to a transfer of after-tax contributions made to SUNY's 403(b)
optional retirement program. Under a Modal Contract,
15
<PAGE>
the Employee Account accepts ongoing Purchase Payments made pursuant to Code
Section 414(h) and transferred funds attributable to Code Section 414(h)
contributions from another investment provider under the SUNY optional
retirement program. Under Code Section 414(h), the governmental employer
"picks up" employee contributions and the contributions are excluded from the
employee's taxable income.
Under a Rollover Contract, the Employer Account accepts Purchase Payments
attributable to transfer of employer contributions made to SUNY's Section
403(b) optional retirement program. Under a Modal Contract, the Employer
Account accepts ongoing Purchase Payments made pursuant to Code Section 401(a)
and transferred funds attributable to Code Section 401(a) contributions from
another investment provider under the SUNY optional retirement program.
For Modal Contracts, the Code imposes a maximum limit on annual Purchase
Payments which may be contributed on your behalf to a 401(a) plan, including
employee contributions picked up by the governmental employer in accordance
with Code Section 414(h). Such limit must be calculated in accordance with
Section 415 of the Code. In addition, the 401(a) plan must meet certain Code
non-discrimination requirements.
NET PURCHASE PAYMENTS
Each Purchase Payment is forwarded to the Aetna Processing Office and 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 under one or more of the available Funds; (b) on a fixed basis under one
or more of the credited interest options (if available); 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.
Under the Contract, you may elect to change the allocation of future Net
Purchase Payments to any mode of accumulation described above.
DISTRIBUTION
The Company will serve as Underwriter for the securities sold by this
Prospectus. The Company is registered as a broker-dealer with the Securities
and Exchange Commission and is a member of the National Association of
Securities Dealers, Inc. (NASD). As Underwriter, the Company will contract
with one or more registered broker-dealers ("Distributors"), including at
least one affiliate of the Company, to offer and sell the Contracts. All
persons offering and selling the Contracts must be registered representatives
of the Distributors and must also be licensed as insurance agents to sell
Variable Annuity Contracts. These registered representatives may also provide
services to Participants in connection with establishing their Accounts under
the Contract.
Persons offering and selling the Contracts may receive commissions in
connection with the sale of the Contracts. The maximum percentage amount that
the Company will ever pay as commission with respect to any given Purchase
Payment is with respect to those made during the first year of Purchase
Payments under a Certificate. That percentage amount will range from 1% to 6%
of those Purchase Payments. The Company many also pay renewal commissions on
Purchase Payments made after the first year and asset-based service fees. The
average of all payments made by the Company is estimated to equal to
approximately 3% 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 Account are set forth on your enrollment form.
Commissions and sales related expenses are paid by the Company and are not
deducted from Purchase Payments.
Occasionally, we may pay commissions and fees to Distributors which are
affiliated or associated with the Contract Holder or the Participants. We may
also enter into agreements with some entities associated with the Contract
Holder or Participants in which we would agree to pay the association for
certain services in connection with administering the Contracts. In both these
circumstances there may be an understanding that the Distributor or
association would endorse the Company as a provider of the Contract. You will
be notified if you are purchasing a Contract that is subject to these
arrangements.
16
<PAGE>
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 the Fixed Plus Account and in GAA.
NET INVESTMENT FACTOR
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 which 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.
CONTRACT RIGHTS
RIGHT TO CANCEL
You may cancel your participation under the Contract no later than 10 days (or
as otherwise allowed by state law) after receiving the certificate evidencing
your participation in the Contract by returning it to the Aetna Processing
Office, along with a written notice of cancellation. We will produce a refund
not later than 7 days after we receive the certificate and the written notice
at the Aetna Processing Office. Unless applicable state law requires a refund
of Purchase Payment(s) only, we will refund the Purchase Payment(s) plus any
increase or minus any decrease in the value attributable to any Purchase
Payment(s) allocated to the variable option(s).
RIGHTS UNDER THE CONTRACT
You have a nonforfeitable right to the value of your Employee Account and
Employer Account, as determined by the Plan Administrator in accordance with
the terms of the Plan. You may select the investment options for your Employer
Account and your Employee Account. You may elect an Annuity
17
<PAGE>
option subject to Plan Administrator certification that you are eligible for a
distribution and that the form of annuity is permitted under the terms of the
Plan. The Contracts and Accounts are not subject to the claims of any creditors
of the Contract Holder.
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.
We also allow unlimited transfers without charge of accumulated values to
available investment options during the Accumulation Period. Transfers of not
less than $500 may be made among the available Funds or from any of the Funds
to GAA and the Fixed Plus Account. Any transfer will be based on the
Accumulation Unit value next determined after we receive a valid request at our
Home Office. See Appendix I and II for information on transfers from GAA and
the Fixed Plus Account.
During the Annuity Period, transfers of accumulated value are not available.
WITHDRAWALS
You may withdraw all or a portion of an Account value during the Accumulation
Period, subject to Plan Administrator certification in writing that you are
eligible, both as to the timing and form of distribution. You may also direct
us to make an in-service transfer from the Rollover Contract to another
investment provider under the SUNY program without Plan Administrator
certification. To do so, you must properly complete a disbursement request form
and send it to the Aetna Processing Office. Disbursement request forms are
available from us and our representatives. Withdrawals prior to age 59 1/2 are
subject to a 10% penalty unless you meet certain conditions. See "Tax Status of
Amounts Distributed Under the Contract." Withdrawals may be requested in one of
the following ways:
. Full Withdrawal of an Account: The amount paid will be the full value of
the Funds and GAA, (plus or minus the market value adjustment), held in
the Account plus one fifth of the amount held in the Fixed Plus Account*,
minus any Fixed Plus Account withdrawals, transfers or annuitizations
made in the prior 12 months.
. Partial Withdrawal (Percentage): The amount paid will be the percentage
of the Account value requested. Amounts withdrawn from GAA may be subject
to a market value adjustment. See Appendix I. However, amounts withdrawn
from the Fixed Plus Account may not exceed 20% minus any Fixed Plus
Account withdrawals, transfers or annuitizations in the prior 12 months.
. Partial Withdrawal (Specific Dollar Amount): The amount paid will be the
dollar amount requested. However, amounts withdrawn from the Fixed Plus
Account may not exceed 20% minus any Fixed Plus Account withdrawals,
transfers or annuitizations in the prior 12 months.
*The balance of the amount held in the Fixed Plus Account will be paid in four
annual installments. If the withdrawal is due to death, annuitization, or meets
certain other qualifications, the entire amount held in the Fixed Plus Account
will be paid in one lump sum (or used to provide Annuity payments) rather than
in annual installments. See Appendix II for more information.
Taxes may be due on any amounts withdrawn. See "Tax Status."
All amounts paid will be based on Account values as of the end of the Valuation
Period in which the request is received in the Aetna Processing Office or such
later date as the request form may specify. For any partial withdrawal, unless
requested otherwise by you, the value of the Accumulation Units cancelled will
be withdrawn proportionately from each investment option used under the
Account.
Payments for withdrawal requests (subject to the above limitations on
withdrawals from the Fixed Plus Account) will be made in accordance with SEC
requirements, but normally not later than seven calendar days after a properly
completed disbursement form is received at the Aetna Processing 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
18
<PAGE>
an emergency exists where disposal of securities held by the Funds is not
reasonably practicable or 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 the protection of you and the Contract Holder. The
conditions under which restricted trading or an emergency exists shall be
determined by the rules and regulations of the SEC.
REINSTATEMENT PRIVILEGE
You may elect to reinvest all or a portion of the proceeds received from the
full withdrawal of an Account within 30 days after such withdrawal.
Accumulation Units will be credited to the Account for the amount 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 the Aetna Processing Office of the
reinstatement request along with the amount to be reinvested. The reinstatement
privilege may be used only once. If you are contemplating reinstatement, you
should seek competent advice regarding the tax consequences associated with
such a transaction.
CHARGES AND DEDUCTIONS
This section describes the maximum charges that we may deduct for
administrative expenses. A description of mortality and expense risk charges
and Fund expenses is also included.
MORTALITY AND EXPENSE RISK CHARGES
We make a daily deduction from the Separate Account for mortality and expense
risks (insurance charges). The deduction, made as part of the calculation of
Accumulation and Annuity Unit value(s), is equal to an annual effective rate of
1.25% per year.
The mortality risk charge is to compensate us for the risk we assume when we
promise to continue making payments for the lives of individual Annuitants
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. We 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
our general account (that supports insurance and annuity obligations), would be
available for any proper corporate purpose including, but not limited to,
payment of sales and distribution expenses. During 1994, the Company received
$59,320,898 for mortality and expense risks from Contracts funded through the
Separate Account.
ADMINISTRATIVE CHARGE
We reserve the right to deduct a daily charge of not more than 0.25% per year
from the Separate Account to reimburse us for expenses we incur in
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 charge is a percentage of the variable portion of Contract
values, there may be no relationship between the amount deducted and the amount
of expenses attributable to the Contract. We do not intend to profit from this
charge.
FUND EXPENSES
Each Fund has an investment adviser. An annual investment advisory fee, based
on the Fund's average daily net assets, is deducted from the assets of each
Fund and paid to the investment adviser.
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
19
<PAGE>
expenses, you and the Contract Holder should read the accompanying prospectus
for each Fund and refer to the Fee Table in this Prospectus.
PREMIUM TAX
Several states and municipalities impose a premium tax on Annuities either
when Purchase Payments are made or when an Annuity option is elected. Such
taxes usually range up to 4%; however, currently, there is no premium tax on
Annuity Contracts issued in the State of New York. Ordinarily, in states that
do impose a premium tax, it would 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 Participant's Account Value
based upon our determination of when such tax is due.
ANNUITY PERIOD
ANNUITY PERIOD ELECTIONS
You must notify the Aetna Processing Office in writing of the Annuity Date and
Annuity option elected. Until a date and option are elected, the Account will
continue in the Accumulation Period (for details, see the Statement of
Additional Information). An election form must be completed, signed and
submitted to the Aetna Processing Office. The form must include certification
by the Plan Administrator that you are entitled to a distribution and that the
option elected is permitted under the Plan.
You must give written notice to us at least 30 days before Annuity payments
begin, electing or changing (a) the date on which Annuity payments are to
begin, (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, the Aetna Variable Fund, the Aetna Income Fund, the 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 that the net investment rate exceeds 5% annually (plus up
to 0.25% to offset any applicable administrative expense charge). 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 $20 or total yearly Annuity payments of less than $100. If the value of
the Accounts are insufficient to elect an option for the minimum amount
specified, a lump-sum payment must be elected.
Section 401(a)(9) of the Code has required minimum distribution rules which
apply to the Contracts. Under such rules, for Rollover Contracts,
distributions of the accumulated values as of December 31, 1986, must
generally begin by age 75. For Modal Contracts and for benefits accrued after
December 31, 1986 under the Rollover Contract, distribution of the entire
value of the Accounts must be made, or must begin by April 1 of the calendar
year following the calendar year in which you attain age 70 1/2 or retire,
whichever occurs later.
In determining the amount of benefit payments, the minimum distribution
incidental death benefit rule described in IRS regulations* must be satisfied.
This distribution rule does not apply if any of the Annuity Options under (b)
below are elected with the spouse as the sole beneficiary. See "Annuity
Options."
A 50% federal penalty tax will be assessed on the difference between the
amount required to be distributed each year under the Code's minimum
distribution rules and the amount actually distributed.
* This rule assures that any death benefits payable under the Plan are
incidental to the primary purpose of the Plan which is to provide retirement
benefits to the Participant. The amount to be distributed under this rule is
determined based on the Participant's age and tables contained in the IRS
regulations.
20
<PAGE>
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.
ANNUITY OPTIONS
LIFETIME:
(a) Life Annuity -- An Annuity will be paid for the life of the Annuitant.
This option may also 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.
Payments under any lifetime Annuity option will be determined without regard to
the sex of the Annuitant(s). Such Annuity payments will be based solely on the
age of the Annuitant(s).
If lifetime option (a) or (b) 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), should die prior to
the due date of the second Annuity payment.
Once lifetime Annuity payments begin, the Annuitant cannot elect to receive a
lump-sum settlement.
NONLIFETIME:
Under the nonlifetime option, the type of Annuity (fixed or variable) and the
number of years that may be selected are determined by the investment options
used prior to annuitization.
Payments for a Stated Period of Time -- For amounts held in the Fixed Plus
Account, an Annuity with payments to be made for at least six but not more
than thirty years, and the Annuity must be paid on a fixed basis. For
amounts held in the Funds or GAA, an Annuity with payments to be made for
three to thirty years, as selected, on a fixed or variable basis. 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.
We make a daily deduction for mortality and expense risks from any amounts held
on a variable basis. See "Charges and Deductions." 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.
21
<PAGE>
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 under any of the Annuity options; (c) subject to
applicable provisions of the Code, left in the variable investment options or
GAA and/or the Fixed Plus Account; or (d), if you have not elected an Annuity
option, 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 to an Annuity option). Any lump-sum payment made 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 the Aetna Processing Office.
Until the election of method of payment, amounts will remain invested as they
were before the death, and the beneficiary will assume all nonforfeitable
rights under the Contract. The Code requires that distributions begun within a
certain time period. If the Beneficiary is the surviving spouse, he or she has
until the Participant would have attained age 70 1/2 to begin Annuity payments
or to receive a lump-sum distribution. If the Beneficiary is not the surviving
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 the 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).
Under the Contract, if lifetime option (a) or (b) was elected with a guaranteed
minimum payment period and the death of the second Annuitant under option (a)
or the surviving Annuitant under option (b)(iv) occurs prior to the end of that
period, we will pay to the 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 the Aetna Processing
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. Such value
22
<PAGE>
will be determined as of the Valuation Period in which proof of death
acceptable to us and a request for payment are received at the Aetna Processing
Office.
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 value 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 Contracts are designed to provide retirement benefits to Participants of
the State University of New York Defined Contribution Retirement Plan. They
accept Purchase Payments made under Code Sections 401(a), 414(h) and 403(b).
The ultimate effect of federal income taxes on 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.
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.
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.
23
<PAGE>
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 Section 403(b) plans and
retirement plans that qualify under Section 401(a) 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.
SECTION 403(B) PLANS. Under Code section 403(b), payments made by public school
systems and certain tax exempt organizations to purchase annuity contracts for
their employees are excludable from the gross income of the employee, subject
to certain limitations. However, these payments may be subject to FICA (Social
Security) taxes. A qualified Contract issued as a tax-deferred annuity under
Section 403(b) will be amended as necessary to conform to the requirements of
the Code.
The Code also required distribution rules for section 403(b) plans.
Distributions of amounts as of December 31, 1986, generally must begin by age
75. Distributions attributable to contributions made on or after January 1,
1987, and any earnings on the entire Account on or after that date, must begin
by (1) for governmental or church plans, April 1 of the calendar year following
the calendar year in which the participant attains age 70 1/2 or retires,
whichever occurs later, or (2) for all other plans, April 1 of the calendar
year following the calendar year in which the participant attains age 70 1/2.
To comply with these provisions, distributions must be in a form and amount
sufficient to satisfy the minimum distribution and minimum distribution
incidental death benefit rules specified in IRS regulations. In general,
annuity payments may not extend beyond your life, the joint lives of you and
your Beneficiary, a period certain greater than your life expectancy, or a
period certain greater than the joint life expectancies of you and your
beneficiary. If you die after the required minimum distributions have
commenced, distributions to your beneficiary must be made at least as rapidly
as under the method of distribution in effect at the time of your death. If you
die before the required minimum distributions have commenced, distribution to
your beneficiary generally must either commence as an annuity within one year
or be completed within five years, subject to certain special rules. If
distributions are taken in excess of the minimum required distribution, the
Company will reduce the December 31, 1986 value by the amount taken.
All distributions will be taxed as they are received unless you made a rollover
contribution of the distribution to another section 403(b) plan or an
individual retirement annuity or account ("IRA") in accordance with the Code,
or unless you have made after tax contributions to the plan, which are not
taxed upon distribution. The Code has specific rules that apply, depending on
the type of distribution received, if after-tax contributions were made.
24
<PAGE>
In general, payments received by your beneficiaries after your death are taxed
in the same manner as if you had received those payments, except that a limited
death benefit exclusion may apply.
Pension and annuity 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 to have tax withheld from distributions.
Certain distributions from Section 403(b) tax-sheltered annuities are subject
to mandatory federal income tax withholding. We will report to the IRS the
taxable portion of all distributions.
The Code imposes a 10% penalty tax on the taxable portion of any distribution
unless made when (a) you have attained age 59 1/2, (b) you have become
disabled, (c) you have died, (d) you have attained age 55 and have separated
from service with the plan sponsor, (e) the distribution amount is rolled over
into another section 403(b) plan or an IRA in accordance with the terms of the
Code, or (f) the distribution amount is annuitized over our life or life
expectancy or the joint lives or life expectancies of you and your plan
beneficiary, provided you have separated from service with the plan sponsor. In
addition, the penalty tax is abated for the amount of a distribution equal to
unreimbursed medical expenses incurred by you that qualify for deduction as
specified in the Code. The Code may impose other penalty taxes in other
circumstances.
CORPORATE PENSION AND PROFIT-SHARING PLANS AND H.R. 10 PLANS. Code section
401(a) permits employers to establish various types of retirement plans for
employees, and permit self-employed individuals to establish retirement plans
for themselves and their employees. These retirement plans may permit the
purchase of the Contracts to accumulate retirement savings under the plans.
Adverse tax consequences to the plan, to the participant or to both may result
if this Contract is assigned or transferred to any individual as a means to
provide benefit payments.
In the case of a withdrawal under a Contract paid to a plan participant or
beneficiary, including withdrawals under the Systematic Withdrawal Option or
the Estate Conservation Option, 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
contributions paid by or on behalf of any individual's total accrued benefit
under the retirement plan. The "investment in the contract" generally equals
the amount of any non-deductible contributions paid by or on behalf of any
individual. For a Contract issued in connection with qualified plans, the
"investment in the contract" can be zero. Special tax rules may be available
for certain distributions from a qualified plan.
Although the tax consequences may vary depending on the Annuity payment elected
under the Contract, in general, only the portion of the Annuity payment that
represents the amount by which the Account Value exceeds the "investment in the
contract" will be taxed; after the "investment in the contract" is recovered,
the full amount of any additional Annuity payments is taxable. 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. However, the entire
distribution will be taxable once the recipient has recovered the dollar amount
of his or her "investment in the contract". 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. Once the "investment in the
contract" has been fully recovered, the full amount of any additional Annuity
payments is taxable. 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 advisor regarding deductibility of the unrecovered amount.
25
<PAGE>
Pension 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 to have tax withheld from distributions; however,
certain distributions are subject to mandatory federal income tax withholding.
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.
MISCELLANEOUS
VOTING RIGHTS
The Contract Holder may direct us in the voting of shares at meetings of
shareholders of the appropriate Fund(s). The number of votes to which the
Contract Holder may give direction will be determined as of the record date.
The number of votes the Contract Holder is entitled to direct with respect to a
particular Fund during the Accumulation Period is equal to the portion of the
Account Value of the Contract attributable to that Fund, divided by the net
asset value of one share of that Fund. During the Annuity Period, the number of
votes is equal to the Valuation Reserve applicable to the portion of the
Contract attributable to that Fund, divided by the net asset value of one share
of that Fund. In determining the number of votes, fractional votes will be
recognized. Where the value of the Contract or Valuation Reserve relates to
more than one Fund, the calculation of votes will be performed separately for
each Fund.
Participants have a fully vested (100%) interest in the benefits provided under
the Contract. Therefore, Participants may instruct the Contract Holder how to
direct us to cast the votes for the portion of the Account Value or Valuation
Reserve attributable to their Accounts. Votes attributable to those
Participants who do not instruct the Contract Holder will be cast by us in the
same proportion as votes for which instructions have been received by the
Contract Holder. Votes attributable to Contract Holders who do not direct us
will be cast by us in the same proportion as the votes for which we have
received directions.
Participants entitled to instruct the casting of votes for a particular Fund
will receive a notice of each meeting of shareholders of that Fund, together
with any proxy solicitation materials, and a statement of the number of votes
attributable to their participation under the Contract and stating the right to
instruct the Contract Holder how such votes shall be cast.
26
<PAGE>
MODIFICATION OF THE CONTRACT
The Company may modify the Contract when it deems an amendment appropriate,
subject to the limitations described below, by notifying the Contract Holder in
writing 30 days before the effective date of the change, with the Contract
Holder's consent. The following Contract provisions may be considered material
by the Company and cannot be changed without the approval of appropriate state
or federal regulatory authorities:
(a)transfers among investment options;
(b)notification to the Contract Holder;
(c)conditions governing payments of withdrawal values;
(d)terms of Annuity options; and
(e)death benefit payments.
In addition, changes to the items listed below will apply only to future
Accounts:
(a) the Annuity Options (such changes may only be made twelve months after
the Effective Date of the Contract and twelve months after the
Effective Date of any such prior changes);
(b) the contractual promise that no deduction will be made from Purchase
Payment(s) for sales or administrative expenses;
(c) increasing the mortality and expense risk charges;
(d) increasing the administrative expense charge provision;
(e) the Fixed Plus Account and Guaranteed Accumulation Account guaranteed
rates;
(f) the calculation of Current Value and withdrawal value; and
(g) the fixed annuity interest rates.
If the Contract Holder has not accepted the proposed change at the time of its
effective date, we will discontinue establishing new Accounts. However, we will
continue to accept Purchase Payments to existing Accounts.
Modification of items (c) and (d) above specifically require authorization by
the SEC to the extent that the proposed charges are not currently authorized by
existing orders issued to us by the SEC.
Once an Annuity has begun, we will not change the terms or the amount of the
Annuity payments, unless a change is deemed necessary to comply with Code
requirements or other laws and regulations affecting the Plan or Contract.
CONTRACT HOLDER/PARTICIPANT INQUIRIES
A Contract Holder or Participant 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.
The Company has enacted procedures to prevent abuses of Account transactions by
telephone. 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 Account resulting from the failure. To ensure authenticity, we record all
calls requesting transfers on the 800 line. Note: all Account Information and
transactions permitted are subject to the terms of the Plan(s).
27
<PAGE>
BENEFICIARY DESIGNATIONS
Unless otherwise requested, the following applies to your beneficiary
designation:
If you designate more than one Beneficiary, the death benefit payments will be
paid in equal amounts to the primary Beneficiaries. If no primary Beneficiaries
survive you, the payments will be made to the contingent Beneficiaries.
If no Beneficiary survives you, payments will be made to your executor or
administrator.
You may elect a class of Beneficiaries by listing the names of currently living
members of the class and the class designation. For example, for "children of
the Participant," list the children and add "and any other children of the
Participant." If a class of Beneficiaries is designated, payments will be made
in equal amounts to each living person who is a member of the class, whether or
not he or she was specifically named.
TRANSFER OF OWNERSHIP; ASSIGNMENT
Unless contrary to applicable law, assignment of the Contract or Account is
prohibited.
LEGAL PROCEEDINGS
The Company knows of no material legal proceedings pending to which the Company
is a party or which would materially affect the Company.
LEGAL MATTERS
The validity of the securities offered has been passed upon by Susan E. Bryant,
Esq., Counsel to the Company.
28
<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............................................................ 4
Dollar-Cost Averaging....................................................... 6
Sales Material.............................................................. 6
Independent Auditors........................................................ 6
Financial Statements of the Separate Account................................ S-1
Financial Statements of Aetna Life Insurance and Annuity Company............ F-1
</TABLE>
29
<PAGE>
APPENDIX I
GUARANTEED ACCUMULATION ACCOUNT
THE GUARANTEED ACCUMULATION ACCOUNT ("GAA") IS A CREDITED INTEREST OPTION
AVAILABLE DURING THE ACCUMULATION PERIOD UNDER THE CONTRACTS. YOU AND THE
CONTRACT HOLDER 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 an credited interest option in which we guarantee stipulated rates of
interest for stated periods of time on amounts directed to GAA. The interest
rate stipulated is an annual effective yield; that is, it reflects a full
year's interest. Interest is credited daily at a rate that will provide the
guaranteed annual effective yield over the period of one year. This option
guarantees the minimum interest rate specified in the Contract.
During a specified period of time, 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.
Withdrawals or transfers from a Guaranteed Term before the end of that
Guaranteed Term may be subject to a Market Value Adjustment ("MVA"). An MVA
reflects the change in the value of the investment due to changes in interest
rates since the date of deposit. When interest rates increase after the date of
deposit, the value of the investment decreases, and the MVA is negative.
Conversely, when interest rates decrease after the date of deposit, the value
of the investment increases, and the MVA is positive. It is possible that a
negative MVA could result in the Participant receiving an amount which 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 tax
penalties and/or withholding.
By notifying us at the Aetna Processing 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 before the end of a Guaranteed Term. Transfers of GAA values
due to a maturity are not subject to an MVA.
REINSTATEMENT PRIVILEGE
Any amounts reinstated to GAA will be applied to the Guaranteed Terms of the
current deposit period. Amounts are proportionately reinvested to the
Classifications in the same manner as they were allocated at the time of
withdrawal. Any negative MVA amount applied to a withdrawal is not included in
the reinstatement.
30
<PAGE>
APPENDIX II
FIXED PLUS ACCOUNT
THE FIXED PLUS 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 CERTIFICATE. AMOUNTS
ALLOCATED TO THE FIXED PLUS ACCOUNT ARE HELD IN THE COMPANY'S GENERAL ACCOUNT
THAT SUPPORTS INSURANCE AND ANNUITY OBLIGATIONS. INTERESTS IN THE FIXED PLUS
ACCOUNT HAVE NOT BEEN REGISTERED WITH THE SEC IN RELIANCE ON EXEMPTIONS UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. DISCLOSURE IN THIS PROSPECTUS REGARDING
THE FIXED PLUS ACCOUNT, 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
PLUS ACCOUNT HAS NOT BEEN REVIEWED BY THE SEC.
The Fixed Plus Account guarantees that amounts allocated to this option will
earn a minimum 3% interest rate. We may credit a higher interest rate from time
to time. The Company's determination of interest rates reflect the investment
income earned on invested assets and the amortization of any capital gains
and/or losses realized on the sale of invested assets. Under this option, we
assume the risk of investment gain or loss by guaranteeing Net Purchase Payment
values and promising a minimum interest rate and Annuity payment.
The Fixed Plus Account will reflect a compound interest rate credited by us.
The interest rate quoted is an annual effective yield. Amounts applied to the
Fixed Plus Account will earn the Fixed Plus interest rate in effect when
actually applied to the Fixed Plus Account.
Beginning on the tenth anniversary of the effective date of an Account, we will
credit amounts held in the Fixed Plus Account with an interest rate that is at
least 0.25% higher than the then-declared interest rate for the Fixed Plus
Accounts for Accounts that have not reached their tenth anniversary. We make no
deductions from the credited interest rate for mortality and expense risks;
these risks are considered in determining the credited rate.
WITHDRAWALS
The amount eligible for partial withdrawal is 20% of the amount held in the
Fixed Plus Account on the day the Aetna Processing Office receives a written
request, reduced by any Fixed Plus Account withdrawals, transfers or
annuitizations made in the prior 12 months.
If a full withdrawal is requested, we will pay any amounts held in the Fixed
Plus Account, with interest, in five annual payments of:
. One-fifth of the Fixed Plus Account value on the day the request is
received, reduced by any Fixed Plus Account withdrawals, transfers or
annuitizations made in the prior 12 months;
. One-fourth of the remaining Fixed Plus Account Value 12 months later;
. One-third of the remaining Fixed Plus Account Value 12 months later;
. One-half of the remaining Fixed Plus Account Value 12 months later; and
. The balance of the Fixed Plus Account Value 12 months later.
Once we receive a request for a full withdrawal from an Account, no further
withdrawals or transfers will be permitted from the Fixed Plus Account.
A full withdrawal from the Fixed Plus Account may be cancelled at any time
before the end of the five-payment period.
The Account Value will be paid in a lump sum when a full withdrawal is:
(a) due to the Participant's death, before Annuity payments begin;
(b) due to the election of an Annuity option;
31
<PAGE>
(c) when the Fixed Plus Account Value is $3,500 or less; the amount
withdrawn is to be transferred to another investment provider under the
SUNY Plan; and no withdrawals, transfers or annuitizations have been
made from the Account within the prior 12 months; or,
(d) when the Account Value (including any MVA) is $4,000 or less and the
amount withdrawn is paid to the Participant in a lump sum.
ALTERNATIVE PAYMENT OF CONTRACT SURRENDER VALUE
As an alternative to the payment of the Fixed Plus Account value, as described
above, the Contract Holder may elect the following:
If the entire Contract is to be surrendered by the Contract Holder, the
Contract Holder must notify us of such intent no less than 60 days prior to
the proposed withdrawal date. Within 30 days of receipt of such notice, we
will supply the Contract Holder with the specific period and interest rate
that would apply to a complete surrender of the Contract under (b) below.
The Contract Holder must then irrevocably elect, in writing, to receive the
total of all Accounts' Current Values invested in the Fixed Plus Account:
(a) In the manner described under Fixed Plus Account Withdrawals above;
or
(b) In level, annual payments for a period not to exceed ten years.
If alternative (b) is elected the interest credited to the Fixed Plus
Account may be reduced up to 1.5% from the interest rate being credited
upon the date of withdrawal. This interest rate will remain constant
throughout the payment period.
TRANSFERS AMONG INVESTMENT OPTIONS
The amount eligible for transfer from the Fixed Plus Account is 20% of the
amount held in the Fixed Plus Account on the day the Aetna Processing Office
receives a written request, reduced by any Fixed Plus Account withdrawals,
transfers or annuitizations made in the prior 12 months. We will waive the 20%
transfer limit when the value in the Fixed Plus Account is $1,000 or less.
ANNUITIZATIONS
By notifying us at the Aetna Processing Office at least 30 days before Annuity
payments begin, you may elect to have amounts which have been accumulating
under the Fixed Plus Account transferred to one or more of the funds available
during the Annuity Period to provide lifetime variable Annuity payments.
32
<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 Funds'
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 currently consists of the
1.25% mortality and expense risk charges. The Accumulation Value is net of all
fees and expenses and is the amount available upon withdrawal.
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. 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 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.
33
<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
VALUE AT END PURCHASE ACCUMULATION
OF MONTH PAYMENTS VALUE(/1/)
--------------------------------------------------------------------------------
<S> <C> <C>
December 1985 $ 1,200.00 $ 1,387.23
--------------------------------------------------------------------------------
December 1986 2,400.00 2,890.49
--------------------------------------------------------------------------------
December 1987 3,600.00 4,104.81
--------------------------------------------------------------------------------
December 1988 4,800.00 5,905.67
--------------------------------------------------------------------------------
December 1989 6,000.00 8,871.58
--------------------------------------------------------------------------------
December 1990 7,200.00 10,293.06
--------------------------------------------------------------------------------
December 1991 8,400.00 14,195.82
--------------------------------------------------------------------------------
December 1992 9,600.00 16,219.71
--------------------------------------------------------------------------------
December 1993 10,800.00 18,344.61
--------------------------------------------------------------------------------
December 1994 12,000.00 19,131.06
--------------------------------------------------------------------------------
</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 June 1990 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 311.16
- -------------------------------------------------------------------------------------
September
1987 193.77 March 1991 261.74 September 1994 317.76
- -------------------------------------------------------------------------------------
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; this is the amount available at withdrawal.
See the narrative preceding these Tables.
34
<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 1992 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
VALUE AT END PURCHASE ACCUMULATION
OF MONTH PAYMENTS VALUE(/2/)
---------------------------------------------------------------------------------
<S> <C> <C>
December 1985 $ 1,200.00 $ 1,346.68
---------------------------------------------------------------------------------
December 1986 2,400.00 2,786.03
---------------------------------------------------------------------------------
December 1987 3,600.00 4,112.48
---------------------------------------------------------------------------------
December 1988 4,800.00 5,591.86
---------------------------------------------------------------------------------
December 1989 6,000.00 7,607.71
---------------------------------------------------------------------------------
December 1990 7,200.00 9,471.91
---------------------------------------------------------------------------------
December 1991 8,400.00 12,508.20
---------------------------------------------------------------------------------
December 1992 9,600.00 14,522.10
---------------------------------------------------------------------------------
December 1993 10,800.00 16,972.32
---------------------------------------------------------------------------------
December 1994 12,000.00 17,308.03
---------------------------------------------------------------------------------
</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; this is the amount available at withdrawal.
See the narrative preceding these Tables.
35
<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 234.13
- -------------------------------------------------------------------------------------
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; this is the amount available at withdrawal.
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
narrative preceding these Tables.
36
<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
VALUE AT END PURCHASE ACCUMULATION
OF MONTH PAYMENTS VALUE(/1/)
--------------------------------------------------------------------------------
<S> <C> <C>
December 1985 $ 1,200.00 $ 1,245.45
--------------------------------------------------------------------------------
December 1986 2,400.00 2,548.29
--------------------------------------------------------------------------------
December 1987 3,600.00 3,924.98
--------------------------------------------------------------------------------
December 1988 4,800.00 5,407.85
--------------------------------------------------------------------------------
December 1989 6,000.00 7,092.18
--------------------------------------------------------------------------------
December 1990 7,200.00 8,839.87
--------------------------------------------------------------------------------
December 1991 8,400.00 10,532.58
--------------------------------------------------------------------------------
December 1992 9,600.00 11,998.10
--------------------------------------------------------------------------------
December 1993 10,800.00 13,440.13
--------------------------------------------------------------------------------
December 1994 12,000.00 15,037.61
--------------------------------------------------------------------------------
</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 160.80
- --------------------------------------------------------------------------------------
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; this is the amount available at withdrawal.
See the narrative preceding these Tables.
37
<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
VALUE AT END PURCHASE ACCUMULATION
OF MONTH PAYMENTS VALUE(/1/)
--------------------------------------------------------------------------------
<S> <C> <C>
December 1990 $1,200.00 $1,242.33
--------------------------------------------------------------------------------
December 1991 2,400.00 2,765.83
--------------------------------------------------------------------------------
December 1992 3,600.00 4,146.11
--------------------------------------------------------------------------------
December 1993 4,800.00 5,760.97
--------------------------------------------------------------------------------
December 1994 6,000.00 6,864.92
--------------------------------------------------------------------------------
</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(/2/) MONTH FOR MONTH(/2/) MONTH FOR MONTH(/2/)
- ---------------------------------------------------------------------------------------
<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; this is the amount available at withdrawal.
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
narrative preceding these Tables.
38
<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
VALUE AT END PURCHASE ACCUMULATION
OF MONTH PAYMENTS VALUE(/1/)
-------------------------------------------------------------------------------
<S> <C> <C>
December 1989 $1,200.00 $ 1,456.08
--------------------------------------------------------------------------------
December 1990 2,400.00 2,850.32
--------------------------------------------------------------------------------
December 1991 3,600.00 5,970.32
--------------------------------------------------------------------------------
December 1992 4,800.00 7,478.61
--------------------------------------------------------------------------------
December 1993 6,000.00 9,733.21
--------------------------------------------------------------------------------
December 1994 7,200.00 10,421.32
--------------------------------------------------------------------------------
</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 310.44
- --------------------------------------------------------------------------------------
March 1990 164.48 March 1992 244.58 March 1994 281.73
- --------------------------------------------------------------------------------------
June 1990 188.05 June 1992 217.20 June 1994 262.42
- --------------------------------------------------------------------------------------
September 1990 148.59 September 1992 233.48 September 1994 285.62
- --------------------------------------------------------------------------------------
December 1990 174.35 December 1992 277.41 December 1994 293.21
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal.
See the narrative preceding these Tables.
39
<PAGE>
CALVERT RESPONSIBLY INVESTED BALANCED 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
VALUE AT END PURCHASE ACCUMULATION
OF MONTH PAYMENTS VALUE(/1/)
--------------------------------------------------------------------------------
<S> <C> <C>
December 1987 $1,200.00 $ 1,132.65
--------------------------------------------------------------------------------
December 1988 2,400.00 2,486.86
--------------------------------------------------------------------------------
December 1989 3,600.00 4,140.68
--------------------------------------------------------------------------------
December 1990 4,800.00 5,657.94
--------------------------------------------------------------------------------
December 1991 6,000.00 7,811.76
--------------------------------------------------------------------------------
December 1992 7,200.00 9,578.05
--------------------------------------------------------------------------------
December 1993 8,400.00 11,457.20
--------------------------------------------------------------------------------
December 1994 9,600.00 12,129.14
-------------------------------------------------------------------------------
</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 $112.57 December 1989 $132.97 September 1992 $167.05
- --------------------------------------------------------------------------------------
June 1987 115.51 March 1990 134.18 December 1992 172.69
- --------------------------------------------------------------------------------------
September 1987 120.87 June 1990 139.46 March 1993 177.45
- --------------------------------------------------------------------------------------
December 1987 104.36 September 1990 133.13 June 1993 177.60
- --------------------------------------------------------------------------------------
March 1988 111.30 December 1990 141.34 September 1993 183.58
- --------------------------------------------------------------------------------------
June 1988 114.04 March 1991 148.25 December 1993 184.20
- --------------------------------------------------------------------------------------
September 1988 114.50 June 1991 148.45 March 1994 177.54
- --------------------------------------------------------------------------------------
December 1988 115.06 September 1991 153.35 June 1994 174.37
- --------------------------------------------------------------------------------------
March 1989 118.57 December 1991 162.47 September 1994 177.74
- --------------------------------------------------------------------------------------
June 1989 127.85 March 1992 158.05 December 1994 176.03
- --------------------------------------------------------------------------------------
September 1989 134.65 June 1992 159.75
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal.
See the narrative preceding these Tables.
40
<PAGE>
FRANKLIN GOVERNMENT SECURITIES TRUST
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
VALUE AT END MAINTENANCE ACCUMULATION
OF MONTH FEES VALUE(/1/)
------------------------------------------------------------------------------
<S> <C> <C>
December 1990 $0.00 $1,279.04
------------------------------------------------------------------------------
December 1991 0.00 2,771.55
------------------------------------------------------------------------------
December 1992 0.00 4,197.56
------------------------------------------------------------------------------
December 1993 0.00 5,684.91
------------------------------------------------------------------------------
December 1994 0.00 6,587.13
------------------------------------------------------------------------------
</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 $ 99.93 December 1991 $124.93 September 1993 $140.77
- --------------------------------------------------------------------------------------
June 1990 103.18 March 1992 123.11 December 1993 141.09
- --------------------------------------------------------------------------------------
September 1990 104.50 June 1992 128.13 March 1994 135.36
- --------------------------------------------------------------------------------------
December 1990 109.10 September 1992 132.42 June 1994 133.38
- --------------------------------------------------------------------------------------
March 1991 111.86 December 1992 132.78 September 1994 133.63
- --------------------------------------------------------------------------------------
June 1991 113.83 March 1993 136.91 December 1994 134.11
- --------------------------------------------------------------------------------------
September 1991 119.43 June 1993 139.64
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal.
See the narrative preceding these Tables.
41
<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
VALUE AT END PURCHASE ACCUMULATION
OF MONTH PAYMENTS VALUE(/1/)
---------------------------------------------------------------------------------
<S> <C> <C>
December 1994 $1,200.00 $1,366.40
---------------------------------------------------------------------------------
</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>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal.
See the narrative preceding these Tables.
42
<PAGE>
LEXINGTON NATURAL RESOURCES TRUST
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
VALUE AT END PURCHASE ACCUMULATION
OF MONTH PAYMENTS VALUE(/1/)
--------------------------------------------------------------------------------
<S> <C> <C>
December 1990 $1,200.00 $1,099.80
--------------------------------------------------------------------------------
December 1991 2,400.00 2,240.87
--------------------------------------------------------------------------------
December 1992 3,600.00 3,496.77
--------------------------------------------------------------------------------
December 1993 4,800.00 5,028.21
--------------------------------------------------------------------------------
December 1994 6,000.00 5,835.65
--------------------------------------------------------------------------------
</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 $94.55 December 1991 $78.82 September 1993 $91.85
- --------------------------------------------------------------------------------------
June 1990 85.87 March 1992 78.05 December 1993 88.03
- --------------------------------------------------------------------------------------
September 1990 94.91 June 1992 77.73 March 1994 85.80
- --------------------------------------------------------------------------------------
December 1990 83.98 September 1992 80.95 June 1994 83.66
- --------------------------------------------------------------------------------------
March 1991 77.84 December 1992 80.35 September 1994 88.82
- --------------------------------------------------------------------------------------
June 1991 81.45 March 1993 89.06 December 1994 82.26
- --------------------------------------------------------------------------------------
September 1991 76.72 June 1993 90.59
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal.
See the narrative preceding these Tables.
43
<PAGE>
NEUBERGER & BERMAN GROWTH PORTFOLIO
HYPOTHETICAL PERIODIC ACCUMULATION VALUES
TABLE 1 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT ANNUAL INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1985
(Assuming $100 Monthly Purchase Payments made during each Contract Year)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
CUMULATIVE
VALUE AT END PURCHASE ACCUMULATION
OF MONTH PAYMENTS VALUE(/1/)
---------------------------------------------------------------------------------
<S> <C> <C>
December 1986 $ 1,200.00 $ 1,202.44
---------------------------------------------------------------------------------
December 1987 2,400.00 2,127.95
---------------------------------------------------------------------------------
December 1988 3,600.00 3,955.67
---------------------------------------------------------------------------------
December 1989 4,800.00 6,441.57
---------------------------------------------------------------------------------
December 1990 6,000.00 7,013.45
---------------------------------------------------------------------------------
December 1991 7,200.00 10,327.45
---------------------------------------------------------------------------------
December 1992 8,400.00 12,476.16
---------------------------------------------------------------------------------
December 1993 9,600.00 14,412.99
---------------------------------------------------------------------------------
December 1994 10,800.00 14,694.13
---------------------------------------------------------------------------------
</TABLE>
TABLE 2 - ACCUMULATION PERIOD
HYPOTHETICAL ACCUMULATION VALUES AT QUARTERLY INTERVALS
FOLLOWING CONTRACT ISSUANCE ON DECEMBER 31, 1985
(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 1986 $117.52 March 1989 $144.66 March 1992 $196.43
- --------------------------------------------------------------------------------------
June 1986 120.84 June 1989 159.49 June 1992 192.09
- --------------------------------------------------------------------------------------
September 1986 109.37 September 1989 178.13 September 1992 198.85
- --------------------------------------------------------------------------------------
December 1986 113.51 December 1989 171.94 December 1992 216.05
- --------------------------------------------------------------------------------------
March 1987 135.03 March 1990 163.27 March 1993 216.27
- --------------------------------------------------------------------------------------
June 1987 138.75 June 1990 173.51 June 1993 216.45
- --------------------------------------------------------------------------------------
September 1987 143.88 September 1990 145.25 September 1993 231.03
- --------------------------------------------------------------------------------------
December 1987 106.60 December 1990 155.92 December 1993 227.89
- --------------------------------------------------------------------------------------
March 1988 120.81 March 1991 178.87 March 1994 218.30
- --------------------------------------------------------------------------------------
June 1988 126.61 June 1991 176.05 June 1994 203.97
- --------------------------------------------------------------------------------------
September 1988 127.35 September 1991 185.94 September 1994 217.80
- --------------------------------------------------------------------------------------
December 1988 132.61 December 1991 199.68 December 1994 213.86
- -------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal.
See the narrative preceding these Tables.
44
<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
VALUE AT END PURCHASE ACCUMULATION
OF MONTH PAYMENTS VALUE(/1/)
---------------------------------------------------------------------------------
<S> <C> <C>
December 1988 $1,200.00 $ 1,292.70
--------------------------------------------------------------------------------
December 1989 2,400.00 3,179.88
--------------------------------------------------------------------------------
December 1990 3,600.00 4,005.48
--------------------------------------------------------------------------------
December 1991 4,800.00 5,649.32
--------------------------------------------------------------------------------
December 1992 6,000.00 6,569.87
--------------------------------------------------------------------------------
December 1993 7,200.00 10,376.95
--------------------------------------------------------------------------------
December 1994 8,400.00 11,317.79
--------------------------------------------------------------------------------
</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 $108.22 September 1990 $137.61 March 1993 $164.50
- --------------------------------------------------------------------------------------
June 1988 110.15 December 1990 143.07 June 1993 171.60
- --------------------------------------------------------------------------------------
September 1988 104.91 March 1991 154.45 September 1993 190.22
- --------------------------------------------------------------------------------------
December 1988 115.28 June 1991 148.17 December 1993 205.15
- --------------------------------------------------------------------------------------
March 1989 125.78 September 1991 156.84 March 1994 203.36
- --------------------------------------------------------------------------------------
June 1989 130.06 December 1991 157.46 June 1994 205.38
- --------------------------------------------------------------------------------------
September 1989 147.69 March 1992 150.63 September 1994 209.63
- --------------------------------------------------------------------------------------
December 1989 156.87 June 1992 159.33 December 1994 200.90
- --------------------------------------------------------------------------------------
March 1990 158.34 September 1992 156.40
- --------------------------------------------------------------------------------------
June 1990 166.92 December 1992 150.70
- -------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal.
See the narrative preceding these Tables.
45
<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
VALUE AT END PURCHASE ACCUMULATION
OF MONTH PAYMENTS VALUE(/1/)
--------------------------------------------------------------------------------
<S> <C> <C>
December 1988 $ 1,200.00 $ 1,221.10
--------------------------------------------------------------------------------
December 1989 2,400.00 2,859.97
--------------------------------------------------------------------------------
December 1990 3,600.00 3,977.80
--------------------------------------------------------------------------------
December 1991 4,800.00 6,986.51
--------------------------------------------------------------------------------
December 1992 6,000.00 8,056.99
--------------------------------------------------------------------------------
December 1993 7,200.00 10,044.31
--------------------------------------------------------------------------------
December 1994 8,400.00 10,999.49
--------------------------------------------------------------------------------
</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 $166.75
- --------------------------------------------------------------------------------------
June 1988 100.13 December 1990 119.63 June 1993 170.26
- --------------------------------------------------------------------------------------
September 1988 94.39 March 1991 145.88 September 1993 179.10
- --------------------------------------------------------------------------------------
December 1988 96.51 June 1991 136.27 December 1993 178.15
- --------------------------------------------------------------------------------------
March 1989 104.63 September 1991 151.98 March 1994 173.61
- --------------------------------------------------------------------------------------
June 1989 110.48 December 1991 167.60 June 1994 164.58
- --------------------------------------------------------------------------------------
September 1989 124.71 March 1992 159.19 September 1994 172.21
- --------------------------------------------------------------------------------------
December 1989 122.65 June 1992 148.65 December 1994 173.94
- --------------------------------------------------------------------------------------
March 1990 123.51 September 1992 152.80
- --------------------------------------------------------------------------------------
June 1990 134.26 December 1992 163.40
- --------------------------------------------------------------------------------------
</TABLE>
(/1/) The Accumulation Value is net of all applicable fees and expenses of the
Fund and under the Contract; this is the amount available at withdrawal.
See the narrative preceding these Tables.
46
<PAGE>
For Master Applications Only
I hereby acknowledge receipt of:
(1) an Account C group prospectus dated May 1,
1995 for the State University of New York Plan
issued by Aetna Life Insurance and Annuity
Company; and
(2) all current prospectuses pertaining to all
of the variable investment options under the
contracts.
[_] Please send an Account C Statement of
Additional Information.
- --------------------------------------------------------------------------------
CONTRACT HOLDER'S SIGNATURE
- --------------------------------------------------------------------------------
DATE
81216-1 (5/95)
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT C
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------------------------------------------
Statement of Additional Information dated May 1, 1995
and Supplemented on September 1, 1995
For
AETNAPLUS
STATE UNIVERSITY OF NEW YORK
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the prospectus dated May 1, 1995, as supplemented on
September 1, 1995, for Variable Annuity Account C (the "Separate Account")
describing contracts issued in connection with the Defined Contribution Plan for
the State University of New York.
A free prospectus is available upon request from the local Aetna Life Insurance
and Annuity Company office or by writing to or calling:
Aetna Life Insurance and Annuity Company
Aetna Processing Office
P. O. Box 12894
Albany, New York 12212-2894
1-800-677-4636
Read the prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the prospectus.
TABLE OF CONTENTS
Page
----
General Information and History......................................... 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.......................................................... 6
Independent Auditors.................................................... 6
Financial Statements of the Separate Account ...................... S-1
Financial Statements of Aetna Life Insurance and Annuity Company...... F-1
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Life Insurance and Annuity Company (the "Company") is a stock life
insurance company which was organized in 1976 under the insurance laws of the
State of Connecticut. The Company is 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. The Company's
Home Office is located at 151 Farmington Avenue, Hartford, Connecticut 06156.
In addition to serving as the principal underwriter and the depositor for the
Separate Account, the Company is also a registered investment adviser under the
Investment Advisers Act of 1940, and a registered broker-dealer under the
Securities Exchange Act of 1934. The Company provides investment advice to
several of the registered management investment companies offered as variable
investment options under the Contracts funded by the Separate Account (see
"Variable Annuity Account C" below).
The Company has established the Aetna Processing Office to provide
administrative support to the Contract Holder and Participants of the State
University of New York Defined Contribution Retirement Plan ("SUNY"). This
office will handle enrollments, billing, transfers, redemptions, and inquiries
for all SUNY Contract Holders and Participants. All forms and correspondence
should be sent to the address listed on the cover of this Statement of
Additional Information.
Other than the mortality and expense risk charges and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the Separate Account are borne by the Company. See "Charges and Deductions" in
the prospectus. The Company receives reimbursement for certain administrative
costs from some unaffiliated sponsors of the Funds used as funding options under
the Contract. These fees generally range from 0.15% to 0.25%.
The assets of the Separate Account are held by the Company. The Separate Account
has no custodian. However, the Funds in whose shares the assets of the Separate
Account are invested each have custodians, as discussed in their respective
prospectuses.
VARIABLE ANNUITY ACCOUNT C
Variable Annuity Account C (the "Separate Account") is a separate account
established by the Company for the purpose of funding variable annuity contracts
issued by the Company. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940, as amended. The assets of the Separate Account will be invested
exclusively in shares of the mutual funds described in the prospectus. Purchase
Payments made under the Contract may be allocated to one or more of the variable
investment options. The Company may make additions to or deletions from
available investment options as permitted by law. The availability of the Funds
is subject to applicable regulatory authorization. The Funds currently
available under the Contract are as follows:
2
<PAGE>
<TABLE>
<S> <C>
Aetna Variable Fund Fidelity Index 500 Portfolio
Aetna Income Shares Franklin Government Securities Trust
Aetna Variable Encore Fund Janus Aspen Aggressive Growth Portfolio
Aetna Investment Advisers Fund, Inc. Janus Aspen Growth Portfolio
Alger American Growth Portfolio Janus Aspen Short-Term Bond Portfolio
Alger American Small Cap Portfolio Janus Aspen Worldwide Growth Portfolio
Calvert Socially Responsible Balanced Portfolio Lexington Emerging Markets Fund, Inc.
Fidelity Asset Manager Portfolio Lexington Natural Resources Trust
Fidelity Contrafund Portfolio Neuberger & Berman Growth Portfolio
Fidelity Equity-Income Portfolio Scudder International Portfolio
TCI Growth (a Twentieth Century Fund)
</TABLE>
Complete descriptions of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, is contained in the
prospectuses and statements of additional information for each of the Funds.
OFFERING AND PURCHASE OF CONTRACTS
The Company is both the Depositor and the principal underwriter for the
securities sold by the prospectus. The Company offers the Contracts through
life insurance agents licensed to sell variable annuities who are registered
representatives of the Company or of other registered broker-dealers who have
sales agreements with the Company. The offering of the Contracts is continuous.
A description of the manner in which Contracts are purchased may be found in the
prospectus under the sections titled "Contract Purchase" and "Determining
Contract Value."
PERFORMANCE DATA
GENERAL
From time to time, the Company may advertise different types of historical
performance for the variable options of the Separate Account available under the
Contracts issued by the Company in connection with Plans described in the
Prospectus. The Company may advertise the "standardized average annual total
returns," calculated in a manner prescribed by the Securities and Exchange
Commission (the "standardized return"), as well as the "non-standardized total
return," both of which are described below.
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial Purchase Payment of
$1,000 is applied to the variable options under the Contract, and then related
to the ending redeemable values over one, three, five and ten year periods (or
fractional periods thereof). These figures reflect the deduction of all
recurring charges during each period (e.g., mortality and expense risk charges,
and any applicable administrative charges). These charges will be deducted on a
pro rata basis in the case of fractional periods.
The non-standardized total return figures use the same formula, but may be
computed to include a three year period as well as the one, five and ten year
periods.
For variable options of the Separate Account that were in existence prior to the
date the Fund became available under the Contract, the standardized and non-
standardized total returns may include periods prior to the date on which such
Fund became available under the Contract. These figures are calculated
3
<PAGE>
by adjusting the actual returns of the Fund to reflect the charges that would
have been assessed under the Contract had that Fund been available under the
Contract during that period.
The total return quotations are based upon historical earnings and are not
necessarily representative of future performance. Investment results of the
Funds will fluctuate over time, and any presentation of the Funds' total return
quotations for any prior period should not be considered as a representation of
how the Funds will perform in any future period. Additionally, your Contract
Value upon redemption may be more or less than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The table below reflects the average annual standardized and non-standardized
total return quotations figures for the period ended December 31, 1994 for each
of the variable options available under the Contract issued by the Company.
<TABLE>
<CAPTION>
---------------------------------------------------------------------
Fund
Standardized Non- Inception
Standardized Date
- ---------------------------------------------------------------------------------------------------------------------
Single Payment Contract 1 Year 5 Years 10 Years 3 Years
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Variable Fund (2.19)% 6.70% 12.22% 2.80% 04/30/75
- ---------------------------------------------------------------------------------------------------------------------
Aetna Income Shares (4.99)% 6.78% 8.89% 2.98% 06/01/78
- ---------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund 2.80% 3.86% 5.15% 2.37% 09/01/75
- ---------------------------------------------------------------------------------------------------------------------
*
Aetna Investment Advisers Fund, Inc. (1.59)% 6.48% 6.67% 3.91% 06/23/89
- ---------------------------------------------------------------------------------------------------------------------
* *
Alger American Growth Portfolio 0.19% 13.91% 15.37% 10.38% 01/08/89
- ---------------------------------------------------------------------------------------------------------------------
*
Alger American Small Cap Portfolio (5.55)% 12.54% 17.99% 2.63% 09/21/88
- ---------------------------------------------------------------------------------------------------------------------
Calvert Responsibly Invested *
Balanced Portfolio ** (4.43)% 5.77% 8.49% 2.71% 09/30/86
- ---------------------------------------------------------------------------------------------------------------------
* *
Fidelity Asset Manager Portfolio (7.23)% 9.35% 8.85% 7.02% 09/06/89
- ---------------------------------------------------------------------------------------------------------------------
* *
Fidelity Equity-Income Portfolio 5.66% 9.12% 9.61% 12.53% 10/22/86
- ---------------------------------------------------------------------------------------------------------------------
* *
Fidelity Index 500 Portfolio (0.21)% N/A N/A 5.93% 08/27/92
- ---------------------------------------------------------------------------------------------------------------------
*
Franklin Government Securities Trust (4.95)% 6.04% 6.46% 2.39% 05/30/89
- ---------------------------------------------------------------------------------------------------------------------
*
Janus Aspen Aggressive Growth Portfolio 14.91% N/A N/A 26.11% 09/13/93
- ---------------------------------------------------------------------------------------------------------------------
* *
Janus Aspen Growth Portfolio 1.49% N/A N/A 3.56% 09/13/93
- ---------------------------------------------------------------------------------------------------------------------
* *
Janus Aspen Short-Term Bond Portfolio (0.33)% N/A N/A (1.08)% 09/13/93
- ---------------------------------------------------------------------------------------------------------------------
* *
Janus Aspen Worldwide Growth Portfolio 0.28% N/A N/A 14.32% 09/13/93
- ---------------------------------------------------------------------------------------------------------------------
*
Lexington Emerging Markets Fund (0.41)% N/A N/A N/A 03/31/94
- ---------------------------------------------------------------------------------------------------------------------
*
Lexington Natural Resources Trust (6.55)% (3.83)% (1.08)% (1.43)% 05/31/89
- ---------------------------------------------------------------------------------------------------------------------
*
Neuberger & Berman Growth Portfolio (6.16)% 4.46% 8.81% 2.31% 12/31/85
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
*
Scudder International Portfolio (2.07)% 5.07% 7.81% 8.46% 04/30/87
- ---------------------------------------------------------------------------------------------------------------------
*
TCI Growth (2.37)% 7.24% 9.13% 1.25% 11/20/87
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Although results are not available for the full calendar indicated, the
percentage shown is an average annual return since inception.
** Prior to May 1, 1995, the Fund was known as Calvert Socially Responsible
Series.
ANNUITY PAYMENTS
When Annuity payments are to commence, the value of the Contract or Individual
Account is determined using Accumulation Unit values as of the tenth Valuation
Period before the first Annuity payment is due. Such value (less any applicable
premium tax) is applied to provide an Annuity in accordance with the Annuity and
investment options elected.
The Annuity option tables found in the Contract show, for each form of Annuity,
the amount of the first Annuity payment for each $1,000 of value applied.
Thereafter, variable Annuity payments fluctuate as the Annuity Unit value(s)
fluctuates with the investment experience of the selected investment option(s).
The first payment and subsequent payments also vary depending on the assumed net
investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes
a higher first payment, but Annuity payments will increase thereafter only to
the extent that the net investment rate increases by more than 5% on an annual
basis. Annuity payments would decline if the rate failed to increase by 5%. Use
of the 3.5% assumed rate causes a lower first payment, but subsequent payments
would increase more rapidly or decline more slowly as changes occur in the net
investment rate.
When the Annuity Period begins, the Annuitant is credited with a fixed number of
Annuity Units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where (a)
is the amount of the first Annuity payment based on a particular investment
option, and (b) is the then current Annuity Unit value for that investment
option. As noted, Annuity Unit values fluctuate from one Valuation Period to the
next; such fluctuations reflect changes in the net investment factor for the
appropriate Fund(s) (with a ten Valuation Period lag which gives the Company
time to process Annuity payments) and a mathematical adjustment which offsets
the assumed net investment rate of 3.5% or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the Annuity Period.
EXAMPLE:
Assume that, at the date Annuity payments are to begin, there are 3,000
Accumulation Units credited under a particular Contract or Individual Account
and that the value of an Accumulation Unit for the tenth Valuation Period prior
to retirement was $13.650000. This produces a total value of $40,950.
Assume also that no premium tax is payable and that the Annuity table in the
Contract provides, for the option elected, a first monthly variable Annuity
payment of $6.68 per $1000 of value applied; the Annuitant's first monthly
payment would thus be 40.950 multiplied by $6.68, or $273.55.
5
<PAGE>
Assume then that the value of an Annuity Unit for the Valuation Period in which
the first payment was due was $13.400000. When this value is divided into the
first monthly payment, the number of Annuity Units is determined to be 20.414.
The value of this number of Annuity Units will be paid in each subsequent month.
If the net investment factor with respect to the appropriate Fund is 1.0015000
as of the tenth Valuation Period preceding the due date of the second monthly
payment, multiplying this factor by .9999058* (to neutralize the assumed net
investment rate of 3.5% per annum built into the number of Annuity Units
determined above) produces a result of 1.0014057. This is then multiplied by the
Annuity Unit value for the prior Valuation Period (assume such value to be
$13.504376) to produce an Annuity Unit value of $13.523359 for the Valuation
Period in which the second payment is due.
The second monthly payment is then determined by multiplying the number of
Annuity Units by the current Annuity Unit value, or 20.414 times $13.523359,
which produces a payment of $276.07.
*If an assumed net investment rate of 5% is elected, the appropriate factor to
neutralize such assumed rate would be .9998663.
DOLLAR-COST AVERAGING
The term "dollar-cost averaging" describes a system of investing a uniform sum
of money at regular intervals over an extended period of time. It is based on
the economic fact that buying a variably priced item with a constant sum of
money at fixed intervals results in acquiring more of the item when prices are
low and less of it when prices are high. In order to maximize the effectiveness
of dollar-cost averaging, it is important that investors consider their
financial ability to continue purchasing the securities through periods of high
and low price levels. Investors should also note that no system can protect
against reduced values in a declining market.
SALES MATERIAL
The Company may include hypothetical illustrations in its sales literature that
explain the mathematical principles of dollar cost averaging, compounded
interest, tax deferred accumulation, and the mechanics of variable annuity
contracts. The Company may also discuss the difference between variable annuity
contracts and other types of savings or investment products, including, but not
limited to, personal savings accounts and Certificates of Deposit.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103 are the
independent auditors for the Separate Account and for the Company. The services
provided to the Separate Account include primarily the examination of the
Separate Account's financial statements and the review of filings made with the
SEC.
6
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT C
Index
Independent Auditors' Report
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
S-1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
for
VARIABLE ANNUITY ACCOUNT C
to be used in connection with Prospectus
describing contracts issued by
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT C
Index
Independent Auditors' Report
Statement of Assets and Liabilities
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
S-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors of Aetna Life Insurance and Annuity Company and
Contract Owners of Variable Annuity Account C:
We have audited the accompanying statement of assets and liabilities of Aetna
Life Insurance and Annuity Company Variable Annuity Account C (the "Account")
as of December 31, 1994, the related statement of operations and condensed fi-
nancial information for the year then ended and the statements of changes in
net assets for each of the years in the two-year period then ended. These fi-
nancial statements and condensed financial information are the responsibility
of the Account's management. Our responsibility is to express an opinion on
these financial statements and condensed financial information based on our au-
dits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and condensed fi-
nancial information are free of material misstatement. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1994, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant esti-
mates made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and condensed financial information
referred to above present fairly, in all material respects, the financial posi-
tion of Aetna Life Insurance and Annuity Company Variable Annuity Account C as
of December 31, 1994, the results of its operations and condensed financial in-
formation for the year then ended and the changes in its net assets for each of
the years in the two-year period then ended in conformity with generally ac-
cepted accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Hartford, Connecticut
January 31, 1995
S-2
<PAGE>
Variable Annuity Account C
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 1994
<TABLE>
<S> <C>
ASSETS:
Investments, at net asset value:(Note 1)
Aetna Variable Fund; 115,046,067 shares at $26.23 per share (cost $2,938,078,798).............. $3,017,586,769
Aetna Income Shares; 28,987,528 shares at $11.72 per share (cost $373,229,679)................. 339,845,651
Aetna Variable Encore Fund; 18,165,132 shares at $12.55 per share (cost $230,182,227).......... 227,945,773
Aetna Investment Advisers Fund, Inc.; 48,115,691 shares at $12.23 per share
(cost $557,208,037).......................................................................... 588,336,344
Aetna GET Fund, Series B; 6,130,437 shares at $9.92 per share (cost $61,658,244)............... 60,813,035
Alger American Fund--Alger American Small Capitalization Portfolio; 2,504,238 shares at
$27.31 per share (cost $68,490,734).......................................................... 68,390,728
Calvert Socially Responsible Series; 11,114,321 shares at $1.44 per share (cost $16,386,553)... 16,015,737
Fidelity Investments Variable Insurance Products Fund II--Asset Manager Portfolio;
859,413 shares at $13.79 per share (cost $12,101,599)........................................ 11,851,301
Fidelity Investments Variable Insurance Products Fund--Equity-Income
Portfolio; 97,900 shares at $15.35 per share (cost $1,512,657)................................. 1,502,758
Fidelity Investments Variable Insurance Products Fund--Growth Portfolio; 74,198 shares at
$21.69 per share (cost $1,566,291)........................................................... 1,609,365
Fidelity Investments Variable Insurance Products Fund--Overseas Portfolio; 35,965 shares at
$15.67 per share (cost $575,367)............................................................. 563,569
Franklin Government Securities Trust; 1,232,301 shares at $12.05 per share (cost $15,779,220).. 14,849,231
Janus Aspen Series--Aggressive Growth Portfolio; 937,913 shares at $13.62 per share
(cost $12,554,413)........................................................................... 12,774,375
Janus Aspen Series--Flexible Income Portfolio; 31,351 shares at $9.48 per share
(cost $307,352).............................................................................. 297,205
Lexington Emerging Markets Fund, Inc.; 128,777 shares at $9.86 per share (cost $1,392,103)..... 1,269,745
Lexington Natural Resources Trust; 1,260,454 shares at $9.71 per share (cost $12,849,039)...... 12,239,010
Neuberger & Berman Advisers Management Trust--Growth Portfolio; 2,416,504 shares at $20.31 per
share (cost $52,391,344)..................................................................... 49,079,202
Scudder Variable Life Investment Fund--International Portfolio; 13,314,695 shares at $10.69
per share (cost $141,368,583)................................................................ 142,334,092
TCI Portfolios, Inc.--TCI Growth; 32,031,260 shares at $9.21 per share (cost $291,200,318)..... 295,007,901
--------------
NET ASSETS....................................................................................... $4,862,311,791
==============
</TABLE>
(continued)
S-3
<PAGE>
Variable Annuity Account C
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 1994 (continued)
Net assets represented by:
<TABLE>
<CAPTION>
ACCUMULATION
UNIT
UNITS VALUE
------------- ------------
<S> <C> <C> <C>
Reserves for annuity contracts in
accumulation period:
AETNA VARIABLE FUND:
Qualified I......................... 1,258,166.4 $138.406 $ 174,137,707
Qualified III....................... 13,966,072.4 105.558 1,474,234,355
Qualified IV........................ 269.0 63.884 17,183
Qualified V......................... 77,510.5 10.823 838,870
Qualified VI........................ 114,733,034.7 10.778 1,236,626,034
Qualified VII....................... 2,703,365.0 10.136 27,402,446
Qualified VIII...................... 3,454.8 10.011 34,586
Qualified IX........................ 23,601.2 9.879 233,158
Qualified X (1.15).................. 110,419.5 10.791 1,191,541
Qualified X (1.25).................. 602,837.7 10.778 6,497,560
AETNA INCOME SHARES:
Qualified I......................... 161,534.6 40.570 6,553,450
Qualified III....................... 5,108,719.7 40.173 205,233,454
Qualified V......................... 14,481.7 10.536 152,573
Qualified VI........................ 11,713,354.4 10.360 121,354,557
Qualified VII....................... 49,298.1 9.565 471,526
Qualified VIII...................... 440.2 9.543 4,201
Qualified IX........................ 4,120.5 9.570 39,432
Qualified X (1.15).................. 16,109.8 10.373 167,101
Qualified X (1.25).................. 148,192.7 10.360 1,535,329
AETNA VARIABLE ENCORE FUND:
Qualified I......................... 241,159.0 36.723 8,856,130
Qualified III....................... 3,679,802.2 36.271 133,469,142
Qualified V......................... 12,934.0 10.523 136,102
Qualified VI........................ 7,673,528.3 10.528 80,784,765
Qualified VII....................... 99,270.9 10.435 1,035,905
Qualified VIII...................... 215.3 10.141 2,184
Qualified IX........................ 3,366.5 10.341 34,812
Qualified X (1.15).................. 9,735.5 10.541 102,618
Qualified X (1.25).................. 334,746.2 10.528 3,524,115
AETNA INVESTMENT ADVISERS FUND,
INC.:
Qualified I......................... 756,261.3 14.317 10,827,393
Qualified III....................... 21,990,186.1 14.270 313,799,955
Qualified V......................... 11,773.4 10.900 128,330
Qualified VI........................ 23,139,603.9 10.868 251,481,215
Qualified VII....................... 144,586.5 10.434 1,508,616
Qualified VIII...................... 120.8 10.091 1,219
Qualified IX........................ 4,574.1 10.000 45,741
Qualified X (1.15).................. 49,332.6 10.880 536,739
Qualified X (1.25).................. 261,895.1 10.868 2,846,276
</TABLE>
(continued)
S-4
<PAGE>
Variable Annuity Account C
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 1994 (continued)
<TABLE>
<CAPTION>
ACCUMULATION
UNIT
UNITS VALUE
----------- ------------
<S> <C> <C> <C>
AETNA GET FUND, SERIES B:
Qualified III.................... 113,700.1 $ 10.160 $ 1,155,184
Qualified VI..................... 5,515,433.4 10.160 56,036,373
Qualified X (1.25)............... 356,447.4 10.160 3,621,478
ALGER AMERICAN FUND--ALGER
AMERICAN SMALL CAPITALIZATION
PORTFOLIO:
Qualified III.................... 665,518.0 9.513 6,331,073
Qualified V...................... 4,574.5 9.461 43,282
Qualified VI..................... 6,339,406.7 9.437 59,827,174
Qualified VIII................... 1,056.6 9.889 10,449
Qualified X (1.15)............... 22,051.9 9.450 208,380
Qualified X (1.25)............... 208,784.3 9.437 1,970,370
CALVERT SOCIALLY RESPONSIBLE
SERIES:
Qualified III.................... 743,464.3 13.990 10,401,066
Qualified V...................... 8,469.2 10.839 91,795
Qualified VI..................... 521,140.5 10.554 5,500,118
Qualified VIII................... 2,401.5 9.590 23,031
FIDELITY INVESTMENTS VARIABLE
INSURANCE PRODUCTS FUND II--
ASSET MANAGER PORTFOLIO:
Qualified III.................... 1,254,504.2 9.447 11,851,301
FIDELITY INVESTMENTS VARIABLE
INSURANCE PRODUCTS FUND--EQUITY-
INCOME PORTFOLIO:
Qualified X (1.15)............... 43,852.1 10.409 456,470
Qualified X (1.25)............... 100,574.2 10.403 1,046,288
FIDELITY INVESTMENTS VARIABLE
INSURANCE PRODUCTS FUND--GROWTH
PORTFOLIO:
Qualified X (1.15)............... 32,591.9 10.479 341,515
Qualified X (1.25)............... 121,069.6 10.472 1,267,850
FIDELITY INVESTMENTS VARIABLE
INSURANCE PRODUCTS FUND--
OVERSEAS PORTFOLIO:
Qualified X (1.15)............... 5,097.9 9.480 48,326
Qualified X (1.25)............... 54,386.5 9.474 515,243
FRANKLIN GOVERNMENT SECURITIES
TRUST:
Qualified III.................... 804,457.0 14.190 11,415,245
Qualified V...................... 10,738.2 10.294 110,534
Qualified VI..................... 325,365.0 10.119 3,292,269
Qualified VIII................... 3,268.3 9.541 31,183
JANUS ASPEN SERIES--AGGRESSIVE
GROWTH PORTFOLIO:
Qualified III.................... 393,553.0 12.169 4,789,146
Qualified V...................... 819.6 10.577 8,669
Qualified VI..................... 753,862.0 10.581 7,976,560
JANUS ASPEN SERIES--FLEXIBLE
INCOME PORTFOLIO:
Qualified III.................... 1,554.8 9.911 15,410
Qualified VI..................... 28,542.8 9.873 281,795
</TABLE>
(continued)
S-5
<PAGE>
Variable Annuity Account C
STATEMENT OF ASSETS AND LIABILITIES -- December 31, 1994 (continued)
<TABLE>
<CAPTION>
ACCUMULATION
UNIT
UNITS VALUE
------------ ------------
<S> <C> <C> <C>
LEXINGTON EMERGING MARKETS FUND,
INC.:
Qualified III................... 144,749.8 $ 8.772 $ 1,269,745
LEXINGTON NATURAL RESOURCES
TRUST:
Qualified III................... 533,015.5 9.412 5,016,742
Qualified V..................... 7,349.7 10.496 77,142
Qualified VI.................... 703,676.0 10.154 7,145,126
NEUBERGER & BERMAN ADVISERS
MANAGEMENT TRUST--
GROWTH PORTFOLIO:
Qualified III................... 2,107,524.7 13.398 28,236,616
Qualified V..................... 21,935.1 11.055 242,485
Qualified VI.................... 1,865,104.0 11.026 20,565,351
Qualified VIII.................. 3,664.8 9.482 34,750
SCUDDER VARIABLE LIFE INVESTMENT
FUND--
INTERNATIONAL PORTFOLIO:
Qualified III................... 4,240,411.7 13.227 56,087,925
Qualified V..................... 22,036.3 12.595 277,545
Qualified VI.................... 6,558,945.9 12.687 83,214,974
Qualified VIII.................. 7,124.8 10.692 76,181
Qualified X (1.15).............. 23,840.2 12.701 302,803
Qualified X (1.25).............. 187,169.4 12.687 2,374,664
TCI PORTFOLIOS, INC.--TCI
GROWTH:
Qualified III *................. 1,608,361.5 11.172 17,968,615
Qualified III................... 12,096,731.2 10.213 123,547,291
Qualified V..................... 15,078.2 11.740 177,018
Qualified VI.................... 12,853,827.6 11.781 151,426,971
Qualified VII................... 14,330.4 9.911 142,029
Qualified VIII.................. 4,377.2 9.939 43,505
Qualified IX.................... 957.4 9.693 9,280
Qualified X (1.15).............. 4,486.4 11.794 52,912
Qualified X (1.25).............. 139,234.6 11.781 1,640,280
Reserves for annuity contracts in payment period (Note 1). 107,867,944
--------------
$4,862,311,791
==============
</TABLE>
*Applies only to participants of the Opportunity Plus program and Multiple
Options Portfolio.
See Notes to Financial Statements.
S-6
<PAGE>
Variable Annuity Account C
STATEMENT OF OPERATIONS -- Year Ended December 31, 1994
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends: (Notes 1 and 3)
Aetna Variable Fund............................... $ 467,266,533
Aetna Income Shares............................... 23,593,571
Aetna Variable Encore Fund........................ 8,637,154
Aetna Investment Advisers Fund, Inc............... 24,584,458
Aetna GET Fund, Series B.......................... 2,115,482
Alger American Fund--Alger American Small
Capitalization Portfolio......................... 2,620,001
Calvert Socially Responsible Series............... 497,655
Fidelity Investments Variable Insurance Products
Fund II--Asset Manager Portfolio................. 5,798
Fidelity Investments Variable Insurance Products
Fund--Equity-Income Portfolio.................... 10,084
Franklin Government Securities Trust.............. 930,986
Janus Aspen Series--Aggressive Growth Portfolio... 92,229
Janus Aspen Series--Flexible Income Portfolio..... 8,975
Lexington Emerging Markets Fund, Inc.............. 26,666
Lexington Natural Resources Trust................. 45,284
Neuberger & Berman Advisers Management Trust--
Growth Portfolio................................. 4,614,980
Scudder Variable Life Investment Fund--
International Portfolio.......................... 441,642
TCI Portfolios, Inc.--TCI Growth.................. 25,820
-------------
Total investment income........................ 535,517,318
Valuation period deductions (Note 2)............... (59,320,898)
-------------
Net investment income.............................. 476,196,420
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain on sales of investments: (Notes 1
and 4)
Proceeds from sales............................... $293,968,699
Cost of investments sold.......................... 229,897,138
------------
Net realized gain.............................. 64,071,561
Net unrealized gain (loss) on investments:
Beginning of year................................. 719,363,247
End of year....................................... 73,479,233
------------
Net unrealized loss............................ (645,884,014)
-------------
Net realized and unrealized loss on investments.... (581,812,453)
-------------
Net decrease in net assets resulting from
operations........................................ $(105,616,033)
=============
</TABLE>
See Notes to Financial Statements.
S-7
<PAGE>
Variable Annuity Account C
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1994 1993
-------------- --------------
<S> <C> <C>
FROM OPERATIONS:
Net investment income...................... $ 476,196,420 $ 232,176,564
Net realized and unrealized gain (loss) on
investments............................... (581,812,453) 21,509,547
-------------- --------------
Net increase (decrease) in net assets re-
sulting from operations.................. (105,616,033) 253,686,111
-------------- --------------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase pay-
ments..................................... 711,565,372 649,666,815
Sales and administrative charges deducted
by the Company............................ (137,737) (165,303)
-------------- --------------
Net variable annuity contract purchase
payments................................. 711,427,635 649,501,512
Transfers from the Company for mortality
guarantee adjustments..................... 1,880,350 1,413,366
Transfers to the Company's fixed account
options................................... (56,920,532) (17,366,092)
Transfers to other variable annuity ac-
counts.................................... (23,284,415) 0
Redemptions by contract holders............ (269,542,942) (210,939,684)
Annuity payments........................... (11,189,149) (8,655,687)
Other...................................... 1,452,959 1,717,888
-------------- --------------
Net increase in net assets from unit
transactions............................. 353,823,906 415,671,303
-------------- --------------
Change in net assets....................... 248,207,873 669,357,414
NET ASSETS:
Beginning of year.......................... 4,614,103,918 3,944,746,504
-------------- --------------
End of year................................ $4,862,311,791 $4,614,103,918
============== ==============
</TABLE>
See Notes to Financial Statements.
S-8
<PAGE>
Variable Annuity Account C
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Variable Annuity Account C ("Account") is registered under the Investment Com-
pany Act of 1940 as a unit investment trust. The Account is sold exclusively
for use with annuity contracts that are qualified under the Internal Revenue
Code of 1986, as amended.
The accompanying financial statements of the Account have been prepared in ac-
cordance with generally accepted accounting principles.
A. VALUATION OF INVESTMENTS
Investments in the following Funds are stated at the closing net asset value
per share as determined by each Fund on December 31, 1994:
<TABLE>
<S> <C>
Aetna Variable Fund Fidelity Investments Variable Insurance Products
Aetna Income Shares Fund-Overseas Portfolio
Aetna Variable Encore Fund Franklin Government Securities Trust
Aetna Investment Advisers Fund, Inc. Janus Aspen Series-Aggressive Growth Portfolio
Aetna GET Fund, Series B Janus Aspen Series-Flexible Income Portfolio
Alger American Fund-Alger American Small Lexington Emerging Markets Fund, Inc.
Capitalization Portfolio Lexington Natural Resources Trust
Calvert Socially Responsible Series Neuberger & Berman Advisers Management
Fidelity Investments Variable Insurance Products Trust-Growth Portfolio
Fund II-Asset Manager Portfolio Scudder Variable Life Investment Fund-
Fidelity Investments Variable Insurance Products International Portfolio
Fund-Equity-Income Portfolio TCI Portfolios, Inc.-TCI Growth
Fidelity Investments Variable Insurance Products
Fund-Growth Portfolio
</TABLE>
B. OTHER
Investment transactions are accounted for on a trade-date basis and dividend
income is recorded on the ex-dividend date. The cost of investments sold is de-
termined by specific identification.
C. FEDERAL INCOME TAXES
The operations of Variable Annuity Account C form a part of, and are taxed
with, the total operations of Aetna Life Insurance and Annuity Company ("Compa-
ny") which is taxed as a life insurance company under the Internal Revenue Code
of 1986, as amended.
D. ANNUITY RESERVES
Annuity reserves are computed for currently payable contracts according to the
Progressive Annuity, Individual Annuity Mortality, and Group Annuity Mortality
tables using various assumed interest rates not to exceed seven percent.
Charges to annuity reserves for mortality and expense risk experience are reim-
bursed to the Company if the reserves required are less than originally esti-
mated. If additional reserves are required, the Company reimburses the Account.
2. VALUATION PERIOD DEDUCTIONS
Deductions by the Account for mortality and expense risk charges are made in
accordance with the terms of the contracts and are paid to the Company.
S-9
<PAGE>
Variable Annuity Account C
NOTES TO FINANCIAL STATEMENTS (continued)
3. DIVIDEND INCOME
On an annual basis the Funds distribute substantially all of their taxable in-
come and realized capital gains to their shareholders. Distributions to the Ac-
count are automatically reinvested in shares of the Funds. The Account's pro-
portionate share of the Funds' undistributed net investment income and accumu-
lated net realized gain (loss) on investments is included in net unrealized
loss in the Statement of Operations.
Dividends were received from the following Funds:
<TABLE>
<CAPTION>
DATE OF DIVIDEND SOURCE OF
FUND REINVESTMENT DIVIDENDS
---- ---------------- ---------
<S> <C> <C>
Aetna Variable Fund July 20, 1994 Net investment income and
December 30, 1994 net realized gains
- -------------------------------------------------------------------------------
Aetna Income Shares July 20, 1994 Net investment income
December 30, 1994
- -------------------------------------------------------------------------------
Aetna Variable Encore Fund July 20, 1994 Net investment income
December 30, 1994
- -------------------------------------------------------------------------------
Aetna Investment Advisers Fund, July 20, 1994 Net investment income and
Inc. December 30, 1994 net realized gains
- -------------------------------------------------------------------------------
Aetna GET Fund, Series B December 30, 1994 Net investment income and
net realized gains
- -------------------------------------------------------------------------------
Alger American Fund-Alger May 9, 1994 Net realized gains
American Small Capitalization
Portfolio
- -------------------------------------------------------------------------------
Calvert Socially Responsible December 30, 1994 Net investment income
Series
- -------------------------------------------------------------------------------
Fidelity Investments Variable September 2, 1994 Net investment income
Insurance Products Fund II-Asset
Manager Portfolio
- -------------------------------------------------------------------------------
Fidelity Investments Variable June 7, 1994 Net investment income
Insurance Products Fund-Equity- September 19, 1994
Income Portfolio December 16, 1994
- -------------------------------------------------------------------------------
Franklin Government Securities June 13, 1994 Net investment income
Trust
- -------------------------------------------------------------------------------
Janus Aspen Series-Aggressive June 29, 1994 Net investment income
Growth Portfolio December 29, 1994
- -------------------------------------------------------------------------------
Janus Aspen Series-Flexible December 29, 1994 Net investment income
Income Portfolio
- -------------------------------------------------------------------------------
Lexington Emerging Markets Fund, December 29, 1994 Net investment income and
Inc. net realized gains
- -------------------------------------------------------------------------------
Lexington Natural Resources Trust December 29, 1994 Net investment income
- -------------------------------------------------------------------------------
Neuberger & Berman Advisers February 11, 1994 Net investment income and
Management Trust-Growth net realized gains
Portfolio
- -------------------------------------------------------------------------------
Scudder Variable Life Investment February 24, 1994 Net investment income
Fund-International Portfolio
- -------------------------------------------------------------------------------
TCI Portfolios, Inc.-TCI Growth April 11, 1994 Net investment income
</TABLE>
4. PURCHASES AND SALES OF INVESTMENTS
The cost of purchases and proceeds from sales of investments other than short-
term investments for the year ended December 31, 1994 aggregated $688,544,469
and $293,968,699, respectively.
S-10
<PAGE>
CONSOLIDATED FINANCIAL STATEMENTS
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Consolidated Financial Statements:
Consolidated Statements of Income for the Years Ended December 31, 1994,
1993 and 1992.......................................................... F-3
Consolidated Balance Sheets as of December 31, 1994 and 1993............ F-4
Consolidated Statements of Shareholder's Equity for the Years Ended
December 31, 1994, 1993 and 1992....................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31,
1994, 1993 and 1992.................................................... F-6
Notes to Consolidated Financial Statements.............................. F-7
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Shareholder and Board of Directors
Aetna Life Insurance and Annuity Company:
We have audited the accompanying consolidated balance sheets of Aetna Life
Insurance and Annuity Company and Subsidiaries as of December 31, 1994 and
1993, and the related consolidated statements of income, changes in
shareholder's equity and cash flows for each of the years in the three-year
period ended December 31, 1994. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Aetna Life
Insurance and Annuity Company and Subsidiaries at December 31, 1994 and 1993,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1994, in conformity with generally
accepted accounting principles.
As discussed in Note 1 to the consolidated financial statements, in 1993 the
Company changed its methods of accounting for certain investments in debt and
equity securities and reinsurance contracts. In 1992, the Company changed its
method of accounting for income taxes and postretirement benefits other than
pensions.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
February 7, 1995
F-2
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED STATEMENTS OF INCOME
(MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Revenue:
Premiums......................................... $ 124.2 $ 82.1 $ 72.5
Charges assessed against policyholders........... 279.0 251.5 235.4
Net investment income............................ 917.2 911.9 848.1
Net realized capital gains....................... 1.5 9.5 13.4
Other income..................................... 10.3 9.5 6.7
-------- -------- --------
Total revenue.................................. 1,332.2 1,264.5 1,176.1
-------- -------- --------
Benefits and expenses:
Current and future benefits...................... 852.4 806.4 761.6
Operating expenses............................... 227.2 201.3 213.5
Amortization of deferred policy acquisition
costs........................................... 36.1 37.7 32.9
-------- -------- --------
Total benefits and expenses.................... 1,115.7 1,045.4 1,008.0
-------- -------- --------
Income before federal income taxes and cumulative
effect adjustments................................ 216.5 219.1 168.1
Federal income taxes............................. 71.2 76.2 54.9
-------- -------- --------
Income before cumulative effect adjustments........ 145.3 142.9 113.2
Cumulative effect adjustments, net of tax:
Change in accounting for income taxes............ -- -- 22.8
Change in accounting for postretirement benefits
other than pensions............................. -- -- (13.2)
-------- -------- --------
Net income......................................... $ 145.3 $ 142.9 $ 122.8
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED BALANCE SHEETS
(MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
ASSETS 1994 1993
- ------ --------- ---------
<S> <C> <C>
Investments:
Debt securities, available for sale:
(amortized cost: $10,577.8 and $9,783.9).................... $10,191.4 $10,531.0
Equity securities, available for sale:
Non-redeemable preferred stock (cost: $43.3 and $38.3)...... 47.2 45.9
Investment in affiliated mutual funds (cost: $187.2 and
$122.4).................................................... 181.9 126.7
Short-term investments....................................... 98.0 22.6
Mortgage loans............................................... 9.9 10.1
Policy loans................................................. 248.7 202.7
Limited partnership.......................................... 24.4 --
--------- ---------
Total investments........................................ 10,801.5 10,939.0
Cash and cash equivalents...................................... 623.3 536.1
Accrued investment income...................................... 142.2 124.7
Premiums due and other receivables............................. 75.8 67.0
Deferred policy acquisition costs.............................. 1,172.0 1,061.0
Reinsurance loan to affiliate.................................. 690.3 711.0
Other assets................................................... 15.9 12.6
Separate Accounts assets....................................... 7,420.8 6,684.3
--------- ---------
Total assets............................................. $20,941.8 $20,135.7
========= =========
<CAPTION>
LIABILITIES AND SHAREHOLDER'S EQUITY
- ------------------------------------
<S> <C> <C>
Liabilities:
Future policy benefits....................................... $ 2,968.1 $ 2,741.8
Unpaid claims and claim expenses............................. 23.8 27.2
Policyholders' funds left with the Company................... 8,901.6 9,003.9
--------- ---------
Total insurance liabilities.............................. 11,893.5 11,698.7
Other liabilities............................................ 302.1 229.7
Federal income taxes:
Current.................................................... 3.4 40.6
Deferred................................................... 233.5 161.5
Separate Accounts liabilities................................ 7,420.8 6,684.3
--------- ---------
Total liabilities........................................ 19,853.3 18,889.0
--------- ---------
Shareholder's equity:
Common capital stock, par value $50 (100,000 shares autho-
rized; 55,000 shares issued and outstanding)................ 2.8 2.8
Paid-in capital.............................................. 407.6 407.6
Net unrealized capital gains (losses)........................ (189.0) 114.5
Retained earnings............................................ 867.1 721.8
--------- ---------
Total shareholder's equity............................... 1,088.5 1,246.7
--------- ---------
Total liabilities and shareholder's equity............... $20,941.8 $20,135.7
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1994 1993 1992
-------- -------- ------
<S> <C> <C> <C>
Shareholder's equity, beginning of year.............. $1,246.7 $ 990.1 $867.4
Net change in unrealized capital gains (losses)...... (303.5) 113.7 (0.1)
Net income........................................... 145.3 142.9 122.8
-------- -------- ------
Shareholder's equity, end of year.................... $1,088.5 $1,246.7 $990.1
======== ======== ======
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(MILLIONS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income.................................. $ 145.3 $ 142.9 $ 122.8
Cumulative effect adjustments............... -- -- (9.6)
Increase in accrued investment income....... (17.5) (11.1) (8.7)
(Increase) decrease in premiums due and
other receivables.......................... 1.3 (5.6) (19.9)
Increase in policy loans.................... (46.0) (36.4) (32.4)
Increase in deferred policy acquisition
costs...................................... (96.5) (60.5) (60.8)
Decrease in reinsurance loan to affiliate... 27.8 31.8 37.8
Net increase in universal life account
balances................................... 164.7 126.4 130.8
Increase in other insurance reserve
liabilities................................ 65.7 86.1 20.5
Net increase in other liabilities and other
assets..................................... 53.9 7.0 20.2
Decrease in federal income taxes............ (11.7) (3.7) (11.8)
Net accretion of discount on bonds.......... (77.9) (88.1) (75.2)
Net realized capital gains.................. (1.5) (9.5) (13.4)
Other, net.................................. (1.0) 0.2 (0.2)
--------- --------- ---------
Net cash provided by operating activities. 206.6 179.5 100.1
--------- --------- ---------
Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities available for sale........ 3,593.8 473.9 543.3
Equity securities......................... 93.1 89.6 50.6
Investment maturities and collections of:
Debt securities available for sale........ 1,289.2 2,133.3 1,179.2
Short-term investments.................... 30.4 19.7 5.0
Cost of investment purchases in:
Debt securities........................... (5,621.4) (3,669.2) (2,612.2)
Equity securities......................... (162.5) (157.5) (63.0)
Short-term investments.................... (106.1) (41.3) (5.0)
Limited partnership....................... (25.0) -- --
--------- --------- ---------
Net cash used for investing activities.. (908.5) (1,151.5) (902.1)
--------- --------- ---------
Cash Flows from Financing Activities:
Deposits and interest credited for
investment contracts....................... 1,737.8 2,117.8 1,619.6
Withdrawals of investment contracts......... (948.7) (1,000.3) (767.7)
--------- --------- ---------
Net cash provided by financing
activities............................. 789.1 1,117.5 851.9
--------- --------- ---------
Net increase in cash and cash equivalents..... 87.2 145.5 49.9
Cash and cash equivalents, beginning of year.. 536.1 390.6 340.7
--------- --------- ---------
Cash and cash equivalents, end of year........ $ 623.3 $ 536.1 $ 390.6
========= ========= =========
Supplemental cash flow information:
Income taxes paid, net...................... $ 82.6 $ 79.9 $ 54.0
========= ========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
F-6
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994, 1993, AND 1992
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include Aetna Life Insurance and Annuity
Company and its wholly owned subsidiaries, Aetna Insurance Company of America,
Systematized Benefits Administrators, Inc., Aetna Private Capital, Inc. and
Aetna Investment Services, Inc. (collectively, the "Company"). Aetna Life
Insurance and Annuity Company is a wholly owned subsidiary of Aetna Life and
Casualty Company ("Aetna").
The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. Intercompany transactions have been
eliminated. Certain reclassifications have been made to 1993 and 1992 financial
information to conform to the 1994 presentation.
The Company offers a wide range of life insurance products and annuity
contracts with variable and fixed accumulation and payout options. The Company
also provides investment advisory and other services to affiliated mutual
funds.
Accounting Changes
Accounting for Certain Investments in Debt and Equity Securities
On December 31, 1993, the Company adopted Financial Accounting Standard ("FAS")
No. 115, Accounting for Certain Investments in Debt and Equity Securities,
which requires the classification of debt securities into three categories:
"held to maturity", which are carried at amortized cost; "available for sale",
which are carried at fair value with changes in fair value recognized as a
component of shareholder's equity; and "trading", which are carried at fair
value with immediate recognition in income of changes in fair value.
Initial adoption of this standard resulted in a net increase of $106.8 million,
net of taxes of $57.5 million, to net unrealized gains in shareholder's equity.
These amounts exclude gains and losses allocable to experience-rated (including
universal life) contractholders. Adoption of FAS No. 115 did not have a
material effect on deferred policy acquisition costs.
Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration
Contracts
During 1993, the Company adopted FAS No. 113, Accounting and Reporting for
Reinsurance of Short-Duration and Long-Duration Contracts, retroactive to
January 1, 1993. Reinsurance recoverables (previously reported as a reduction
in insurance reserve liabilities) and reinsurance receivables and ceded
unearned premiums are included in premiums due and other receivables. The
adoption of FAS No. 113 did not have a material impact on the Company's 1993
Consolidated Financial Statements.
Accounting for Income Taxes
The Company adopted FAS No. 109, Accounting for Income Taxes, in 1992,
retroactive to January 1, 1992. A cumulative effect benefit of $22.8 million
related to the adoption of this standard is reflected in the 1992 Consolidated
Statement of Income.
F-7
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Postretirement Benefits Other Than Pensions
FAS No. 106, Employers' Accounting for Postretirement Benefits Other Than
Pensions, required that employers accrue the cost and recognize the liability
for providing non-pension benefits to retired employees and agents. Aetna and
the Company implemented FAS No. 106 in 1992, retroactive to January 1, 1992 on
the immediate recognition basis. The cumulative effect charge for all Aetna
employees was reflected in Aetna's 1992 Statement of Income. A cumulative
effect charge of $13.2 million, net of taxes of $7.1 million, related to the
adoption of this standard for Company agents is reflected in the Company's 1992
Consolidated Statement of Income.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, money market instruments and
other debt issues with a maturity of ninety days or less when purchased.
Investments
Debt Securities
At December 31, 1994 and 1993, all of the Company's debt securities are
classified as available for sale and carried at fair value. These securities
are written down (as realized losses) for other than temporary decline in
value. Unrealized gains and losses related to these securities, after deducting
amounts allocable to experience-rated contractholders and related taxes, are
reflected in shareholder's equity.
Fair values for debt securities are based on quoted market prices or dealer
quotations. Where quoted market prices or dealer quotations are not available,
fair values are measured utilizing quoted market prices for similar securities
or by using discounted cash flow methods. Cost for mortgage-backed securities
is adjusted for unamortized premiums and discounts, which are amortized using
the interest method over the estimated remaining term of the securities,
adjusted for anticipated prepayments.
Purchases and sales of debt securities are recorded on the trade date.
Equity Securities
Equity securities are classified as available for sale and carried at fair
value based on quoted market prices or dealer quotations. Equity securities are
written down (as realized losses) for other than temporary declines in value.
Unrealized gains and losses related to such securities are reflected in
shareholder's equity. Purchases and sales are recorded on the trade date.
The investment in affiliated mutual funds represents an investment in the Aetna
Series Fund, Inc., a retail mutual fund which has been seeded by the Company,
and is carried at fair value.
Mortgage Loans and Policy Loans
Mortgage loans and policy loans are carried at unpaid principal balances net of
valuation reserves, which approximates fair value, and are generally secured.
Purchases and sales of mortgage loans are recorded on the closing date.
F-8
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Limited Partnership
The Company's limited partnership investment is carried at the amount invested
plus the Company's share of undistributed operating results and unrealized
gains (losses), which approximates fair value.
Short-Term Investments
Short-term investments, consisting primarily of money market instruments and
other debt issues purchased with an original maturity of over ninety days and
less than one year, are considered available for sale and are carried at fair
value, which approximates amortized cost.
Deferred Policy Acquisition Costs
Certain costs of acquiring insurance business have been deferred. These costs,
all of which vary with and are primarily related to the production of new
business, consist principally of commissions, certain expenses of underwriting
and issuing contracts and certain agency expenses. For fixed ordinary life
contracts, such costs are amortized over expected premium-paying periods. For
universal life and certain annuity contracts, such costs are amortized in
proportion to estimated gross profits and adjusted to reflect actual gross
profits. These costs are amortized over twenty years for annuity pension
contracts, and over the contract period for universal life contracts. Deferred
policy acquisition costs are written off to the extent that it is determined
that future policy premiums and investment income or gross profits would not be
adequate to cover related losses and expenses.
Insurance Reserve Liabilities
The Company's liabilities include reserves related to fixed ordinary life,
fixed universal life and fixed annuity contracts. Reserves for future policy
benefits for fixed ordinary life contracts are computed on the basis of assumed
investment yield, assumed mortality, withdrawals and expenses, including a
margin for adverse deviation, which generally vary by plan, year of issue and
policy duration. Reserve interest rates range from 2.25% to 10.50%. Assumed
investment yield is based on the Company's experience. Mortality and withdrawal
rate assumptions are based on relevant Aetna experience and are periodically
reviewed against both industry standards and experience.
Reserves for fixed universal life (included in Future Policy Benefits) and
fixed deferred annuity contracts (included in Policyholders' Funds Left With
the Company) are equal to the fund value. The fund value is equal to cumulative
deposits less charges plus credited interest thereon, without reduction for
possible future penalties assessed on premature withdrawal. For guaranteed
interest options, the interest credited ranged from 4.00% to 5.85% in 1994 and
4.00% to 7.68% in 1993. For all other fixed options, the interest credited
ranged from 5.00% to 7.50% in 1994 and 5.00% to 9.25% in 1993.
Reserves for fixed annuity contracts in the annuity period and for future
amounts due under settlement options are computed actuarially using the
Progressive Annuity Table (modified), the Annuity Table for 1949, the 1971
Individual Annuity Mortality Table, the 1971 Group Annuity Mortality Table, the
1983 Individual Annuity Mortality Table and the 1983 Group Annuity Mortality
Table, at assumed interest rates ranging from 3.5% to 9.5%. Reserves relating
to contracts with life contingencies are included in Future Policy Benefits.
For other contracts, the reserves are reflected in Policyholders' Funds Left
With the Company.
F-9
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Unpaid claims for all lines of insurance include benefits for reported losses
and estimates of benefits for losses incurred but not reported.
Premiums, Charges Assessed Against Policyholders, Benefits and Expenses
Premiums are recorded as revenue when due for fixed ordinary life contracts.
Charges assessed against policyholders' funds for cost of insurance, surrender
charges, actuarial margin and other fees are recorded as revenue for universal
life and certain annuity contracts. Policy benefits and expenses are recorded
in relation to the associated premiums or gross profit so as to result in
recognition of profits over the expected lives of the contracts.
Separate Accounts
Assets held under variable universal life, variable life and variable annuity
contracts are segregated in Separate Accounts and are invested, as designated
by the contractholder or participant under a contract, in shares of Aetna
Variable Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna
Investment Advisers Fund, Inc., Aetna GET Fund, or The Aetna Series Fund Inc.,
which are managed by the Company or other selected mutual funds not managed by
the Company.
Separate Accounts assets and liabilities are carried at fair value except for
those relating to a guaranteed interest option which is offered through a
Separate Account. The assets of the Separate Account supporting the guaranteed
interest option are carried at an amortized cost of $149.7 million for 1994
(fair value $146.3 million) and $31.2 million for 1993 (fair value $33.3
million), since the Company bears the investment risk where the contract is
held to maturity. Reserves relating to the guaranteed interest option are
maintained at fund value and reflect interest credited at rates ranging from
4.5% to 8.38% in 1994 and from 4% to 9.45% in 1993. Separate Accounts assets
and liabilities are shown as separate captions in the Consolidated Balance
Sheets. Deposits, investment income and net realized and unrealized capital
gains (losses) of the Separate Accounts are not reflected in the Consolidated
Statements of Income (with the exception of realized capital gains (losses) on
the sale of assets supporting the guaranteed interest option). The Consolidated
Statements of Cash Flows do not reflect investment activity of the Separate
Accounts.
Federal Income Taxes
The Company is included in the consolidated federal income tax return of Aetna.
The Company is taxed at regular corporate rates after adjusting income reported
for financial statement purposes for certain items. Deferred income tax
benefits result from changes during the year in cumulative temporary
differences between the tax basis and book basis of assets and liabilities.
F-10
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
2. INVESTMENTS
Investments in debt securities available for sale as of December 31, 1994 were
as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obliga-
tions of U.S government agencies and
corporations........................ $ 1,396.1 $ 2.0 $ 84.2 $ 1,313.9
Obligations of states and political
subdivisions........................ 37.9 1.2 -- 39.1
U.S. Corporate securities:
Financial.......................... 2,216.9 3.8 109.4 2,111.3
Utilities.......................... 100.1 -- 7.9 92.2
Other.............................. 1,344.3 6.0 67.9 1,282.4
--------- ------ ------ ---------
Total U.S. Corporate securities.. 3,661.3 9.8 185.2 3,485.9
Foreign securities:
Government......................... 434.4 1.2 33.9 401.7
Financial.......................... 368.2 1.1 23.0 346.3
Utilities.......................... 204.4 2.5 9.5 197.4
Other.............................. 46.3 0.8 1.5 45.6
--------- ------ ------ ---------
Total Foreign securities......... 1,053.3 5.6 67.9 991.0
Residential mortgage-backed securi-
ties:
Residential pass-throughs.......... 627.1 81.5 5.0 703.6
Residential CMOs................... 2,671.0 32.9 139.4 2,564.5
--------- ------ ------ ---------
Total Residential mortgage-backed se-
curities............................ 3,298.1 114.4 144.4 3,268.1
Commercial/Multifamily mortgage-
backed securities................... 435.0 0.2 21.3 413.9
--------- ------ ------ ---------
Total Mortgage-backed securities. 3,733.1 114.6 165.7 3,682.0
Other loan-backed securities......... 696.1 0.2 16.8 679.5
--------- ------ ------ ---------
Total debt securities available for
sale................................ $10,577.8 $133.4 $519.8 $10,191.4
========= ====== ====== =========
</TABLE>
F-11
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Investments in debt securities available for sale as of December 31, 1993
were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
(millions)
<S> <C> <C> <C> <C>
U.S. Treasury securities and obliga-
tions of U.S. government agencies
and corporations.................... $ 827.2 $ 19.4 $ 6.6 $ 840.0
Obligations of states and political
subdivisions........................ 0.5 -- -- 0.5
U.S. Corporate securities:
Financial.......................... 983.3 49.2 0.7 1,031.8
Utilities.......................... 141.2 12.4 -- 153.6
Other.............................. 704.3 51.6 2.3 753.6
-------- ------ ----- ---------
Total U.S. Corporate securi-
ties.......................... 1,828.8 113.2 3.0 1,939.0
Foreign securities:
Government......................... 289.1 31.7 0.5 320.3
Financial.......................... 365.8 18.5 0.9 383.4
Utilities.......................... 206.2 28.9 0.1 235.0
Other.............................. 30.4 1.3 0.8 30.9
-------- ------ ----- ---------
Total Foreign securities....... 891.5 80.4 2.3 969.6
Residential mortgage-backed securi-
ties:
Residential pass-throughs.......... 1,125.0 218.1 1.7 1,341.4
Residential CMOs................... 4,868.7 318.1 1.1 5,185.7
-------- ------ ----- ---------
Total Residential mortgage-backed se-
curities............................ 5,993.7 536.2 2.8 6,527.1
Commercial/Multifamily mortgage-
backed securities................... 193.0 13.4 0.8 205.6
-------- ------ ----- ---------
Total Mortgage-backed securi-
ties.......................... 6,186.7 549.6 3.6 6,732.7
Other loan-backed securities......... 49.2 0.2 0.2 49.2
-------- ------ ----- ---------
Total debt securities available for
sale................................ $9,783.9 $762.8 $15.7 $10,531.0
======== ====== ===== =========
</TABLE>
At December 31, 1994 and 1993, net unrealized appreciation (depreciation) of
$(386.4) million and $747.1 million, respectively, on available for sale debt
securities included $(308.6) million and $582.8 million, respectively, related
to experience-rated contractholders, which were not included in shareholder's
equity.
F-12
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The amortized cost and fair value of debt securities for the year ended
December 31, 1994 are shown below by contractual maturity. Actual maturities
may differ from contractual maturities because securities may be restructured,
called, or prepaid.
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- ---------
(millions)
<S> <C> <C>
Due to mature:
One year or less................................... $ 103.9 $ 103.5
After one year through five years.................. 1,965.6 1,920.0
After five years through ten years................. 2,371.3 2,207.0
After ten years.................................... 1,707.8 1,599.4
Mortgage-backed securities......................... 3,733.1 3,682.0
Other loan-backed securities....................... 696.1 679.5
--------- ---------
Total............................................ $10,577.8 $10,191.4
========= =========
</TABLE>
At December 31, 1994 and 1993, debt securities carried at $7.0 million and $7.3
million, respectively, were on deposit as required by regulatory authorities.
The valuation reserve for mortgage loans was $3.1 million and $4.2 million at
December 31, 1994 and 1993, respectively. The carrying value of non-income
producing investments was $0.2 million and $34.3 million at December 31, 1994
and 1993, respectively.
Investments in a single issuer, other than obligations of the U.S. government,
with a carrying value in excess of 10% of the Company's shareholder's equity at
December 31, 1994 are as follows:
<TABLE>
<CAPTION>
AMORTIZED FAIR
DEBT SECURITIES COST VALUE
--------------- --------- ------
(millions)
<S> <C> <C>
General Electric Capital Corporation.................... $264.9 $252.1
General Motors Corporation.............................. 167.8 161.7
Society National Bank................................... 152.8 143.7
Ford Motor Company...................................... 144.7 142.3
Associates Corporation of North America................. 132.9 131.1
First Deposit Master Trust 1994-1A...................... 114.9 112.1
</TABLE>
The portfolio of debt securities at December 31, 1994 and 1993 included $318
million and $329 million, respectively, (3% of the debt securities for both
years) of investments that are considered "below investment grade". "Below
investment grade" securities are defined to be securities that carry a rating
below BBB-/Baa3, by Standard & Poors/Moody's Investor Services, respectively.
Of these below investment grade assets, $32 million and $39 million, at
December 31, 1994 and 1993, respectively, were investments that were purchased
at investment grade, but whose ratings have since been downgraded.
Included in residential mortgage-back securities are collateralized mortgage
obligations ("CMOs") with carrying values of $2.6 billion and $5.2 billion at
December 31, 1994 and 1993, respectively. The $2.6 billion decline in CMOs from
December 31, 1993 to December 31, 1994 was related primarily to sales
F-13
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
and principal repayments. CMO sales of $1.6 billion resulted in net realized
capital gains of $35 million of which $23 million was allocated to experience-
rated contracts. The Company's CMO exposure was reduced as a result of changes
in their risk and return characteristics and to better diversify the risk
profile of the Company's assets. The principal risks inherent in holding CMOs
are prepayment and extension risks related to dramatic decreases and increases
in interest rates whereby the CMOs would be subject to repayments of principal
earlier or later than originally anticipated. At December 31, 1994 and 1993,
approximately 85% and 93%, respectively, of the Company's CMO holdings
consisted of sequential and planned amortization class ("PAC") debt securities
which are subject to less prepayment and extension risk than other CMO
instruments. At December 31, 1994 and 1993, approximately 82% of the Company's
CMO holdings were collateralized by residential mortgage loans, on which the
timely payment of principal and interest was backed by specified government
agencies (e.g., GNMA, FNMA, FHLMC).
If due to declining interest rates, principal was to be repaid earlier than
originally anticipated, the Company could be affected by a decrease in
investment income due to the reinvestment of these funds at a lower interest
rate. Such prepayments may result in a duration mismatch between assets and
liabilities which could be corrected as cash from prepayments could be
reinvested at an appropriate duration to adjust the mismatch.
Conversely, if due to increasing interest rates, principal was to be repaid
slower than originally anticipated, the Company could be affected by a decrease
in cash flow which reduces the ability to reinvest expected principal
repayments at higher interest rates. Such slower payments may result in a
duration mismatch between assets and liabilities which could be corrected as
available cash flow could be reinvested at an appropriate duration to adjust
the mismatch.
At December 31, 1994 and 1993, 4% and 3%, respectively, of the Company's CMO
holdings consisted of interest-only strips (IOs) or principal-only strips
(POs). IOs receive payments of interest and POs receive payments of principal
on the underlying pool of mortgages. The risk inherent in holding POs is
extension risk related to dramatic increases in interest rates whereby the
future payments due on POs could be repaid much slower than originally
anticipated. The extension risks inherent in holding POs, PACs and sequentials
was mitigated by purchasing offsetting positions in IOs. During dramatic
increases in interest rates, IOs would generate more future payments than
originally anticipated.
The risk inherent in holding IOs is prepayment risk related to dramatic
decreases in interest rates whereby future IO cash flows could be much less
than originally anticipated and in some cases could be less than the original
cost of the IO. The risks inherent in IOs are mitigated by holding offsetting
positions in PO's, PACs, and sequentials. During dramatic decreases in interest
rates POs, PACs and sequentials would generate future cash flows much quicker
than originally anticipated.
In 1993, due to declining interest rates and prepayments on the underlying pool
of mortgages, the amortized cost on IO's was written down by $85.4 million. IO
writedowns of $4.7 million, net of $80.7 million allocated to experience-rated
contracts, were reflected in 1993 net realized capital gains (losses). In 1994,
due to increasing interest rates, unrealized gains on IO's increased from $0.5
million at December 31, 1993 to $17.8 million at December 31, 1994. Conversely,
unrealized gains on POs decreased from $36.7 million at December 31, 1993 to
$5.3 million at December 31, 1994. 1994 net realized gains (losses) included
net gains of $10.0 million as a result of sales of IOs and POs (including
amounts allocated to experience-rated contractholders).
F-14
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company did not use derivative instruments (ie., futures, forward
contracts, interest swaps, etc.) for hedging or any other purposes in 1994 or
1993.
The Company does hold investments in certain debt and equity securities with
derivative characteristics (ie., including the fact that their market value is
at least partially determined by, among other things, levels of or changes in
interest rates, prepayment rates, equity markets or credit ratings/spreads).
The amortized cost and fair value of these securities, included in the $10.8
billion investment portfolio, as of December 31, 1994 was as follows:
<TABLE>
<CAPTION>
AMORTIZED FAIR
COST VALUE
--------- --------
(millions)
<S> <C> <C>
Collateralized mortgage obligations (including
interest-only and principal-only strips)............ $2,671.0 $2,564.5
Treasury and agency strips:
Principal.......................................... 20.7 21.6
Interest........................................... 104.2 90.2
Mandatorily convertible preferred stock.............. 12.1 11.6
</TABLE>
Investments in available for sale equity securities were as follows:
<TABLE>
<CAPTION>
GROSS GROSS
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------- ---------- ---------- -------
(millions)
<S> <C> <C> <C> <C>
1994
Equity Securities...................... $ 230.5 $ 6.5 $7.9 $ 229.1
------- ----- ---- -------
1993
Equity Securities...................... $ 160.7 $12.0 $0.1 $ 172.6
------- ----- ---- -------
</TABLE>
At December 31, 1994 and 1993, 91% of outstanding policy loans had fixed
interest rates. The fixed interest rates for annuity policy loans ranged from
1% to 3% for individual annuity policies in both 1994 and 1993. The fixed
interest rates for individual life policy loans ranged from 5% to 8% in 1994
and 6% to 8% in 1993. The remaining outstanding policy loans had variable
interest rates averaging 8% in 1994 and 1993. Investment income from policy
loans was $11.5 million, $10.8 million and $9.5 million in 1994, 1993 and 1992,
respectively.
Off-Balance Sheet Financial Instruments
At December 31, 1993, the Company had $149.0 million in outstanding forward
commitments to purchase mortgage-backed securities at a specified future date
and at a specified price or yield. These instruments involve elements of market
risk whereby future changes in market prices may make a financial instrument
less valuable. However, the difference between the fair value at which the
commitments can be settled, and the contractual value of these securities, was
immaterial at December 31, 1993. There were no outstanding forward commitments
at December 31, 1994.
There were no material concentrations of off-balance sheet financial
instruments at December 31, 1994 and 1993.
F-15
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. CAPITAL GAINS AND LOSSES ON INVESTMENT OPERATIONS
Realized capital gains or losses are the difference between proceeds received
from investments sold or prepaid, and amortized cost. Net realized capital
gains as reflected in the Consolidated Statements of Income are after
deductions for net realized capital gains (losses) allocated to experience-
rated contracts of $(29.1) million, $(54.8) million and $36.1 million for the
years ended December 31, 1994, 1993, and 1992, respectively. Net realized
capital gains (losses) allocated to experience-rated contracts are deferred and
subsequently reflected in credited rates on an amortized basis. Net unamortized
gains (losses), reflected as a component of Policyholders' Funds Left With the
Company, were $(50.7) million and $(16.5) million at the end of December 31,
1994 and 1993, respectively.
Changes to the mortgage loan valuation reserve and writedowns on debt
securities are included in net realized capital gains (losses) and amounted to
$1.1 million and $(98.5) million, of which $0.8 million and $(91.5) million
were allocable to experience-rated contractholders, for the years ended
December 31, 1994 and 1993, respectively. There were no changes to the
valuation reserve or writedowns in 1992. The 1993 losses were primarily related
to writedowns of interest-only mortgage-backed securities to their fair value.
Net realized capital gains (losses) on investments, net of amounts allocated to
experience-rated contracts, were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- -----
(millions)
<S> <C> <C> <C>
Debt securities............................................ $1.0 $9.6 $12.9
Equity securities.......................................... 0.2 .1 0.5
Mortgage loans............................................. 0.3 (0.2) --
---- ---- -----
Pretax realized capital gains.............................. $1.5 $9.5 $13.4
==== ==== =====
After-tax realized capital gains........................... $1.0 $6.2 $ 8.8
==== ==== =====
</TABLE>
Gross gains of $26.6 million, $33.3 million and $13.9 million and gross losses
of $25.6 million, $23.7 million and $1.0 million were realized from the sales
of investments in debt securities in 1994, 1993 and 1992, respectively.
Changes in unrealized capital gains (losses), excluding changes in unrealized
capital gains (losses) related to experience-rated contracts, for the years
ended December 31, were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------ -----
(millions)
<S> <C> <C> <C>
Debt securities...................................... $(242.1) $164.3 $ --
Equity securities.................................... (13.3) 10.6 (0.1)
Limited partnership.................................. (1.8) -- --
------- ------ -----
(257.2) 174.9 (0.1)
Deferred federal income taxes (See Note 6)........... 46.3 61.2 --
------- ------ -----
Net change in unrealized capital gains (losses)...... $(303.5) $113.7 $(0.1)
======= ====== =====
</TABLE>
The net change in unrealized capital gains (losses) on debt securities in 1994
and 1993 resulted from the adoption of FAS No. 115. For the year ended December
31, 1992, debt securities were carried at
F-16
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
amortized cost. The unrecorded net appreciation for debt securities carried at
amortized cost (including amounts allocable to experience-rated contracts)
amounted to $612.4 million at December 31, 1992.
Net unrealized capital gains (losses) allocable to experience-rated contracts
of $(308.6) million and $582.8 million at December 31, 1994 and 1993,
respectively, are not included in shareholder's equity. These amounts are
reflected on the Consolidated Balance Sheet in policyholders' funds left with
the Company.
Shareholder's equity included the following unrealized capital gains (losses),
which are net of amounts allocable to experience-rated contractholders, at
December 31:
<TABLE>
<CAPTION>
1994 1993 1992
------- ------ ------
(millions)
<S> <C> <C> <C>
Debt securities
Gross unrealized capital gains.................... $ 27.4 $164.3 $ --
Gross unrealized capital losses................... (105.2) -- --
------- ------ ------
(77.8) 164.3 --
Equity securities
Gross unrealized capital gains.................... 6.5 12.0 2.0
Gross unrealized capital losses................... (7.9) (0.1) (0.7)
------- ------ ------
(1.4) 11.9 1.3
Limited Partnership
Gross unrealized capital gains.................... -- -- --
Gross unrealized capital losses................... (1.8) -- --
------- ------ ------
(1.8) -- --
Deferred federal income taxes (See Note 6).......... 108.0 61.7 0.5
------- ------ ------
Net unrealized capital gains (losses)............... $(189.0) $114.5 $ 0.8
======= ====== ======
</TABLE>
4. NET INVESTMENT INCOME
Sources of net investment income were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(millions)
<S> <C> <C> <C>
Debt securities.................................. $823.9 $828.0 $763.7
Preferred stock.................................. 3.9 2.3 2.8
Investment in affiliated mutual funds............ 5.2 2.9 3.2
Mortgage loans................................... 1.4 1.5 1.8
Policy loans..................................... 11.5 10.8 9.5
Reinsurance loan to affiliate.................... 51.5 53.3 56.7
Cash equivalents................................. 29.5 16.8 16.6
Other............................................ 6.7 7.7 6.4
------ ------ ------
Gross investment income.......................... 933.6 923.3 860.7
Less investment expenses......................... (16.4) (11.4) (12.6)
------ ------ ------
Net investment income............................ $917.2 $911.9 $848.1
====== ====== ======
</TABLE>
F-17
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Net investment income includes amounts allocable to experience-rated
contractholders of $677.1 million, $661.3 million and $604.0 million for the
years ended December 31, 1994, 1993 and 1992, respectively. Interest credited
to contractholders is included in Current and Future Benefits.
5. DIVIDEND RESTRICTIONS AND SHAREHOLDER'S EQUITY
The amount of dividends that may be paid to the shareholder in 1995 without
prior approval by the Insurance Commissioner of the State of Connecticut is
$70.9 million.
The Insurance Department of the State of Connecticut (the "Department")
recognizes as net income and shareholder's equity those amounts determined in
conformity with statutory accounting practices prescribed or permitted by the
Department, which differ in certain respects from generally accepted accounting
principles. Statutory net income was $70.9 million, $77.6 million and $62.5
million for the years ended December 31, 1994, 1993 and 1992, respectively.
Statutory shareholder's equity was $615.0 million and $574.4 million as of
December 31, 1994 and 1993, respectively.
As of December 31, 1994, the Company does not utilize any statutory accounting
practices which are not prescribed by insurance regulators that, individually
or in the aggregate, materially affect statutory shareholder's equity.
6. FEDERAL INCOME TAXES
The Company is included in the consolidated federal income tax return of Aetna.
Aetna allocates to each member an amount approximating the tax it would have
incurred were it not a member of the consolidated group, and credits the member
for the use of its tax saving attributes in the consolidated return.
As discussed in Note 1, the Company adopted FAS No. 109 as of January 1, 1992
resulting in a cumulative effect benefit of $22.8 million.
In August 1993, the Omnibus Budget Reconciliation Act of 1993 (OBRA) was
enacted which resulted in an increase in the federal corporate tax rate from
34% to 35% retroactive to January 1, 1993. The enactment of OBRA resulted in an
increase in the deferred tax liability of $3.4 million at date of enactment,
which is included in the 1993 deferred tax expense.
Components of income tax expense (benefits) were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(millions)
<S> <C> <C> <C>
Current taxes (benefits):
Income from operations............................. $ 78.7 $ 87.1 $ 68.0
Net realized capital gains......................... (33.2) 18.1 18.1
------ ------ ------
45.5 105.2 86.1
------ ------ ------
Deferred taxes (benefits):
Income from operations............................. (8.0) (14.2) (17.7)
Net realized capital gains......................... 33.7 (14.8) (13.5)
------ ------ ------
25.7 (29.0) (31.2)
------ ------ ------
Total............................................ $ 71.2 $ 76.2 $ 54.9
====== ====== ======
</TABLE>
F-18
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Income tax expense was different from the amount computed by applying the
federal income tax rate to income before federal income taxes for the following
reasons:
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
(millions)
<S> <C> <C> <C>
Income before federal income taxes................... $216.5 $219.1 $168.1
Tax rate............................................. 35% 35% 34%
------ ------ ------
Application of the tax rate.......................... 75.8 76.7 57.2
------ ------ ------
Tax effect of:
Excludable dividends............................... (8.6) (8.7) (6.4)
Tax reserve adjustments............................ 2.9 4.7 5.1
Reinsurance transaction............................ 1.9 (0.2) (0.5)
Tax rate change on deferred liabilities............ -- 3.7 --
Other, net......................................... (0.8) -- (0.5)
------ ------ ------
Income tax expense............................... $ 71.2 $ 76.2 $ 54.9
====== ====== ======
</TABLE>
The tax effects of temporary differences that give rise to deferred tax assets
and deferred tax liabilities under FAS No. 109 at December 31, 1994 and 1993
are presented below:
<TABLE>
<CAPTION>
1994 1993
------ ------
(millions)
<S> <C> <C>
Deferred tax assets:
Insurance reserves........................................... $211.5 $195.4
Net unrealized capital losses................................ 136.3 --
Investment losses not currently deductible................... 15.5 31.2
Postretirement benefits other than pensions.................. 8.4 8.6
Impairment reserves.......................................... -- 7.9
Other........................................................ 28.3 19.3
------ ------
Total gross assets......................................... 400.0 262.4
Less valuation allowance....................................... 136.3 --
------ ------
Deferred tax assets net of valuation......................... 263.7 262.4
Deferred tax liabilities:
Deferred policy acquisition costs............................ 385.2 355.2
Unrealized losses allocable to experience-rated contracts.... 108.0 --
Market discount.............................................. 3.6 5.4
Net unrealized capital gains................................. -- 61.7
Other........................................................ 0.4 1.6
------ ------
Total gross liabilities.................................... 497.2 423.9
------ ------
Net deferred tax liability................................. $233.5 $161.5
====== ======
</TABLE>
Net unrealized capital gains and losses are presented in shareholder's equity
net of deferred taxes. At December 31, 1994, $81.0 million of net unrealized
capital losses were reflected in shareholder's equity without deferred tax
benefits. For federal income tax purposes, capital losses are deductible only
against capital gains in the year of sale or during the carryback and
carryforward periods (three and five years, respectively). Due to the expected
full utilization of capital gains in the carryback period and
F-19
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the uncertainty of future capital gains, a valuation allowance of $28.3 million
related to the net unrealized capital losses has been reflected in
shareholder's equity. In addition, $308.6 million of net unrealized capital
losses related to experience-rated contracts are not reflected in shareholder's
equity since such losses, if realized, are allocable to contractholders.
However, the potential loss of tax benefits on such losses is the risk of the
Company and therefore would adversely affect the Company rather than the
contractholder. Accordingly, an additional valuation allowance of $108.0
million has been reflected in shareholder's equity as of December 31, 1994. Any
reversals of the valuation allowance are contingent upon the recognition of
future capital gains in the Company's federal income tax return or a change in
circumstances which causes the recognition of the benefits to become more
likely than not. Non-recognition of the deferred tax benefits on net unrealized
losses described above had no impact on net income for 1994, but has the
potential to adversely affect future results if such losses are realized.
The "Policyholders' Surplus Account," which arose under prior tax law, is
generally that portion of a life insurance company's statutory income that has
not been subject to taxation. As of December 31, 1983, no further additions
could be made to the Policyholders' Surplus Account for tax return purposes
under the Deficit Reduction Act of 1984. The balance in such account was
approximately $17.2 million at December 31, 1994. This amount would be taxed
only under certain conditions. No income taxes have been provided on this
amount since management believes the conditions under which such taxes would
become payable are remote.
The Internal Revenue Service ("Service") has completed examinations of the
consolidated federal income tax returns of Aetna through 1986. Discussions are
being held with the Service with respect to proposed adjustments. However,
management believes there are adequate defenses against, or sufficient reserves
to provide for, such adjustments. The Service has commenced its examinations
for the years 1987 through 1990.
7. BENEFIT PLANS
Employee Pension Plans -- The Company, in conjunction with Aetna, has non-
contributory defined benefit pension plans covering substantially all
employees. The plans provide pension benefits based on years of service and
average annual compensation (measured over sixty consecutive months of highest
earnings in a 120 month period). Contributions are determined using the Entry
Age Normal Cost Method and, for qualified plans subject to ERISA requirements,
are limited to the amounts that are currently deductible for tax reporting
purposes. The accumulated benefit obligation and plan assets are recorded by
Aetna. The accumulated plan assets exceed accumulated plan benefits. There has
been no funding to the plan for the years 1992 through 1994, and therefore, no
expense has been recorded by the Company.
Agent Pension Plans -- The Company, in conjunction with Aetna, has a non-
qualified pension plan covering certain agents. The plan provides pension
benefits based on annual commission earnings. The accumulated plan assets
exceed accumulated plan benefits. There has been no funding to the plan for the
years 1992 through 1994, and therefore, no expense has been recorded by the
Company.
Employee Postretirement Benefits -- In addition to providing pension benefits,
Aetna also provides certain postretirement health care and life insurance
benefits, subject to certain caps, for retired employees. Medical and dental
benefits are offered to all full-time employees retiring at age 50 with at
least 15 years of service or at age 65 with at least 10 years of service.
Retirees are required to contribute to the plans based on their years of
service with Aetna.
F-20
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Aetna implemented FAS No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions in 1992 on the immediate recognition basis. The
cumulative effect charge for all Aetna employees was reflected in Aetna's 1992
Statement of Income. Prior to the adoption of FAS No. 106, the cost of
postretirement benefits was charged to operations as payments were made. The
accumulated benefit obligation and plan assets are recorded by Aetna.
Accumulated postretirement benefits exceed plan assets.
The cost to the Company associated with the Aetna postretirement plans for
1994, 1993 and 1992 were $1.0 million, $0.8 million and $0.8 million,
respectively.
Agent Postretirement Benefits -- The Company, in conjunction with Aetna, also
provides certain postemployment health care and life insurance benefits for
certain agents. The impact of recognizing the liability for agent costs was a
cumulative effect adjustment of $13.2 million (net of deferred taxes of $6.8
million) and is reported in the 1992 Consolidated Statement of Income.
The cost to the Company associated to the agents' postretirement plans for
1994, 1993 and 1992 were $0.7 million, $0.6 million and $0.7 million,
respectively.
Incentive Savings Plan -- Substantially all employees are eligible to
participate in a savings plan under which designated contributions, which may
be invested in common stock of Aetna or certain other investments, are matched,
up to 5% of compensation, by Aetna. Pretax charges to operations for the
incentive savings plan were $3.3 million, $3.1 million and $2.8 million in
1994, 1993 and 1992, respectively.
Stock Plans -- Aetna has a stock incentive plan that provides for stock options
and deferred contingent common stock or cash awards to certain key employees.
Aetna also has a stock option plan under which executive and middle management
employees of Aetna may be granted options to purchase common stock of Aetna at
the market price on the date of grant or, in connection with certain business
combinations, may be granted options to purchase common stock on different
terms. The cost to the Company associated to the Aetna stock plans for 1994 and
1993 was $2.3 million, $0.4 million, respectively. The cost for 1992 was
immaterial.
8. RELATED PARTY TRANSACTIONS
The Company is compensated by the Separate Accounts for bearing mortality and
expense risks pertaining to variable life and annuity contracts. Under the
insurance contracts, the Separate Accounts pay the Company a daily fee which,
on an annual basis, ranges, depending on the product, from .70% to 1.80% of
their average daily net assets. The Company also receives fees from the
variable life and annuity mutual funds and The Aetna Series Fund for serving as
investment adviser. Under the advisory agreements, the Funds pay the Company a
daily fee which, on an annual basis, ranges, depending on the fund, from .25%
to 1.00% of their average daily net assets. The advisory agreements also call
for the variable funds to pay their own administrative expenses and for The
Aetna Series Fund to pay certain administrative expenses. The Company also
receives fees (expressed as a percentage of the average daily net assets) from
The Aetna Series Fund for providing administration shareholder services and
promoting sales. The amount of compensation and fees received from the Separate
Accounts and Funds, included in Charges Assessed Against Policyholders,
amounted to $104.6 million, $93.6 million and $80.5 million in 1994, 1993 and
1992, respectively. The Company may waive advisory fees at its discretion.
F-21
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company may, from time to time, make reimbursements to a Fund for some or
all of its operating expenses. Reimbursement arrangements may be terminated at
any time without notice.
Since 1981, all domestic individual non-participating life insurance of Aetna
and its subsidiaries has been issued by the Company. Effective December 31,
1988, the Company entered into a reinsurance agreement with Aetna Life
Insurance Company ("Aetna Life") in which substantially all of the non-
participating individual life and annuity business written by Aetna Life prior
to 1981 was assumed by the Company. A $108.0 million commission, paid by the
Company to Aetna Life in 1988, was capitalized as deferred policy acquisition
costs. The Company maintained insurance reserves of $690.3 million and $711.0
million as of December 31, 1994 and 1993, respectively, relating to the
business assumed. In consideration for the assumption of this business, a loan
was established relating to the assets held by Aetna Life which support the
insurance reserves. The loan is being reduced in accordance with the decrease
in the reserves. The fair value of this loan was $630.3 million and $685.8
million as of December 31, 1994 and 1993, respectively, and is based upon the
fair value of the underlying assets. Premiums of $32.8 million, $33.3 million
and $36.8 million and current and future benefits of $43.8 million, $55.4
million and $47.2 million were assumed in 1994, 1993 and 1992, respectively.
Investment income of $51.5 million, $53.3 million and $56.7 million was
generated from the reinsurance loan to affiliate in 1994, 1993 and 1992,
respectively. Net income of approximately $25.1 million, $13.6 million and
$21.7 million resulted from this agreement in 1994, 1993 and 1992,
respectively.
On December 16, 1988, the Company assumed $25.0 million of premium revenue from
Aetna Life for the purchase and administration of a life contingent single
premium variable payout annuity contract. In addition, the Company also is
responsible for administering fixed annuity payments that are made to
annuitants receiving variable payments. Reserves of $24.2 million and $27.8
million were maintained for this contract as of December 31, 1994 and 1993,
respectively.
Effective February 1, 1992, the Company increased its retention limit per
individual life to $2.0 million and entered into a reinsurance agreement with
Aetna Life to reinsure amounts in excess of this limit, up to a maximum of $8.0
million on any new individual life business, on a yearly renewable term basis.
Premium amounts related to this agreement for 1994, 1993 and 1992 were
immaterial.
Effective December 31, 1992, the Company entered into an assumption reinsurance
agreement with Aetna Life to reinsure a block of approximately 3,500 life
contingent, period certain and deferred lump sum annuities (totaling $175.5
million in premium) issued by the Company to Aetna Casualty to fund its
obligations under structured settlement agreements. The negotiated price
recognized the sale of future profits and included consideration to ALIAC for
the continued administration of the reinsured contracts on behalf of, and in
the name of, Aetna Life.
The Company received no capital contributions in 1994, 1993 or 1992.
Premiums due and other receivables include $27.6 million and $9.8 million due
from affiliates in 1994 and 1993, respectively. Other liabilities include $27.9
million and $26.1 million due to affiliates for 1994 and 1993, respectively.
Substantially all of the administrative and support functions of the Company
are provided by Aetna and its affiliates. The financial statements reflect
allocated charges for these services based upon measures appropriate for the
type and nature of service provided.
F-22
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. REINSURANCE
The Company utilizes indemnity reinsurance agreements to reduce its exposure to
large losses in all aspects of its insurance business. Such reinsurance permits
recovery of a portion of losses from reinsurers, although it does not discharge
the primary liability of the Company as direct insurer of the risks reinsured.
The Company evaluates the financial strength of potential reinsurers and
continually monitors the financial condition of reinsurers. Only those
reinsurance recoverables deemed probable of recovery are reflected as assets on
the Company's Consolidated Balance Sheets.
The following table includes premium amounts ceded/assumed to/from affiliated
companies as discussed in Note 8 above.
<TABLE>
<CAPTION>
CEDED TO ASSUMED
DIRECT OTHER FROM OTHER NET
AMOUNT COMPANIES COMPANIES AMOUNT
------ --------- ---------- ------
(millions)
<S> <C> <C> <C> <C>
1994
Premiums:
Life Insurance............................ $ 25.8 $ 6.0 $32.8 $ 52.6
Accident and Health Insurance............. 10.8 9.3 -- 1.5
Annuities................................. 69.9 -- 0.2 70.1
------ ----- ----- ------
Total earned premiums................... $106.5 $15.3 $33.0 $124.2
====== ===== ===== ======
1993
Premiums:
Life Insurance............................ $ 20.9 $ 5.6 $33.3 $ 48.6
Accident and Health Insurance............. 14.4 12.9 -- 1.5
Annuities................................. 31.3 -- 0.7 32.0
------ ----- ----- ------
Total earned premiums................... $ 66.6 $18.5 $34.0 $ 82.1
====== ===== ===== ======
1992
Premiums:
Life Insurance............................ $ 20.8 $ 5.2 $36.8 $ 52.4
Accident and Health Insurance............. 15.1 13.7 -- 1.4
Annuities................................. 18.4 -- 0.3 18.7
------ ----- ----- ------
Total earned premiums................... $ 54.3 $18.9 $37.1 $ 72.5
====== ===== ===== ======
</TABLE>
10. FINANCIAL INSTRUMENTS
The carrying values and estimated fair values of the Company's financial
instruments at December 31, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1994 1993
------------------- -------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
--------- --------- --------- ---------
(millions)
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents............. $ 623.3 $ 623.3 $ 536.1 $ 536.1
Short-term investments................ 98.0 98.0 22.6 22.6
Debt securities....................... 10,191.4 10,191.4 10,531.0 10,531.0
Equity securities..................... 229.1 229.1 172.6 172.6
Limited partnership................... 24.4 24.4 -- --
Mortgage loans........................ 9.9 9.9 10.1 10.1
Liabilities:
Investment contract liabilities:
With a fixed maturity............... 826.7 833.5 733.3 795.6
Without a fixed maturity............ 8,074.9 7,870.4 8,196.4 8,099.3
</TABLE>
F-23
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Fair value estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument, such as
estimates of timing and amount of expected future cash flows. Such estimates do
not reflect any premium or discount that could result from offering for sale at
one time the Company's entire holdings of a particular financial instrument,
nor do they consider the tax impact of the realization of unrealized gains or
losses. In many cases, the fair value estimates cannot be substantiated by
comparison to independent markets, nor can the disclosed value be realized in
immediate settlement of the instrument. In evaluating the Company's management
of interest rate and liquidity risk, the fair values of all assets and
liabilities should be taken into consideration, not only those above.
The following valuation methods and assumptions were used by the Company in
estimating the fair value of the above financial instruments:
Short-term instruments: Fair values are based on quoted market prices or dealer
quotations. Where quoted market prices are not available, the carrying amounts
reported in the Consolidated Balance Sheets approximates fair value. Short-term
instruments have a maturity date of one year or less and include cash and cash
equivalents, and short-term investments.
Debt and equity securities: Fair values are based on quoted market prices or
dealer quotations. Where quoted market prices or dealer quotations are not
available, fair value is estimated by using quoted market prices for similar
securities or discounted cash flow methods.
Mortgage loans: Fair value is estimated by discounting expected mortgage loan
cash flows at market rates which reflect the rates at which similar loans would
be made to similar borrowers. The rates reflect management's assessment of the
credit quality and the remaining duration of the loans. The fair value estimate
of mortgage loans of lower quality, including problem and restructured loans,
is based on the estimated fair value of the underlying collateral.
Investment contract liabilities (included in Policyholders' Funds Left With the
Company): With a fixed maturity: Fair value is estimated by discounting cash
flows at interest rates currently being offered by, or available to, the
Company for similar contracts.
Without a fixed maturity: Fair value is estimated as the amount payable to the
contractholder upon demand. However, the Company has the right under such
contracts to delay payment of withdrawals which may ultimately result in paying
an amount different than that determined to be payable on demand.
11. SEGMENT INFORMATION
Effective December 31, 1994, the Company's operations, which previously were
reported in total, will now be reported through two major business segments:
Life Insurance and Financial Services. The Life Insurance segment markets most
types of life insurance including universal life, interest-sensitive whole
life, and term insurance. These products are offered primarily to individuals,
small businesses, employer-sponsored groups and executives of Fortune 2000
companies. The Financial Services segment markets and services individual and
group annuity contracts which offer a variety of funding and distribution
options for personal and employer-sponsored retirement plans that qualify for
tax deferral under sections 401(k) for corporations, 403(b) for hospitals and
educational institutions, 408 for individual retirement accounts, and 457 for
state and local governments and tax exempt healthcare organizations (the
"deferred compensation market"), of the Internal Revenue Code. These contracts
may be immediate or deferred. These products are offered primarily to
individuals, pension plans, small businesses and employer-sponsored groups.
F-24
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A WHOLLY OWNED SUBSIDIARY OF AETNA LIFE AND CASUALTY COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONCLUDED)
Summarized financial information for the Company's principal operations was as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
(millions)
<S> <C> <C> <C>
Revenue:
Life insurance................................. $ 386.1 $ 371.7 $ 363.6
Financial services............................. 946.1 892.8 812.5
--------- --------- ---------
Total revenue................................ $ 1,332.2 $ 1,264.5 $ 1,176.1
========= ========= =========
Income from continuing operations before income
taxes and cumulative effect adjustments:
Life insurance................................. $ 96.8 $ 98.0 $ 74.6
Financial services............................. 119.7 121.1 93.5
--------- --------- ---------
Total income from continuing operations be-
fore income taxes and cumulative effect ad-
justments................................... $ 216.5 $ 219.1 $ 168.1
Net income:
Life insurance................................. $ 59.8 $ 56.1 $ 45.6
Financial services............................. 85.5 86.8 67.6
--------- --------- ---------
Income before cumulative effect adjustments.. $ 145.3 $ 142.9 $ 113.2
--------- --------- ---------
Cumulative effect adjustments................ -- -- 9.6
--------- --------- ---------
Net income....................................... $ 145.3 $ 142.9 $ 122.8
========= ========= =========
<CAPTION>
1994 1993 1992
--------- --------- ---------
(millions)
<S> <C> <C> <C>
Assets under management, at fair value:
Life insurance................................. $ 2,175.2 $ 2,180.1 $ 1,973.1
Financial services............................. 17,791.9 16,600.5 13,644.3
--------- --------- ---------
Total assets under management................ $19,967.1 $18,780.6 $15,617.4
========= ========= =========
</TABLE>
F-25
<PAGE>
- -------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT C
- -------------------------------------------------------------------------------
STATE UNIVERSITY OF NEW YORK
(SUNY) DEFINED CONTRIBUTION PLAN
DATED MAY 1, 1995
[LOGO OF VARIABLE ANNUITY ACCOUNT C APPEARS HERE]
[LOGO OF AETNA LIFE INSURANCE APPEARS HERE]
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Aetna Processing Office
P.O. Box 12894, Albany, NY 12212-2894
Telephone: 1-800-677-4636
81216-1 (5/95)
[LOGO OF RECYCLED PAPER APPEARS HERE]
<PAGE>
VARIABLE ANNUITY ACCOUNT C
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- -------------------------------------------
(a) Financial Statements:
(1) Included in Part A:
Condensed Financial Information
(2) Included in Part B:
Financial Statements of Variable Annuity Account C:
- Independent Auditors' Report
- Statement of Assets and Liabilities as of December 31, 1994
- Statement of Operations for the year ended December 31, 1994
- Statements of Changes in Net Assets for the years ended
December 31, 1994 and 1993
- Notes to Financial Statements
Financial Statements of the Depositor:
- Independent Auditors' Report
- Consolidated Balance Sheets as of December 31, 1994 and 1993
- Consolidated Statements of Income for the years ended
December 31, 1994, 1993 and 1992
- Consolidated Statements of Changes in Shareholder's Equity for
the years ended December 31, 1994, 1993 and 1992
- Consolidated Statements of Cash Flows for the years ended
December 31, 1994, 1993 and 1992
- Notes to Consolidated Financial Statements
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Life Insurance and
Annuity Company establishing Variable Annuity Account C/1/
(2) Not applicable
(3.1) Form of Broker-Dealer Agreement/2/
(3.2) Alternative Form of Wholesaling Agreement and related Selling
Agreement/2/
(4.1) Form of Variable Annuity Contract (G-401-IB(X/M)/3/
(4.2) Form of Variable Annuity Contract (G-CDA-IB(XC/SM)/3/
(5) Form of Variable Annuity Contract Application (300-MOP-IB)/3/
(6) Certificate of Incorporation and By-Laws of Depositor/4/
(7) Not applicable
(8.1) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Alger American Fund and Fred Alger Management,
Inc. dated September 1, 1993/2/
(8.2) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Calvert Asset Management Company (Calvert
Responsibly Invested
<PAGE>
Balanced Portfolio formerly Calvert Socially Responsible Series)
dated March 13, 1989 and amended December 12, 1993/5/
(8.3) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Fidelity Distributors Corporation dated
February 1, 1994 (Variable Insurance Products Fund)/6/
(8.4) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Fidelity Distributors Corporation dated
February 1, 1994 (Variable Insurance Products Fund II)/6/
(8.5) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Franklin Advisers, Inc. dated January 31,
1989/7/
(8.6) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994 and
amended June 15, 1994/8/
(8.7) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Lexington Management Corporation regarding
Natural Resources Trust dated December 1, 1988 and amended
February 11, 1991/5/
(8.8) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Lexington Emerging Markets Fund, Inc. and
Lexington Management Corporation dated April 28, 1994/9/
(8.9) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Advisers Management Trust (now Neuberger &
Berman Advisers Management Trust) dated April 14, 1989/2/
(8.10) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Scudder Variable Life Investment Fund dated
April 27, 1992 and amended February 19, 1993 and August 13,
1993/10/
(8.11) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Investors Research Corporation and TCI
Portfolios, Inc. dated July 29, 1992 and amended December 22, 1992
and June 1, 1994/10/
(9) Opinion of Counsel/11/
(10.1) Consent of Independent Auditors
(10.2) Consent of Counsel
(11) Not applicable
(12) Not applicable
(13) Computation of Performance Data/3/
(14) Financial Data Schedule (See Exhibit 27)
(15.1) Powers of Attorney/12/
(15.2) Authorization for Signatures/13/
1. Incorporated by reference to Registration Statement on Form N-4 (File
No. 2-52449) filed on February 28, 1986.
2. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75996) filed on April 21, 1994.
<PAGE>
3. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-81216) filed on April 28, 1995.
4. Incorporated by reference to Post-Effective Amendment No. 58 to Registration
Statement on Form N-4 (File No. 2-52449) filed on February 28, 1994.
5. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 33-75978) filed on March 24, 1995.
6. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75978) filed on April 25, 1994.
7. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75990) filed on April 25, 1994.
8. Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement on Form N-4 (File No. 33-75960) filed on August 9, 1994.
9. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-75978) filed on August 24, 1994.
10. Incorporated by reference to Registration Statement on Form N-4 (File
No. 33-88720) filed on January 20, 1995.
11. Incorporated by reference to Registrant's 24f-2 Notice for fiscal year ended
December 31, 1994 filed on February 28, 1995.
12. Incorporated by Reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-75996) filed on February 23, 1995.
13. Incorporated by Reference to Post-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 33-91846) filed on August 16, 1995.
<PAGE>
Item 25. Directors and Officers of the Depositor
- -------------------------------------------------
Name and Principal
Business Address* Positions and Offices with Depositor
- ----------------- ------------------------------------
Daniel P. Kearney Director and President
Gary G. Benanav Director
Christopher J. Burns Director and Senior Vice President, Life
Laura R. Estes Director and Senior Vice President, ALIAC Pensions
Shaun P. Mathews Director and Senior Vice President, Strategic
Markets and Products
Scott A. Striegel Director and Senior Vice President, Annuity
James C. Hamilton Director, Vice President and Treasurer
Dominick J. Agostino Director and Senior Vice President and Chief
Financial Officer
John Y. Kim Director and Senior Vice President, ALIAC
Investments
Robert E. Broatch Senior Vice President and Corporate Controller
Zoe Baird Senior Vice President and General Counsel
Fred J. Franklin Vice President and Chief Compliance Officer
Susan E. Schechter Corporate Secretary and Counsel
* The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
Item 26. Persons Controlled by or Under Common Control with the Depositor or
-------------------------------------------------------------------
Registrant
----------
Incorporated herein by reference to Exhibit 24(c) to Registration Statement
on Form N-4 (File No. 33-88720) filed on January 20, 1995.
<PAGE>
Item 27. Number of Contract Owners
- -----------------------------------
As of June 30, 1995, there were 537,272 contract owners of variable annuity
contracts funded through Account C.
Item 28. Indemnification
- -------------------------
Reference is hereby made to Section 33-320a of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and officers of
Connecticut corporations. The statute provides in general that Connecticut
corporations shall indemnify their officers, directors, employees, agents, and
certain other defined individuals against judgments, fines, penalties, amounts
paid in settlement and reasonable expenses actually incurred in connection with
proceedings against the corporation. The corporation's obligation to provide
such indemnification does not apply unless (1) the individual is successful on
the merits in the defense of any such proceeding; or (2) a determination is made
(by a majority of the board of directors not a party to the proceeding by
written consent; by independent legal counsel selected by a majority of the
directors not involved in the proceeding; or by a majority of the shareholders
not involved in the proceeding) that the individual acted in good faith and in
the best interests of the corporation; or (3) the court, upon application by the
individual, determines in view of all the circumstances that such person is
reasonably entitled to be indemnified.
C.G.S. Section 33-320a provides an exclusive remedy: a Connecticut
corporation cannot indemnify a director or officer to an extent either greater
or less than that authorized by the statute, e.g., pursuant to its certificate
of incorporation, bylaws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Consistent with the statute, Aetna Life and Casualty Company has procured
insurance from Lloyd's of London and several major United States excess insurers
for its directors and officers and the directors and officers of its
subsidiaries, including the Depositor, which supplements the indemnification
rights provided by C.G.S. Section 33-320a to the extent such coverage does not
violate public policy.
Item 29. Principal Underwriter
- -------------------------------
(a) In addition to serving as the principal underwriter for the Registrant,
Aetna Life Insurance and Annuity Company (ALIAC) also acts as the
principal underwriter for Variable Life Account B and Variable Annuity
Account B (separate accounts of ALIAC registered as unit investment
trusts), and Separate Account I (a separate account of Aetna Insurance
Company of America registered as a unit investment trust). Additionally,
ALIAC is the investment adviser for Aetna Variable Fund, Aetna Income
Shares, Aetna Variable Encore Fund, Aetna Investment Advisers Fund,
Inc., Aetna GET Fund, Aetna Series Fund, Inc. and Aetna Generation
Portfolios, Inc. ALIAC is also the depositor of Variable Life Account B
and Variable Annuity Account B.
<PAGE>
(b) See Item 25 regarding the Depositor.
(c) Compensation as of December 31, 1994:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage
Underwriter Commissions or Annuitization Commissions Compensation*
- ----------- ----------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Aetna Life $1,644,753 $62,552,321
Insurance and
Annuity
Company
</TABLE>
* Compensation shown in column 5 includes deductions for mortality and expense
risk guarantees and contract charges assessed to cover costs incurred in the
sales and administration of the contracts issued under Account C.
Item 30. Location of Accounts and Records
- ------------------------------------------
All records concerning contract owners of Variable Annuity Account C are
located at the home office of the Depositor as follows:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
Item 31. Management Services
- -----------------------------
Not applicable
Item 32. Undertakings
- ----------------------
Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement on
Form N-4 as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than
sixteen months old for as long as payments under the variable annuity
contracts may be accepted;
(b) to include as part of any application to purchase a contract offered by
a prospectus which is part of this registration statement on Form N-4, a
space that an applicant can check to request a Statement of Additional
Information; and
<PAGE>
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.
(d) The Company hereby represents that it is relying upon and complies with
the provisions of Paragraphs (1) through (4) of the SEC Staff's No-
Action Letter dated November 22, 1988 with respect to language
concerning withdrawal restrictions applicable to plans established
pursuant to Section 403(b) of the Internal Revenue Code. See American
Counsel of Life Insurance; SEC No-Action Letter, [1989 Transfer Binder]
Fed. SEC. L. Rep. (CCH) 78,904 at 78,523 (November 22, 1988).
(e) Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, and the Investment
Company Act of 1940, the Registrant, Variable Annuity Account C of Aetna Life
Insurance and Annuity Company, certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of this Post-Effective Amendment
No. 2 to its Registration Statement on Form N-4 (File No. 33-81216) and has duly
caused this Post-Effective Amendment No. 2 to its Registration Statement on Form
N-4 (File No. 33-81216) to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Hartford, State of Connecticut, on the 18th day
of August, 1995.
VARIABLE ANNUITY ACCOUNT C OF AETNA LIFE
INSURANCE AND ANNUITY COMPANY
(Registrant)
By: AETNA LIFE INSURANCE AND ANNUITY COMPANY
(Depositor)
By: Daniel P. Kearney*
-----------------------------------------------
Daniel P. Kearney
President
As required by the Securities Act of 1933, as amended, this Post-Effective
Amendment No. 2 to the Registration Statement on Form N-4 (File No. 33-81216)
has been signed by the following persons in the capacities and on the dates
indicated.
Signature Title Date
- --------- ----- ----
Daniel P. Kearney* Director and President )
- --------------------------- (Principal Executive Officer) )
Daniel P. Kearney )
)
Dominick J. Agostino* Director, Senior Vice President and )
- --------------------------- Chief Financial )
Dominick J. Agostino )
)
James C. Hamilton* Officer (Principal Accounting and )
- --------------------------- Financial Officer) )
James C. Hamilton )
) August
Gary G. Benanav* ) 21, 1995
- --------------------------- Director )
Gary G. Benanav )
)
Christopher J. Burns* )
- --------------------------- Director )
Christopher J. Burns )
<PAGE>
Laura R. Estes* )
- --------------------------- Director )
Laura R. Estes )
)
John Y. Kim* )
- --------------------------- Director )
John Y. Kim )
)
Shaun P. Mathews* )
- --------------------------- Director )
Shaun P. Mathews )
)
Scott A. Striegel* )
- --------------------------- Director )
Scott A. Striegel
By: /s/ Julie E. Rockmore
--------------------------------------
*Julie E. Rockmore
Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT C
EXHIBIT INDEX
Exhibit No. Exhibit Page
- ----------- ------- ----
99-B.1 Resolution of the Board of Directors of *
Aetna Life Insurance and Annuity Company
establishing Variable Annuity Account C
99-B.3.1 Form of Broker-Dealer Agreement *
99-B.3.2 Alternative Form of Wholesaling Agreement *
and related Selling Agreement
99-B.4.1 Form of Variable Annuity Contract *
(G-401-IB(X/M)
99-B.4.2 Form of Variable Annuity Contract *
(G-CDA-IB(XC/SM)
99-B.5 Form of Variable Annuity Contract *
Application (300-MOP-IB)
99-B.6 Certificate of Incorporation and By-Laws of *
Depositor
99-B.8.1 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company, Alger
American Fund and Fred Alger Management,
Inc. dated September 1, 1993
99-B.8.2 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company and
Calvert Asset Management Company (Calvert
Responsibly Invested Balanced Portfolio
formerly Calvert Socially Responsible
Series) dated March 13, 1989 and amended
December 12, 1993
99-B.8.3 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company and
Fidelity Distributors Corporation dated
February 1, 1994 (Variable Insurance
Products Fund)
99-B.8.4 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company and
Fidelity Distributors Corporation dated
February 1, 1994 (Variable Insurance
Products Fund II)
99-B.8.5 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company and
Franklin Advisers, Inc. dated January 31,
1989
<PAGE>
99-B.8.6 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company and Janus
Aspen Series dated April 19, 1994 and
amended June 15, 1994
99-B.8.7 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company and
Lexington Management Corporation regarding
Natural Resources Trust dated December 1,
1988 and amended February 11, 1991
99-B.8.8 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company,
Lexington Emerging Markets Fund, Inc. and
Lexington Management Corporation dated April
28, 1994
99-B.8.9 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company and
Advisers Management Trust (now Neuberger &
Berman Advisers Management Trust) dated
April 14, 1989
99-B.8.10 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company and
Scudder Variable Life Investment Fund dated
April 27, 1992 and amended February 19, 1993
and August 13, 1993
99-B.8.11 Fund Participation Agreement between Aetna *
Life Insurance and Annuity Company,
Investors Research Corporation and TCI
Portfolios, Inc. dated July 29, 1992 and
amended December 22, 1992 and June 1, 1994
99-B.9 Opinion of Counsel *
99-B.10.1 Consent of Independent Auditors ------
99-B.10.2 Consent of Counsel ------
99-B.13 Computation of Performance Data ------
99-B.15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
27 Financial Data Schedule
------
*Incorporated by reference
<PAGE>
Consent of Independent Auditors
The Board of Directors of Aetna Life Insurance and Annuity Company
and Contract Owners of Aetna Variable Annuity Account C:
We consent to the use of our reports dated January 31, 1995 and February 7, 1995
included herein and to the references to our Firm under the captions "CONDENSED
FINANCIAL INFORMATION" in the Prospectus and "INDEPENDENT AUDITORS" in the
Statement of Additional Information.
Our report dated February 7, 1995 refers to a change in 1993 in the Company's
methods of accounting for certain investments in debt and equity securities and
reinsurance contracts, and a change in 1992 in the Company's methods of
accounting for income taxes and postretirement benefits other than pensions.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG Peat Marwick LLP
Hartford, Connecticut
August 18, 1995
<PAGE>
[LETTERHEAD OF AETNA APPEARS HERE]
[LOGO OF AETNA APPEARS HERE]
August 21, 1995
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
Dear Sir or Madam:
As Counsel of Aetna Life Insurance and Annuity Company (the "Company"), I hereby
consent to the use of my opinion dated February 27, 1995 (incorporated herein by
reference to the 24f-2 Notice for the fiscal year ended December 31, 1994 filed
on behalf of Variable Annuity Account C of Aetna Life Insurance and Annuity
Company on February 28, 1995) as an exhibit to this Post-Effective Amendment No.
2 to Registration Statement on Form N-4 (File No. 33-81216) and to my being
named under the caption "Legal Matters" therein.
Sincerely,
/s/ Susan E. Bryant
Susan E. Bryant
Counsel
Aetna Life Insurance and Annuity Company
<PAGE>
<TABLE>
Aetna Variable Fund - Aetna Income Shares - Aetna Variable Encore Fund suny - wwo
- ---------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
VQPT3C AQPT3C EQPT3C
Nom. 0.00 M.F. (0.000%) Nom. 0.00 M.F. (0.000%) Nom. 0.00 M.F. (0.000%)
# of Years --------------------------- --------------------------- ---------------------------
Ending 12-94 DSC Value IRR MF IRR Value IRR MF IRR Value IRR MF IRR
- ------------ ---- --------- ------ ------ --------- ------ ------ --------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0.0% 978.07 -2.19% -2.19% 950.10 -4.99% -4.99% 1028.02 2.80% 2.80%
3 0.0% 1086.38 2.80% 2.80% 1091.99 2.98% 2.98% 1072.72 2.37% 2.37%
5 0.0% 1383.26 6.70% 6.70% 1388.00 6.78% 6.78% 1208.54 3.86% 3.86%
10 0.0% 3167.70 12.22% 12.22% 2343.12 8.89% 8.89% 1653.01 5.15% 5.15%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
VQPT3C AQPT3C EQPT3C
VQPT3C.UV AQPT3C.UV EQPT3C.UV
<S> <C> <C> <C>
12-99-84 33.323321 17.145161 21.942246
12-99-89 76.311237 28.943288 30.012013
12-99-91 97.164976 36.789117 33.811896
12-99-93 107.924961 42.283236 35.282195
12-99-94 105.558264 40.173168 36.270739
</TABLE>
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
Aetna Investment Advisers Fund suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
IQPT3C
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 984.11 -1.59% -1.59%
3 0.0% 1121.91 3.91% 3.91%
5 0.0% 1369.02 6.48% 6.48%
From 06-23-89 0.0% 1428.84 6.67% 6.67%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
IQPT3C
IQPT3C.UV
<S> <C>
06-23-89 10.000000 i
12-99-89 10.436961
12-99-91 12.735850
12-99-93 14.519151
12-99-94 14.288435 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
Alger American Growth suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALGGINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1001.86 0.19% 0.19%
3 0.0% 1344.80 10.38% 10.38%
5 0.0% 1917.48 13.91% 13.91%
From 01-08-89 0.0% 2350.70 15.37% 15.37%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
ALGGINST
ALGGINST.UV
<S> <C>
01-08-89 3.698184 i
12-99-89 4.533711
12-99-91 6.464415
12-99-93 8.677182
12-99-94 8.693321 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
Alger Small Capitalization Portfolio suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
ALINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 944.52 -5.55% -5.55%
3 0.0% 1080.84 2.63% 2.63%
5 0.0% 1805.10 12.54% 12.54%
From 09-21-88 0.0% 2824.05 17.99% 17.99%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
ALINST
ALINST.UV
<S> <C>
09-21-88 3.368489 i
12-99-89 5.269946
12-99-91 8.801243
12-99-93 10.071500
12-99-94 9.512776 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
Calvert Responsibly Invested Balanced Portfolio suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
CAINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 955.66 -4.43% -4.43%
3 0.0% 1083.47 2.71% 2.71%
5 0.0% 1323.88 5.77% 5.77%
From 09-99-86 0.0% 1959.26 8.49% 8.49%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
CAINST
CAINST.UV
<S> <C>
09-99-86 7.140673 i
12-99-89 10.567754
12-99-91 12.912682
12-99-93 14.639644
12-99-94 13.990467 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
Fidelity Asset Manager suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FDINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 927.72 -7.23% -7.23%
3 0.0% 1225.66 7.02% 7.02%
5 0.0% 1563.34 9.35% 9.35%
From 09-06-89 0.0% 1569.78 8.85% 8.85%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
FDINST
FDINST.UV
<S> <C>
09-06-89 6.018143 i
12-99-89 6.042943
12-99-91 7.707836
12-99-93 10.183211
12-99-94 9.447153 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
Fidelity Equity Income suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FDEIINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1056.63 5.66% 5.66%
3 0.0% 1424.95 12.53% 12.53%
5 0.0% 1547.40 9.12% 9.12%
From 10-22-86 0.0% 2121.02 9.61% 9.61%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
FDEIINST
FDEIINST.UV
<S> <C>
10-22-86 4.101054 i
12-99-89 5.621311
12-99-91 6.104389
12-99-93 8.232249
12-99-94 8.698436 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
suny Fidelity Index 500 suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FDIND5ST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 997.86 -0.21% -0.21%
From 08-27-92 0.0% 1144.69 5.93% 5.93%
From 08-27-92 0.0% 1144.69 5.93% 5.93%
From 08-27-92 0.0% 1144.69 5.93% 5.93%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
FDIND5ST
FDIND5ST.UV
<S> <C>
08-27-92 7.567758 i
12-99-93 8.681369
12-99-94 8.662753 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
SUNY Franklin Government Securities suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
FRINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 950.51 -4.95% -4.95%
3 0.0% 1073.48 2.39% 2.39%
5 0.0% 1341.06 6.04% 6.04%
From 05-30-89 0.0% 1419.02 6.46% 6.46%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
FRINST
FRINST.UV
<S> <C>
05-30-89 10.000000 i
12-99-89 10.581336
12-99-91 13.218811
12-99-93 14.928928
12-99-94 14.190155 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
SUNY Janus Aspen Aggressive Growth suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JAGINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1149.14 14.91% 14.91%
From 09-13-93 0.0% 1351.51 26.11% 26.11%
From 09-13-93 0.0% 1351.51 26.11% 26.11%
From 09-13-93 0.0% 1351.51 26.11% 26.11%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
JAGINST
JAGINST.UV
<S> <C>
09-13-93 9.004063 i
12-99-93 10.589723
12-99-94 12.169105 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
SUNY Janus Aspen Growth suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JGINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1014.86 1.49% 1.49%
From 09-13-93 0.0% 1046.46 3.56% 3.56%
From 09-13-93 0.0% 1046.46 3.56% 3.56%
From 09-13-93 0.0% 1046.46 3.56% 3.56%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
JGINST
JGINST.UV
<S> <C>
09-13-93 8.840192 i
12-99-93 9.115442
12-99-94 9.250909 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
SUNY Janus Aspen Short - Term Bond suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JSTBINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 996.73 -0.33% -0.33%
From 09-13-93 0.0% 986.06 -1.08% -1.08%
From 09-13-93 0.0% 986.06 -1.08% -1.08%
From 09-13-93 0.0% 986.06 -1.08% -1.08%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
JSTBINST
JSTBINST.UV
<S> <C>
09-13-93 9.769017 i
12-99-93 9.664486
12-99-94 9.632844 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
SUNY Janus Aspen Worldwide suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
JWWINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 1002.75 0.28% 0.28%
From 09-13-93 0.0% 1189.83 14.32% 14.32%
From 09-13-93 0.0% 1189.83 14.32% 14.32%
From 09-13-93 0.0% 1189.83 14.32% 14.32%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
JWWINST
JWWINST.UV
<S> <C>
09-13-93 8.120805 i
12-99-93 9.635899
12-99-94 9.662416 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
SUNY Lexington Emerging Markets suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
LXEMINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
From 03-99-94 0.0% 995.89 -0.41% -0.41%
From 03-99-94 0.0% 995.89 -0.41% -0.41%
From 03-99-94 0.0% 995.89 -0.41% -0.41%
From 03-99-94 0.0% 995.89 -0.41% -0.41%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
LXEMINST
LXEMINST.UV
<S> <C>
03-99-94 8.808240 i
12-99-94 8.772014 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
SUNY Lexington Natural Resources suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
LXINST5 MAY
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 934.53 -6.55% -6.55%
3 0.0% 1043.66 1.43% 1.43%
5 0.0% 822.63 -3.83% -3.83%
From 05-31-89 0.0% 941.19 -1.08% -1.08%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
LXINST5 MAY
LXINST5.UV
<S> <C>
05-31-89 10.000000 i
12-99-89 11.441203
12-99-91 9.018121
12-99-93 10.071302
12-99-94 9.411888 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
SUNY Neuberger & Berman Growth suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
NBINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 938.41 -6.16% -6.16%
3 0.0% 1070.97 2.31% 2.31%
5 0.0% 1243.76 4.46% 4.46%
From 12-99-85 0.0% 2138.55 8.81% 8.81%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
NBINST
NBINST.UV
<S> <C>
12-99-85 6.265145 i
12-99-89 10.772467
12-99-91 12.510514
12-99-93 14.277708
12-99-94 13.398331 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
SUNY Scudder International suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
SCINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 979.26 -2.07% -2.07%
3 0.0% 1275.86 8.46% 8.46%
5 0.0% 1280.70 5.07% 5.07%
From 04-99-87 0.0% 1780.25 7.81% 7.81%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
SCINST
SCINST.UV
<S> <C>
04-99-87 7.430038 i
12-99-89 10.328260
12-99-91 10.367383
12-99-93 13.507528
12-99-94 13.227359 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<PAGE>
<TABLE>
SUNY TCI Growth suny.wwo
- ------------------------------------------------------------------------------
<S> <C>
Gross Deposit: 1000.00
Net Deposit: 1000.00
</TABLE>
<TABLE>
<CAPTION>
Redeemable Value
-------------------------------------------------------------------------------------
TCINST
Nom. 0.00 M.F. (0.000%)
# of Years ---------------------------
Ending 12-94 DSC Value IRR MF IRR
- ------------ ---- --------- ------ ------
<S> <C> <C> <C> <C>
1 0.0% 976.33 -2.37% -2.37%
3 0.0% 1037.83 1.25% 1.25%
5 0.0% 1418.20 7.24% 7.24%
From 11-20-87 0.0% 1861.94 9.13% 9.13%
</TABLE>
<TABLE>
<CAPTION>
Accumulation Unit Values
------------------------------------------------------------
TCINST
TCINST.UV
<S> <C>
11-20-87 6.000160 i
12-99-89 7.877551
12-99-91 10.764738
12-99-93 11.442767
12-99-94 11.171952 i
</TABLE>
(Unit values marked "i" are used for from-inception calculations.)
(Day = 99 means end-of-month.)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 4,788,832,558
<INVESTMENTS-AT-VALUE> 4,862,311,791
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,862,311,791
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 4,862,311,791
<DIVIDEND-INCOME> 535,517,318
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 59,320,898
<NET-INVESTMENT-INCOME> 476,196,420
<REALIZED-GAINS-CURRENT> 64,071,561
<APPREC-INCREASE-CURRENT> (645,884,014)
<NET-CHANGE-FROM-OPS> (105,616,033)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 248,207,873
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
