As filed with the Securities and Exchange Registration No. 33-81216
Commission on November 17, 1997 Registration No. 811-2513
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
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POST-EFFECTIVE AMENDMENT NO. 10 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment To
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
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Variable Annuity Account C of Aetna Life Insurance and Annuity Company
(Exact Name of Registrant)
Aetna Life Insurance and Annuity Company
(Name of Depositor)
151 Farmington Avenue, RE4A, Hartford, Connecticut 06156
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code: (860) 273-4686
Julie E. Rockmore, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RE4A, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
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It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[X] on November 28, 1997 pursuant to paragraph (b) of Rule 485
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CROSS REFERENCE SHEET
FORM N-4
ITEM NO. PART A (PROSPECTUS) LOCATION - PROSPECTUS
1 Cover Page.......................... Cover Page
2 Definitions......................... Definitions
3 Synopsis............................ 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................... Purchase; Miscellaneous
8 Annuity Period...................... Annuity Period
9 Death Benefit....................... Death Benefit During Accumulation
Period; Death Benefit Payable
During the Annuity Period
10 Purchases and Contract Value........ Purchase; Contract Valuation
11 Redemptions......................... Right to Cancel; Withdrawals
12 Taxes............................... Tax Status
13 Legal Proceedings................... Miscellaneous - Legal Matters and
Proceedings
14 Table of Contents of the Statement
of Additional Information........... Contents of the Statement of
Additional Information
<PAGE>
LOCATION -STATEMENT OF ADDITIONAL
INFORMATION DATED MAY 1, 1997 AND
AS SUPPLEMENTED ON
FORM N-4 PART B (STATEMENT OF NOVEMBER 28, 1997
ITEM NO. ADDITIONAL INFORMATION)
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 ............. Offering and Purchase of Contracts
Being Offered
20 Underwriters........................ Offering and Purchase of Contracts
21 Calculation of Performance Data..... Performance Data, and as amended;
Average Annual Total Return
Quotations, and as amended
22 Annuity Payments.................... Annuity Payments
23 Financial Statements................ Financial Statements
Part C (Other Information)
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
PARTS A AND B
The Prospectus is included in Part A of this Post-Effective Amendment No. 10.
The Statement of Additional Information is incorporated into Part B of this
Post-Effective Amendment No. 10 by reference to Post-Effective Amendment No. 8
to the Registration Statement on Form N-4 (File No. 33-81216), as filed
electronically on April 11, 1997 (Accession No. 0000950146-97-000580) and by
reference to a Supplement to the Statement of Additional Information dated
November 28, 1997, which is included in this filing.
<PAGE>
PROSPECTUS
================================================================================
The Contracts offered in connection with this Prospectus are group flexible
premium deferred variable 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 (the "SUNY Plan") and to accept transfers of amounts made to the
predecessor program which is qualified under Section 403(b) of the Code. Two
Contracts will be issued: one for transferred assets from the predecessor
Section 403(b) optional retirement program ("Rollover Contract"), and one for
ongoing contributions and transferred assets from the SUNY Plan, a plan
qualified under Sections 401(a) and 414(h) of the Code ("Modal Contract").
The Contracts provide that contributions may be allocated to one or more of the
Credited Interest Options or to one or more of the Subaccounts of Variable
Annuity Account C, a separate account of the Company. The Subaccounts invest
directly in shares of the following Funds:
<TABLE>
<S> <C>
[bullet] Aetna Ascent Variable Portfolio [bullet] Fidelity VIP II Index 500 Portfolio
[bullet] Aetna Crossroads Variable Portfolio [bullet] Janus Aspen Aggressive Growth Portfolio
[bullet] Aetna Income Shares [bullet] Janus Aspen Growth Portfolio
[bullet] Aetna Investment Advisers Fund, Inc. [bullet] Janus Aspen Worldwide Growth Portfolio
[bullet] Aetna Legacy Variable Portfolio [bullet] Lexington Emerging Markets Fund, Inc.
[bullet] Aetna Variable Encore Fund [bullet] Lexington Natural Resources Trust*
[bullet] Aetna Variable Fund [bullet] Portfolio Partners, Inc. MFS Emerging Equities Portfolio
[bullet] Aetna Variable Index Plus [bullet] Portfolio Partners, Inc. MFS Research Growth Portfolio
[bullet] Calvert Responsibly Invested Balanced Portfolio [bullet] Portfolio Partners, Inc. MFS Value Equity Portfolio
[bullet] Fidelity VIP Equity-Income Portfolio [bullet] Portfolio Partners, Inc. Scudder International Growth
[bullet] Fidelity VIP II Asset Manager Portfolio Portfolio
[bullet] Fidelity VIP II Contrafund Portfolio [bullet] Portfolio Partners, Inc. T. Rowe Price Growth Portfolio
</TABLE>
* This Fund will be removed from the list of Funds as of the close of business
of the New York Stock Exchange on November 26, 1997, or as soon thereafter
as all Participants have redirected their allocations to other investment
options, since it will be closed to new investments after that date (except
reinvested dividends and capital gains earned on amounts already invested in
the Fund through the Separate Account and loan repayments automatically
deposited into the Fund pursuant to the Company's loan repayment
procedures).
The Credited Interest Options currently available under the Contract are the
Guaranteed Accumulation Account and the Fixed Plus Account. Except as
specifically mentioned, this Prospectus describes only investments through the
Separate Account. A brief description of each of the Credited Interest Options
is contained in Appendices to this Prospectus. Additional information
concerning the Guaranteed Accumulation Account is contained in a separate
prospectus.
The availability of the Funds and the Credited Interest Options is subject to
applicable regulatory authorization. Not all Funds or Credited Interest Options
may be available under all Contracts. Please check with your employer to
determine option availability. (See "Investment Options.")
This Prospectus provides investors with the information that they should know
about the Separate Account before investing in the Contract through the
Separate Account. Additional information about the Separate Account is
contained in a Statement of Additional Information ("SAI") which has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. The Table of Contents for the SAI is printed on page 15 of this
Prospectus. An SAI may be obtained at no charge by indicating the request on
the enrollment form or on the prospectus receipt contained in this Prospectus,
or by calling the number listed under the "Inquiries" section of the Prospectus
Summary. You may also obtain an SAI for any of the Funds by calling that phone
number.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF
THE FUNDS AND THE GUARANTEED ACCUMULATION ACCOUNT. ALL PROSPECTUSES SHOULD BE
READ AND RETAINED FOR FUTURE REFERENCE.
THIS PROSPECTUS, THE STATEMENT OF ADDITIONAL INFORMATION AND OTHER INFORMATION
ABOUT THE SEPARATE ACCOUNT REQUIRED TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION (SEC) CAN BE FOUND IN THE SEC'S WEB SITE AT
http://www.sec.gov.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION ARE DATED NOVEMBER
28, 1997.
<PAGE>
TABLE OF CONTENTS
================================================================================
DEFINITIONS .................................. DEFINITIONS 1
PROSPECTUS SUMMARY ............................ SUMMARY 1
FEE TABLE ..................................... FEE TABLE 1
CONDENSED FINANCIAL INFORMATION ............. AUV HISTORY 1
THE COMPANY ............................................. 1
VARIABLE ANNUITY ACCOUNT C .............................. 1
INVESTMENT OPTIONS .................................... 1
The Funds ............................................. 1
Credited Interest Options ........................... 3
PURCHASE ................................................ 4
Contract Availability ................................. 4
Contract Purchase .................................... 4
Purchase Payments .................................... 4
Rights Under the Contract ........................... 4
Right to Cancel ....................................... 5
CHARGES AND DEDUCTIONS ................................. 5
Daily Deductions from the Separate Account ............ 5
Fund Expenses ....................................... 5
Premium and Other Taxes .............................. 5
CONTRACT VALUATION .................................... 5
Account Value ....................................... 5
Accumulation Units .................................... 6
Net Investment Factor ................................. 6
TRANSFERS ............................................. 6
WITHDRAWALS ............................................. 6
Reinvestment Privilege .............................. 7
ADDITIONAL WITHDRAWAL OPTIONS ........................... 7
DEATH BENEFIT DURING ACCUMULATION PERIOD ............... 8
ANNUITY PERIOD .......................................... 8
Annuity Period Elections .............................. 8
Annuity Options ....................................... 9
Annuity Payments .................................... 9
Charges Deducted During the Annuity Period ............ 9
Death Benefit Payable During the Annuity Period ...... 9
TAX STATUS ............................................. 10
Introduction .......................................... 10
Taxation of the Company .............................. 10
Contracts Used with Certain Retirement Plans ......... 10
MISCELLANEOUS .......................................... 12
Distribution .......................................... 12
Delay or Suspension of Payments ..................... 13
Performance Reporting ................................. 13
<PAGE>
Voting Rights .......................................... 13
Modification of the Contract ........................... 14
Transfer of Ownership; Assignment ..................... 14
Legal Matters and Proceedings ........................... 14
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION ...... 15
APPENDIX I--GUARANTEED ACCUMULATION ACCOUNT ............... 16
APPENDIX II--FIXED PLUS ACCOUNT ........................... 17
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. THE COMPANY DOES NOT AUTHORIZE ANY
PERSON TO GIVE INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH
THE OFFERING CONTAINED IN THIS PROSPECTUS EXCEPT AS OTHERWISE CONTAINED HEREIN.
<PAGE>
DEFINITIONS
================================================================================
The following terms are defined as they are used in this Prospectus:
Account: A record which identifies contract values accumulated on behalf of
each Participant during the Accumulation Period. One or more Employee Accounts
and Employer Accounts may be established for each Participant.
Account Value: The total dollar value of amounts held in an Account as of each
Valuation Date during the Accumulation Period.
Account Year: A period of twelve months measured from the date on which an
Account is established (the effective date) or from an anniversary of such
effective date.
Accumulation Period: The period during which Purchase Payment(s) credited to an
Account are invested to fund future annuity payments.
Accumulation Unit: A measure of the value of each Subaccount before Annuity
payments begin.
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.
Annuitant: The person on whose life or life expectancy the annuity payments are
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 begin.
Annuity Period: The period during which annuity payments are made.
Annuity Unit: A measure of the value of each Subaccount selected during the
Annuity Period.
Beneficiary(ies): The person or persons identified on the enrollment form who
are to receive any death benefit proceeds payable under the Contract.
Code: The Internal Revenue Code of 1986, amended.
Company (We, Us): 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 Contract
Holder is the trustee of a multiple employer trust approved by the Company to
apply for and own the Contract as authorized by SUNY.
Credited Interest Options: The fixed interest options available under the
Contract. The Credited Interest Options currently consist of the Guaranteed
Accumulation Account and the Fixed Plus Account, each of which is described in
an Appendix to this Prospectus. Amounts allocated to the Credited Interest
Options are included in the Account Value.
Employee Account: An account established for each Participant. This Account is
credited with net Purchase Payments made by the Participant.
Employer Account: An account established for each Participant. This Account
will be credited with net Purchase Payments made by the employer.
Fund(s): An open-end registered management investment company whose shares are
purchased by the Separate Account to fund the benefits provided by the
Contract.
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.
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DEFINITIONS - 1
<PAGE>
Participant (You): A person participating in the Plan.
Plan(s): 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. The Company
is not the Plan Administrator.
Purchase Payment(s): The gross payment(s) made to the Company under a Contract.
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 Section 403(b) optional retirement program.
Separate Account: Variable Annuity Account C, a separate account established by
the Company for the purpose of funding variable annuity contracts issued by the
Company.
SUNY Plan: The State of New York Defined Contribution Retirement Plan.
Subaccount(s): The portion of the assets of the Separate Account that is
allocated to a particular Fund. Each Subaccount invests in the shares of only
one corresponding Fund.
Valuation Date: The date and time at which the Accumulation Unit Value and
Annuity Unit Value of a Subaccount is calculated. Currently, this calculation
occurs after the close of business of the New York Stock Exchange on any normal
business day, Monday through Friday, that the New York Stock Exchange is open.
- --------------------------------------------------------------------------------
DEFINITIONS - 2
<PAGE>
PROSPECTUS SUMMARY
================================================================================
CONTRACTS OFFERED
The Contracts offered in connection with this Prospectus are designed to
fund the SUNY Plan and to accept transfers from SUNY's predecessor optional
retirement program which is qualified under Section 403(b) of the Code. The
Contracts are group flexible premium deferred variable annuity contracts under
which accounts are established for persons in the group.
Two Contracts have been issued: one for transferred assets under the
predecessor Section 403(b) program ("Rollover Contract"), and one for ongoing
contributions and transferred assets under the SUNY Plan qualified under
Sections 401(a) and 414(h) of the Code ("Modal Contract"). (See "Contract
Availability.")
CONTRACT PURCHASE
For each Contract, both an Employee Account and an Employer Account will
be established for each Participant. The Accounts are established when you
complete an enrollment form (and any other required forms) and forward them to
the Company through the Aetna Processing Office. (See "Purchase.")
FREE LOOK PERIOD
Participation under the Contract may be cancelled within 10 days after you
receive the Certificate by returning it to the Company along with a written
notice of cancellation. The amount you will receive upon cancellation will
reflect the investment performance of the Subaccounts into which your Purchase
Payments were deposited. In some cases this may be more or less than the amount
of your Purchase Payments. (See "Purchase--Right to Cancel.")
INVESTMENT OPTIONS
The Company has established Variable Annuity Account C, a registered unit
investment trust, for the purpose of funding the variable portion of the
Contracts. The Separate Account is divided into Subaccounts which invest
directly in shares of the Funds described herein, as designated by the
Participant. The Contract allows investment in any or all of the Subaccounts,
as well as in the Credited Interest Options described below. The total number
of investment options that may be selected during the Accumulation Period is
limited. For a complete list of the Funds available under the Contracts, a
description of the investment objectives of each of the Funds and their
investment advisers, and a description of the limitations on the number of
investment options, see "Investment Options--The Funds" in this Prospectus, as
well as the prospectuses for each of the Funds.
The Contract also provides for investment in Credited Interest Options
which allow you to earn fixed rates of interest. The fixed options available
under the Contract are the Guaranteed Accumulation Account ("GAA") and the
Fixed Plus Account. (See the Appendices to this Prospectus.)
CHARGES AND DEDUCTIONS
Certain charges are associated with these Contracts. These charges include
daily deductions from the Separate Account (the mortality and expense risk
charge and an administrative expense charge), as well as premium and other
taxes. The Funds also incur certain fees and expenses which are deducted
directly from the Funds. (See the Fee Table and "Charges and Deductions.")
TRANSFERS
Prior to the Annuity Date, and subject to certain limitations, Account
Values may be transferred among the Subaccounts and the Credited Interest
Options without charge. Transfers can be requested in writing or by telephone
in accordance with the Company's transfer procedures. (See the Appendices for a
full description of the restrictions applicable to transfers made from the
Credited Interest Options.) (See "Transfers.")
WITHDRAWALS
All or a part of the Account Value may be withdrawn prior to the Annuity
Date by properly completing a disbursement form and sending 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. Limitations
- --------------------------------------------------------------------------------
SUMMARY - 1
<PAGE>
apply to withdrawals from the Fixed Plus Account. The withdrawal may be subject
to income tax and a federal tax penalty. (See "Withdrawals.")
The Contract also offers certain Additional Withdrawal Options during the
Accumulation Period to persons meeting certain criteria. Additional Withdrawal
Options may not be suitable in every situation. (See "Additional Withdrawal
Options.")
DEATH BENEFIT
A death benefit is payable if the Participant dies before the Annuity
Date. Death benefit proceeds will be paid to the Beneficiary in an amount equal
to the Account Value. Until the election of a method of payment, the Account
Value will remain invested under the Contract as it was before the
Participant's death. The Beneficiary may elect to receive the proceeds in a
lump sum or under any of the payment options available under the Contract.
However, the Code requires that distributions begin within a certain time
period. (See "Death Benefit During Accumulation Period.")
After Annuity Payments have commenced, a death benefit may be payable to
the Beneficiary depending upon the terms of the Contract and the Annuity Option
selected. (See "Death Benefit Payable During the Annuity Period.")
THE ANNUITY PERIOD
On the Annuity Date, you may elect to begin receiving Annuity Payments.
Annuity Payments can be made on either a fixed, variable or combination fixed
and variable basis. If a variable payout is selected, the payments will vary
with the investment performance of the Subaccount(s) selected. The Company
reserves the right to limit the number of Subaccounts that may be available
during the Annuity Period. (See "Annuity Period.")
TAXES
Contributions and earnings are not generally taxed until you or your
Beneficiary(ies) actually receive a distribution from the Contract. A 10%
federal tax penalty and 20% withholding for income tax may be imposed on
certain withdrawals. (See "Tax Status.")
INQUIRIES
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
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SUMMARY - 2
<PAGE>
FEE TABLE
================================================================================
This Fee Table describes the charges and expenses associated with the Contract
during the Accumulation Period. For amounts deducted during the Annuity Period,
see "Annuity Period--Charges Deducted During the Annuity Period." The charges
and expenses shown below do not include premium taxes that may be applicable.
For more information regarding fees and expenses paid out of the assets of a
particular Fund, see the Fund's prospectus.
CHARGES AGAINST THE SEPARATE ACCOUNT. Each Subaccount pays these expenses out
of its assets. The charges are reflected in the Subaccount's daily Accumulation
Unit Value and are not charged directly to an Account. They include:
Mortality and Expense Risk Charge ...... 1.25%
Administrative Expense Charge ......... 0.00%*
------
Total Separate Account Charges ......... 1.25%
======
* 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 Subaccounts.
ANNUAL EXPENSES OF THE FUNDS
The following table illustrates the advisory fees and other expenses applicable
to the Funds. A Fund's "Other Expenses" include operating costs of the Fund.
These expenses are reflected in the Fund's net asset value and are not deducted
from the Account Value under the Contract. (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, 1996.)
<TABLE>
<CAPTION>
Investment Other Total
Advisory Fees(1) Expenses Fund
(after expense (after expense Annual
reimbursement) reimbursement) Expenses
---------------- ---------------- --------------
<S> <C> <C> <C>
Aetna Ascent Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Crossroads Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Income Shares(2) 0.40% 0.08% 0.48%
Aetna Investment Advisers Fund, Inc.(2) 0.50% 0.08% 0.58%
Aetna Legacy Variable Portfolio(2) 0.60% 0.15% 0.75%
Aetna Variable Encore Fund(2) 0.25% 0.10% 0.35%
Aetna Variable Fund(2) 0.50% 0.06% 0.56%
Aetna Variable Index Plus(2) 0.35% 0.15% 0.50%
Calvert Responsibly Invested Balanced Portfolio(3) 0.71% 0.13% 0.84%
Fidelity VIP Equity-Income Portfolio(4) 0.51% 0.07% 0.58%
Fidelity VIP II Asset Manager Portfolio(4) 0.64% 0.10% 0.74%
Fidelity VIP II Contrafund Portfolio(4) 0.61% 0.13% 0.74%
Fidelity VIP II Index 500 Portfolio(5) 0.13% 0.15% 0.28%
Janus Aspen Aggressive Growth Portfolio(6) 0.72% 0.04% 0.76%
Janus Aspen Growth Portfolio(6) 0.65% 0.04% 0.69%
Janus Aspen Worldwide Growth Portfolio(6) 0.66% 0.14% 0.80%
Lexington Emerging Markets Fund, Inc.(7) 0.85% 1.38% 2.23%
Lexington Natural Resources Trust 1.00% 0.42% 1.42%
Portfolio Partners, Inc. MFS Emerging Equities Portfolio 0.70%(8) 0.13% 0.83%(9)
Portfolio Partners, Inc. MFS Research Growth Portfolio 0.70%(8) 0.15% 0.85%(9)
Portfolio Partners, Inc. MFS Value Equity Portfolio 0.65% 0.25% 0.90%(9)
Portfolio Partners, Inc. Scudder International Growth Portfolio 0.80% 0.20% 1.00%(9)
Portfolio Partners, Inc. T. Rowe Price Growth Equity Portfolio 0.60% 0.15% 0.75%(9)
</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.
- --------------------------------------------------------------------------------
FEE TABLE - 1
<PAGE>
(2) The Company provides administrative services to the Fund and assumes the
Fund's ordinary recurring direct costs under an Administrative Service
Agreement. The new Administrative Services Agreement became effective on
May 1, 1996 for Aetna Variable Fund, Aetna Income Shares, Aetna Variable
Encore Fund, Aetna Investment Advisers Fund, Inc., Aetna Ascent Variable
Portfolio, Aetna Crossroads Variable Portfolio, and Aetna Legacy Variable
Portfolio. The "Other Expenses" shown for these funds are not based on
actual figures for the year ended December 31, 1996, but reflect the fee
payable under the Agreement. The Administrative Services Agreement has
been in effect for the Aetna Variable Index Plus Portfolio since its
inception. Effective August 1, 1996, investment advisory fees were
increased for the Aetna Variable Fund, Aetna Income Shares, Aetna
Investment Advisers Fund, Inc., Aetna Ascent Variable Portfolio, Aetna
Crossroads Variable Portfolio, and Aetna Legacy Variable Portfolio. The
advisory fees shown above are not based on actual figures for the year
ended December 31, 1996, but reflect the increased investment advisory
fees.
(3) The figures above are based on expenses for fiscal year 1996, and have
been restated to reflect an increase in transfer agency expenses of 0.03%
expected to be incurred in 1997. "Investment Advisory Fees" include a
performance adjustment, which could cause the fee to be as high as 0.85%
or as low as 0.55%, depending on performance. "Other Expenses" reflect an
indirect fee of 0.03% (relating to an expense offset arrangement with the
Portfolio's custodian). Net fund operating expenses after reductions for
fees paid indirectly (again, restated) would be 0.81%.
(4) A portion of the brokerage commissions that certain funds pay was used to
reduce expenses. In addition, certain funds have entered into arrangements
with their custodian and transfer agent whereby interest earned on
uninvested cash balances was used to reduce custodian and transfer agent
expenses. Including these reductions, the total operating expenses would
have been 0.56% for Equity Income Portfolio, 0.73% for Asset Manager
Portfolio; and 0.71% for Contrafund Portfolio.
(5) The Fund's investment adviser agreed to reimburse a portion of Index 500
Portfolio's expenses during the period. Without this reimbursement, the
fund's management fee, other expenses and total expenses would have been
0.28%, 0.15% and 0.43%, respectively, for Index 500 Portfolio.
(6) The fees and expenses shown above are based on gross expenses of the
Shares before expense offset arrangements for the fiscal year ended
December 31, 1996. The information for each Portfolio is net of fee
waivers or reductions from Janus Capital. Fee reductions for the
Aggressive Growth, Growth, and Worldwide Growth Portfolios reduce the
management fee to the level of the corresponding Janus retail fund. Other
waivers, if applicable, are first applied against the management fee and
then against other expenses. Without such waivers or reductions, the
Management Fee, Other Expenses and Total Fund Annual Expenses would have
been 0.79%, 0.04% and 0.83% for Aggressive Growth Portfolio; 0.79%, 0.04%
and 0.83% for Growth Portfolio; and 0.77%, 0.14% and 0.91% for Worldwide
Growth Portfolio, respectively. Janus Capital may modify or terminate the
waivers or reductions at any time upon at least 90 days' notice to the
Portfolio's Board of Trustees.
(7) The Fund's investment adviser has agreed to voluntarily limit the total
expenses of the Fund (excluding interest, taxes, brokerage commissions,
and extraordinary expenses, but including management fees and operating
expenses) to an annual rate of 1.75% of the Fund's average net assets from
May 1, 1996 through April 30, 1997. For the period ending December 31,
1996, the Total Fund Annual Expenses, after reimbursement, was 1.64%.
Effective May 1, 1997, an expense limitation is no longer in effect. The
Advisory Fees, Other Expenses and Total Fund Annual Expenses shown above
reflect the actual expenses of the Fund before reimbursement, as if such
arrangement had not been in effect at any time during 1996. The example
shown in the table above should not be considered a representation of past
or future expenses and actual expenses may be greater or less than those
shown.
(8) The advisory fee is .70% of the first $500 million in assets and .65% on
the excess.
(9) The Fund commenced investment operations on November 28, 1997. The fees
and expenses shown above are the contractual rates for the current period.
The Company has agreed to reimburse the Fund for expenses and/or waive its
fees so that the aggregate expenses will not exceed this amount through
April 30, 1999. Without such reimbursements or waivers, Total Annual Fund
Expenses are estimated to be as follows: 1.00% for the Scudder
International Growth Portfolio; .87% for the MFS Emerging Equities
Portfolio; .92% for the MFS Research Growth Portfolio; .90% for the MFS
Value Equity Portfolio; and .79% for the T. Rowe Price Growth Equity
Portfolio.
<PAGE>
- --------------------------------------------------------------------------------
FEE TABLE - 2
<PAGE>
HYPOTHETICAL ILLUSTRATION (EXAMPLE)
THIS EXAMPLE IS PURELY HYPOTHETICAL. IT SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR EXPECTED RETURN. ACTUAL EXPENSES
AND/OR RETURN MAY BE MORE OR LESS THAN THOSE SHOWN BELOW.
Whether or not you withdraw or if you annuitize your Account, assuming a 5%
annual return on assets, you would have paid the following expenses on a $1,000
investment at the end of the applicable time period:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
-------- --------- --------- ---------
<S> <C> <C> <C> <C>
Aetna Ascent Variable Portfolio $20 $ 63 $108 $233
Aetna Crossroads Variable Portfolio $20 $ 63 $108 $233
Aetna Income Shares $18 $ 54 $ 94 $204
Aetna Investment Advisers Fund, Inc. $19 $ 58 $ 99 $215
Aetna Legacy Variable Portfolio $20 $ 63 $108 $233
Aetna Variable Encore Fund $16 $ 51 $ 87 $190
Aetna Variable Fund $18 $ 57 $ 98 $213
Aetna Variable Index Plus $18 $ 55 $ 95 $206
Calvert Responsibly Invested Balanced Portfolio $21 $ 65 $112 $242
Fidelity VIP Equity-Income Portfolio $19 $ 58 $ 99 $215
Fidelity VIP II Asset Manager Portfolio $20 $ 62 $107 $232
Fidelity VIP II Contrafund Portfolio $20 $ 62 $107 $232
Fidelity VIP II Index 500 Portfolio $16 $ 48 $ 83 $182
Janus Aspen Aggressive Growth Portfolio $20 $ 63 $108 $234
Janus Aspen Growth Portfolio $20 $ 61 $105 $226
Janus Aspen Worldwide Growth Portfolio $21 $ 64 $110 $238
Lexington Emerging Markets Fund, Inc. $35 $107 $181 $376
Lexington Natural Resources Trust $27 $ 83 $141 $300
Portfolio Partners, Inc. MFS Emerging Equities Portfolio $21 $ 65 $112 $241
Portfolio Partners, Inc. MFS Research Growth Portfolio $21 $ 66 $113 $243
Portfolio Partners, Inc. MFS Value Equity Portfolio $22 $ 67 $115 $248
Portfolio Partners, Inc. Scudder International Growth Portfolio $23 $ 70 $120 $258
Portfolio Partners, Inc. T. Rowe Price Growth Equity Portfolio $20 $ 63 $108 $233
</TABLE>
- --------------------------------------------------------------------------------
FEE TABLE - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for each of the years in
the ten-year period ended December 31, 1996 (as applicable), is derived from
the financial statements of the Account, which financial statements have been
audited by KPMG Peat Marwick LLP, independent auditors. It reflects investment
options available under the Contracts as of December 31, 1996; not all
investment options shown here are currently available. The financial statements
and the independent auditors' report thereon are included in the Statement of
Additional Information.
<TABLE>
<CAPTION>
1996 1995 1994 1993
-------------- ------------------- ---------------- -----------------
<S> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $137.869 $105.558 $107.925 $102.383
Value at end of period $169.448 $137.869 $105.558 $107.925
Increase (decrease) in value of
accumulation unit(1) 22.91% 30.61% (2.19)% 5.41%
Number of accumulation units
outstanding at end of period 2,071,139 6,364,000 13,966,072 21,148,863
AETNA INCOME SHARES
Value at beginning of period $46.913 $40.173 $42.283 $39.038
Value at end of period $47.992 $46.913 $40.173 $42.283
Increase (decrease) in value of
accumulation unit(1) 2.30% 16.78% (4.99)% 8.31%
Number of accumulation units
outstanding at end of period 835,724 2,377,622 5,108,720 8,210,666
AETNA VARIABLE ENCORE FUND
Value at beginning of period $37.988 $36.271 $35.282 $34.619
Value at end of period $39.528 $37.988 $36.271 $35.282
Increase (decrease) in value of
accumulation unit(1) 4.05% 4.73% 2.80% 1.92%
Number of accumulation units
outstanding at end of period 597,656 1,836,260 3,679,802 5,086,515
AETNA INVESTMENT ADVISERS
FUND, INC.
Value at beginning of period $17.954 $14.270 $14.519 $13.379
Value at end of period $20.419 $17.954 $14.270 $14.519
Increase (decrease) in value of
accumulation unit(1) 13.73% 25.82% (1.71)% 8.52%
Number of accumulation units
outstanding at end of period 2,716,641 9,193,181 21,990,186 30,784,750
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period $11.715 $10.000(13)
Value at end of period $13.113 $11.715
Increase (decrease) in value of
accumulation unit(1) 11.93% 17.15%
Number of accumulation units
outstanding at end of period 1,023,908 530,263
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at beginning of period $13.558 $9.513 $10.072 $10.000(3)
Value at end of period $13.949 $13.558 $9.513 $10.072
Increase (decrease) in value of
accumulation unit(1) 2.88% 42.52% (5.55)% 0.72%
Number of accumulation units
outstanding at end of period 2,373,178 1,714,187 665,518 51,327
AMERICAN CENTURY VP
CAPITAL APPRECIATION*
Value at beginning of period $14.464 $11.172 $11.443 $10.495
Value at end of period $13.650 $14.464 $11.172 $11.443
Increase (decrease) in value of
accumulation unit(1) (5.63)% 29.47% (2.37)% 9.03%
Number of accumulation units
outstanding at end of period 1,566,276 1,784,552 1,608,362 1,016,894
<CAPTION>
1992 1991 1990 1989 1988 1987
------------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $97.165 $77.845 $76.311 $59.871 $52.885 $50.760
Value at end of period $102.383 $97.165 $77.845 $76.311 $59.871 $52.885
Increase (decrease) in value of
accumulation unit(1) 5.37% 24.82% 2.01% 27.46% 13.21% 4.19%
Number of accumulation units
outstanding at end of period 24,201,565 20,948,226 18,362,906 17,142,820 16,455,396 16,497,406
AETNA INCOME SHARES
Value at beginning of period $36.789 $31.192 $28.943 $25.574 $24.061 $23.308
Value at end of period $39.038 $36.789 $31.192 $28.943 $25.574 $24.061
Increase (decrease) in value of
accumulation unit(1) 6.11% 17.94% 7.77% 13.17% 6.29% 3.23%
Number of accumulation units
outstanding at end of period 8,507,292 7,844,412 6,984,793 6,202,834 5,955,293 5,372,271
AETNA VARIABLE ENCORE FUND
Value at beginning of period $33.812 $32.138 $30.012 $27.783 $26.171 $24.812
Value at end of period $34.619 $33.812 $32.138 $30.012 $27.783 $26.171
Increase (decrease) in value of
accumulation unit(1) 2.39% 5.21% 7.08% 8.02% 6.16% 5.48%
Number of accumulation units
outstanding at end of period 7,534,662 8,430,082 10,220,110 8,286,033 8,154,644 7,326,151
AETNA INVESTMENT ADVISERS
FUND, INC.
Value at beginning of period $12.736 $10.896 $10.437 $10.000(2)
Value at end of period $13.379 $12.736 $10.896 $10.437
Increase (decrease) in value of
accumulation unit(1) 5.05% 16.89% 4.40% 4.37%
Number of accumulation units
outstanding at end of period 34,802,433 22,898,099 17,078,985 9,535,986
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
AMERICAN CENTURY VP
CAPITAL APPRECIATION*
Value at beginning of period $10.000(12)
Value at end of period $10.495
Increase (decrease) in value of
accumulation unit(1) 4.95%
Number of accumulation units
outstanding at end of period 232,832
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 1
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
================================================================================
<TABLE>
<CAPTION>
1996 1995 1994 1993
------------- ------------------ ---------------- -------------
<S> <C> <C> <C> <C>
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO**
Value at beginning of period $17.951 $13.990 $14.640 $13.726
Value at end of period $19.965 $17.951 $13.990 $14.640
Increase (decrease) in value of
accumulation unit(1) 11.22% 28.31% (4.44)% 6.66%
Number of accumulation units
outstanding at end of period 898,279 856,361 743,464 705,415
FIDELITY VIP II ASSET MANAGER PORTFOLIO
Value at beginning of period $10.912 $9.447 $10.000(5)
Value at end of period $12.349 $10.912 $9.447
Increase (decrease) in value of
accumulation unit(1) 13.17% 15.51% (5.53)%
Number of accumulation units
outstanding at end of period 1,384,927 1,316,916 1,254,504
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $11.763 $10.000(14)
Value at end of period $14.092 $11.763
Increase (decrease) in value of
accumulation unit(1) 19.79% 17.63%
Number of accumulation units
outstanding at end of period 1,522,169 525,476
FIDELITY VIP II INDEX 500 PORTFOLIO
Value at beginning of period $11.740 $10.000(14)
Value at end of period $14.240 $11.740
Increase (decrease) in value of
accumulation unit(1) 21.29% 17.40%
Number of accumulation units
outstanding at end of period 1,490,937 290,547
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $11.617 $10.000(14)
Value at end of period $13.110 $11.617
Increase (decrease) in value of
accumulation unit(1) 12.86% 16.17%
Number of accumulation units
outstanding at end of period 1,454,755 628,582
FRANKLIN GOVERNMENT SECURITIES TRUST
Value at beginning of period $16.495 $14.190 $14.929 $14.050
Value at end of period $16.952 $16.495 $14.190 $14.990
Increase (decrease) in value of
accumulation unit 2.77% 16.24% (4.95)% 6.26%
Number of accumulation units
outstanding at end of period 767,910 809,414 804,457 960,629
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $15.323 $12.169 $10.000(7)
Value at end of period $16.334 $15.323 $12.169
Increase (decrease) in value of
accumulation unit(1) 6.60% 25.91% 21.69%
Number of accumulation units
outstanding at end of period 1,893,718 1,280,953 393,553
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $11.859 $10.000(13)
Value at end of period $13.872 $11.859
Increase (decrease) in value of
accumulation unit(1) 16.98% 18.59%
Number of accumulation units
outstanding at end of period 663,945 109,717
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period $10.393 $10.000(13)
Value at end of period $10.671 $10.393
Increase (decrease) in value of
accumulation unit(1) 2.68% 3.93%
Number of accumulation units
outstanding at end of period 54,215 18,473
<CAPTION>
1992 1991 1990 1989 1988 1987
---------- ---------- ---------- ---------------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO**
Value at beginning of period $12.913 $11.233 $10.568 $10.000(4)
Value at end of period $13.726 $12.913 $11.233 $10.568
Increase (decrease) in value of
accumulation unit(1) 6.30% 14.96% 6.29% 5.68%
Number of accumulation units
outstanding at end of period 503,006 355,851 148,576 20,710
FIDELITY VIP II ASSET MANAGER PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
FIDELITY VIP II INDEX 500 PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
FRANKLIN GOVERNMENT SECURITIES TRUST
Value at beginning of period $13.219 $11.545 $10.581 $10.000(6)
Value at end of period $14.050 $13.219 $11.545 $10.581
Increase (decrease) in value of
accumulation unit 6.29% 14.50% 9.11% 5.81%
Number of accumulation units
outstanding at end of period 810,155 627,552 178,761 25,258
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
JANUS ASPEN SHORT-TERM BOND PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
</TABLE>
- --------------------------------------------------------------------------------
AUV HISTORY - 2
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
================================================================================
<TABLE>
<CAPTION>
1996 1995 1994 1993
------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $12.158 $10.000(13)
Value at end of period $15.493 $12.158
Increase (decrease) in value of
accumulation unit(1) 27.43% 21.58%
Number of accumulation units
outstanding at end of period 2,090,908 314,653
LEXINGTON EMERGING MARKETS FUND, INC.
Value at beginning of period $8.323 $8.772 $10.000(8)
Value at end of period $8.832 $8.323 $8.772
Increase (decrease) in value of
accumulation unit(1) 6.12% (5.12)% (12.28)%
Number of accumulation units
outstanding at end of period 548,618 371,156 144,750
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $10.862 $9.412 $10.071 $9.193
Value at end of period $13.611 $10.862 $9.412 $10.071
Increase (decrease) in value of
accumulation unit(1) 25.31% 15.41% (6.54)% 9.55%
Number of accumulation units
outstanding at end of period 587,248 530,562 533,016 341,771
NEUBERGER & BERMAN GROWTH PORTFOLIO
Value at beginning of period $17.430 $13.398 $14.278 $13.536
Value at end of period $18.786 $17.430 $13.398 $14.278
Increase (decrease) in value of
accumulation unit(1) 7.78% 30.09% (6.16)% 5.48%
Number of accumulation units
outstanding at end of period 2,169,362 2,359,090 2,107,525 1,927,674
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES***
Value at beginning of period $14.515 $13.227 $13.508 $9.922
Value at end of period $16.453 $14.515 $13.227 $13.508
Increase (decrease) in value of
accumulation unit(1) 13.35% 9.74% (2.08)% 36.14%
Number of accumulation units
outstanding at end of period 3,684,698 3,823,292 4,240,412 2,371,037
<CAPTION>
1992 1991 1990 1989 1988 1987
-------------- ------------- -------------- ---------------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
LEXINGTON EMERGING MARKETS FUND, INC.
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $9.018 $9.608 $11.441 $10.000(9)
Value at end of period $9.193 $9.018 $9.608 $11.441
Increase (decrease) in value of
accumulation unit(1) 1.94% (6.14)% (16.02)% 14.41%
Number of accumulation units
outstanding at end of period 198,338 144,139 75,052 11,481
NEUBERGER & BERMAN GROWTH PORTFOLIO
Value at beginning of period $12.511 $9.769 $10.772 $10.000(10)
Value at end of period $13.536 $12.511 $9.769 $10.772
Increase (decrease) in value of
accumulation unit(1) 8.19% 28.07% (9.31)% 7.72%
Number of accumulation units
outstanding at end of period 1,346,898 971,985 482,220 68,885
SCUDDER INTERNATIONAL PORTFOLIO CLASS A SHARES***
Value at beginning of period $10.239** $9.256 $10.306 $10.000(11)
Value at end of period $9.922 $10.239 $9.256 $10.306
Increase (decrease) in value of
accumulation unit(1) (3.10)% 10.62% (10.19)% 3.06%
Number of accumulation units
outstanding at end of period 1,161,007 779,667 317,829 32,902
</TABLE>
(1) The above figures are calculated by subtracting the beginning Accumulation
Unit value from the ending Accumulation Unit value during a calendar year,
and dividing the result by the beginning Accumulation Unit value. These
figures do not reflect the deferred sales charge or the fixed dollar
annual maintenance fee, if any. Inclusion of these charges would reduce
the investment results shown.
(2) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 on June 23, 1989, the
date on which the Fund commenced operations.
(3) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 on September 17, 1993.
The Portfolio became available under the Contract on March 15, 1994.
(4) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 on May 31, 1989, the
date on which the Fund became available under the Contract.
(5) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during March 1994, when
funds were first received under this option.
(6) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 on June 7, 1989, the
date on which the Fund became available under the Contract.
(7) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during June 1994, when
funds were first received in this option.
(8) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during October 1994,
when funds were first received in this option.
(9) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 on May 31, 1989, the
date on which the Fund became available under the Contract.
(10) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 on May 31, 1989, the
date on which the Portfolio became available under the Contract.
(11) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 on July 5, 1989, the
date on which the Portfolio became available under the Contract.
(12) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 on September 21, 1992,
the date on which the Portfolio became available under the Contract.
(13) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during July 1995, when
the Fund became available under the Contract.
- --------------------------------------------------------------------------------
AUV HISTORY - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
================================================================================
(14) Reflects less than a full year of performance activity. The initial
Accumulation Unit value was established at $10.000 during May 1995, when
the Fund became available under the Contract.
* Formerly TCI Portfolios, Inc.--TCI Growth.
** 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
Investment Fund--Managed International Portfolio. The Accumulation Unit
value following the merger was $10.051.
- --------------------------------------------------------------------------------
AUV HISTORY - 4
<PAGE>
THE COMPANY
================================================================================
Aetna Life Insurance and Annuity Company (the "Company") is the issuer of
the Contract, and as such, it is responsible for providing the insurance and
annuity benefits under the Contract. The Company is a stock life insurance
company organized under the insurance laws of the State of Connecticut in 1976.
Through a merger, it succeeded to the business of Aetna Variable Annuity Life
Insurance Company (formerly Participating Annuity Life Insurance Company, an
Arkansas life insurance company organized in 1954). The Company is engaged in
the business of issuing life insurance policies and variable annuity contracts
in all states of the United States. The Company's principal executive offices
are located at 151 Farmington Avenue, Hartford, Connecticut 06156.
The Company is a wholly owned subsidiary of Aetna Retirement Holdings,
Inc., which is in turn a wholly owned subsidiary of Aetna Retirement Services,
Inc. and an indirect wholly owned subsidiary of Aetna Inc.
VARIABLE ANNUITY ACCOUNT C
================================================================================
The Company established Variable Annuity Account C (the "Separate
Account") in 1976 as a segregated asset account for the purpose of funding its
variable annuity contracts. The Separate Account is registered as a unit
investment trust under the Investment Company Act of 1940 (the "1940 Act"), and
meets the definition of the "separate account" under federal securities laws.
The Separate Account is divided into "subaccounts" which do not invest directly
in stocks, bonds or other investments. Instead, each Subaccount buys and sells
shares of a corresponding Fund.
Although the Company holds title to the assets of the Separate Account,
such assets are not chargeable with liabilities arising out of any other
business conducted by the Company. Income, gains or losses of the Separate
Account are credited or charged against the assets of the Separate Account
without regard to other income, gains or losses. All obligations arising under
the Contracts are our general corporate obligations.
INVESTMENT OPTIONS
================================================================================
THE FUNDS
Purchase Payments may be allocated to one or more of the Subaccounts as
designated on the enrollment form. In turn, the Subaccounts invest in the
corresponding Funds at net asset value. The total number of investment options
that you may select during the Accumulation Period is limited to 18. Each
Subaccount selected, the Fixed Plus Account and each guaranteed term of GAA
counts as one option, even if you no longer have amounts allocated to that
option.
SUNY may decide to offer only a select number of Funds under its plan. In
addition, the Company may add, withdraw or substitute Funds, subject to the
conditions in the Contract and to compliance with regulatory requirements. The
availability of Funds may also be applicable to regulatory authorization. Not
all Funds may be available in all jurisdictions, under all Contracts or in all
Plans.
The investment results of the Funds described below are likely to differ
significantly and there is no assurance that any of the Funds will achieve
their respective investment objectives. Except where otherwise noted, all of
the Funds are diversified, as defined in the 1940 Act.
[bullet] Aetna Generation Portfolios, Inc.--Aetna Ascent Variable Portfolio
seeks to provide capital appreciation by allocating its investments
among equities and fixed income securities. The Portfolio is managed
for investors who generally have an investment horizon exceeding
fifteen years, and who have a high level of risk tolerance.(1)
[bullet] Aetna Generation Portfolios, Inc.--Aetna Crossroads Variable Portfolio
seeks to provide total return (i.e., income and capital appreciation,
both realized and unrealized) by allocating its investments among
equities and fixed income securities. The Portfolio is managed for
investors who generally have an
- --------------------------------------------------------------------------------
1
<PAGE>
investment horizon exceeding ten years and who have a moderate level of
risk tolerance.(1)
[bullet] Aetna Generation Portfolios, Inc.--Aetna Legacy Variable Portfolio
seeks to provide total return consistent with preservation of capital
by allocating its investments among equities and fixed income
securities. The Portfolio is managed for investors who generally have
an investment horizon exceeding five years and who have a low level of
risk tolerance.(1)
[bullet] Aetna Income Shares seeks to maximize total return, consistent with
reasonable risk, through investments in a diversified portfolio
consisting primarily of debt securities.(1)
[bullet] Aetna Investment Advisers Fund, Inc. is a managed fund which seeks to
maximize investment return consistent with reasonable safety of
principal by investing in one or more of the following asset classes:
stocks, bonds and cash equivalents based on the Company's judgment of
which of those sectors or mix thereof offers the best investment
prospects.(1)
[bullet] Aetna Variable Encore Fund seeks to provide high current return,
consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments. An investment in
the Fund is neither insured nor guaranteed by the U.S. Government.(1)
[bullet] Aetna Variable Fund seeks to maximize total return through investments
in a diversified portfolio of common stocks and securities convertible
into common stock.(1)
[bullet] Aetna Variable Portfolios, Inc.--Aetna Variable Index Plus Portfolio
seeks to outperform the total return performance of publicly traded
common stocks represented by the S&P 500.(1)
[bullet] Calvert Responsibly Invested Balanced Portfolio is a nondiversified
portfolio that seeks to achieve a total return above the rate of
inflation through an actively managed, nondiversified portfolio of
common and preferred stocks, bonds and money market instruments which
offer income and capital growth opportunity and which satisfy the
social criteria established for the Portfolio.(2)
[bullet] Fidelity Investments' Variable Insurance Products Fund II--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.(3)
[bullet] Fidelity Investments' Variable Insurance Products Fund II--Contrafund
Portfolio seeks maximum total return over the long term by investing
mainly in equity securities of companies that are undervalued or
out-of-favor.(3)
[bullet] Fidelity Investments' Variable Insurance Products Fund--Equity-Income
Portfolio seeks reasonable income by investing primarily in
income-producing equity securities. In selecting investments, the Fund
also considers the potential for capital appreciation.(3)
[bullet] Fidelity Investments' Variable Insurance Products Fund II--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
Composite Index of 500 stocks.(3)
[bullet] Janus Aspen Series--Aggressive Growth Portfolio is a nondiversified
portfolio that seeks long-term growth of capital in a manner
consistent with the preservation of capital. The Portfolio pursues its
investment objective by normally investing at least 50% of its equity
assets in securities issued by medium-sized companies. Medium sized
companies are those whose market capitalizations fall within the range
of companies in the S&P MidCap 400 Index, which as of December 30,
1996 included companies with capitalizations of between approximately
$192 million and $6.5 billion, but which is expected to change on a
regular basis.(4)
[bullet] Janus Aspen Series--Growth Portfolio seeks long-term growth of capital
in a manner consistent with the preservation of capital. The Portfolio
pursues its investment objective by investing in common stocks of
companies of any size.(4)
[bullet] Janus Aspen Series--Worldwide Growth Portfolio seeks long-term growth
of capital in a manner consistent with preservation of capital. The
Portfolio pursues its investment objective primarily through
investments in common stocks of foreign and domestic issuers.(4)
[bullet] 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
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present in domestic markets. See the Fund's prospectus for information
on risks inherent in this investment.(5)
[bullet] 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.(5)(a)
[bullet] Portfolio Partners, Inc. MFS Emerging Equities Portfolio seeks long
term growth of capital by investing primarily in common stocks issued
by companies that its sub-adviser believes are early in their life
cycle but which have the potential to become major enterprises
(emerging growth companies).(6)(a)
[bullet] Portfolio Partners, Inc. MFS Research Growth Portfolio seeks long term
growth of capital and future income by investing primarily in common
stocks or securities convertible into common stocks issued by companies
that the sub-adviser believes to possess better-than-average prospects
for long-term growth, and, to a lesser extent, in income-producing
securities including bonds and preferred stocks.(6)(a)
[bullet] Portfolio Partners, Inc. MFS Value Equity Portfolio seeks capital
appreciation by investing primarily in common stocks.(6)(a)
[bullet] Portfolio Partners, Inc. Scudder International Growth Portfolio seeks
long term growth of capital primarily through a diversified portfolio
of marketable foreign equity securities.(6)(b)
[bullet] Portfolio Partners, Inc. T. Rowe Price Growth Equity Portfolio seeks
long term capital and, secondarily, seeks to increase dividend income
by investing primarily in common stocks issued by a diversified group
of well-established growth companies.(6)(c)
* This Fund will be removed from the list of Funds as of the close of business
of the New York Stock Exchange on November 26, 1997, or as soon thereafter
as all Participants have redirected their allocations to other investment
options, since it will be closed to new investments after that date (except
reinvested dividends and capital gains earned on amounts already invested
in the Fund through the Separate Account and loan repayments automatically
deposited into the Fund pursuant to the Company's loan repayment
procedures).
Investment Advisers for each of the Funds:
(1) Aetna Life Insurance and Annuity Company (adviser); Aeltus Investment
Management, Inc. (sub-adviser)
(2) Calvert Asset Management Company, Inc.
(3) Fidelity Management & Research Company, Inc.
(4) Janus Capital Corporation
(5) Lexington Management Corporation
(a) Market Systems Research Advisors, Inc.
(sub-adviser)
(6) Aetna Life Insurance and Annuity Company (adviser);
(a) Massachusetts Financial Services Company (sub-adviser)
(b) Scudder, Stevens & Clark, Inc. (sub-adviser)
(c) T. Rowe Price Associates, Inc. (sub-advisers
Risks Associated with Investment in the Funds. Some of the Funds may use
instruments known as derivatives as part of their investment strategies. The
use of certain derivatives may involve high risk of volatility to a Fund, and
the use of leverage in connection with such derivatives can also increase risk
of losses. Some of the Funds may also invest in foreign or international
securities which involve greater risks than U.S. investments.
More comprehensive information, including a discussion of potential
risks, is found in the current prospectuses for each Fund which is distributed
with and accompanies this Prospectus. You should read the Fund prospectuses and
consider carefully, and on a continuing basis, which Fund or combination of
Funds is best suited to your long-term investment objectives. Additional
prospectuses and Statements of Additional Information for this Prospectus and
for each of the Funds can be obtained from the Company's Home Office at the
address and telephone number listed under the "Inquiries" section of the
Prospectus summary.
Conflicts of Interest (Mixed and Shared Funding). Shares of the Funds are
sold to each of the Subaccounts for funding the variable annuity contracts
issued by the Company. Shares of the Funds may also be sold to other insurance
companies for the same purpose. This is referred to as "shared funding." Shares
of the Funds may also be used for funding variable life insurance contracts
issued by the Company or by third parties. This is referred to as "mixed
funding."
Because the Funds available under the Contract are sold to fund variable
annuity contracts and variable life insurance policies issued by us or by other
companies, certain conflicts of interest could arise. If a conflict of interest
were to occur, one of the separate accounts might withdraw its investment in a
Fund, which might force that Fund to sell portfolio securities at
disadvantageous prices, causing its per share value to
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decrease. Each Fund's Board of Directors or Trustees has agreed to monitor
events in order to identify any material irreconcilable conflicts which might
arise and to determine what action, if any, should be taken to address such
conflict.
CREDITED INTEREST OPTIONS
Purchase Payments may be allocated to one or more of the Credited
Interest Options available under the Contract, as described below. SUNY may
elect not to offer all Credited Interest Options under its Plan.
[bullet] The Guaranteed Accumulation Account (GAA) is a credited interest
option through which we guarantee stipulated rates of interest for
stated periods of time. Amounts must remain in the GAA for the full
guaranteed term to received the quoted interest rates, or a market
value adjustment (which may be positive or negative) will be applied.
(See Appendix I.)
[bullet] The Fixed Plus Account is also a part of the Company's general account
and guarantees a minimum interest rate, as specified in the Contract.
The Company may credit higher interest rates at its discretion.
Withdrawals and transfers from the Fixed Plus Account are limited.
(See Appendix II.)
PURCHASE
================================================================================
CONTRACT AVAILABILITY
The Contracts are designed to fund the SUNY Plan and to accept transfers
of amounts made to the predecessor program which is qualified under Section
403(b) of the Code. Two Contracts have been issued: one for transferred assets
from the predecessor Section 403(b) SUNY optional retirement program ("Rollover
Contract"), and one for ongoing contributions and transferred assets from a
plan qualified under Sections 401(a) and 414(h) of the Code ("Modal Contract").
Contracts are issued in allocated form which means that one or more
individual accounts are established for each Participant. Two accounts will be
established under each Contract: an Employer Account and an Employee Account.
Under a Rollover Contract, Purchase Payments attributable to a transfer
of after-tax employee contributions made to the predecessor 403(b) SUNY
optional retirement program are allocated to the Employee Account, and Purchase
Payments attributable to a transfer of employer contributions made to the
predecessor Section 403(b) SUNY optional retirement program are allocated to
the Employer Account.
Under a Modal Contract, ongoing Purchase Payments made pursuant to
Section 414(h) of the Code and transferred funds attributable to Code Section
414(h) contributions from another investment provider under the SUNY Plan are
allocated to the Employee Account, and ongoing Purchase Payments made pursuant
to Section 401(a) of the Code and transferred funds attributable to Code
Section 401(a) contributions from another investment provider under the SUNY
Plan are allocated to the Employer Account. (See also "Tax Status.")
CONTRACT PURCHASE
Employees of SUNY may fill out an enrollment form (or forms) and return
it to the Company for review, acceptance or rejection. The Company must accept
or reject the enrollment form within two business days of receipt. If the
enrollment materials are incomplete, the Company may hold any forms and
accompanying Purchase Payments for five days. Purchase Payments may be held for
longer periods pending acceptance of the forms only with consent of the
Participant, or under limited circumstances, with the consent of the Contract
Holder. If we agree to hold Purchase Payments for longer than the five business
days based on the consent of the Contract Holder, the Purchase Payments will be
deposited in the Aetna Variable Encore Fund Subaccount until the forms are
completed.
PURCHASE PAYMENTS
As discussed above, Purchase Payments can be applied to the Contracts
either through a lump-sum transfer of existing plan assets, or through ongoing
contributions. For Modal Contracts, the Code imposes a maximum limit on annual
Purchase Payments that may be contributed to a 401(a) Plan on your behalf. (See
"Tax Status.")
Allocation of Purchase Payments. Purchase Payments will initially be
allocated to the Subaccounts or Credited Interest Options as specified by the
Participant on the enrollment form. Changes in such allocation may be
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made in writing or by telephone transfer. Allocations must be in whole
percentages. (See "Transfers.")
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 to be used for
allocations to both your Employee and Employer Accounts. You may elect an
Annuity 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.
RIGHT TO CANCEL
Participation under the Contract may be cancelled without penalty by
returning the certificate to the Aetna Processing Office with a written notice
of your intent to cancel. You have ten days to exercise this right. We will
produce a refund of the Purchase Payment (plus or minus any increase or
decrease in value) not later than seven days after we receive the certificate
and the written notice at the Aetna Processing Office.
CHARGES AND DEDUCTIONS
================================================================================
DAILY DEDUCTIONS FROM THE SEPARATE ACCOUNT
Mortality and Expense Risk Charge. The Company makes a daily deduction
from each of the Subaccounts for the mortality and expense risk charge. The
charge is equal, on an annual basis, to 1.25% of the daily net assets of the
Subaccounts and compensates the Company for the assumption of the mortality and
expense risks under the Contract. The mortality risks are those assumed for our
promise to make lifetime payments according to annuity rates specified in the
Contract. The expense risk is the risk that the actual expenses for costs
incurred under the Contract will exceed the maximum costs that can be charged
under the Contract.
If the amount deducted for mortality and expense risks is not sufficient
to cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess may be used to
recover distribution expenses relating to the Contracts and as a source of
profit to the Company. The Company expects to make a profit from the mortality
and expense risk charge.
Administrative Expense Charge. The Company reserves the right to make a
deduction from each of the Subaccounts for an administrative expense charge.
The administrative expense charge compensates the Company for its
administrative expenses incurred in connection with the Contract. The charge is
set at a level which does not exceed the average expected cost of the
administrative services to be provided while the Contract is in force. The
Company does not expect to make a profit from this charge.
Under the Contract, the amount of the administrative expense charge may
be an amount equal, on an annual basis, to a maximum of 0.25% of the daily net
assets of the Subaccounts. There is currently no administrative expense charge
during the Accumulation Period or Annuity Period. Once an Annuity Option is
elected, the charge will be established and will be effective during the entire
Annuity Period.
FUND EXPENSES
Each Fund incurs certain expenses which are paid out of its net assets.
These expenses include, among other things, the investment advisory or
"management" fee. The expenses of the Funds are set forth in the Fee Table in
this Prospectus and described more fully in the accompanying Fund prospectuses.
PREMIUM AND OTHER TAXES
Several states and municipalities impose a premium tax on Annuities.
These taxes currently range from 0% to 4%; however, there is currently no
premium tax on annuity contracts issued in the state of New York. In states
that do impose a premium tax, the Company reserves the right to deduct the tax
from Purchase Payments or Account Values at any time, but no earlier than when
we have a tax liability under state law. The Company's current practice is to
deduct for premium taxes at the time of complete withdrawal or annuitization.
In addition to the premium tax, the Company reserves the right to assess a
charge for any state or federal taxes due against the Contract or the Separate
Account assets. (See "Tax Status.")
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CONTRACT VALUATION
================================================================================
ACCOUNT VALUE
Until the Annuity Date, the Account Value is the total dollar value of
amounts held in your Account as of any Valuation Date. The Account Value at any
given time is based on the value of the units held in each Subaccount, plus the
value of amounts held in any of the Credited Interest Options.
ACCUMULATION UNITS
The value of your interests in a Subaccount is expressed as the number of
"Accumulation Units" that you hold multiplied by an "Accumulation Unit Value"
(or "AUV") for each unit. The AUV on any Valuation Date is determined by
multiplying the value on the immediately preceding Valuation Date by the net
investment factor of that Subaccount for the period between the immediately
preceding Valuation Date and the current Valuation Date. (See "Net Investment
Factor" below.) The Accumulation Unit Value will be affected by the investment
performance, expenses and charges of the applicable Fund and is reduced each
day by a percentage that accounts for the daily assessment of mortality and
expense risk charges and the administrative charge (if any).
Initial Purchase Payments will be credited to your Account at the AUV
computed on the next Valuation Date following our acceptance of the enrollment
materials, as described under "Purchase--Contract Purchase". Each subsequent
Purchase Payment (or amount transferred) received by the Company by the close
of business of the New York Stock Exchange will be credited to your Account at
the AUV computed on the next Valuation Date following our receipt of your
payment or transfer request. The value of an Accumulation Unit may increase or
decrease.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment performance
of a Subaccount from one Valuation Date to the next. The net investment factor
for a Subaccount for any valuation period is equal to the sum of 1.0000 plus
the net investment rate. The net investment rate equals:
(a) the net assets of the Fund held by the Subaccount on the current
Valuation Date, minus
(b) the net assets of the Fund held by the Subaccount on the preceding
Valuation Date, plus or minus
(c) taxes or provisions for taxes, if any, attributable to the operation
of the Subaccount;
(d) divided by the total value of the Subaccount's Accumulation and
Annuity Units the preceding Valuation Date;
(e) minus a daily charge at the annual effective rate of 1.25% for
mortality and expense risks and up to 0.25% as an administrative
expense charge (currently 0%).
The net investment rate may be either positive or negative.
TRANSFERS
================================================================================
At any time prior to the Annuity Date, you can transfer amounts held
under your Accounts from one Subaccount to another. Transfers between the
Credited Interest Options and the Subaccounts are subject to certain
restrictions (See Appendices I and II). A request for transfer can be made
either in writing or by telephone. The telephone transfer privilege is
available automatically; no special election is necessary. All transfers must
be in accordance with the terms of the Contract and your Plan, as applicable.
The Company currently allows unlimited transfers of accumulated amounts
to available investment options without charge, provided that the transfer
amount is not less than $500. The total number of investment options in which
you may invest during the Accumulation Period is limited. (See "Investment
Options--The Funds.") Any transfer will be based on the Accumulation Unit Value
next determined after the Company receives a valid transfer request at its Home
Office. Transfers are not available during the Annuity Period.
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WITHDRAWALS
================================================================================
You may withdraw all or a portion of the 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. Payments
for withdrawal requests will be made in accordance with SEC requirements, but
normally not later than seven calendar days following our receipt of a
disbursement form.
Withdrawals may be requested in one of the following forms:
[bullet] Full Withdrawal of an Account: The amount paid for a full withdrawal
will be the Account Value allocated to the Subaccounts and the,
Guaranteed Accumulation Account (plus or minus a market value
adjustment) (see Appendix I), plus the amount available for withdrawal
from the Fixed Plus Account (see Appendix II).
[bullet] Partial Withdrawals: The amount paid will be the percentage or dollar
amount of the Account Value requested; however, the amount available
for withdrawal from the Fixed Plus Account is limited (see Appendix
II).
For any partial withdrawal, amounts will be withdrawn proportionately
from the Subaccounts or Credited Interest Option in which the Account is
invested, unless you request otherwise. All amounts paid will be based on
Account Values as of the next Valuation Date after we receive a request for
withdrawal at our Home Office, or on such later date as the disbursement form
may specify. A 20% federal income tax may be withheld from amounts paid
directly to you. (See "Tax Status--Contracts Used with Certain Retirement
Plans.")
REINVESTMENT PRIVILEGE
You may elect to reinvest all or a portion of the proceeds received from
a full withdrawal of your Account within 30 days after such withdrawal has been
made. Accumulation Units will be credited to the Account for the amount
reinvested. Reinvested amounts will be reallocated to the applicable investment
options in the same proportion as they were allocated at the time of
withdrawal. Accumulation Units will be credited to your Account based on the
Accumulation Unit Value next computed following our receipt of your request
along with the amount to be reinvested. The reinvestment privilege may be used
only once. See Appendix I for a discussion of amounts withdrawn from GAA and
then reinvested. If you are contemplating reinvestment, you should seek
competent advice regarding the tax consequences associated with such a
transaction.
ADDITIONAL WITHDRAWAL OPTIONS
================================================================================
Subject to state regulatory approval, the Company offers certain
withdrawal options under the Contract that are not considered annuity options
("Additional Withdrawal Options"). To exercise these options, your Account
Value must meet the minimum dollar amounts and age criteria applicable to that
option. In addition, for Employer and certain Employee Accounts, the Contract
Holder must provide written certification that the distribution is in
accordance with the terms of the Plan. The Additional Withdrawal Options that
may be available under the Contract include the following:
[bullet] SWO--Systematic Withdrawal Option. SWO is a series of partial
withdrawals from your Account based on a payment method you select. It
is designed for those who want a periodic income while retaining
investment flexibility for amounts accumulated under a Contract. (This
option may not be elected if you have an outstanding contract loan.)
[bullet] ECO--Estate Conservation Option. ECO offers the same investment
flexibility as SWO but is designed for those who want to receive only
the minimum distribution that the Code requires each year. Under ECO,
the Company calculates the minimum distribution amount required by law
at the later of age 70-1/2 or retirement, or for 5% owners at age
70-1/2 and pays you that amount once a year. (See "Tax Status.")
Other Additional Withdrawal Options may be added from time to time.
Information relating to any of the Additional Withdrawal Options may be
obtained from your local representative or from the Company at its Home Office.
If you select one of the Additional Withdrawal Options, you will retain
all of the rights and flexibility permitted under the Contract during the
Accumulation Period. Your Account Value will continue to be subject
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to the charges and deductions described in this Prospectus. Taking a withdrawal
under one of these Additional Withdrawal Options may have tax consequences. Any
person concerned about tax implications should consult a competent tax advisor
prior to electing an option.
Once you elect an Additional Withdrawal Option, you may revoke it any
time by submitting a written request to our Home Office. Once an option is
revoked, it may not be elected again, nor may any other Additional Withdrawal
Option be elected unless permitted by the Code. The Company reserves the right
to discontinue the availability of one or all of these Additional Withdrawal
Options at any time, and/or to change the terms of future elections.
DEATH BENEFIT DURING ACCUMULATION PERIOD
================================================================================
The Contract provides that a death benefit is payable to the
Beneficiary(ies) upon the death of the Participant before the Annuity Date. The
amount of the death benefit will be equal to the Account Value. Death benefit
proceeds may be paid to the Beneficiary:
[bullet] in a lump sum; or
[bullet] in accordance with any of the Annuity Options available under the
Contract; or
[bullet] under any Additional Withdrawal Options available under the Contract
(if the Beneficiary is your spouse).
The Beneficiary may instead elect one of the following two options;
however, the Code limits how long the death benefit proceeds may be left in
these options (see below):
[bullet] to leave the Account Value invested in the Contract; or
[bullet] to leave the Account Value on deposit in the Company's general
account, and to receive monthly, quarterly, semi-annual or annual
interest payments at the interest rate then being credited on such
deposits. The balance on deposit can be withdrawn at any time or
applied to an Annuity Option.
When paying the Beneficiary, we will determine the Account Value on the
Valuation Date following the date on which the Aetna Processing Office receives
proof of death acceptable to the Company. Interest, if any, will be paid from
the date of death at a rate no less than required by law. We will mail payment
to the Beneficiary within seven days after we receive proof of death and the
request for payment.
The Code requires that distribution of death proceeds begin within a
certain period of time. Generally, either payments must begin by December 31 of
the year following the year of your death, or the entire value of your benefits
must be distributed by December 31 of the fifth year following the year of your
death. If your Beneficiary is your spouse, he or she is not required to begin
distributions until the year you would have attained age 70-1/2. In no event may
payments extend beyond the life expectancy of the Beneficiary or any period
certain greater than the Beneficiary's life expectancy. If no elections are
made, no distributions will be made. Failure to commence distributions within
the above time periods can result in tax penalties. Regardless of the method of
payment, death benefit proceeds will generally be taxed to the Beneficiary in
the same manner as if you had received those payments. (See "Tax Status.")
ANNUITY PERIOD
================================================================================
ANNUITY PERIOD ELECTIONS
The Code generally requires that minimum annual distributions of the
Account Value must begin by April 1st of the calendar year following the
calendar year in which you attain age 70-1/2 or retire, whichever is later. In
addition, distributions must be in a form and amount sufficient to satisfy the
Code requirements. These requirements may be satisfied by the election of
certain Annuity Options or Additional Withdrawal Options. (See "Tax Status.")
At least 30 days prior to the Annuity Date, you must notify the Aetna
Processing Office in writing of the following:
[bullet] the date on which you would like to start receiving annuity payments;
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[bullet] the Annuity Option under which you want your payments to be calculated
and paid;
[bullet] whether the payments are to be made monthly, quarterly, semi-annually
or annually; and
[bullet] the investment option(s) used to provide annuity payments (i.e., a
fixed annuity using the general account or any of the Subaccounts
available at the time of annuitization). As of the date of this
Prospectus, Aetna Variable Fund, Aetna Income Shares and Aetna
Investment Advisers Fund, Inc. are the only Subaccounts available.
(See "Annuity Options.")
Annuity payments will not begin until you have selected an Annuity
Option. Until a date and option are elected, the Account will continue in the
Accumulation Period. Once Annuity payments begin, the Annuity Option may not be
changed, nor may transfers be made among the investment option(s) selected.
ANNUITY OPTIONS
You may choose one of the following Annuity Options:
Lifetime Annuity Options:
[bullet] Option 1--Life Annuity--An annuity with payments ending on the
Annuitant's death.
[bullet] Option 2--Life Annuity with Guaranteed Payments--An annuity with
payments guaranteed for 5, 10, 15 or 20 years, or such other periods as
the Company may offer at the time of annuitization.
[bullet] Option 3--Life Income based Upon the Lives of Two Payees--An annuity
will be paid during the lives of the Annuitant and a second Annuitant,
with 100%, 66-2/3% or 50% of the payment to continue after the first
death, or 100% of the payment to continue at the death of the second
Annuitant and 50% of the payment to continue at the death of the
Annuitant.
[bullet] Option 4--Life Income based Upon the Lives of Two Payees--An annuity
with payments for a minimum of 120 months, with 100% of the payment to
continue after the first death.
If Option 1 or 3 is elected, it is possible that only one Annuity Payment
will be made if the Annuitant under Option 1, or the surviving Annuitant under
Option 3, should die prior to the due date of the second Annuity Payment. Once
lifetime Annuity payments begin, the Annuitant cannot elect to receive a
lump-sum settlement.
Nonlifetime Annuity Options:
[bullet] Option 1--Payments for a Specified Period--payments will continue for
a specified period of time, as provided for under your Contract.
Under the nonlifetime option, the type of annuity (fixed or variable) and
the number of years that may be selected are determined by the investment
options used prior to annuitization. For amounts held in the Fixed Plus
Account, the Annuity must be paid on a fixed basis and payments may be made for
6-30 years. For amounts held in the Subaccounts or the Guaranteed Accumulation
Account, an annuity may be selected on a fixed or variable basis and payments
may be made for 3-30 years. If this option is elected on a variable basis, the
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 may also offer additional Annuity Options under your Contract from
time to time.
ANNUITY PAYMENTS
Duration of Annuity Payments. Annuity Payments may not extend beyond (a)
the life of the Annuitant, (b) the joint lives of the Annuitant and
Beneficiary, (c) a period certain greater than the Annuitant's life expectancy,
or (d) a period certain greater than the joint life expectancies of the
Annuitant and Beneficiary.
Amount of Each Annuity Payment. The amount of each payment depends on how
you allocate your Account Value between fixed and variable payouts. No election
may be made that would result in the first Annuity Payment of less than $20, or
total yearly Annuity Payments of less than $100. If your Account Value on the
Annuity Date is insufficient to elect an option for the minimum amount
specified, a lump-sum payment must be elected.
If Annuity Payments are to be made on a variable basis, the first and
subsequent payments will vary depending on the assumed net investment rate
selected (3-1/2% or 5% per annum). Selection of a 5% rate causes a higher first
payment, but Annuity Payments will increase thereafter only to the extent that
the net investment rate exceeds 5% on an annualized basis. Annuity Payments
would decline if the rate were below 5%. Use of the 3-1/2% assumed rate causes a
lower first payment, but subsequent payments would increase more rapidly or
decline more slowly as changes occur in the net investment rate. (See the
Statement of Additional Information for further discussion on the impact of
selecting an assumed net investment rate.)
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CHARGES DEDUCTED DURING THE ANNUITY PERIOD
We make a daily deduction for mortality and expense risks from any
amounts held on a variable basis. Therefore, electing the nonlifetime option on
a variable basis will result in a deduction being made even though we assume no
mortality risk. We may also deduct a daily administrative expense charge from
amounts held under the variable options. (See "Charges and Deductions.")
DEATH BENEFIT PAYABLE DURING THE ANNUITY PERIOD
If an Annuitant dies after Annuity Payments have begun, any death benefit
payable will depend on the terms of the Contract and the Annuity Option
selected. If Option 1 or Option 3 was elected, Annuity Payments will cease on
the death of the Annuitant under Option 1 or the death of the surviving
Annuitant under Option 3.
If Lifetime Option 2 or Option 4 was elected and the death of the
Annuitant under Option 2, or the surviving Annuitant under Option 4, occurs
prior to the end of the guaranteed minimum payment period, we will pay to the
Beneficiary in a lump sum, unless otherwise requested, the present value of the
guaranteed annuity payments remaining.
If the nonlifetime option was elected, and the Annuitant dies before all
payments are made, the value of any remaining payments may be paid in a
lump-sum to the beneficiary (unless otherwise requested).
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.
Any lump-sum payment paid under the applicable lifetime or nonlifetime
Annuity options will be made within seven calendar days after proof of death
acceptable to us, and a request for payment are received at the Aetna
Processing Office. Under Options 2 and 4, the value of any death benefit
proceeds will be determined as of the next Valuation Date after we receive
acceptable proof of death and a request for payment. Such value will be reduced
by any payments made after the date of death.
TAX STATUS
================================================================================
INTRODUCTION
The following provides a general discussion and is not intended as tax
advice. This discussion reflects the Company's understanding of current federal
income tax law. Such laws may change in the future, and it is possible that any
change could be retroactive (i.e., effective prior to the date of the change).
The Company makes no guarantee regarding the tax treatment of any contract or
transaction involving a Contract. The ultimate effect of federal income taxes
on the amounts held under a Contract, on Annuity Payments, and on the economic
benefit to the Contract Holder, Participant or Beneficiary may depend upon the
tax status of the individual concerned. Any person concerned about these tax
implications should consult a competent tax adviser before initiating any
transaction.
TAXATION OF THE COMPANY
The Company is taxed as a life insurance company under the Code. Since the
Separate Account is not an entity separate from the Company, it will not be
taxed separately as a "regulated investment company" under the Code. Investment
income and realized capital gains are automatically applied to increase
reserves under the Contracts. Under existing federal income tax law, the
Company believes that the Separate 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 interpretation 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.
CONTRACTS USED WITH CERTAIN RETIREMENT PLANS
In General. The Contracts are designed to provide retirement benefits to
Participants of the SUNY Plan. Purchase Payments made under Sections 401(a),
414(h) and 403(b) of the Code are permitted under the Contracts.
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The Company makes no attempt to provide more than general information
about use of the Contracts with the various types of retirement plans.
Participants as well as beneficiaries are cautioned that the rights of any
person to any benefits under the Contracts may be subject to the terms and
conditions of the plans themselves, in addition to the terms and conditions of
the Contracts issued in connection with such plans. Some retirement plans are
subject to limitations on distribution and other requirements that are not
incorporated in the Contracts. Purchasers are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts satisfy applicable laws, and should consult their legal counsel and
tax adviser regarding the suitability of the Contract.
Minimum Distribution Requirements. The Code has required distribution
rules for Section 403(b) and 401(a) plans. Under 403(b) plans, distributions of
amounts held as of December 31, 1986 must generally begin by the end of the
calendar year in which you attain age 75 or retire, if later. However, special
rules require that some or all of that balance be distributed earlier if any
distributions are taken in excess of the minimum required amount. For
Participants other than 5% owners, distributions under 401(a) plans, and
distributions attributable to contributions under Section 403(b) plans made on
or after January 1, 1987 (including any earnings on the entire Account Value
after that date), must generally 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. For 5% owners, such distributions must begin April 1st of the
calendar year following the calendar year in which you attain age 70-1/2.
In general, annuity payments must be distributed over your life or the
joint lives of you and your beneficiary, or over a period not greater than your
life expectancy or the joint life expectancies of you and your beneficiary.
If you die after the required minimum distribution has 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. However, if the
minimum required distribution is calculated each year based on your single life
expectancy or the joint life expectancies of you and your beneficiary, the
regulations for Code Section 401(a)(9) provide specific rules for calculating
the minimum required distributions at your death. For example, if you have
elected ECO with the calculation based on your single life expectancy, and the
life expectancy is recalculated each year, your recalculated life expectancy
becomes zero in the calendar year following your death and the entire remaining
interest must be distributed to your beneficiary by December 31 of the year
following your death. However, a spousal beneficiary has certain rollover
rights which can only be exercised in the year of your death. The rules are
complex and you should consult your tax adviser before electing the method of
calculation to satisfy the minimum distribution requirements.
If you die before the required minimum distribution has commenced, your
entire interest must be distributed by December 31 of the calendar year
containing the fifth anniversary of the date of your death. Alternatively,
payments may be made over the life of the beneficiary or over a period not
extending beyond the life expectancy of the beneficiary provided the
distribution begins by December 31 of the calendar year following the calendar
year of your death. If the Beneficiary is your spouse, distribution must begin
by the later of December 31 of the calendar year following the calendar year of
your death or December 31 of the calendar year in which you would have attained
age 70-1/2.
If you fail to receive the minimum required distribution for any tax
year, a 50% excise tax is imposed on the required amount that was not
distributed.
Taxation of Distributions. All distributions will be taxed as they are
received unless you made a rollover contribution of the distribution to another
plan of the same type or to an individual retirement annuity/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.
In general, payments received by your beneficiaries after your death are
taxed in the same manner as if you have received those payments, except that a
limited death benefit exclusion may apply to payments made for deaths occuring
on or before August 20, 1996.
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
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may be provided the opportunity to elect not to have tax withheld from
distributions; however, certain distributions from 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 separated from service with
the plan sponsor at or after age 55, (e) the distribution amount is rolled over
into another plan of the same type in accordance with the terms of the Code, or
(f) the distribution amount is made in substantially equal periodic payments
(at least annually) over your life or life expectancy or the joint lives or
joint life expectancies of you and your plan beneficiary, provided you have
separated from service with the plan sponsor. In addition, the penalty tax does
not apply 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.
Section 403(b) Plans. Under Section 403(b), contributions made by public
school systems to purchase annuity contracts for their employees are generally
excludable from the gross income of the employee.
Generally, no amounts accumulated under the Contract will be taxable
prior to the time of actual distribution. However, the IRS has stated in
published rulings that a variable contract owner, including participants under
Section 403(b) Plans, will be considered the owner of separate account assets
if the owner possesses incidents of investment control over the assets. In
these circumstances, income and gains from the separate account assets would be
currently includable in the variable contract owner's gross income. The
Treasury announced that guidance would be issued in the future regarding the
extent to which owners could direct their investments among Subaccounts without
being treated as owners of the underlying assets of the Separate Account. It is
possible that the Treasury's position, when announced, may adversely affect the
tax treatment of existing contracts. The Company therefore reserves the right
to modify the Contract as necessary to attempt to prevent the owner from being
considered the federal tax owner of the assets of the Separate Account.
Section 401(a) Plans. Section 401(a) permits corporate employers to
establish various types of retirement plans for employees, and permits self-
employed individuals to establish various types of retirement plans for
themselves and for 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 except to a
participant as a means to provide benefit payments.
The Code imposes a maximum limit on annual Purchase Payments that may be
excluded from a Participant's gross income. Such limit must be calculated under
the Plan by the employer in accordance with Section 415 of the Code. This limit
is generally the lesser of 25% of your compensation or $30,000. In addition,
Purchase Payments will be excluded from a Participant's gross income only if
the 401(a) plan meets certain nondiscrimination requirements.
Section 414(h) Plans. Under Section 414(h) of the Code, where a
governmental employer "picks up" plan contributions otherwise designated as
employee contributions, the contributions are treated as employer
contributions. The 414(h) contributions are excluded from the employee's
taxable income and are not subject to federal income tax withholding.
MISCELLANEOUS
================================================================================
DISTRIBUTION
The Company will serve as the Principal Underwriter for the securities
sold by this Prospectus. The Company is registered as a broker-dealer with the
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.
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Payment of Commissions. Persons offering and selling the Contracts may
receive commissions in connection with the sale of the Contracts. The maximum
percentage amount that the Company will ever pay as commission with respect to
any given Purchase Payment is with respect to those made during the first year
of Purchase Payments under an Account. The percentage amount will range from 1%
to 4% of those Purchase Payments. The Company may 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
approximately 3% of the total Purchase Payments made over the life of an
average Contract. In addition, some sales personnel may receive various types
of non-cash compensation as special sales incentives, including trips and
educational and/or business seminars. Supervisory and other management
personnel of the Company may receive compensation that will vary based on the
relative profitability to the Company of the funding options you select.
Funding options that invest in Funds advised by the Company or its affiliates
are generally more profitable to the Company. 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 in your
enrollment materials. Commissions and sales related expenses are paid by the
Company and are not deducted from Purchase Payments. (See "Charges and
Deductions.")
Third Party Compensation Arrangements. 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.
DELAY OR SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of payment
for any benefit or values (a) on any Valuation Date on which the New York Stock
Exchange ("Exchange") is closed (other than customary weekend and holiday
closings) or when trading on the Exchange is restricted; (b) when an emergency
exists, as determined by the SEC, so that disposal of securities held in the
Subaccounts is not reasonably practicable or it is not reasonably practicable
for the Company fairly to determine the value of the Subaccount's assets; or
(c) during such other periods as the SEC may by order permit for the protection
of investors. The conditions under which restricted trading or an emergency
exists shall be determined by the rules and regulations of the SEC.
PERFORMANCE REPORTING
From time to time, the Company may advertise different types of
historical performance for the Subaccounts of the Separate Account. The Company
may advertise the "standardized average annual total returns" of the
Subaccounts, calculated in a manner prescribed by the SEC, as well as the
"non-standardized returns." "Standardized average annual total returns" and
"non-standardized average annual total returns" are computed according to a
formula in which a hypothetical investment of $1,000 is applied to the
Subaccount and then related to the ending redeemable values over the most
recent one, five and ten-year periods (or since inception, if less than ten
years). Standardized and non-standardized returns will reflect the reduction of
all recurring charges during each period (e.g., mortality and expense risk
charges and any administrative expense charge). The non-standardized figures
may also include monthly, quarterly, year-to-date or three-year periods.
The Company may also advertise certain ratings, rankings or other
information related to the Company, the Subaccounts or the Funds. Further
details regarding performance reporting and advertising are described in the
Statement of Additional Information.
VOTING RIGHTS
In accordance with the Company's view of present applicable law, it will
vote the shares of each of the Funds held by the Separate Account at regular
and special meetings of Fund shareholders in accordance with instructions
received from persons having a voting interest in the Separate Account.
Participants and Annuitants have a fully vested (100%) interest in the benefits
provided under the Contract and may instruct the Contract Holder how to direct
the Company to cast the votes for the portion of the Account Value or valuation
reserve attributable to their Accounts. Currently, the Company obtains
participant voting instructions directly from the participants, subject to the
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receipt of authorization from the Contract Holder to accept such instructions.
The Company will vote shares for which it has not received instructions in the
same proportion as it votes shares for which it has received instructions.
Each person having a voting interest in the Separate Account will receive
periodic reports relating to the Fund(s) in which he or she has an interest, as
well as any proxy materials and a form on which to give voting instructions.
Voting instructions will be solicited by written communication at least 14 days
before such meeting. The number of votes to which each person may give
direction will be determined as of the record date set by the Fund.
The number of votes which the Contract Holder or the Participant, as
applicable, may cast during the Accumulation Period is equal to the portion of
the Account Value 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.
MODIFICATION OF THE CONTRACT
The Company may change the Contract as required by federal or state law.
In addition, the Company may, upon 30 days written notice to the Contract
Holder, make other changes to the Contracts that would apply only to
individuals who become Participants under that Contract after the effective
date of such changes. If the Contract Holder does not agree to a change, no new
Participants will be covered under the Contract. Certain changes will require
the approval of appropriate state or federal regulatory authorities.
TRANSFER OF OWNERSHIP; ASSIGNMENT
No assignment of a Contract will be binding on us unless made in writing
and sent to us at our Aetna Processing Office. The Company will use reasonable
procedures to confirm that the assignment is authentic, including verification
of signature. If the Company fails to follow its procedures, it would be liable
for any losses to you directly resulting from the failure. Otherwise, we are
not responsible for the validity of any assignment. The rights of the Contract
Holder and the interest of the Annuitant and any Beneficiary will be subject to
the rights of any assignee of record.
LEGAL MATTERS AND PROCEEDINGS
The Company knows of no material legal proceedings pending to which the
Separate Account or the Company is a party or which would materially affect the
Separate Account. The validity of the securities offered by this Prospectus has
been passed upon by Counsel to the Company.
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CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
================================================================================
The Statement of Additional Information contains more specific information on
the Separate Account and the Contract, as well as the financial statements of
the Separate Account and the Company. A list of the contents of the SAI is set
forth below:
General Information and History
Variable Annuity Account C
Offering and Purchase of Contracts
Performance Data
General
Average Annual Total Return Quotations
Annuity Payments
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of the Company
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APPENDIX I
GUARANTEED ACCUMULATION ACCOUNT
================================================================================
The Guaranteed Accumulation Account ("GAA") is a credited interest option
available during the Accumulation Period under the Contracts discussed in this
Prospectus. Amounts allocated to Long-Term Classifications of GAA are held in a
noninsulated, nonunitized separate account. Amounts allocated to Short-Term
Classifications of GAA are held in the Company's general account. This Appendix
is a summary of GAA and is not intended to replace the GAA prospectus. You
should read the accompanying GAA prospectus carefully before investing.
GAA is a credited interest option in which we guarantee stipulated rates of
interest for stated periods of time on amounts directed to GAA. The interest
rate stipulated is an annual effective yield; that is, it reflects a full
year's interest. Interest is credited daily at a rate that will provide the
guaranteed annual effective yield for one year. This option guarantees the
minimum interest rate specified in the Contract.
During a specified period of time (the "deposit period"), amounts may be
applied to any or all available Guaranteed Terms within the Short-Term and
Long-Term classifications. Short-Term GAA has Guaranteed Terms from one to
three years, and Long-Term GAA has Guaranteed Terms from three to ten years.
Purchase Payments must remain in GAA for the full Guaranteed Term to receive
the quoted interest rates. Withdrawals or transfers from a Guaranteed Term
before the end of that Guaranteed Term may be subject to a market value
adjustment ("MVA"). An MVA reflects the change in the value of the investments
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 other available
investment options, or (c) withdrawn. Amounts withdrawn may be subject to
federal tax penalties or mandatory income tax withholding.
By notifying us at least 30 days prior to the Annuity Date, you may elect a
variable annuity and have amounts that have been accumulating under GAA
transferred to one or more of the Subaccounts available during the Annuity
Period. GAA cannot be used as an investment option during the Annuity Period.
MORTALITY AND EXPENSE RISK CHARGES
We make no deductions from the credited interest rate for mortality and
expense risks; these risks are considered in determining the credited rate.
TRANSFERS
Transfers are permitted among Guaranteed Terms. However, amounts applied
to GAA may not be transferred to another Guaranteed Term of GAA, or to any
other Subaccount or credited interest option available under the Contract,
during the deposit period or the 90 days after the close of the deposit period.
We will apply an MVA to transfers made before the end of a Guaranteed Term,
unless such transfer is due to the maturity of the Guaranteed Term.
REINVESTMENT PRIVILEGE
If amounts are withdrawn from GAA and reinvested, they will be applied to
the current deposit period. Amounts are proportionately reinvested in the same
manner as they were allocated before the withdrawal. Any negative MVA amount
applied to a withdrawal is not included in the reinvestment.
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APPENDIX II
FIXED PLUS ACCOUNT
================================================================================
The following summarizes material information concerning the Fixed Plus
Account. Amounts allocated to the Fixed Plus Account are held in the Company's
general account that supports general 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 the Prospectus regarding the Fixed Plus Account, may, however, be subject to
certain generally applicable provisions of the federal securities laws relating
to the accuracy and completeness of such statements. Disclosure in this
Appendix regarding the Fixed Plus Account has not been reviewed by the SEC.
The Fixed Plus Account guarantees the minimum Fixed Plus interest rate
specified in the Contract. The Company may credit a higher interest rate from
time to time. The current rate is subject to change at any time, but will never
fall below the guaranteed minimum. The Company's determination of interest
rates reflects the investment income earned on invested assets and the
amortization of any capital gains and/or losses realized on the sale of
invested assets. Under the Fixed Plus Account, the Company assumes the risk of
investment gain or loss by guaranteeing Account Values and promising a minimum
interest rate and Annuity Payment.
The Fixed Plus Account will reflect a compound interest rate credited by us.
The interest rate quoted is an annual effective yield. Amounts applied to the
Fixed Plus Account will earn the Fixed Plus interest rate in effect when
actually applied to the Fixed Plus Account. We make no deductions from the
credited interest rate for mortality and expense risks; these risks are
considered in determining the credited rate.
Beginning in the tenth Account Year, we will credit amounts held in the Fixed
Plus Account with an interest rate that is at least 0.25% higher than the
then-declared interest rate for the Fixed Plus Account for Accounts that have
not reached their tenth anniversary.
FIXED PLUS ACCOUNT WITHDRAWALS
The amount eligible for partial withdrawal is 20% of the amount held in
the Fixed Plus Account on the day a written request is received at the Aetna
Processing Office. Such amount will be reduced by any Fixed Plus Account
withdrawals, transfers or annuitizations made during the prior 12 months. In
calculating the 20% limit, we reserve the right to include payments made due to
the election of any Additional Withdrawal Options.
If a full withdrawal is requested, we will pay any amounts held in the
Fixed Plus Account, with interest, in five annual payments equal to:
1. One-fifth of the Fixed Plus Account Value on the day the request is
received, reduced by any Fixed Plus Account withdrawals, transfers or
annuitizations made during the prior 12 months;
2. One-fourth of the remaining Fixed Plus Account Value 12 months later;
3. One-third of the remaining Fixed Plus Account Value 12 months later;
4. One-half of the remaining Fixed Plus Account Value 12 months later; and
5. The balance of the Fixed Plus Account Value 12 months later.
Once we receive a request for a full withdrawal, 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. We will waive the Fixed Plus Account full withdrawal
provision and pay the Account Value in a lump sum if a full withdrawal is made
(a) due to the Participant's death before the Annuity Date; (b) due to the
election of a fixed lifetime or non-lifetime Annuity option or a variable
lifetime Annuity option; or (c) if the Fixed Plus Account value is $3,500 or
less and the amount withdrawn is to be transferred to another investment
program under the SUNY Plan and no withdrawals, transfers or annuitizations
have been made from the Account within the
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prior 12 months; or (d) when the Account Value 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 Fixed Plus Account Values described
above, the Contract Holder may elect the following. If the Contract Holder
intends to surrender the entire Contract, the Company must be notified of such
intent no less than 60 days prior to the proposed withdrawal date. Within 30
days of its receipt of such notice, the Company will supply the Contract Holder
with the specific period and interest rate that would apply to a complete
surrender of the Contract under option (b) below. The Contract Holder must then
irrevocably elect, in writing, to receive the total of all current Account
Values invested in the Fixed Plus Account in either (a) the manner described
under "Fixed Plus Account Withdrawals" above; or (b) 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 we receive a written request,
reduced by any Fixed Plus Account withdrawals, transfers or annuitizations made
during the prior 12 months. In calculating the 20% limit, we reserve the right
to include payments made due to the election of one of the Additional
Withdrawal Options. The 20% limit on transfers will be waived when the value in
the Fixed Plus Account is $1,000 or less.
By notifying us at the Aetna Processing Office at least 30 days before the
Annuity Date, you may elect to have amounts which have been accumulating under
the Fixed Plus Account transferred to one or more of the Subaccounts available
during the Annuity Period to provide lifetime variable Annuity Payments.
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For Master Applications Only
I hereby acknowledge receipt of an Account C State University of New York
"SUNY" Group Deferred Variable Annuity prospectus dated November 28, 1997, as
well as all current prospectuses pertaining to the variable investment options
available under the Contracts.
___ Please send an Account C Statement of Additional Information (Form No.
SAI.81216-97) dated May 1, 1997.
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CONTRACT HOLDER'S SIGNATURE
- --------------------------------------------------------------------------------
DATE
PROS.81216-97A
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<PAGE>
VARIABLE ANNUITY ACCOUNT C
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Supplement dated November 28, 1997 to May 1, 1997 Statement of Additional
Information for Group Variable Annuity Contracts issued to
The State University of New York ("SUNY") Defined Contribution Plan.
Information in this supplement amends the Statement of Additional Information
dated May 1, 1997 for The State University of New York Defined Contribution Plan
- - Group Variable Multiple Option Annuity Contracts (the "Statement") and should
be read in conjunction with the Statement. Capitalized terms are defined by
either the Statement or the Prospectus.
The following Funds are currently available under The State University of New
York Defined Contribution Plan - Group Variable Multiple Option Annuity
Contracts:
Aetna Variable Fund Fidelity VIP II Index 500 Portfolio
Aetna Income Shares Fidelity VIP Equity Income Portfolio
Aetna Variable Encore Fund Janus Aspen Aggressive Growth Portfolio
Aetna Investment Advisers Fund, Inc. Janus Aspen Growth Portfolio
Aetna Ascent Variable Portfolio Janus Aspen Worldwide Growth Portfolio
Aetna Crossroads Variable Portfolio Lexington Emerging Markets Fund, Inc.
Lexington Natural Resources Trust*
Aetna Legacy Variable Portfolio Portfolio Partners, Inc. MFS Emerging
Equities Portfolio
Aetna Variable Index Plus Portfolio Portfolio Partners, Inc. MFS Research
Growth Portfolio
Calvert Responsibly Invested Portfolio Partners, Inc. MFS Value Equity
Balanced Portfolio Portfolio
Fidelity VIP II Asset Manager Portfolio Partners, Inc. Scudder
Portfolio International Growth Portfolio
Fidelity VIP II Contrafund Portfolio Partners, Inc. T. Rowe Price
Portfolio Growth Equity Portfolio
* This Fund will be removed from the list of Funds as of the close of business
of the New York Stock Exchange on November 26, 1997, or as soon thereafter
as all Participants have redirected their allocations to other investment
options, since it will be closed to new investments after that date (except
reinvested dividends and capital gains earned on amounts already invested in
the Fund through the Separate Account and loan repayments automatically
deposited into the Fund pursuant to the Company's loan repayment
procedures).
A complete description of each fund, including investment objectives, policies,
risks, fees and expenses, is contained in its individual prospectus and
statement of additional information.
The table below reflects standardized and non-standardized average annual total
return quotations for the periods ended December 31, 1996 for the Subaccounts
available under the Contract. The average annual return since inception is
substituted for Subaccounts with no results available for the indicated calendar
periods (denoted by a '*').
The following is a supplement to the chart on page 5 of the Statement:
<TABLE>
<CAPTION>
SINGLE PURCHASE PAYMENT FUND
CONTRACT STANDARDIZED NON-STANDARDIZED INCEPTION
($0 MAINTENANCE FEE) DATE
- --------------------------------------------------------------------------------------------------
1 5 10 1 3 5 10
SUBACCOUNT Year Years Years Year Years Years Years
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Ascent Variable 26.39% 21.83%* n/a 26.39% 21.83%* n/a n/a 07/05/95
Portfolio
- --------------------------------------------------------------------------------------------------
Aetna Crossroads 21.50% 17.92%* n/a 21.50% 17.92%* n/a n/a 07/05/95
Variable Portfolio
- --------------------------------------------------------------------------------------------------
Aetna Legacy Variable 17.06% 14.05%* n/a 17.06% 14.05%* n/a n/a 07/05/95
Portfolio
- --------------------------------------------------------------------------------------------------
Aetna Variable Index 33.74%* n/a n/a 33.74%* n/a n/a n/a 09/16/96
Plus Portfolio
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</TABLE>
<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:*
- Statement of Assets and Liabilities as of December 31, 1996
- Statements of Operations and Changes in Net Assets for the
years ended December 31, 1996 and 1995
- Notes to Financial Statements
- Independent Auditors' Report
Financial Statements of the Depositor:*
- Independent Auditors' Report
- Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994
- Consolidated Balance Sheets as of December 31, 1996 and 1995
- Consolidated Statements of Changes in Shareholder's Equity for
the years ended December 31, 1996, 1995 and 1994
- Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994
- Notes to Consolidated Financial Statements
* Incorporated by reference to the Statement of Additional Information
(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) Broker-Dealer Agreement(2)
(3.2) Alternative Form of Wholesaling Agreement and Related Selling
Agreement(2)
(4.1) Variable Annuity Contract (G-401-IB(X/M))(3)
(4.2) Variable Annuity Contract (G-CDA-IB(XC/SM))(3)
(4.3) Endorsement (EGET-IC(R)) to Contracts G-401-IB(X/M) and
G-CDA-IB(XC/SM)(4)
(4.4) Endorsement (ESUNYSDO97) to Contracts G-CDA-IB(XC/SM) and
G-401-IB(X/M)(5)
(5) Variable Annuity Contract Application (300-MOP-IB)(6)
(6.1) Certificate of Incorporation of Aetna Life Insurance and Annuity
Company(7)
(6.2) Amendment of Certificate of Incorporation of Aetna Life Insurance
and Annuity Company(8)
(6.3) By-Laws, as amended September 17, 1997, of Aetna Life Insurance
and Annuity Company(9)
<PAGE>
(7) Not applicable
(8.1) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Calvert Asset Management Company (Calvert
Responsibly Invested Balanced Portfolio, formerly Calvert Socially
Responsible Series) dated March 13, 1989 and amended December 27,
1993(2)
(8.2) Second Amendment dated January 1, 1996 to Fund Participation
Agreement between Aetna Life Insurance and Annuity Company and
Calvert Asset Management Company (Calvert Responsibly Invested
Balanced Portfolio, formerly Calvert Socially Responsible Series)
dated March 13, 1989 and amended December 27, 1993(10)
(8.3) Third Amendment dated February 11, 1997 to Fund Participation
Agreement between Aetna Life Insurance and Annuity Company and
Calvert Asset Management Company (Calvert Responsibly Invested
Balanced Portfolio, formerly Calvert Socially Responsible Series)
dated March 13, 1989 and amended December 27, 1993 and January 1,
1996(11)
(8.4) Fourth Amendment dated February 11, 1997 to Fund Participation
Agreement between Aetna Life Insurance and Annuity Company and
Calvert Asset Management Company (Calvert Responsibly Invested
Balanced Portfolio, formerly Calvert Socially Responsible Series)
dated March 13, 1989 and amended December 27, 1993, January 1, 1996
and February 11, 1997(12)
(8.5) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996
and March 1, 1996(8)
(8.6) Fifth Amendment, dated as of May 1, 1997, to the Fund Participation
Agreement between Aetna Life Insurance and Annuity Company, Variable
Insurance Products Fund and Fidelity Distributors Corporation dated
February 1, 1994 and amended on December 15, 1994, May 1, 1995,
February 1, 1996, January 1, 1996 and March 1, 1996(13)
(8.7) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996
and March 1,1996(8)
(8.8) Fifth Amendment, dated as of May 1, 1997, to the Fund Participation
Agreement between Aetna Life Insurance and Annuity Company, Variable
Insurance Products Fund II and Fidelity Distributors Corporation
dated February 1, 1994 and amended on December 15, 1994, February 1,
1996, May 1, 1995, January 1, 1996 and March 1, 1996(13)
(8.9) Service Agreement between Aetna Life Insurance and Annuity
Company and Fidelity Investments Institutional Operations Company
dated as of November 1, 1995(9)
<PAGE>
(8.10) Amendment dated January 1, 1997 to Service Agreement between
Aetna Life Insurance and Annuity Company and Fidelity Investments
Institutional Operations Company dated as of November 1, 1995(13)
(8.11) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994 and
amended June 15, 1994, July 31, 1995 and March 1, 1996(2)
(8.12) 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(2)
(8.13) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Lexington Emerging Markets Fund, Inc. and
Lexington Management Corporation dated April 28, 1994(14)
(9) Opinion and Consent of Counsel
(10) Consent of Independent Auditors
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data(15)
(14) Not applicable
(15.1) Powers of Attorney(13)
(15.2) Authorization for Signatures(2)
(27) Financial Data Schedule
1. Incorporated by reference to Post-Effective Amendment No. 6 to
Registration Statement on Form N-4 (File No. 33-75986), as filed
electronically on April 22, 1996 (Accession No. 0000950146-96-000563).
2. Incorporated by reference to Post-Effective Amendment No. 5 to
Registration Statement on Form N-4 (File No. 33-75986), as filed
electronically on April 12, 1996 (Accession No. 0000912057-96-006383).
3. Incorporated by reference to Post-Effective Amendment No. 3 to
Registration Statement on Form N-4 (File No. 33-81216), as filed
electronically on April 17, 1996 (Accession No. 0000912057-96-006581).
4. Incorporated by reference to Post-Effective Amendment No. 3 to
Registration Statement on Form N-4 (File No. 33-91846), as filed
electronically on April 15, 1996 (Accession No. 0000912057-96-006418).
5. Incorporated by reference to Post-Effective Amendment No. 7 to
Registration Statement on Form N-4 (File No. 33-81216), as filed
electronically on February 12, 1997 (Accession No. 0000950146-97-000167).
6. Incorporated by reference to Post-Effective Amendment No. 11 to
Registration Statement on Form N-4 (File No. 33-91846), as filed
electronically on August 19, 1997 (Accession No. 0000950146-97-001307).
7. Incorporated by reference to Post-Effective Amendment No. 1 to
Registration Statement on Form S-1 (File No. 33-60477), as filed
electronically on April 15, 1996 (Accession No. 0000950146-96-000534).
<PAGE>
8. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on February 11, 1997 (Accession No. 0000950146-97-000159).
9. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-4 (File No. 33-91846), as filed
electronically on October 30, 1997 (Accession No. 0000950146-97-001589).
10. Incorporated by reference to Post-Effective Amendment No. 3 to
Registration Statement on Form N-4 (File No. 33-88720), as filed
electronically on June 28, 1996 (Accession No. 0000928389-96-000136).
11. Incorporated by reference to Post-Effective Amendment No. 4 to
Registration Statement on Form N-4 (File No. 333-01107), as filed
electronically on February 26, 1997 (Accession No. 0000950146-97-000241).
12. Incorporated by reference to Post-Effective Amendment No. 14 to
Registration Statement on Form N-4 (File No. 33-75964), as filed
electronically on July 29, 1997 (Accession No. 0000950146-97-001101).
13. Incorporated by reference to Post-Effective Amendment No. 30 to
Registration Statement on Form N-4 (File No. 33-34370), as filed
electronically on September 29, 1997 (Accession No. 0000950146-97-001485).
14. Incorporated by reference to Post-Effective Amendment No. 22 to
Registration Statement on Form N-4 (File No. 33-34370), as filed
electronically on April 22, 1996 (Accession No. 0000912057-96-006805).
15. Incorporated by reference to Post-Effective Amendment No. 4 to
Registration Statement on Form N-4 (File No. 33-81216), as filed on April
28, 1995.
<PAGE>
Item 25. Directors and Officers of the Depositor
- ------------------------------------------------
Name and Principal
Business Address* Positions and Offices with Depositor
- ----------------- ------------------------------------
Thomas J. McInerney Director and President
Timothy A. Holt Director, Senior Vice President and
Chief Financial Officer
Christopher J. Burns Director and Senior Vice President
J. Scott Fox Director and Senior Vice President
John Y. Kim Director and Senior Vice President
Shaun P. Mathews Director and Senior Vice President
Deborah Koltenuk Vice President and Treasurer,
Corporate Controller
Frederick D. Kelsven Vice President and Chief Compliance
Officer
Kirk P. Wickman Vice President, General Counsel and
Corporate Secretary
* The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
Incorporated herein by reference to Item 26 of Post-Effective Amendment
No. 12 to the Registration Statement on Form N-4 (File No. 33-91846), as
filed electronically on October 30, 1997 (Accession No. 0000950146-97-001589).
Item 27. Number of Contract Owners
As of September 30, 1997, there were 623,598 individuals holding interests in
variable annuity contracts funded through Variable Annuity Account C.
<PAGE>
Item 28. Indemnification
Reference is hereby made to Section 33-771(f) of the Connecticut General
Statutes ("C.G.S.") regarding indemnification of directors and Section 33-776(4)
regarding indemnification of officers, employees and agents of Connecticut
corporations. These statutes provide in general that Connecticut corporations
incorporated prior to January 1, 1997 shall indemnify their officers, directors,
employees and agents against "liability" (defined as the obligation to pay a
judgment, settlement, penalty, fine, excise tax in the case of an employee
benefit plan or reasonable expenses incurred with respect to a proceeding). In
the case of a proceeding by or in the right of the corporation, indemnification
is limited to reasonable expenses incurred in connection with the proceeding
against the corporation to which the individual was named a party. The
corporation's obligation to provide such indemnification does not apply unless
(1) the individual has met the standard of conduct set forth in Section 33-771;
and (2) a determination is made (by majority vote of a quorum of the board of
directors who were not parties to the proceeding, or if a quorum cannot be
obtained, by a committee of the board selected as described in Section
33-775(b)(2); by special legal counsel selected by the board of directors or
members thereof as described in Section 33-775(b)(3); by shareholders) that the
individual met the standard set forth in Section 33-771; 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. Also, unless limited by
its Certificate of Incorporation, a corporation must indemnify an individual who
was wholly successful on the merits or otherwise against reasonable expenses
incurred by him in connection with a proceeding to which he was a party because
of his relationship as director, officer, employee or agent of the corporation.
The statute does specifically authorize a corporation to procure indemnification
insurance on behalf of an individual who is or was a director, officer, employer
or agent of the corporation. Consistent with the statute, Aetna Inc. has
procured insurance from Lloyd's of London and several major United States excess
insurers for its directors and officers and the directors and officers of its
subsidiaries, including the Depositor.
Item 29. Principal Underwriter
(a) In addition to serving as the principal underwriter and depositor for the
Registrant, Aetna Life Insurance and Annuity Company (Aetna) also acts as
the investment adviser, only, for Aetna Series Fund, Inc. and the
principal underwriter and investment adviser for Portfolio Partners, Inc.,
Aetna Variable Encore Fund, Aetna Variable Fund, Aetna Generation
Portfolios, Inc., Aetna Income Shares, Aetna Investment Advisers Fund,
Inc., Aetna GET Fund, and Aetna Variable Portfolios, Inc. (all management
investment companies registered under the Investment Company Act of 1940
(1940 Act)). Additionally, Aetna acts as the principal underwriter and
depositor for Variable Life Account B of Aetna, Variable Annuity Account B
of Aetna and Variable Annuity Account G of Aetna (separate accounts of
Aetna registered as unit investment trusts under the 1940 Act). Aetna is
also the principal underwriter for Variable Annuity Account I of Aetna
Insurance Company of America (AICA) (a separate account of AICA registered
as a unit investment trust under the 1940 Act).
<PAGE>
(b) See Item 25 regarding the Depositor.
(c) Compensation as of December 31, 1996:
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation
Principal Discounts and on Redemption Brokerage
Underwriter Commissions or Annuitization Commissions Compensation*
- ----------- ----------- ---------------- ----------- -------------
Aetna Life $1,325,661 $96,924,599
Insurance and
Annuity Company
* Compensation shown in column 5 includes deductions for mortality and expense
risk guarantees and contract charges assessed to cover costs incurred in the
sales and administration of the contracts issued under Variable Annuity
Account C.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the Rules under it relating to the securities
described in and issued under this Registration Statement are located at the
home office of the Depositor as follows:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
and
Aetna Processing Office
18 Corporate Woods Blvd., Fourth Floor
P.O. Box 12894
Albany, New York 12212-2894
Item 31. Management Services
Not applicable
Item 32. Undertakings
Registrant hereby undertakes:
<PAGE>
(a) to file a post-effective amendment to this registration statement on Form
N-4 as frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than sixteen
months old for as long as payments under the variable annuity contracts
may be accepted;
(b) to include as part of any application to purchase a contract offered by a
prospectus which is part of this registration statement on Form N-4, a
space that an applicant can check to request a Statement of Additional
Information; and
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly upon
written or oral request.
(d) 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) P. 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.
(f) Aetna Life Insurance and Annuity Company represents that the fees and
charges deducted under the contracts covered by this registration
statement, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by
the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, and the Investment Company Act of
1940, the Registrant, Variable Annuity Account 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 to its Registration
Statement on Form N-4 (File No. 33-81216) and has duly caused this
Post-Effective Amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Hartford, State of Connecticut, on the
17th day of November, 1997.
VARIABLE ANNUITY ACCOUNT C OF AETNA LIFE
INSURANCE AND ANNUITY COMPANY
(Registrant)
By: AETNA LIFE INSURANCE AND ANNUITY COMPANY
(Depositor)
By: Thomas J. McInerney*
-------------------------------------------
Thomas J. McInerney
President
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 10 to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature Title Date
Thomas J. McInerney* Director and President )
- ------------------------- (principal executive officer) )
Thomas J. McInerney )
)
)
Timothy A. Holt* Director and Chief Financial Officer ) November
- ------------------------- ) 17, 1997
Timothy A. Holt )
)
)
Christopher J. Burns* Director )
- ------------------------- )
Christopher J. Burns )
)
)
J. Scott Fox* Director )
- ------------------------- )
J. Scott Fox )
)
)
John Y. Kim* Director )
- ------------------------- )
John Y. Kim )
<PAGE>
Shaun P. Mathews* Director )
- ------------------------- )
Shaun P. Mathews )
)
)
Deborah Koltenuk* Vice President and Treasurer, Corporate )
- ------------------------- Controller )
Deborah Koltenuk )
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 Broker-Dealer Agreement *
99-B.3.2 Alternative Form of Wholesaling Agreement and *
Related Selling Agreement
99-B.4.1 Variable Annuity Contract (G-401-IB(X/M)) *
99-B.4.2 Variable Annuity Contract (G-CDA-IB(XC/SM)) *
99-B.4.3 Endorsement (EGET-IC(R)) to Contracts G-401-IB(X/M) *
and G-CDA-IB(XC/SM)
99-B.4.4 Endorsement (ESUNYSDO97) to Contracts *
G-CDA-IB(XC/SM) and G-401-IB(X/M)
99-B.5 Variable Annuity Contract Application (300-MOP-IB) *
99-B.6.1 Certificate of Incorporation of Aetna Life Insurance *
and Annuity Company
99-B.6.2 Amendment of Certificate of Incorporation of Aetna *
Life Insurance and Annuity Company
99-B.6.3 By-Laws, as amended September 17, 1997, of Aetna *
Life Insurance and Annuity Company
99-B.8.1 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Calvert Asset
Management Company (Calvert Responsibly Invested
Balanced Portfolio, formerly Calvert Socially
Responsible Series) dated March 13, 1989 and amended
December 12, 1993
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
- ----------- ------- ----
99-B.8.2 Second Amendment dated January 1, 1996 to Fund *
Participation Agreement between Aetna Life Insurance
and Annuity Company and Calvert Asset Management
Company (Calvert Responsibly Invested Balanced
Portfolio, formerly Calvert Socially Responsible
Series) dated March 13, 1989 and amended December
27, 1993
99-B.8.3 Third Amendment dated February 11, 1997 to Fund *
Participation Agreement between Aetna Life Insurance
and Annuity Company and Calvert Asset Management
Company (Calvert Responsibly Invested Balanced
Portfolio, formerly Calvert Socially Responsible
Series) dated March 13, 1989 and amended December
27, 1993 and January 1, 1996
99-B.8.4 Fourth Amendment dated February 28, 1997 to Fund *
Participation Agreement between Aetna Life Insurance
and Annuity Company and Calvert Asset Management
Company (Calvert Responsibly Invested Balanced
Portfolio, formerly Calvert Socially Responsible
Series) dated March 13, 1989 and amended December
27, 1993, January 1, 1996 and February 11, 1997
99-B.8.5 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company, Variable Insurance
Products Fund and Fidelity Distributors Corporation
dated February 1, 1994 and amended on December 15,
1994, February 1, 1995, May 1, 1995, January 1, 1996
and March 1, 1996
99-B.8.6 Fifth Amendment, dated as of May 1, 1997, to the *
Fund Participation Agreement between Aetna Life
Insurance and Annuity Company, Variable Insurance
Products Fund and Fidelity Distributors Corporation
dated February 1, 1994 and amended on December 15,
1994, May 1, 1995, February 1, 1996, January 1, 1996
and March 1, 1996
99-B.8.7 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company, Variable Insurance
Products Fund II and Fidelity Distributors
Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995,
January 1, 1996 and March 1,1996
*Incorporated by reference
<PAGE>
Exhibit No. Exhibit Page
- ----------- ------- ----
99-B.8.8 Fifth Amendment, dated as of May 1, 1997, to the *
Fund Participation Agreement between Aetna Life
Insurance and Annuity Company, Variable Insurance
Products Fund II and Fidelity Distributors
Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1996, May 1, 1995,
January 1, 1996 and March 1, 1996
99-B.8.9 Service Agreement between Aetna Life Insurance and *
Annuity Company and Fidelity Investments
Institutional Operations Company dated as of
November 1, 1995
99-B.8.10 Amendment dated January 1, 1997 to Service Agreement *
between Aetna Life Insurance and Annuity Company and
Fidelity Investments Institutional Operations
Company dated as of November 1, 1995
99-B.8.11 Fund Participation Agreement between Aetna Life *
Insurance and Annuity Company and Janus Aspen Series
dated April 19, 1994 and amended June 15, 1994, July
31, 1995 and March 1, 1996
99-B.8.12 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.8.13 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.9 Opinion and Consent of Counsel _______
99-B.10 Consent of Independent Auditors _______
99-B.13 Schedule for Computation of Performance Data *
99-B.15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
27 Financial Data Schedule _______
*Incorporated by reference
[Aetna Letterhead]
[Aetna logo] 151 Farmington Avenue
Hartford, CT 06156
Julie E. Rockmore
Counsel
Law Division, RE4A
November 17, 1997 Investments & Financial
Services
(860) 273-4686
Fax: (860) 273-8340
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Aetna Life Insurance and Annuity Company
and its Variable Annuity Account C
Post-Effective Amendment No. 10 to Registration
Statement on Form N-4
Prospectus Title: Group Flexible Premium Deferred Variable
Annuity Contracts for State University of New York (SUNY)
Defined Contribution Retirement Plan
File Nos.: 33-81216 and 811-2513
Dear Sir or Madam:
The undersigned serves as counsel to Aetna Life Insurance and Annuity Company, a
Connecticut life insurance company (the "Company"). It is my understanding that
the Company, as depositor, has registered an indefinite amount of securities
(the "Securities") under the Securities Act of 1933 (the "Securities Act") as
provided in Rule 24f-2 under the Investment Company Act of 1940 (the "Investment
Company Act").
In connection with this opinion, I have reviewed the N-4 Registration, as
amended to the date hereof, and this Post-Effective Amendment No. 10. I have
also examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents, trust records and other instruments I have
deemed necessary or appropriate for the purpose of rendering this opinion. For
purposes of such examination, I have assumed the genuineness of all signatures
on original documents and the conformity to the original of all copies.
I am admitted to practice law in Connecticut, and do not purport to be an expert
on the laws of any other state. My opinion herein as to any other law is based
upon a limited inquiry thereof which I have deemed appropriate under the
circumstances.
<PAGE>
Based upon the foregoing, and, assuming the Securities are sold in accordance
with the provisions of the prospectus, I am of the opinion that the Securities
being registered will be legally issued and will represent binding obligations
of the Company.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Julie E. Rockmore
Julie E. Rockmore
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors of Aetna Life Insurance and Annuity Company
and Contractholders of Aetna Variable Annuity Account C:
We consent to the use of our reports dated February 4, 1997 and February 14,
1997 incorporated by reference in registration statement (No. 33-81216) on
Form N-4 and to the reference to our firm under the caption "CONDENSED
FINANCIAL INFORMATION" in the Prospectus.
/s/ KPMG Peat Marwick LLP
Hartford, Connecticut
November 17, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000103007
<NAME> Aetna Variable Annuity Account C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 7,952,811,278
<INVESTMENTS-AT-VALUE> 8,565,202,363
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 8,565,202,363
<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> 8,565,202,363
<DIVIDEND-INCOME> 712,854,599
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 93,446,331
<NET-INVESTMENT-INCOME> 619,408,268
<REALIZED-GAINS-CURRENT> 513,568,522
<APPREC-INCREASE-CURRENT> 18,307,901
<NET-CHANGE-FROM-OPS> 1,151,284,691
<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> 0
<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>
