As filed with the Securities and Exchange Registration No. 33-75962*
Commission on February 11, 1997 Registration No. 811-2513
_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
_______________________________________________________________________________
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
_______________________________________________________________________________
Variable Annuity Account C of Aetna Life Insurance and Annuity Company
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RC4A, Hartford, Connecticut 06156
Depositor's Telephone Number, including Area Code: (860) 273-7834
Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, RC4A, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
_______________________________________________________________________________
It is proposed that this filing will become effective:
60 days after filing pursuant to paragraph (a)(2) of
-------- Rule 485
X on May 1, 1997 pursuant to paragraph (a)(1) of Rule 485
--------
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
registered an indefinite number of securities under the Securities Act of 1933.
Registrant expects to file a Rule 24f-2 Notice for the fiscal year ended
December 31, 1996 on or before February 28, 1997.
*Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has
included a combined prospectus under this Registration Statement which includes
all the information which would currently be required in a prospectus relating
to the securities covered by the following earlier Registration Statement:
33-75978.
<PAGE>
VARIABLE ANNUITY ACCOUNT C
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-4
ITEM NO. PART A (PROSPECTUS) LOCATION
<S> <C> <C>
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>
FORM N-4 PART B (STATEMENT OF ADDITIONAL INFORMATION)
ITEM NO. LOCATION
15 Cover Page........................................... Cover page
16 Table of Contents.................................... Table of Contents
17 General Information and History...................... General Information and History
18 Services............................................. General Information and History;
Independent Auditors
19 Purchase of Securities Being Offered................. Offering and Purchase of Contracts
20 Underwriters......................................... Offering and Purchase of Contracts
21 Calculation of Performance Data...................... Performance Data; Average Annual
Total Return Quotations
22 Annuity Payments..................................... Annuity Payments
23 Financial Statements................................. Financial Statements
</TABLE>
Part C (Other Information)
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
=============================================================================
The Contracts offered in connection with this Prospectus are two group
deferred variable annuity contracts ("Contracts") issued by Aetna Life
Insurance and Annuity Company (the "Company"). One allows lump sum payments
("Single Purchase Payment Contracts") and the other allows installment
payments ("Installment Purchase Payment Contracts"). The Contracts are
available through participation in the "Opportunity Plus" retirement programs
which receive favorable tax deferred treatment under Federal income tax law.
(See "Purchase.") Interests in these Contracts are offered to employees of
school boards and public universities in the state of New York.
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:
(bullet) Aetna Variable Fund
(bullet) Aetna Income Shares
(bullet) Aetna Variable Encore Fund
(bullet) Aetna Investment Advisers Fund, Inc.
(bullet) Alger American Growth Portfolio
(bullet) Alger American Small Cap Portfolio
(bullet) American Century VP Capital Appreciation (formerly TCI Growth)
(bullet) Calvert Responsibly Invested Balanced Portfolio
(bullet) Fidelity VIP II Asset-Manager Portfolio
(bullet) Fidelity VIP II Contrafund Portfolio
(bullet) Fidelity VIP II Index 500 Portfolio
(bullet) Fidelity VIP Equity-Income Portfolio
(bullet) Franklin Government Securities Trust
(bullet) Janus Aspen Aggressive Growth Portfolio
(bullet) Janus Aspen Growth Portfolio
(bullet) Janus Aspen Short-Term Bond Portfolio
(bullet) Janus Aspen Worldwide Growth Portfolio
(bullet) Lexington Emerging Markets Fund, Inc.
(bullet) Lexington Natural Resources Trust
(bullet) Neuberger & Berman Growth Portfolio
(bullet) Scudder International Portfolio Class A Shares
The Credited Interest Options currently available under the Contract are the
Guaranteed Accumulation Account and the Fixed 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 is available
at no charge. The SAI 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 in this Prospectus. An SAI may be obtained 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.
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.
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 May 1, 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
Purchasing Interests in the Contract 4
Right to Cancel 4
CHARGES AND DEDUCTIONS 4
Daily Deductions from the Separate Account 4
Maintenance Fee 5
Deferred Sales Charge 5
Fund Expenses 6
Premium and Other Taxes 6
CONTRACT VALUATION 6
Account Value 6
Accumulation Units 7
Net Investment Factor 7
TRANSFERS 7
WITHDRAWALS 7
Reinvestment Privilege 8
CONTRACT LOANS 8
ADDITIONAL WITHDRAWAL OPTIONS 8
DEATH BENEFIT DURING ACCUMULATION PERIOD 9
ANNUITY PERIOD 9
Annuity Period Elections 9
Annuity Options 10
Annuity Payments 10
Charges Deducted During the Annuity Period 10
Death Benefit Payable During the Annuity Period 11
TAX STATUS 11
Introduction 11
Taxation of the Company 11
Contracts Used with Certain Retirement Plans 11
<PAGE>
MISCELLANEOUS 13
Opportunity Plus Processing Office 13
Distribution 13
Delay or Suspension of Payments 14
Performance Reporting 14
Voting Rights 14
Changes in Beneficiary Designations 15
Modification of the Contract 15
Agreements with the Company 15
Legal Matters and Proceedings 15
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION 15
APPENDIX I--GUARANTEED ACCUMULATION ACCOUNT 16
APPENDIX II--FIXED 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 established for each Participant to identify contract
values accumulated on each Participant's behalf during the Accumulation
Period. For any given Participant, the Account includes amounts held under an
Installment Purchase Payment Contract and a Single Purchase Payment Contract.
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.
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 in the enrollment form who
are to receive any death benefit proceeds payable under the Contract.
Code: Internal Revenue Code of 1986, as amended.
Company (We, Us): Aetna Life Insurance and Annuity Company.
Contracts: The group deferred, variable annuity contracts offered by this
Prospectus.
Contract Holder: The person or entity to whom the Contract is issued. The
Contract Holder of the Contract is usually the employer.
Credited Interest Options: The fixed interest options under the Contract. The
Credited Interest Options currently consist of the Guaranteed Accumulation
Account and the Fixed 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.
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.
Home Office: The Company's principal executive offices, located at 151
Farmington Avenue, Hartford, Connecticut 06156.
NYSUT: New York State United Teachers Trust.
Opportunity Plus Processing Office: The Opportunity Plus administrative
headquarters. The mailing address is P.O. Box 12894, Albany, New York
12212-2894.
Participant (You): A person participating in a Plan maintained by an eligible
organization.
Plan(s): Tax-deferred retirement plans under Section 403(b) of the Code for
employees of public school systems.
Purchase Payment(s): The gross payment(s) made to the Company under a
Contract.
DEFINITIONS - 1
<PAGE>
Purchase Payment Periods: For "Installment Purchase Payment Contracts," the
period of time for completion of the agreed upon annual number and amount of
Purchase Payments. For example, if it is determined that the Purchase Payment
Period will consist of 12 payments per year and only 11 payments are made,
the Purchase Payment Period is not completed until the twelfth Purchase
Payment is made.
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.
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.
UUP: United University Professions.
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 two Contracts offered in connection with this Prospectus are group
deferred variable annuity contracts issued by Aetna Life Insurance and
Annuity Company (the "Company"). One allows lump sum payments ("Single
Purchase Payment Contracts") and the other allows installment payments
("Installment Purchase Payment Contracts"). The purpose of the Contract is to
accumulate values and to provide benefits upon retirement for retirement
plans under Section 403(b) of the Code. The Contracts are available for
school boards and public universities in the State of New York, specifically
for Participants who are members of NYSUT and UUP.
The Contracts are available to Plans that include a variable annuity
contract alone or in conjunction with retail mutual funds for which
Systemized Benefits Administrators, Inc. ("SBA"), an affiliate of the
Company, has agreed to perform recordkeeping services and to provide
consolidated statements. SBA may receive compensation for these services, but
such compensation will generally not be charged to the Separate Account or
deducted from a Participant's Account under the Contract.
CONTRACT PURCHASE
The Contracts may be purchased by eligible organizations on behalf of a
group made up of their employees. Eligible employees may participate in the
Contract by completing the enrollment form and submitting it to the
Opportunity Plus Processing Office. Purchase Payments can be applied to the
Contract either through a lump-sum transfer from a pre- existing plan or
through salary reduction. (See "Purchase.")
FREE LOOK PERIOD
Contract Holders and Participants have the right to cancel their purchase
within 10 days after receiving the Contract or other document evidencing
interest in the Contract by returning it to the Opportunity Plus Processing
Office along with a written notice of cancellation. The amount received upon
cancellation will be the full value of Purchase Payments plus any increase or
minus any decrease in the Account Value allocated to the Subaccounts. (See
"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 Contracts allow 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 Contracts also provide for investment in Credited Interest Options
which allow you to earn fixed rates of interest. The fixed options available
under the Contracts are the Guaranteed Accumulation Account ("GAA") and the
Fixed 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
charges and an administrative charge), as well as any annual maintenance fee
and premium and other taxes. The Funds also incur certain fees and expenses
which are deducted directly from the Funds. A deferred sales charge may apply
upon a full or partial withdrawal of the Account Value. (See the Fee Table
and "Charges and Deductions.")
SUMMARY - 1
<PAGE>
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
Company. Certain charges may be assessed upon withdrawal. The withdrawal may
also be subject to income tax and a federal tax penalty. The Code restricts
full and partial withdrawals in some circumstances. (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.")
LOANS
Participants under Section 403(b) Plans may request a loan from their
Account Value at any time during the Accumulation Period. (See "Contract
Loans.")
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. 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
continue to 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 a 20% withholding for income tax may be imposed on
certain withdrawals. (See "Tax Status.")
INQUIRIES
(bullet) Questions, inquiries or requests for additional information can be
directed to your agent or local representative, or you may contact
the Company through the Opportunity Plus Processing Office by
writing to P.O. Box 12894, Albany, New York 12212-2894, or by
calling 1-800-OPP-INFO (1-800-677-4636). (See
"Miscellaneous--Opportunity Plus Processing Office.")
SUMMARY - 2
<PAGE>
FEE TABLE
=============================================================================
This Fee Table describes the various charges and expenses associated with the
Contracts during the Accumulation Period. For amounts deducted during the
Annuity Period, see "Annuity Period--Charges Deducted During the Annuity
Period." No sales charge is paid upon purchase of the Contracts. All costs
that are borne directly or indirectly under the Subaccounts and Funds are
shown below. For more information regarding expenses paid out of the assets
of a particular Fund, see the Fund's prospectus.
DIRECT CHARGES. These charges are deducted directly from the Account Value.
They include:
Deferred Sales Charge. The deferred sales charge is deducted as a percentage
of the amount withdrawn from Installment Purchase Payment Contracts. The
total amount deducted for the deferred sales charge will not exceed 8.5% of
the total Purchase Payments applied to the Account under the Installment
Purchase Payment Contract. The amount of the deferred sales charge is
calculated as follows:
INSTALLMENT PURCHASE PAYMENT CONTRACTS:*
Purchase Payment Deferred Sales
Periods Completed Charge Deduction
- -------------------------------- ---------------------
Less than 5 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or more but less than 10 2%
More than 10 0%
* For Single Purchase Payment Contracts, there is no deduction for deferred
sales charges. For Installment Purchase Payment Contracts, the deferred
sales charge is waived for amounts deposited in the Subaccounts (or GAA) on
or after April 1, 1995. (See "Charges and Deductions--Deferred Sales
Charge.")
Annual Contract Maintenance Fee $5.00**
The maintenance fee will generally be deducted quarterly during the Accumulation
Period in an amount equal to $1.25 each calendar quarter.
INDIRECT CHARGES. 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%
==========
** Effective July 1, 1997 the quarterly maintenance fee will be reduced from
$3.75 per quarter to $1.25 per quarter, resulting in an annual
maintenance fee of $5.00 for the period from May 1, 1997 to May 1, 1998.
Effective January 1, 1999 the quarterly maintenance fee will be reduced
to $0.00, thereby eliminating the maintenance fee charge.
*** 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.
FEE TABLE - 1
<PAGE>
Annual Expenses of the Funds
The following table illustrates the advisory fees and other expenses
applicable to the Funds. Except as noted, these figures are a percentage of
each Fund's average net assets and are based on figures for the year ended
December 31, 1996. 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.
<TABLE>
<CAPTION>
Investment
Advisory
Fees(1) Other Expenses
(after expense (after expense Total Fund
reimbursement) reimbursement) Annual Expenses
-------------- -------------- ----------------
<S> <C> <C> <C>
Aetna Variable Fund(2) 0.50% 0.06% 0.56%
Aetna Income Shares(2) 0.40% 0.08% 0.48%
Aetna Variable Encore Fund(2) 0.25% 0.10% 0.35%
Aetna Investment Advisers Fund, Inc.(2) 0.50% 0.08% 0.58%
Alger American Growth Portfolio 0.75%
Alger American Small Cap Portfolio 0.85%
American Century VP Capital Appreciation(3) 1.00%
Calvert Responsibly Invested Balanced Portfolio(4) 0.70%
Fidelity VIP II Asset Manager Portfolio(5) 0.71%
Fidelity VIP II Contrafund Portfolio(5) 0.61%
Fidelity VIP II Index 500 Portfolio(6) 0.00%
Fidelity VIP Equity-Income Portfolio 0.51%
Franklin Government Securities Trust(7) 0.63%
Janus Aspen Aggressive Growth Portfolio(8) 0.75%
Janus Aspen Growth Portfolio(8) 0.65%
Janus Aspen Short-Term Bond Portfolio(8) 0.00%
Janus Aspen Worldwide Growth Portfolio(8) 0.68%
Lexington Emerging Markets Fund, Inc.(9) 0.85%
Lexington Natural Resources Trust 1.00%
Neuberger & Berman Growth Portfolio(10) 0.84%
Scudder International Portfolio Class A Shares 0.88%
</TABLE>
(1)Certain of the unaffiliated Fund advisers reimburse the Company for
administrative costs incurred in connection with administering the Funds
as variable funding options under the Contract. These reimbursements are
paid out of the investment advisory fees and are not charged to
investors.
(2)The Company provides administrative services to the Funds and assumes the
Fund's ordinary recurring direct costs under an Administrative Services
Agreement. The "Other Expenses" shown reflect the fee payable under that
Agreement.
(3)The Portfolio's investment adviser pays all expenses of the Portfolio
except brokerage commissions, taxes, interest, fees, expenses of the
non-interested person directors (including counsel fees) and
extraordinary expenses. These expenses have historically represented a
very small percentage (less than 0.01%) of total net assets in a fiscal
year.
(4)The Management and Advisory Fees are subject to a performance adjustment,
which could cause the fee to be as high as % or as low as %,
depending on performance. "Other Expenses" reflect an indirect fee of
%. Net fund operating expenses after reductions for fees paid
indirectly would be %.
(5)A portion of the brokerage commissions the Fund paid was used to reduce
its expenses. Without this reduction, total operating expenses would have
been % for the Asset Manager Portfolio and % for the Contrafund
Portfolio.
(6)The Fund's expenses were voluntarily reduced by the Fund's investment
adviser. Absent reimbursement, the management fee, other expenses and
total expenses would have been %, % and %, respectively, for
the Index 500 Portfolio.
(7)An expense reimbursement arrangement was in effect until February 1,
1996; however, it is no longer in effect. The advisory fee and total
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.
(8)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 %, %, and % for Aggressive
Growth Portfolio; %, % and % for Growth Portfolio; %,
% and % for Short- Term Bond Portfolio; and %, % and %
for Worldwide Growth Portfolio; respectively. Janus Capital may modify or
terminate the waivers or reductions at any time upon 90 days' notice to the
Portfolio's Board of Trustees.
(9)The Fund's investment adviser has agreed to voluntarily limit the total
expenses of the Fund (excluding interest, taxes, brokerage, and
extraordinary expenses, but including management fees and operating
expenses) to an annual rate of % of the Fund's
FEE TABLE - 2
<PAGE>
average net assets through . Without this agreement, the Fund's
Investment Advisory Fee, Total Other Expenses and Total Fund Annual
Expenses would have been %, % and % for the most recent
fiscal year.
(10)Neuberger & Berman Advisers Management Trust (the "Trust") is divided
into portfolios ("Portfolios"), each of which invests all of its net
investable assets in a corresponding series ("Series") of Advisers
Managers Trust. Expenses in the table reflect expenses of the Portfolio
and include the Portfolio's pro rata portion of the operating expenses of
the Portfolio's corresponding Series. The Portfolio pays Neuberger &
Berman Management Inc. ("NBMI") an administration fee based on the
Portfolio's net asset value. The corresponding Series of the Portfolio
pays NBMI a management fee based on the Series' average daily net assets.
Accordingly, this table combines management fees at the Series level and
administration fees at the Portfolio level in a unified fee rate. (See
"Expenses" in the Trust's prospectus.)
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.
The following Examples illustrate the expenses that would have been paid
assuming a $1,000 investment in the Contract and a 5% return on assets. For
the purposes of these Examples, the maintenance fee of $5.00 that is deducted
under the Contract has been converted to a percentage of assets equal to
%.
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
-------------------------------------- ---------------------------------------
If you withdraw your entire Account If you do not withdraw your Account
Value at the end of the periods shown, Value, or if you annuitize at the end
you would pay the following expenses, of the periods shown, you would pay the
including any applicable deferred following expenses (no deferred sales
sales charge:* charge is reflected):**
1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years
------- ------- ------- ---------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers
Fund, Inc.
Alger American Growth
Portfolio
Alger American Small Cap
Portfolio
American Century VP
Capital Appreciation
Calvert Responsibly
Invested Balanced
Portfolio
Fidelity VIP II Asset
Manager Portfolio
Fidelity VIP II Contrafund
Portfolio
Fidelity VIP Equity-Income
Portfolio
Fidelity VIP II Index 500
Portfolio
Franklin Government
Securities Trust
Janus Aspen Aggressive
Growth Portfolio
Janus Aspen Growth
Portfolio
Janus Aspen Short-Term
Bond Portfolio
Janus Aspen Worldwide
Growth Portfolio
Lexington Emerging Markets
Fund, Inc.
Lexington Natural
Resources Trust
Neuberger & Berman Growth
Portfolio
Scudder International
Portfolio Class A Shares
</TABLE>
* For Single Purchase Payment Accounts, there is no deduction for deferred
sales charges. For Installment Purchase Payment Accounts, the deferred sales
charge is waived for amounts deposited in the Subaccounts (or GAA) on or
after April 1, 1995.
** This Example would not apply if a nonlifetime variable annuity option is
selected, and a lump sum settlement is requested within three years after
annuity payments start since the lump sum payment will be treated as a
withdrawal during the Accumulation Period and will be subject to any deferred
sales charge that would then apply. (Refer to Example A.)
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. The financial
statements as of and for the year ended December 31, 1996 and the independent
auditors' report thereon, are included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $ $105.558 $107.925 $102.383 $97.165
Value at end of period $137.869 $105.558 $107.925 $102.383
Increase (decrease) in value of
accumulation unit(1) 30.61% (2.19)% 5.41% 5.37%
Number of accumulation units
outstanding at end of period 6,364,000 13,966,072 21,148,863 24,201,565
AETNA INCOME SHARES
Value at beginning of period $40.173 $42.283 $39.038 $36.789
Value at end of period $46.913 $40.173 $42.283 $39.038
Increase (decrease) in value of
accumulation unit(1) 16.78% (4.99)% 8.31% 6.11%
Number of accumulation units
outstanding at end of period 2,377,622 5,108,720 8,210,666 8,507,292
AETNA VARIABLE ENCORE FUND
Value at beginning of period $36.271 $35.282 $34.619 $33.812
Value at end of period $37.988 $36.271 $35.282 $34.619
Increase (decrease) in value of
accumulation unit(1) 4.73% 2.80% 1.92% 2.39%
Number of accumulation units
outstanding at end of period 1,836,260 3,679,802 5,086,515 7,534,662
AETNA INVESTMENT ADVISERS
FUND, INC.
Value at beginning of period $14.270 $14.519 $13.379 $12.736
Value at end of period $17.954 $14.270 $14.519 $13.379
Increase (decrease) in value of
accumulation unit(1) 25.82% (1.71)% 8.52% 5.05%
Number of accumulation units
outstanding at end of period 9,193,181 21,990,186 30,784,750 34,802,433
ALGER AMERICAN GROWTH PORTFOLIO
Value at beginning of period $10.000(14)
Value at end of period $11.715
Increase (decrease) in value of
accumulation unit(1) 17.15%
Number of accumulation units
outstanding at end of period 530,263
ALGER AMERICAN SMALL CAP PORTFOLIO
Value at beginning of period $9.513 $10.072 $10.000(3)
Value at end of period $13.558 $9.513 $10.072
Increase (decrease) in value of
accumulation unit(1) 42.52% (5.55)% 0.72%
Number of accumulation units
outstanding at end of period 1,714,187 665,518 51,327
AMERICAN CENTURY VP CAPITAL
APPRECIATION*
Value at beginning of period $11.172 $11.443 $10.495 $10.000(12)
Value at end of period $14.464 $11.172 $11.443 $10.495
Increase (decrease) in value of
accumulation unit(1) 29.47% (2.37)% 9.03% 4.95%
Number of accumulation units
outstanding at end of period 1,784,552 1,608,362 1,016,894 232,832
</TABLE>
<TABLE>
<CAPTION>
1991 1990 1989 1988 1987
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
AETNA VARIABLE FUND
Value at beginning of period $77.845 $76.311 $59.871 $52.885 $50.760
Value at end of period $97.165 $77.845 $76.311 $59.871 $52.885
Increase (decrease) in value of
accumulation unit(1) 24.82% 2.01% 27.46% 13.21% 4.19%
Number of accumulation units
outstanding at end of period 20,948,226 18,362,906 17,142,820 16,455,396 16,497,406
AETNA INCOME SHARES
Value at beginning of period $31.192 $28.943 $25.574 $24.061 $23.38
Value at end of period $36.789 $31.192 $28.943 $25.574 $24.061
Increase (decrease) in value of
accumulation unit(1) 17.94% 7.77% 13.17% 6.29% 3.23%
Number of accumulation units
outstanding at end of period 7,844,412 6,984,793 6,202,834 5,955,293 5,372,271
AETNA VARIABLE ENCORE FUND
Value at beginning of period $32.138 $30.012 $27.783 $26.171 $24.812
Value at end of period $33.812 $32.138 $30.012 $27.783 $26.171
Increase (decrease) in value of
accumulation unit(1) 5.21% 7.08% 8.02% 6.16% 5.48%
Number of accumulation units
outstanding at end of period 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 $10.896 $10.437 $10.000(2)
Value at end of period $12.736 $10.896 $10.437
Increase (decrease) in value of
accumulation unit(1) 16.89% 4.40% 4.37%
Number of accumulation units
outstanding at end of period 22,898,099 17,078,985 9,535,986
</TABLE>
AUV HISTORY - 1
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
=============================================================================
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO**
Value at beginning of period $13.990 $14.640 $13.726 $12.913
Value at end of period $17.951 $13.990 $14.640 $13.726
Increase (decrease) in value of
accumulation unit(1) 28.31% (4.44)% 6.66% 6.30%
Number of accumulation units
outstanding at end of period 856,361 743,464 705,415 503,006
FIDELITY VIP II ASSET MANAGER
PORTFOLIO
Value at beginning of period $9.447 $10.000(5)
Value at end of period $10.912 $9.447
Increase (decrease) in value of
accumulation unit(1) 15.51% (5.53)%
Number of accumulation units
outstanding at end of period 1,316,916 1,254,504
FIDELITY VIP II CONTRAFUND
PORTFOLIO
Value at beginning of period $10.000(14)
Value at end of period $11.763
Increase (decrease) in value of
accumulation unit(1) 17.63%
Number of accumulation units
outstanding at end of period 525,476
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Value at beginning of period $10.000(14)
Value at end of period $11,617
Increase (decrease) in value of
accumulation unit(1) 16.17%
Number of accumulation units
outstanding at end of period 628,582
FIDELITY VIP II INDEX 500
PORTFOLIO
Value at beginning of period $10.000(14)
Value at end of period $11.740
Increase (decrease) in value of
accumulation unit(1) 17.40%
Number of accumulation units
outstanding at end of period 290,547
FRANKLIN GOVERNMENT
SECURITIES TRUST
Value at beginning of period $14.190 $14.929 $14.050 $13.219
Value at end of period $16.495 $14.109 $14.990 $14.050
Increase (decrease) in value of
accumulation unit(1) 16.24% (4.95)% 6.26% 6.29%
Number of accumulation units
outstanding at end of period 809,414 804,457 960,629 810,155
</TABLE>
<TABLE>
<CAPTION>
1991 1990 1989 1988 1987
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO**
Value at beginning of period $11.233 $10.568 $10.000(4)
Value at end of period $12.913 $11.233 $10.568
Increase (decrease) in value of
accumulation unit(1) 14.96% 6.29% 5.68%
Number of accumulation units
outstanding at end of period 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 EQUITY-INCOME
PORTFOLIO
Value at beginning of period
Value at end of period
Increase (decrease) in value of
accumulation unit(1)
Number of accumulation units
outstanding at end of period
FIDELITY VIP 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
FRANKLIN GOVERNMENT
SECURITIES TRUST
Value at beginning of period $11.545 $10.581 $10.000(6)
Value at end of period $13.219 $11.545 $10.581
Increase (decrease) in value of
accumulation unit(1) 14.50% 9.11% 5.81%
Number of accumulation units
outstanding at end of period 627,552 178,761 25,258
</TABLE>
AUV HISTORY - 2
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
=============================================================================
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $12.169 $10.000(7)
Value at end of period $15.323 $12.169
Increase (decrease) in value of
accumulation unit(1) 25.91% 21.69%
Number of accumulation units
outstanding at end of period 1,280,953 393,553
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $11.859
Increase (decrease) in value of
accumulation unit(1) 18.59%
Number of accumulation units
outstanding at end of period 109,717
JANUS ASPEN SHORT-TERM
BOND PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $10.393
Increase (decrease) in value of
accumulation unit(1) 3.93%
Number of accumulation units
outstanding at end of period 18,473
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $12.158
Increase (decrease) in value of
accumulation unit(1) 21.58%
Number of accumulation units
outstanding at end of period 314,653
LEXINGTON EMERGING
MARKETS FUND, INC.
Value at beginning of period $8.772 $10.000(8)
Value at end of period $8.323 $8.772
Increase (decrease) in value of
accumulation unit(1) (5.12)% (12.28)%
Number of accumulation units
outstanding at end of period 371,156 144,750
</TABLE>
<TABLE>
<CAPTION>
1991 1990 1989 1988 1987
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
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
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
</TABLE>
AUV HISTORY - 3
<PAGE>
CONDENSED FINANCIAL INFORMATION (continued)
=============================================================================
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $9.412 $10.071 $9.193 $9.018
Value at end of period $10.862 $9.412 $10.071 $9.193
Increase (decrease) in value of
accumulation unit(1) 15.41% (6.54)% 9.55% 1.94%
Number of accumulation units
outstanding at end of period 530,562 533,016 341,771 198,338
NEUBERGER & BERMAN
GROWTH PORTFOLIO
Value at beginning of period $13.398 $14.278 $13.536 $12.511
Value at end of period $17.430 $13.398 $14.278 $13.536
Increase (decrease) in value of
accumulation unit(1) 30.09% (6.16)% 5.48% 8.19%
Number of accumulation units
outstanding at end of period 2,359,090 2,107,525 1,927,674 1,346,898
SCUDDER INTERNATIONAL
PORTFOLIO CLASS A SHARES***
Value at beginning of period $13.227 $13.508 $9.922 $10.239**
Value at end of period $14.515 $13.227 $13.508 $9.922
Increase (decrease) in value of
accumulation unit(1) 9.74% (2.08)% 36.14% (3.10)%
Number of accumulation units
outstanding at end of period 3,823,292 4,240,412 2,371,037 1,161,007
</TABLE>
<TABLE>
<CAPTION>
1991 1990 1989 1988 1987
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $9.608 $11.441 $10.000(9)
Value at end of period $9.018 $9.608 $11.441
Increase (decrease) in value of
accumulation unit(1) (6.14)% (16.02)% 14.41%
Number of accumulation units
outstanding at end of period 144,139 75,052 11,481
NEUBERGER & BERMAN
GROWTH PORTFOLIO
Value at beginning of period $9.769 $10.772 $10.000(10)
Value at end of period $12.511 $9.769 $10.772
Increase (decrease) in value of
accumulation unit(1) 28.07% (9.31)% 7.72%
Number of accumulation units
outstanding at end of period 971,985 482,220 68,885
SCUDDER INTERNATIONAL
PORTFOLIO CLASS A SHARES***
Value at beginning of period $9.256 $10.306 $10.000(11)
Value at end of period $10.239 $9.256 $10.306
Increase (decrease) in value of
accumulation unit(1) 10.62% (10.19)% 3.06%
Number of accumulation units
outstanding at end of period 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.
(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 "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 we may conduct. Income, gains or losses of the Separate Account are
credited to or charged against the assets of the Separate Account without
regard to our other income, gains or losses. All obligations arising under
the Contracts are our general corporate obligations.
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 Account and each guaranteed term of GAA
counts as one option, even if you no longer have amounts allocated to that
option.
The Contract Holder 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 in compliance with
regulatory requirements. The availability of Funds may also be subject to
applicable 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 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 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 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 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
1
<PAGE>
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) Alger American Fund--Alger American Growth Portfolio seeks long-term
capital appreciation by investing in a diversified, actively managed
portfolio of equity securities. The Portfolio primarily invests in
equity securities of companies which have a market capitalization of
$1 billion or greater.(2)
(bullet) Alger American Fund--Alger American Small Capitalization Portfolio
seeks long-term capital appreciation. Except during temporary
defensive periods, the Portfolio invests at least 65% of its total
assets in equity securities of companies that, at the time of
purchase of such securities, have total market capitalization within
the range of companies included in the Russell 2000 Growth Index,
updated quarterly. The Russell 2000 Growth Index is designed to
track the performance of small capitalization companies. At , the
range of market capitalization of these companies was $ million to
$ billion.(2)
(bullet) American Century Variable Portfolios, Inc.--American Century VP
Capital Appreciation (formerly Twentieth Century Portfolios--TCI
Growth) seeks capital growth. The Fund seeks to achieve its
objective by investing in common stocks (including securities
convertible into common stocks) and other securities that meet
certain fundamental and technical standards of selection and, in the
opinion of the Fund's investment manager, have better than average
potential for appreciation.(3)
(bullet) Calvert Responsibly Invested Balanced Portfolio is a nondiversified
portfolio that seeks growth of capital through investment in
enterprises that make a significant contribution to society through
their products and services and through the way they do business.(4)
(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.
(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.(5)
(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 500 Composite Index of 500 stocks.(5)
(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.(5)
(bullet) Franklin Government Securities Trust seeks income through
investments in obligations of the U.S. Government or its agencies or
instrumentalities, primarily GNMA obligations.(6)
(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 included companies with capitalizations between approximately
$ million and $ billion, but which is expected to change on a
regular basis.(7)
(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.(7)
(bullet) Janus Aspen Series--Short-Term Bond Portfolio seeks as high a level
of current income as is consistent with preservation of capital. The
Portfolio pursues its investment objective by investing primarily in
short- and intermediate-term fixed income securities.(7)
(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.(7)
(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.
2
<PAGE>
Investments in emerging markets involve risks not present in
domestic markets. See the Fund's prospectus for information on risks
inherent in this investment.(8)
(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.(8)
(bullet) Neuberger & Berman Advisers Management Trust-- Growth Portfolio
seeks capital appreciation without regard to income. The Portfolio
generally invests in securities believed to have the maximum
potential for long-term capital appreciation. The Portfolio expects
to be almost fully invested in common stocks, often of companies
that may be temporarily out of favor in the market.(9)
(bullet) Scudder Variable Life Investment Fund--International Portfolio Class
A Shares seeks long-term growth of capital primarily through
diversified holdings of marketable foreign equity investments.(10)
Investment Advisers for each of the Funds:
(1) Aetna Life Insurance and Annuity Company (adviser); Aeltus
Investment Management, Inc. (sub-adviser)
(2) Fred Alger Management, Inc.
(3) American Century Investment Management, Inc.
(4) Calvert Asset Management Company, Inc.
(5) Fidelity Management & Research Company
(6) Franklin Advisers, Inc.
(7) Janus Capital Corporation
(8) Lexington Management Corporation (adviser); Market Systems
Research Advisors, Inc. (sub-adviser--Natural Resources Trust
only)
(9) Neuberger & Berman Management Inc.
(Investment Manager); Neuberger & Berman, L.P.
(Sub-Adviser)
(10) Scudder, Stevens & Clark, Inc.
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 respective Fund prospectuses which accompany 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.
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
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 Contracts as described below. The Contract Holder
may elect not to offer all Credited Interest Options under its Plan. The
Credited Interest Options currently available under the Contract include the
Guaranteed Accumulation Account and the Fixed Account.
(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 Account is a part of the Company's general account. The
Fixed Account guarantees a minimum interest rate, as specified in
the Contract. The Company may credit higher interest rates from time
to time. Transfers from the Fixed Account are limited. (See Appendix
II.)
3
<PAGE>
PURCHASE
=============================================================================
CONTRACT AVAILABILITY
The Contracts are designed to allow the accumulation of assets and to
provide retirement benefits under retirement plans under Section 403(b) of
the Code by school boards and public universities in the state of New York,
for Participants who are members of NYSUT or UUP.
Two group contracts may be issued to cover all present and future
Participants. The group Contracts are generally owned by the employer and
individual Accounts are established for each Participant. Single Purchase
Payment Contracts are issued for lump-sum transfers to us of amounts
accumulated under a pre-existing Plan. Installment Purchase Payment Contracts
are established to accept continuing periodic payments. We reserve the right
to set a minimum Purchase Payment on Single Purchase Payment Contracts. Lump
Sum transfers below this minimum will be applied to an Installment Purchase
Payment Contract.
Under the Plans, the employer has no right, title or interest in the
amounts held under the Contract or in the Account; Participants make all
elections under the Contract.
PURCHASING INTERESTS IN THE CONTRACT
Eligible organizations may acquire Contracts by submitting an application
to the Opportunity Plus Processing Office at 18 Corporate Woods Boulevard,
Fourth Floor, Albany, New York 12211. Once we approve the forms, the Contract
will be issued to the employer as the group Contract Holder. Participants may
purchase interests in a group Contract by submitting enrollment materials to
the Opportunity Plus Processing Office.
The Company must accept or reject the application or enrollment forms
within two business days of receipt. If the forms 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 the 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.
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 made in
writing or by telephone transfer. Allocations must be in whole percentages.
RIGHT TO CANCEL
Contract Holders and Participants have the right to cancel their purchase
within 10 days of receiving the Contract (or other document evidencing your
interest) by returning it to the Opportunity Plus Processing Office with a
written notice of intent to cancel. When we receive your request for
cancellation, we will return your Account Value. You bear the entire
investment risk for amounts allocated among the Subaccounts during the free
look period. Account Values will be determined as of the Valuation Date on
which we receive your request for cancellation at the Opportunity Plus
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.
4
<PAGE>
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 administrative
expenses that exceed revenues from the maintenance fee described below. 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
of 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.
MAINTENANCE FEE
During the Accumulation Period, the Company will deduct an annual
maintenance fee from the Account Value. The maintenance fee is to reimburse
the Company for some of its administrative expenses relating to the
establishment and maintenance of the Accounts.
For the period from May 1, 1997 to May 1, 1998, the maintenance fee will
be $5 on an annual basis, with one fourth of this fee ($1.25) deducted during
the first month after the end of each calendar quarter. Effective January 1,
1999, the quarterly maintenance fee will be reduced to $0.00, thereby
eliminating the maintenance fee charge. The maintenance fee will be deducted
on a pro rata basis from each investment option in which you have an
interest.
DEFERRED SALES CHARGE
Withdrawals of all or a portion of the Account Value may be subject to a
deferred sales charge. The deferred sales charge is a percentage of the
amounts withdrawn from the Subaccounts, the Fixed Account and the Guaranteed
Accumulation Account.
For Installment Purchase Payment Contracts, the deferred sales charge is
based on the number of completed Purchase Payment Periods. There is no
deferred sales charge provision on Single Purchase Payment Contracts.
However, if amounts are transferred from a Single Purchase Payment Contract
to an Installment Purchase Payment Contract, the applicable deferred sales
charge provisions apply to all amounts in the Installment Purchase Payment
Contract.
For Installment Purchase Payment Contracts, the amount of the deferred
sales charge is determined in accordance with the schedule set forth in the
following table:
INSTALLMENT PURCHASE PAYMENT CONTRACTS:
Purchase Payment Deferred Sales
Periods Completed Charge Deduction
- -------------------------------- ---------------------
Less than 5 5%
5 or more but less than 7 4%
7 or more but less than 9 3%
9 or more but less than 10 2%
More than 10 0%
In addition, if a nonlifetime Annuity Option is elected on a variable
basis and the remaining value is withdrawn before three years of Annuity
payments have been completed, the applicable deferred sales charge will be
assessed (see "Annuity Options").
The deduction for the deferred sales charge will not exceed 8.5% of the
total Purchase Payments actually made to the Account. The Company does not
anticipate that the deferred sales charge will cover all sales and
administrative expenses which it incurs in connection with the Contract. The
difference will be covered by the general assets of the Company which are
attributable, in part, to mortality and expense risk charges under the
Contract described above.
Generally, if you transfer the total account value under another similar
annuity contract issued by the Company to an Account under this Contract, the
effective date of the new Account will be the same effective date as your
former contract for the purpose of calculating the applicable deferred sales
charge under this Contract.
A deferred sales charge will not be deducted from any portion of the
Account Value if the withdrawal is:
(bullet) applied to provide Annuity benefits;
(bullet) taken on or after the tenth anniversary of the effective date of the
Account;
(bullet) paid due to your death before Annuity payments begin;
(bullet) made due to the election of an Additional Withdrawal Option (see
"Additional Withdrawal Options");
(bullet) paid where the Account Value is $2,500 or less and no amount has
been withdrawn, taken as a loan, or used to purchase Annuity
benefits during the prior 12 months;
5
<PAGE>
(bullet) taken from an Installment Purchase Payment Contract by a Participant
who is at least age 59-1/2 and who has completed nine Purchase
Payment Periods;
(bullet) withdrawn due to disability as specified in the Code;
(bullet) withdrawn due to financial hardship as specified in the Code;
(bullet) withdrawn due to separation from service while meeting the age and
service requirements to receive benefits under the New York State
Teachers' or Employees' Retirement Systems (even if you are not a
member of either system); or
(bullet) withdrawn from the portion of the Account Value invested in the
Subaccount(s) and/or GAA attributable to Purchase Payments made on
or after April 1, 1995. This waiver does not apply to amounts
deposited in the Fixed Account. If amounts are deposited in a
Subaccount or GAA and then transferred to the Fixed Account, the
waiver would no longer apply. If amounts are deposited in the Fixed
Account and then transferred to a Subaccount or GAA, the waiver
would not apply to amounts that came from the Fixed Account. No
deferred sales charge would be assessed unless and until these
amounts are withdrawn from the Account. For any withdrawal, the
Account Value of the Purchase Payment(s) made on or after April 1,
1995 will be withdrawn first. Then, the remaining Account Value will
be used to satisfy the disbursement request.
Free Withdrawals. For Participants between the ages of 59-1/2 and 70-1/2,
up to 10% of the current Account Value may be withdrawn during each calendar
year without imposition of a deferred sales charge. The free withdrawal
applies only to the first partial withdrawal in each calendar year. The 10%
amount will be based on the Account Value calculated on the Valuation Date
next following our receipt of your request for withdrawal. Any outstanding
contract loans are excluded from the Account Value when calculating the 10%
free withdrawal amount. This provision does not apply to a full withdrawal of
the Account, or to partial withdrawals due to a default on a contract loan
(see "Contract Loans"). This provision may not be exercised if ECO or SWO is
elected. (See "Additional Withdrawal Options.")
In the instances cited above, no deferred sales charge is deducted.
However, the amount withdrawn may be subject to the 10% federal penalty tax.
(See "Tax Status.")
DEFERRED SALES CHARGE SCHEDULE FOR GAA FOR
CERTAIN NEW YORK CONTRACTS
The following deferred sales charge schedule applies for withdrawals from
the Guaranteed Accumulation Account, where available, for Single Purchase
Payment and Installment Purchase Payment Master Contracts which are issued
after July 29, 1993 in the State of New York. This schedule is based on the
number of completed Account Years, as follows:
Completed Deferred Sales
Account Years Charge Deduction
- ------------------------------- ---------------------
Less than 3 5%
3 or more but less than 4 4%
4 or more but less than 5 3%
5 or more but less than 6 2%
6 or more but less than 7 1%
7 or more 0%
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
Currently, there is no premium tax on annuities under New York
regulations. However, if the state does impose a premium tax, it would be
deducted from the amount applied to an annuity option. We reserve the right
to deduct a state premium tax at any time from the Purchase Payment(s) or
from the Account Value at any time, but no earlier than when we have a tax
liability under state law. (See "Tax Status.")
CONTRACT VALUATION
=============================================================================
ACCOUNT VALUE
Until the Annuity Date, the Account Value is the total dollar value of
amounts held in the 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.
6
<PAGE>
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 expense charge (if
any).
Initial Purchase Payments will be credited to your Contract at the AUV
computed on the next Valuation Date following our acceptance of the
enrollment materials, as described under "Purchase-Purchasing Interests in the
Contract." 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 Contract 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 Subaccounts' 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
the Contracts 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 Contracts and your Plan, as applicable.
The Company currently allows unlimited transfers of accumulated amounts to
available investment options without charge. The minimum transfer amount may
not be 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
the Opportunity Plus Processing Office. Transfers are not available during
the Annuity Period.
WITHDRAWALS
=============================================================================
Subject to the withdrawal restrictions under Section 403(b) Contracts
described below, all or a portion of the Account Value may be withdrawn at
any time during the Accumulation Period. To request a withdrawal, you must
properly complete a disbursement form and send it to the Opportunity Plus
Processing Office. 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 as in one of the following forms:
(bullet) Full Withdrawal of an Account: The amount paid upon a full
withdrawal will be the full Account Value, minus any
7
<PAGE>
applicable deferred sales charge and maintenance fee due.
(bullet) Partial Withdrawals (Percentage): The amount paid will be the
percentage of the Account Value requested minus any applicable
deferred sales charge.
(bullet) Partial Withdrawal (Specified Dollar Amount): The amount paid will
be the dollar amount requested. However, the amount withdrawn from
the Account will equal the amount requested plus any applicable
deferred sales charge.
For any partial withdrawal, amounts will be withdrawn proportionately from
each Subaccount or Credited Interest Option in which the Account is invested,
unless you request otherwise in writing. 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.")
Withdrawal Restrictions from 403(b) Plans. Under Section 403(b) Contracts,
a withdrawal of salary reduction contributions and earnings on such
contributions is generally prohibited prior to the Participant's death,
disability, attainment of age 59-1/2, separation from service or financial
hardship. (See "Tax Status.")
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, as well as any maintenance fee and any deferred sales charge
imposed at the time of withdrawal. Any maintenance fee which falls due after
the withdrawal and before the reinvestment will be deducted from the amounts
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.
CONTRACT LOANS
=============================================================================
During the Accumulation Period, Participants may request a loan from their
Account Value. Loans can only be taken from those Account Values held in the
Subaccounts or from those Credited Interest Options that allow loans. (See
Appendices I and II.) A loan may be obtained by reviewing and reading the
terms of the loan agreement, properly completing a loan request form and
submitting it to the Opportunity Plus Processing Office.
ADDITIONAL WITHDRAWAL OPTIONS
=============================================================================
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.
The Additional Withdrawal Options currently 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.
Additional information relating to any of the Additional Withdrawal Options
may be obtained from your local representative or from the Company at the
Opportunity Plus Processing Office.
8
<PAGE>
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 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 the Opportunity Plus Processing Office.
Once an option is revoked, it may not be elected again, nor may any other
additional withdrawal options 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;
(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 we receive 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.
The Code requires that distribution of death proceeds begin within a
certain period of time. Generally, either annuity 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 a Participant attains age 70-1/2, or retires, if
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 us in writing
of the following:
(bullet) the date on which you would like to start receiving annuity
payments;
(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
9
<PAGE>
(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.
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, 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. However, under an Installment Purchase
Payment Contract, any lump-sum elected before three years of payments have
been completed will be treated as a withdrawal during the Accumulation Period
and any applicable deferred sales charge will be assessed. (See "Charges and
Deductions--Deferred Sales Charge.")
We may also offer additional Annuity Options under the Contract from time
to time.
ANNUITY PAYMENTS
Date Payouts Start. When payments start, the age of the Annuitant plus the
number of years for which payments are guaranteed must not exceed 95. Annuity
payments may not extend beyond (a) the life of the Annuitant, (b) the joint
lives of the Annuitant and beneficiary, (c) a period certain greater than the
Annuitant's life expectancy, or (d) a period certain greater than the joint
life expectancies of the Annuitant and beneficiary.
Amount of Each Annuity Payment. The amount of each payment depends on the
size of your Account Value, how you allocate it between fixed and variable
payouts, and the Annuity Option chosen. 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
information on the impact of selecting a particular net investment rate.)
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
10
<PAGE>
result in a deduction being made even though we assume no mortality risk. We
may also deduct a daily administrative 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), and no deferred
sales charge will be imposed.
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 our Home Office.
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. Under Options 2 and 4, 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 Contract is designed for use with Section 403(b) plans.
The tax rules applicable to retirement plans vary according to the type of
plan and the terms and conditions of the plan.
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
11
<PAGE>
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.
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.
In order to be excludable from taxable income, total annual contributions
made by you and your employer cannot exceed either of two limits set by the
Code. The first limit, under Section 415, is generally the lesser of 25% of
your includible compensation or $30,000. The second limit, which is the
exclusion allowance under Section 403(b), is usually calculated according to
a formula that takes into account your length of employment and any pretax
contributions to certain other retirement plans. These two limits apply to
your contributions as well as to any contributions made by your employer on
your behalf. There is an additional limit that specifically limits your
salary reduction contributions to generally no more than $9,500 annually
(subject to indexing); your own limit may be higher or lower, depending on
certain conditions. In addition Purchase Payments will be excluded from your
gross income only if the Plan meets certain non-discrimination requirements.
Section 403(b)(11) restricts the distribution under Section 403(b)
contracts of: (1) salary reduction contributions made after December 31,
1988; (2) earnings on those contributions; and (3) earnings during such
period on amounts held as of December 31, 1988. Distribution of those amounts
may only occur upon death of the employee, attainment of age 59-1/2,
separation from service, disability, or financial hardship. In addition,
income attributable to salary reduction contributions may not be distributed
in the case of hardship.
If, pursuant to Revenue Ruling 90-24, the Company agrees to accept, under
any of the Contracts covered by this Prospectus, amounts transferred from a
Code Section 403(b)(7) custodial account, such amounts will be subject to the
withdrawal restrictions set forth in Code Section 403(b)(7)(A)(ii).
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 includible 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.
Minimum Distribution Requirements. The Code has required distribution
rules for Section 403(b) 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 attributable to
contributions under Section 403(b) Plans 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
12
<PAGE>
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 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, 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 had received those payments, except that a
limited death benefit exclusion may apply to payments made for deaths
occurring 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 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.
MISCELLANEOUS
=============================================================================
OPPORTUNITY PLUS PROCESSING OFFICE
We have established the Opportunity Plus Processing Office to provide
administrative support to Participants of the Opportunity Plus Program. This
office will handle enrollments, billing, transfers, redemptions and inquiries
for all Opportunity Plus Participants. All forms and correspondence should be
sent to:
Aetna Life Insurance and Annuity Company
Opportunity Plus Processing Office
P.O. Box 12894
Albany, New York 12212-2894
Telephone Number: 1-800-677-4636
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
13
<PAGE>
also provide services to Participants in connection with establishing their
Accounts under the Contract.
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--Deferred Sales Charge.")
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" 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 returns will reflect the reduction of all
recurring charges during each period (e.g., mortality and expense risk
charges, annual maintenance fees, administrative expense charge (if any) and
any applicable deferred sales charge). "Non-standardized returns" will be
calculated in a similar manner, except that non-standardized figures will not
reflect the deduction of any applicable deferred sales charge (which would
decrease the level of performance shown if reflected in these calculations).
The non-standardized figures may also include monthly, quarterly,
year-to-date and 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 each Contract Holder. 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
individual Accounts. Currently, for group contracts used with Section 403(b)
plans, the Company obtains participant voting instructions directly from the
participants, subject to 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 each Contract Holder or Participant, as applicable,
may cast during the Accumulation
14
<PAGE>
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.
CHANGES IN BENEFICIARY DESIGNATIONS
The designated Beneficiary may be changed at any time. Such change will
not become effective until written notice of the change is received by the
Company.
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.
AGREEMENTS WITH THE COMPANY
In 1994, NYSUT and the Company entered into an arrangement which calls for
NYSUT to exclusively endorse the Opportunity Plus program and for the Company
to provide educational programs focusing on financial planning for
retirement. The educational program is provided to all NYSUT members
including agency fee payors. Trained personnel have been hired by the Company
to conduct these programs exclusively for NYSUT members. NYSUT is reimbursed
for direct out-of-pocket expenses incurred in the promotion of the
Opportunity Plus program up to a maximum of $75,000 per year. In addition,
the Company will pay NYSUT between $30,000-$42,000 per month from 1994
through 1998. NYSUT has indicated to the Company that it intends to use these
amounts to enhance benefits to the membership.
The Company compensates UUP $48,000 per year for the use of on-site campus
facilities, the endorsement of the Opportunity Plus program and for the use
of UUP payroll slots.
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.
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
15
<PAGE>
APPENDIX I
GUARANTEED ACCUMULATION ACCOUNT
=============================================================================
The Guaranteed Accumulation Account ("GAA") is a Credited Interest Option
available during the Accumulation Period under the Contracts described 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 a
deferred sales charge and/or 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.
CONTRACT LOANS
Loans may not be made against amounts held in GAA, although such value is
included in determining the Account Value against which a loan may be made.
REINVESTMENT PRIVILEGE
If amounts are withdrawn from GAA and reinvested, they will be applied to
the current deposit period. Amounts are proportionately reinvested to the
classifications in the same manner as they were allocated before the
withdrawal. Any negative MVA amount applied to a withdrawal is not included
in the reinvestment.
16
<PAGE>
APPENDIX II
FIXED ACCOUNT
=============================================================================
The following summarizes material information concerning the Fixed
Account. Amounts allocated to the Fixed Account are held in the Company's
general account that supports general insurance and annuity obligations.
Interests in the Fixed Account have not been registered with the SEC in
reliance on exemptions under the Securities Act of 1933, as amended.
Disclosure in the Prospectus regarding the Fixed 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 Account has not been reviewed by the
SEC.
The Fixed Account guarantees the minimum 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 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 Account is available under Installment Purchase
Payment Contracts only.
Under certain emergency conditions, we may defer payment of a Fixed
Account withdrawal value (a) for a period of up to six months, or (b) as
provided by federal law.
Amounts applied to the Fixed Account will earn the interest rate in effect
when actually applied to the Fixed Account.
The Fixed Account will reflect a compound interest rate credited by us.
The interest rate quoted is an annual effective yield. We make no deductions
from the credited interest rate for mortality and expense risks; these risks
are considered in determining the credited rate.
If a withdrawal is made from the Fixed Account, a deferred sales charge
may apply. See "Charges and Deductions--Deferred Sales Charge."
TRANSFERS AMONG INVESTMENT OPTIONS
Transfers from the Fixed Account to any other available investment
options(s) are allowed in each calendar year during the Accumulation Period.
There is no limit on the number of transfers that you can make out of the
Fixed Account in a calendar year; however, the amount you are allowed to
transfer from the Fixed Account is the current value of your Fixed Account
multiplied by the current maximum percentage of the transfer allowed (the
"window") minus any previous transfers made during the calendar year.
By notifying us at the Opportunity Plus Processing Office at least 30 days
before Annuity payments begin, you may elect to have amounts which have been
accumulating under the Fixed Account transferred to one or more of the
Subaccounts available during the Annuity Period to provide variable Annuity
Payments.
CONTRACT LOANS
Loans may be made from Account Values held in the Fixed Account.
17
<PAGE>
For Master Applications Only
I hereby acknowledge receipt of an Account C "Opportunity Plus" Group
Deferred Variable Annuity prospectus dated May 1, 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.75962-97) dated May 1, 1997.
CONTRACT HOLDER'S SIGNATURE
DATE
PROS.75962-97
<PAGE>
VARIABLE ANNUITY ACCOUNT C
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Statement of Additional Information dated May 1, 1997
for
OPPORTUNITY PLUS
Group Variable Multiple Option Annuity Contracts
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Variable Annuity Account C (the
"Separate Account") dated May 1, 1997.
A free prospectus is available upon request from the local Aetna Life Insurance
and Annuity Company office or by writing to or calling:
Aetna Life Insurance and Annuity Company
Opportunity Plus Processing Office
P. O. Box 12894
Albany, New York 12212-2894
1-800-677-4636
Read the prospectus before you invest. Unless otherwise indicated, terms used in
this Statement of Additional Information have the same meaning as in the
prospectus.
TABLE OF CONTENTS
Page
General Information and History..................................... 2
Variable Annuity Account C.......................................... 3
Offering and Purchase of Contracts.................................. 3
Performance Data.................................................... 3
General....................................................... 3
Average Annual Total Return Quotations........................ 4
Annuity Payments.................................................... 7
Sales Material and Advertising...................................... 8
Independent Auditors................................................ 8
Financial Statements of the Separate Account........................ S-1
Financial Statements of Aetna Life Insurance and Annuity Company.... F-1
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Life Insurance and Annuity Company (the "Company") is a stock life
insurance company which was organized under the insurance laws of the State of
Connecticut in 1976. Through a merger, it succeeded to the business of Aetna
Variable Annuity Life Insurance Company (formerly Participating Annuity Life
Insurance Company organized in 1954). As of December 31, 1996, the Company had
assets of $___ billion (subject to $____ billion of customer and other
liabilities, $___ billion of shareholder equity) which includes $___billion in
assets held in the Company's separate accounts. The Company had $____ billion in
assets under management, including $__ billion in its mutual funds. As of
______________, it ranked among the top ___% of all U.S. life insurance
companies by size. 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 indirectly wholly owned subsidiary of Aetna Inc. The
Company is engaged in the business of issuing life insurance policies and
annuity contracts in all states of the United States. The Company's Home Office
is located at 151 Farmington Avenue, Hartford, Connecticut 06156.
In addition to serving as the principal underwriter and the depositor for the
Separate Account, the Company is also a registered investment adviser under the
Investment Advisers Act of 1940, and a registered broker-dealer under the
Securities Exchange Act of 1934. The Company provides investment advice to
several of the registered management investment companies offered as variable
investment options under the Contracts funded by the Separate Account (see
"Variable Annuity Account C" below).
The Company has established the Opportunity Plus Processing Office to provide
administrative support to Contract Holders and Participants investing in the
Opportunity Plus Contract. This office will handle enrollments, billing,
transfers, redemptions, and inquiries for all Opportunity Plus Contract Holders
and Participants. All forms and correspondence should be sent to:
Aetna Life Insurance and Annuity Company
Opportunity Plus Processing Office
P. O. Box 12894
Albany, New York 12212-2894
Telephone number: 1-800-677-4636
Other than the mortality and expense risk charges and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the Separate Account are borne by the Company. See "Charges and Deductions" in
the prospectus. The Company receives reimbursement for certain administrative
costs from some unaffiliated sponsors of the Funds used as funding options under
the Contract. These fees generally range up to 0.25%.
The assets of the Separate Account are held by the Company. The Separate Account
has no custodian. However, the Funds in whose shares the assets of the Separate
Account are invested each have custodians, as discussed in their respective
prospectuses.
2
<PAGE>
VARIABLE ANNUITY ACCOUNT C
Variable Annuity Account C (the "Separate Account") is a separate account
established by the Company for the purpose of funding variable annuity contracts
issued by the Company. The Separate Account is registered with the Securities
and Exchange Commission as a unit investment trust under the Investment Company
Act of 1940, as amended. The assets of each of the Subaccounts of the Separate
Account will be invested exclusively in shares of the Funds described in the
prospectus. Purchase Payments made under the Contract may be allocated to one or
more of the Subaccounts. The Company may make additions to, deletions from or
substitution of available variable investment options as permitted by law and
subject to the conditions of the Contract. The availability of the Funds is
subject to applicable regulatory authorization. Not all Funds are available in
all jurisdictions, under all Contracts, or under all Plans. The Funds currently
available under the Contract are as follows:
<TABLE>
<S> <C>
Aetna Variable Fund Fidelity VIP II Index 500 Portfolio
Aetna Income Shares Fidelity VIP Equity-Income Portfolio
Aetna Variable Encore Fund Franklin Government Securities Trust
Aetna Investment Advisers Fund, Inc. Janus Aspen Aggressive Growth Portfolio
Alger American Growth Portfolio Janus Aspen Growth Portfolio
Alger American Small Cap Portfolio Janus Aspen Short-Term Bond Portfolio
American Century VP Capital Appreciation Janus Aspen Worldwide Growth Portfolio
(formerly TCI Growth) Lexington Emerging Markets Fund, Inc.
Calvert Responsibly Invested Balanced Portfolio Lexington Natural Resources Trust
Fidelity VIP II Asset Manager Portfolio Neuberger & Berman Growth Portfolio
Fidelity VIP II Contrafund Portfolio Scudder International Portfolio Class A Shares
</TABLE>
Complete descriptions of each of the Funds, including their investment
objectives, policies, risks and fees and expenses, is contained in the
prospectuses and statements of additional information for each of the Funds.
OFFERING AND PURCHASE OF CONTRACTS
The Company is both the depositor and the principal underwriter for the
securities sold by the prospectus. The Company offers the Contracts through life
insurance agents licensed to sell variable annuities who are registered
representatives of the Company or of other registered broker-dealers who have
sales agreements with the Company. The offering of the Contracts is continuous.
A description of the manner in which Contracts are purchased may be found in the
prospectus under the sections titled "Purchase" and "Contract Valuation."
PERFORMANCE DATA
General
From time to time, the Company may advertise different types of historical
performance for the Subaccounts of the Separate Account available under the
Contracts issued by the Company in connection with Plans described in the
prospectus. The Company may advertise the "standardized average annual total
returns," calculated in a manner prescribed by the Securities and Exchange
Commission (the "standardized return"), as well as "non-standardized returns,"
both of which are described below.
3
<PAGE>
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial Purchase Payment of
$1,000 is applied to the various Subaccounts under the Contract, and then
related to the ending redeemable values over one, five and ten year periods (or
fractional periods thereof). The redeemable value is then divided by the initial
investment and this quotient is taken to the Nth root (N represents the number
of years in the period) and 1 is subtracted from the result which is then
expressed as a percentage, carried to at least the nearest hundredth of a
percent. The standardized figures reflect the deduction of all recurring charges
during each period (e.g., mortality and expense risk charges, maintenance fees,
administrative expense charges, and deferred sales charges). These charges will
be deducted on a pro rata basis in the case of fractional periods. The
maintenance fee is converted to a percentage of assets based on the average
account size under the Contracts described in the prospectus.
The non-standardized figures will be calculated in a similar manner, except that
they will not reflect the deduction of any applicable deferred sales charge
(which would decrease the level of performance shown if reflected in these
calculations). The non-standardized figures may also include monthly, quarterly,
year-to-date and three year periods.
If a Fund was in existence prior to the date it became available under the
Contract, standardized and non-standardized total returns may include periods
prior to such date. These figures are calculated by adjusting the actual returns
of the Fund to reflect the charges that would have been assessed under the
Contract had that Fund been available under the Contract during that period.
Investment results of the Subaccounts will fluctuate over time, and any
presentation of the Subaccounts' total return quotations for any prior period
should not be considered as a representation of how the Subaccounts will perform
in any future period. Additionally, the Account Value upon redemption may be
more or less than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The tables shown below represent each type of contract provided for in this
Statement of Additional Information. The first table reflects the average annual
standardized and non-standardized total return quotation figures for the period
ended December 31, 1996 for the Subaccounts under the Single Payment Contract
issued by the Company. The second table reflects the average annual standardized
and non-standardized total return quotation figures for the period ended
December 31, 1996 for the Subaccounts under Installment Payment Contracts with a
$5 annual maintenance fee, deducted quarterly. For those Subaccounts where
results are not available for the full calendar period indicated, the percentage
shown is an average annual return since inception (denoted with an *).
4
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Fund
SINGLE PURCHASE PAYMENT CONTRACT STANDARDIZED NON-STANDARDIZED Inception
($0 MAINTENANCE FEE) Date
- -----------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund 04/30/75
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares 06/01/78
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund 09/01/75
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc. 06/23/89
- -----------------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 01/08/89
- -----------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap Portfolio 09/21/88
- -----------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital
Appreciation 11/20/87
- -----------------------------------------------------------------------------------------------------------------------------------
Calvert Responsibly Invested Balanced
Portfolio 09/04/86
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager 11/07/86
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 01/03/95
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Index 500 Portfolio 08/27/92
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 10/22/86
- -----------------------------------------------------------------------------------------------------------------------------------
Franklin Government Securities Trust 05/30/89
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth 09/13/93
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 09/13/93
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Short-Term Bond Portfolio 09/13/93
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 09/13/93
- -----------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund 3/31/94
- -----------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust 10/14/91
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Growth Portfolio 12/31/85
- -----------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio
Class A Shares 05/01/87
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the Tables for an explanation of the
charges included in the Standardized and Non-Standardized figures. These figures
represent historical performance and should not be considered a projection of
future performance.
5
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
INSTALLMENT PURCHASE PAYMENT CONTRACTS Fund
($5 MAINTENANCE FEE) STANDARDIZED NON-STANDARDIZED Inception
Date
- -----------------------------------------------------------------------------------------------------------------------------------
SUBACCOUNT 1 Year 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund 04/30/75
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares 06/01/78
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund 09/01/75
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc. 06/23/89
- -----------------------------------------------------------------------------------------------------------------------------------
Alger American Growth Portfolio 01/08/89
- -----------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap Portfolio 09/21/88
- -----------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital
Appreciation 11/20/87
- -----------------------------------------------------------------------------------------------------------------------------------
Calvert Responsibly Invested Balanced
Portfolio 09/30/86
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 10/22/86
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Asset Manager 11/07/86
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 01/03/95
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Index 500 Portfolio 08/27/92
- -----------------------------------------------------------------------------------------------------------------------------------
Franklin Government Securities Trust 05/30/89
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth 9/13/93
Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 09/13/93
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Short-Term Bond Portfolio 09/13/93
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 09/13/93
- -----------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund 3/31/94
- -----------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust 10/14/91
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Growth Portfolio 12/31/85
- -----------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio
Class A Shares 05/01/87
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the Tables for an explanation of the
charges included in the Standardized and Non-Standardized figures. These figures
represent historical performance and should not be considered a projection of
future performance.
6
<PAGE>
ANNUITY PAYMENTS
When Annuity payments are to begin, the value of the Account is determined using
Accumulation Unit values as of the tenth Valuation Date before the first annuity
payment is due. Such value (less any applicable premium tax) is applied to
provide an Annuity in accordance with the annuity and investment options
elected.
The Annuity option tables found in the Contract show, for each form of Annuity,
the amount of the first annuity payment for each $1,000 of value applied.
Thereafter, variable annuity payments fluctuate as the Annuity Unit value(s)
fluctuates with the investment experience of the selected investment option(s).
The first payment and subsequent payments also vary depending on the assumed net
investment rate selected (3.5% or 5% per annum). Selection of a 5% rate causes a
higher first payment, but Annuity payments will increase thereafter only to the
extent that the net investment rate increases by more than 5% on an annual
basis. Annuity payments would decline if the rate failed to increase by 5%. Use
of the 3.5% assumed rate causes a lower first payment, but subsequent payments
would increase more rapidly or decline more slowly as changes occur in the net
investment rate.
When the Annuity Period begins, the Annuitant is credited with a fixed number of
Annuity Units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where (a)
is the amount of the first annuity payment based on a particular investment
option, and (b) is the then current Annuity Unit value for that investment
option. As noted, Annuity Unit values fluctuate from one Valuation Date to the
next; such fluctuations reflect changes in the net investment factor for the
appropriate Subaccount(s) (with a ten Valuation Date lag which gives the Company
time to process Annuity payments) and a mathematical adjustment which offsets
the assumed net investment rate of 3.5% or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the Annuity Period.
EXAMPLE:
Assume that, at the date Annuity payments are to begin, there are 3,000
Accumulation Units credited under a particular Contract or Account and that the
value of an Accumulation Unit for the tenth Valuation Date prior to retirement
was $13.650000. This produces a total value of $40,950.
Also assume that no premium tax is payable and that the Annuity table in the
Contract provides, for the option elected, a first monthly variable Annuity
payment of $6.68 per $1,000 of value applied; the Annuitant's first monthly
payment would thus be 40.950 multiplied by $6.68, or $273.55.
Assume then that the value of an Annuity Unit for the Valuation Date on which
the first payment was due was $13.400000. When this value is divided into the
first monthly payment, the number of Annuity Units is determined to be 20.414.
The value of this number of Annuity Units will be paid in each subsequent month.
If the net investment factor with respect to the appropriate Subaccount is
1.0015000 as of the tenth Valuation Date preceding the due date of the second
monthly payment, multiplying this factor by .9999058* (to neutralize the assumed
net investment rate of 3.5% per annum built into the number of Annuity Units
determined above) produces a result of 1.0014057. This is then multiplied by the
Annuity Unit value for the prior Valuation Date (assume such value to be
$13.504376) to produce an Annuity Unit value of $13.523359 for the Valuation
Date on which the second payment is due. The second monthly
7
<PAGE>
payment is then determined by multiplying the number of Annuity Units by the
current Annuity Unit value, or 20.414 times $13.523359, which produces a payment
of $276.07.
*If an assumed net investment rate of 5% is elected, the appropriate factor to
neutralize such assumed rate would be .9998663.
SALES MATERIAL AND ADVERTISING
The Company may include hypothetical illustrations in its sales literature that
explain the mathematical principles of dollar cost averaging, compounded
interest, tax deferred accumulation, and the mechanics of variable annuity
contracts. The Company may also discuss the difference between variable annuity
contracts and other types of savings or investment products, including, but not
limited to, personal savings accounts and certificates of deposit.
We may distribute sales literature that compares the percentage change in
Accumulation Unit values for any of the Subaccounts to established market
indices such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average or to the percentage change in values of other management
investment companies that have investment objectives similar to the Subaccount
being compared.
We may publish in advertisements and reports, the ratings and other information
assigned to us by one or more independent rating organizations such as A.M. Best
Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors
Services, Inc. The purpose of the ratings is to reflect our financial strength
and/or claims-paying ability. We may also quote ranking services such as
Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable
Insurance Products Performance Analysis Service (VIPPAS), which rank variable
annuity or life Subaccounts or their underlying funds by performance and/or
investment objective. We may illustrate in advertisements the performance of the
underlying funds, if accompanied by performance which also shows the performance
of such funds reduced by applicable charges under the Separate Account. We may
also show in advertisements the portfolio holdings of the underlying funds,
updated at various intervals. We may show in advertisements the portfolio
holdings of the underlying funds, updated at various intervals. From time to
time, we will quote articles from newspapers and magazines or other publications
or reports, including, but not limited to The Wall Street Journal, Money
magazine, USA Today and The VARDS Report.
The Company may provide in advertising, sales literature, periodic publications
or other materials information on various topics of interest to current and
prospective Contract Holders or Participants. These topics may include the
relationship between sectors of the economy and the economy as a whole and its
effect on various securities markets, investment strategies and techniques (such
as value investing, market timing, dollar cost averaging, asset allocation,
constant ratio transfer and account rebalancing), the advantages and
disadvantages of investing in tax-deferred and taxable investments, customer
profiles and hypothetical purchase and investment scenarios, financial
management and tax and retirement planning, and investment alternatives to
certificates of deposit and other financial instruments, including comparison
between the Contracts and the characteristics of and market for such financial
instruments.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the
independent auditors for the Separate Account and for the Company. The services
provided to the Separate Account include primarily the examination of the
Separate Account's financial statements and the review of filings made with the
SEC.
8
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT C
Index
Independent Auditors' Report....................... S-__
Statement of Assets and Liabilities................ S-__
Statement of Operations............................ S-__
Statements of Changes in Net Assets................ S-__
Notes to Financial Statements ..................... S-__
Condensed Financial Information.................... S-__
FINANCIAL STATEMENTS OF VARIABLE ANNUITY ACCOUNT C AND AETNA LIFE
INSURANCE AND ANNUITY COMPANY TO BE FILED BY AMENDMENT
S-1
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY ACCOUNT C
VARIABLE ANNUITY CONTRACTS
issued by
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Form No. SAI.75962-97 ALIAC Ed. May 1997
<PAGE>
VARIABLE ANNUITY ACCOUNT C
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:*
(1) Included in Part A:
Condensed Financial Information
(2) Included in Part B:
Financial Statements of Variable Annuity Account C:
- Independent Auditors' Report
- Statement of Assets and Liabilities as of December 31, 1996
- Statement of Operations for the year ended December 31, 1996
- Statements of Changes in Net Assets for the years ended
December 31, 1996 and 1995
- Notes to Financial Statements
Financial Statements of the Depositor:
- Independent Auditors' Report
- Consolidated Balance Sheets as of December 31, 1996 and 1995
- Consolidated Statements of Income for the years ended
December 31, 1996, 1995 and 1994
- 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
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Life Insurance
and Annuity Company establishing Variable Annuity Account C(1)
(2) Not applicable
(3.1) Form of Broker-Dealer Agreement(2)
(3.2) Alternative Form of Wholesaling Agreement and Related Selling
Agreement(2)
(4.1) Form of Variable Annuity Contract (G-TDA-HH(XC/M))(3)
(4.2) Form of Variable Annuity Contract (G-TDA-HH(XC/S))(3)
(4.3) Endorsement (EGET-IC(R)) to Contracts G-TDA-HH(XC/M) and
G-TDA-HH(XC/S)(4)
(4.4) Endorsement (ENYSUTMF97) to Contract G-TDA-HH(XC/M)
(4.5) Endorsement (ENYSUTMF97(S)) to Contract G-TDA-HH(XC/S)
(5) Form of Variable Annuity Contract Application
(300-TDA-HH(XC))(5)
(6.1) Certification of Incorporation and By-Laws of Aetna Life
Insurance and Annuity Company(6)
<PAGE>
(6.2) Amendment of Certificate of Incorporation of Aetna Life
Insurance and Annuity Company(7)
(7) Not applicable
(8.1) Fund Participation Agreement (Amended and Restated) between
Aetna Life Insurance and Annuity Company, Alger American Fund
and Fred Alger Management, Inc. dated as of March 31, 1995(2)
(8.2) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Calvert Asset Management Company (Calvert
Responsibly Invested Balanced Portfolio, formerly Calvert
Socially Responsible Series) dated March 13, 1989 and amended
December 27, 1993(2)
(8.3) 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(8)
(8.4) 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(7)
(8.5) 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(7)
(8.6) Service Agreement between Aetna Life Insurance and Annuity
Company and Fidelity Investments Institutional Operations
Company dated as of November 1, 1995(8)
(8.7) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Franklin Advisers, Inc. dated January 31,
1989(2)
(8.8) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Janus Aspen Series dated April 19, 1994
and amended March 1, 1996(2)
(8.9) 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)
(8.10) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Lexington Emerging Markets Fund, Inc. and
Lexington Management Corporation (its investment advisor)
dated April 28, 1994(9)
(8.11) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Advisers Management Trust (now Neuberger &
Berman Advisers Management Trust) dated April 14, 1989 and as
assigned and modified on May 1, 1995(2)
<PAGE>
(8.12) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Scudder Variable Life Investment Fund
dated April 27, 1992 and amended February 19, 1993 and August
13, 1993(2)
(8.13) Amendment dated as of February 20, 1996 to Fund Participation
Agreement between Aetna Life Insurance and Annuity Company and
Scudder Variable Life Investment Fund dated April 27, 1992 as
amended February 19, 1993 and August 13, 1993(8)
(8.14) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Investors Research Corporation and TCI
Portfolios, Inc. dated July 29, 1992 and amended December 22,
1992 and June 1, 1994(2)
(9) Opinion of Counsel*
(10.1) Consent of Independent Auditors*
(10.2) Consent of Counsel*
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data(5)
(14) Not applicable
(15.1) Powers of Attorney(7)
(15.2) Authorization for Signatures(2)
(27) Financial Data Schedule*
*To be filed by amendment
1. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75986), as filed electronically on April
22, 1996.
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.
3. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75962), as filed electronically on April
17, 1996.
4. Incorporated by reference to Post-Effective Amendment No. 4 to Registration
Statement on Form N-4 (File No. 33-75962), as filed on March 24, 1995.
5. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-75964), as filed on February 24, 1995.
6. 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.
7. 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.
8. 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.
9. 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.
<PAGE>
Item 25. Directors and Officers of the Depositor
Name and Principal
Business Address* Positions and Offices with Depositor
Daniel P. Kearney Director and President
Timothy A. Holt Director, Senior Vice President and Chief
Financial Officer
Christopher J. Burns Director and Senior Vice President
Laura R. Estes Director and Senior Vice President
Gail P. Johnson Director and Vice President
John Y. Kim Director and Senior Vice President
Shaun P. Mathews Director and Vice President
Glen Salow Director and Vice President
Creed R. Terry Director and 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 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. 33-75964), as filed
electronically on February 11, 1997.
Item 27. Number of Contract Owners
As of December 31,1996, there were 600,951 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 (ALIAC) also
acts as the principal underwriter and investment adviser for Aetna
Variable Encore Fund, Aetna Variable Fund, Aetna Series Fund, Inc.,
Aetna Generation Portfolios, Inc., Aetna Income Shares, Aetna
Investment Advisers Fund, Inc., Aetna GET Fund, and Aetna Variable
Portfolios, Inc. (all registered management investment companies under
the 1940 Act). Additionally, ALIAC acts as the principal underwriter
and depositor for Variable Life Account B and Variable Annuity Accounts
B and G (separate accounts of ALIAC registered as unit investment
trusts under the 1940 Act). ALIAC is also the principal underwriter for
Variable Annuity Account I (a separate account of Aetna Insurance
Company of America registered as a unit investment trust under the 1940
Act).
(b) See Item 25 regarding the Depositor.
<PAGE>
(c) Compensation as of December 31, 1996:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation on
Principal Underwriter Discounts and Redemption or Brokerage
Commissions Annuitization Commissions Compensation*
<S> <C> <C> <C> <C>
Aetna Life Insurance $1,325,661 $96,924,599
and Annuity Company
</TABLE>
* Compensation shown in column 5 includes deductions for mortality and
expense risk guarantees and contract charges assessed to cover costs
incurred in the sales and administration of the contracts issued under
Variable Annuity Account 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
Opportunity Plus Processing Office
18 Corporate Woods Blvd., 4th Fl.
Albany, NY 12211
Item 31. Management Services
Not applicable
Item 32. Undertakings
Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement on
Form N-4 as frequently as is necessary to ensure that the audited
financial statements in the
<PAGE>
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, has duly caused this Post-Effective Amendment No. 10 to its
Registration Statement on Form N-4 (File No. 33-75962) to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Hartford,
State of Connecticut, on the 11 day of February, 1997.
VARIABLE ANNUITY ACCOUNT C OF AETNA
LIFE INSURANCE AND ANNUITY COMPANY
(Registrant)
By: AETNA LIFE INSURANCE AND ANNUITY
COMPANY
(Depositor)
By: Daniel P. Kearney*
------------------------------------------
Daniel P. Kearney
President
As required by the Securities Act of 1933, this Post-Effective Amendment
No. 10 to the Registration Statement on Form N-4 (File No. 33-75962) has been
signed by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
Daniel P. Kearney* Director and President )
- ------------------------------------ (principal executive officer) )
Daniel P. Kearney )
)
Timothy A. Holt* Director, Senior Vice President and ) February
- ----------------------------------- Chief Financial Officer ) 11, 1997
Timothy A. Holt )
)
Christopher J. Burns* Director )
- ------------------------------------ )
Christopher J. Burns )
)
Laura R. Estes* Director )
- ------------------------------------ )
Laura R. Estes )
)
Gail P. Johnson* Director )
- ------------------------------------ )
Gail P. Johnson )
)
John Y. Kim* Director )
- ------------------------------------ )
John Y. Kim )
)
<PAGE>
Shaun P. Mathews* Director )
- ------------------------------------ )
Shaun P. Mathews )
)
Glen Salow* Director )
- ------------------------------------ )
Glen Salow )
)
Creed R. Terry* Director )
- ------------------------------------ )
Creed R. Terry )
)
Deborah Koltenuk* Vice President and Treasurer, Corporate Controller )
- ------------------------------------ )
Deborah Koltenuk )
</TABLE>
By: /s/Julie E. Rockmore
------------------------------------------------------------
*Julie E. Rockmore
Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT C
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
- ----------- ------- ----
<S> <C> <C>
99-B.1 Resolution of the Board of Directors of Aetna Life Insurance and Annuity *
Company establishing Variable Annuity Account C
99-B.3.1 Form of Broker-Dealer Agreement *
99-B.3.2 Alternative Form of Wholesaling Agreement and Related Selling Agreement *
99-B.4.1 Form of Variable Annuity Contract (G-TDA-HH(XC/M)) *
99-B.4.2 Form of Variable Annuity Contract (G-TDA-HH(XC/S)) *
99-B.4.3 Endorsement (EGET-IC(R)) to Contracts G-TDA-HH (XC/M) *
and G-TDA-HH(XC/S)
99-B.4.4 Endorsement (ENYSUTMF97) to Contract G-TDA-HH(XC/M)
--------------
99-B.4.5 Endorsement (ENYSUTMF97(S)) to Contract
G-TDA-HH(XC/S)
--------------
99-B.5 Form of Variable Annuity Contract Application (300-TDA-HH(XC)) *
99-B.6.1 Certification of Incorporation and By-Laws of Depositor *
99-B.6.2 Amendment of Certificate of Incorporation of Depositor *
99-B.8.1 Fund Participation Agreement (Amended and Restated) between Aetna Life Insurance *
and Annuity Company, Alger American Fund and Fred Alger Management, Inc. dated as
of March 31, 1995
99-B.8.2 Fund Participation Agreement between Aetna Life Insurance
and Annuity Company and Calvert Asset Management *
Company (Calvert Responsibly Invested Balanced Portfolio,
formerly Calvert Socially Responsible Series) dated March
13, 1989 and amended December 27, 1993
*Incorporated by reference
**To be filed by amendment
<PAGE>
Exhibit No. Exhibit Page
- ----------- ------- ----
99-B.8.3 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.8.4 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.8.5 Fund Participation Agreement between Aetna Life Insurance *
and Annuity Company, Variable Insurance Products Fund
II and Fidelity Distributors Corporation dated February
1, 1994 and amended on December 15, 1994, February 1.
1995, May 1, 1995, January 1, 1996 and March 1,1996
99-B.8.6 Service Agreement between Aetna Life Insurance and Annuity Company and Fidelity *
Investments Institutional Operations Company dated as of November 1, 1995
99-B.8.7 Fund Participation Agreement between Aetna Life Insurance and Annuity Company *
and Franklin Advisers, Inc. dated January 31, 1989
99-B.8.8 Fund Participation Agreement between Aetna Life Insurance and Annuity Company *
and Janus Aspen Series dated April 19, 1994 and amended March 1, 1996
99-B.8.9 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.8.10 Fund Participation Agreement between Aetna Life Insurance and Annuity Company, *
Lexington Emerging Markets Fund, Inc. and Lexington Management Corporation (its
investment advisor) dated April 28, 1994
*Incorporated by reference
**To be filed by amendment
<PAGE>
Exhibit No. Exhibit Page
- ----------- ------- ----
99-B.8.11 Fund Participation Agreement between Aetna Life Insurance and Annuity Company and *
Advisers Management Trust (now Neuberger & Berman Advisers Management Trust) dated
April 14, 1989 and as assigned and modified on May 1, 1995
99-B.8.12 Fund Participation Agreement between Aetna Life Insurance and Annuity Company and *
Scudder Variable Life Investment Fund dated April 27, 1992 and amended February
19, 1993 and August 13, 1993
99-B.8.13 Amendment dated as of February 20, 1996 to Fund *
Participation Agreement between Aetna Life Insurance and
Annuity Company and Scudder Variable Life Investment Fund
dated April 27, 1992 as amended February 19, 1993 and August
13, 1993
99-B.8.14 Fund Participation Agreement between Aetna Life Insurance and Annuity Company, *
Investors Research Corporation and TCI Portfolios, Inc. dated July 29, 1992 and
amended December 22, 1992 and June 1, 1994
99-B.9 Opinion of Counsel **
99-B.10.1 Consent of Independent Auditors **
99-B.10.2 Consent of Counsel **
99-B.13 Schedule for Computation of Performance Data *
99-B.15.1 Powers of Attorney *
99-B.15.2 Authorization for Signatures *
27 Financial Data Schedule **
</TABLE>
*Incorporated by reference
**To be filed by amendment
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed as follows:
Delete Section 3.05, Maintenance Fee and replace with the following.
There will be an annual maintenance fee of $10 in 1997 an annual
maintenance fee of $5 in 1998 and an annual maintenance fee of $0 in 1999
and thereafter.
The following language will replace all language found in Endorsement Form
ETECSW-IO(XC).
Without further amendment of this Contract, Aetna may, from time to
time, establish and make available for election by the Contract Holder, one
or more Individual Account systematic distribution options (SDO). When an
SDO election is in effect as to any Individual Account, automatic
withdrawals will be made from the Individual Account. No Surrender Fees
apply to such automatic withdrawals made under an SDO. A Market Value
Adjustment may apply depending on the terms of the SDO.
Any SDO offered by Aetna will be subject to the following criteria:
(a) any SDO established by Aetna will be made available among similarly
situated contracts uniformly and on the basis of objective criteria
consistently applied;
(b) the availability of any SDO may be limited by terms and conditions
applicable to the election of such SDO; and
(c) Aetna may discontinue the availability of an SDO at any time. Except
to the extent required in order to comply with the applicable law, any such
discontinuance shall not apply to any Individual Accounts as to which an
election under such SDO is in effect at the time of such SDO's
discontinuance.
Endorsed and made a part of the Contract on the effective date of the Contract.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
ENYSUT MF97
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed as follows:
Delete Section 3.04, Maintenance Fee and replace with the following.
The maintenance fee is $0.
The following language will replace all language found in Endorsement Form
ETECSW-IO(XC).
Without further amendment of this Contract, Aetna may, from time to
time, establish and make available for election by the Contract Holder, one
or more Individual Account systematic distribution options (SDO). When an
SDO election is in effect as to any Individual Account, automatic
withdrawals will be made from the Individual Account. No Surrender Fees
apply to such automatic withdrawals made under an SDO. A Market Value
Adjustment may apply depending on the terms of the SDO.
Any SDO offered by Aetna will be subject to the following criteria:
(a) any SDO established by Aetna will be made available among similarly
situated contracts uniformly and on the basis of objective criteria
consistently applied;
(b) the availability of any SDO may be limited by terms and conditions
applicable to the election of such SDO; and
(c) Aetna may discontinue the availability of an SDO at any time. Except
to the extent required in order to comply with the applicable law, any such
discontinuance shall not apply to any Individual Accounts as to which an
election under such SDO is in effect at the time of such SDO's
discontinuance.
Endorsed and made a part of the Contract on the effective date of the Contract.
/s/Dan Kearney
President
Aetna Life Insurance and Annuity Company
ENYSUT MF97(S)
