PORTFOLIO PARTNERS INC
N-1A EL, 1997-07-31
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    As filed with the Securities and Exchange
    Commission on July 31, 1997



                                                   Registration Nos. 333-
                                                                     811-


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                    FORM N-1A

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                                       and

         REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

                            PORTFOLIO PARTNERS, INC.
                            ------------------------
               (Exact name of registrant as specified in charter)

      151  Farmington  Avenue
      Hartford, CT                                              06156-8962
      (Address  of Principal Executive Offices)                 (Zip Code)
      ____________________________________________________________________


                             Amy R. Doberman, Esq.
                    Aetna Life Insurance and Annuity Company
              151 Farmington Avenue, RE4A, Hartford, CT 06156-8962
                    (Name and Address of Agent For Service)


Approximate date of proposed public offering: August 21, 1997


Registrant is registering an indefinite number of securities under the
Securities Act of 1933 pursuant to Investment Company Act Rule 24f-2.

===============================================================================

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>

                            PORTFOLIO PARTNERS, INC.

                              CROSS REFERENCE SHEET

         PART A
<TABLE>
<CAPTION>
N-1A
- ----
Item No.                                             Location
- --------                                             --------
<S>      <C>                                         <C>
1.       Cover Page                                  Cover Page

2.       Synopsis                                    Not Applicable

3.       Financial  Highlights                       Not Applicable

4.       General Description of Registrant.......    Cover Page; The Fund; Description of the Portfolios;
                                                     Investment Policies and Practices; Risk Factors and Other
                                                     Considerations; Investment Restrictions; General Information

5.       Management of the Fund..................    Management of the Portfolios

6.       Capital Stock and Other Securities......    Purchase and Redemption of Shares; Net Asset Value; Tax
                                                     Matters; General Information

7.       Purchase of Securities Being Offered....    The Fund; Purchase and Redemption of Shares; Net Asset Value

8.       Redemption or Repurchase................    Purchase and Redemption of Shares; Net Asset Value

9.       Pending Legal Proceedings...............    Not Applicable

         PART B

10.      Cover Page..............................    Cover Page

11.      Table of Contents.......................    Table of Contents

12.      General Information and History.........    General Information and History

13.      Investment Objectives and Policies......    Additional Investment Restrictions and Policies of the
                                                     Portfolios; Description of Various Securities and Investment
                                                     Policies and Practices

14.      Management of the Fund..................    Directors and Officers of the Fund

15.      Control Persons and Principal Holders
            of Securities........................    Control Persons and Principal Shareholders


                                      -2-
<PAGE>


16.       Investment Advisory and Other
            Services..........................       The Investment Advisory Agreement; The Subadvisory
                                                     Agreements; The Administrative Services Agreement;
                                                     Custodian; Independent Auditors

17.      Brokerage Allocation and Other
           Practices.............................    Brokerage Allocation and Trading Practices

18.      Capital Stock and Other Securities......    Description of Shares

19.      Purchase, Redemption and Pricing of
           Securities Being Offered..............    Net Asset Value

20.      Tax Status..............................    Tax Status

21.      Underwriters............................    Principal Underwriter

22.      Calculation of Performance Data.........    Performance Information

23.      Financial Statements....................    Financial Statements
</TABLE>

                                     PART C

Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of the Registration Statement.


                                      -3-
<PAGE>

                       SUBJECT TO COMPLETION OR AMENDMENT

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>


                            PORTFOLIO PARTNERS, INC.
                             151 FARMINGTON AVENUE
                            HARTFORD, CT 06156-8962


                        MFS EMERGING EQUITIES PORTFOLIO
                         MFS RESEARCH GROWTH PORTFOLIO
                           MFS VALUE EQUITY PORTFOLIO
                     SCUDDER INTERNATIONAL GROWTH PORTFOLIO
                     T. ROWE PRICE GROWTH EQUITY PORTFOLIO

                       PROSPECTUS DATED: August 21, 1997

Portfolio Partners, Inc. (the "Fund") is an open-end management investment
company authorized to issue multiple series of shares, each representing a
diversified portfolio of investments (individually, a "Portfolio," and
collectively, the "Portfolios"). Aetna Life Insurance and Annuity Company serves
as the Investment Adviser of each Portfolio, and each has a Subadviser. The
Fund's five Portfolios (and their Subadvisers) are:

   MFS Emerging Equities Portfolio (Massachusetts Financial Services Company)
    MFS Research Growth Portfolio (Massachusetts Financial Services Company)
      MFS Value Equity Portfolio (Massachusetts Financial Services Company)
     Scudder International Growth Portfolio (Scudder, Stevens & Clark, Inc.)
     T. Rowe Price Growth Equity Portfolio (T. Rowe Price Associates, Inc.)

The Fund's shares are offered only to insurance companies to fund benefits under
their variable annuity contracts ("VA Contracts") and variable life insurance
policies ("VLI Policies").

This Prospectus sets forth concisely the information that a prospective contract
holder or policy holder should know before directing an investment to a
Portfolio and should be read and kept for future reference. A Statement of
Additional Information ("Statement"), dated August 21, 1997, contains more
information about the Portfolios. For a free copy of the Statement, call
1-800-238-6263 or write to Portfolio Partners, Inc., at the address listed
above. The Statement has been filed with the Securities and Exchange Commission
("SEC") and is incorporated by reference into this Prospectus.

This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, the securities of the Fund in any jurisdiction in which such sale,
offer to sell, or solicitation may not be lawfully made.

INVESTMENTS IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. SHARES OF THE FUND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL
AGENCY. AN INVESTMENT IN THE FUND IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF
THE INVESTMENT TO FLUCTUATE, AND WHEN THE INVESTMENT IS REDEEMED, THE VALUE MAY
BE HIGHER OR LOWER THAN THE AMOUNT ORIGINALLY INVESTED BY THE INVESTOR.

LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

PLEASE READ THIS PROSPECTUS CAREFULLY BEFORE INVESTING AND RETAIN FOR FUTURE
REFERENCE.
<PAGE>


                                TABLE OF CONTENTS

                                                                            PAGE

THE FUND.......................................................................
DESCRIPTION OF THE PORTFOLIOS..................................................
INVESTMENT POLICIES AND PRACTICES..............................................
RISK FACTORS AND OTHER CONSIDERATIONS..........................................
INVESTMENT RESTRICTIONS........................................................
MANAGEMENT OF THE PORTFOLIOS...................................................
PURCHASE AND REDEMPTION OF SHARES..............................................
NET ASSET VALUE................................................................
PERFORMANCE....................................................................
TAX MATTERS....................................................................
GENERAL INFORMATION............................................................


                                       -2-
<PAGE>


                                    THE FUND

The Fund is an open-end, management investment company, consisting of multiple
Portfolios. It currently has authorized five Portfolios: MFS Emerging Equities
Portfolio, MFS Research Growth Portfolio, MFS Value Equity Portfolio, Scudder
International Growth Portfolio and T. Rowe Price Growth Equity Portfolio. The
Fund may authorize additional Portfolios in the future. Aetna Life Insurance and
Annuity Company ("Aetna") serves as the Investment Adviser for each Portfolio,
and Aetna has appointed various Subadvisers that are responsible for the
day-to-day management of the Portfolios. The Fund is intended to serve as one of
the funding vehicles for VA Contracts and VLI Policies to be offered through the
separate accounts of insurance companies. The insurance companies, not the
owners of the VA Contracts or VLI Policies or participants therein
("Participants"), are shareholders of the Fund. See "General Information."


                          DESCRIPTION OF THE PORTFOLIOS

Each Portfolio has an investment objective, which is a fundamental policy. A
Portfolio's fundamental policies and restrictions may not be changed without the
vote of a majority of the holders of that Portfolio's outstanding shares (see
"Voting Rights," below). Investment in a Portfolio involves risk, and, as with
all mutual funds, there can be no assurance that a Portfolio will meet its
investment objective. Each Portfolio is subject to investment policies and
restrictions described in this Prospectus and in the Statement, some of which
are fundamental.

MFS EMERGING EQUITIES PORTFOLIO

INVESTMENT OBJECTIVE. The MFS Emerging Equities Portfolio ("MFS Emerging
Equities") seeks to provide long-term growth of capital. Dividend and interest
income from portfolio securities, if any, is incidental to MFS Emerging
Equities' investment objective.

INVESTMENT POLICIES. Under normal market conditions, MFS Emerging Equities
invests primarily in common stocks issued by companies that its Subadviser
believes are early in their life cycle but which have the potential to become
major enterprises (emerging growth companies). The Subadviser generally expects
these companies, which may include domestic and foreign companies, to show
earnings growth over time that is well above the growth rate of the overall
economy and the rate of inflation. In addition, the Subadviser generally expects
these companies to have the products, technologies, management and market and
other opportunities that are usually necessary to become more widely recognized
as growth companies. Emerging growth companies can be of any size, and MFS
Emerging Equities may invest in larger or more established companies whose rates
of earnings growth are expected to accelerate because of special factors, such
as rejuvenated management, new products, changes in consumer demand, or basic
changes in the economic environment.

The nature of investing in emerging growth companies involves greater risk than
is customarily associated with investments in more established companies.
Emerging growth companies often have limited product lines, markets or other
financial resources, and they may be dependent on one-person management. In
addition, there may be less research available on many promising small- and
medium-sized emerging growth companies, making it more difficult to find and
analyze these companies. Securities issued by emerging growth companies may have
limited marketability and may be subject to more abrupt or erratic market
movements than securities of larger, more established growth companies or the
market averages in general. Shares of MFS Emerging Equities are therefore
subject to greater fluctuation in value than shares of a conservative equity
fund or of a growth fund that invests primarily in proven growth stocks.

When the Subadviser determines that other investments appear attractive, MFS
Emerging Equities may, to a limited extent, invest in other types of securities,
including investment grade fixed-income securities and



                                       -3-
<PAGE>



high-yield, below investment grade fixed-income securities ("below investment
grade fixed-income securities"), or unrated fixed-income securities of
comparable quality; convertible securities and warrants. (For a description of
bond ratings, see the Statement, Appendix A.) MFS Emerging Equities may hold
cash equivalents or other forms of debt securities as a reserve for future
purchases of common stock or to meet liquidity needs.

MFS Emerging Equities may engage in strategic transactions, which may include
the use of derivatives. See "Investment Policies and Practices" and "Risk
Factors and Other Considerations."

Massachusetts Financial Services Company ("MFS") serves as the Subadviser of MFS
Emerging Equities and is responsible for its day-to-day management, subject to
the oversight of Aetna and the Fund's Board of Directors.
See "Management of the Portfolios."

MFS RESEARCH GROWTH PORTFOLIO

INVESTMENT OBJECTIVE. The MFS Research Growth Portfolio ("MFS Research Growth")
seeks long-term growth of capital and future income.

INVESTMENT POLICIES. Under normal market conditions, MFS Research Growth invests
primarily in common stocks or securities convertible into common stocks issued
by companies that the Subadviser believes to possess better-than-average
prospects for long-term growth. MFS Research Growth may invest a smaller
proportion of its assets in fixed-income securities such as bonds and short-term
debt obligations, preferred stocks or common stocks whose principal
characteristic is income production rather than growth. In the case of both
growth stocks and income issues, the Subadviser emphasizes securities issued by
progressive, well-managed companies.

MFS Research Growth may invest in investment grade fixed-income securities and
in below investment grade fixed-income securities, or unrated fixed-income
securities of comparable quality. In making investment decisions, the Subadviser
does not rely exclusively on ratings on fixed-income securities provided by
established rating agencies, but rather supplements those ratings with its own
independent and ongoing review of credit quality. Therefore, the ability of MFS
Research Growth to achieve its investment objective may be more dependent on its
Subadviser's own credit analysis than a fund that invests primarily in
higher-quality bonds. The Subadviser allocates a proportion of assets invested
in growth stocks, income-producing securities or cash (including foreign
currency) and cash equivalents, depending on its view of the relative
attractiveness of each type of investment.

MFS serves as the Subadviser of MFS Research Growth and is responsible for its
day-to-day management, subject to the oversight of Aetna and the Fund's Board of
Directors. See "Management of the Portfolios."

MFS VALUE EQUITY PORTFOLIO

INVESTMENT OBJECTIVE. The MFS Value Equity Portfolio ("MFS Value Equity") seeks
capital appreciation. Dividend income, if any, is a consideration incidental to
MFS Value Equity's objective of capital appreciation.

INVESTMENT POLICIES. Under normal market conditions, MFS Value Equity invests
primarily in common stocks (which may be issued by domestic or foreign
companies), and may seek appreciation by investing in other types of securities,
including fixed-income securities, convertible bonds, convertible preferred
stocks and warrants, when relative values make such purchases appear attractive
either as individual issues or as types of securities in certain economic
environments. MFS Value Equity may invest in investment grade fixed-income
securities and below investment grade fixed-income securities or unrated
securities of comparable quality. These may include zero coupon bonds, deferred
interest bonds and bonds


                                       -4-
<PAGE>


on which the interest is payable in kind ("PIK bonds"). MFS Value Equity may
hold cash equivalents or other forms of debt securities as a reserve for future
purchases of common stock or to meet liquidity needs.

MFS Value Equity may engage in strategic transactions, which may include the use
of derivatives. See "Investment Policies and Practices" and "Risk Factors and
Other Considerations."

MFS serves as the Subadviser of MFS Value Equity and is responsible for its
day-to-day management, subject to the oversight of Aetna and the Fund's Board of
Directors. See "Management of the Portfolios."

SCUDDER INTERNATIONAL GROWTH PORTFOLIO

INVESTMENT OBJECTIVE. The Scudder International Growth Portfolio ("Scudder
International Growth") seeks long-term growth of capital primarily through a
diversified portfolio of marketable foreign equity securities.

INVESTMENT POLICIES. Under normal market conditions, Scudder International
Growth invests primarily in securities that, in the opinion of its Subadviser,
allow it to participate in non-U.S. companies and economies with prospects for
growth. Scudder International Growth invests in securities issued by companies,
wherever organized, that do business primarily outside the U.S., including
emerging market countries. Scudder International Growth intends to diversify
investments among several countries and to have represented, in substantial
proportions, business activities in not less than three countries.

Scudder International Growth generally invests in equity securities issued by
established companies listed on foreign exchanges that the Subadviser believes
have favorable characteristics. When the Subadviser believes that it is
appropriate in order to achieve long-term capital growth, Scudder International
Growth may invest in fixed-income securities of foreign governments,
supranational organizations and private issuers, including bonds denominated in
the European Currency Unit ("ECU"). The Subadviser will select fixed-income
securities on the basis of, among other things, yield, credit quality, and the
fundamental outlook for currency and interest rate trends in different parts of
the globe, taking into account the ability to hedge a degree of currency or
local bond price risk. Scudder International Growth may invest in investment
grade fixed-income securities and below investment grade fixed-income
securities, or unrated securities of comparable quality. Scudder International
Growth may hold cash equivalents or other forms of debt securities as a reserve
for future purchases of common stock or to meet liquidity needs.

When the Subadviser determines that exceptional conditions exist abroad, Scudder
International Growth may, for temporary defensive purposes, invest all or a
portion of its assets in Canadian or U.S. Government obligations or currencies,
or securities of companies incorporated in and having their principal activities
in Canada or the U.S. In addition, Scudder International Growth may engage in
strategic transactions, which may include the use of derivatives. See
"Investment Policies and Practices" and "Risk Factors and Other Considerations."

Scudder, Stevens & Clark, Inc. ("Scudder") serves as the Subadviser of Scudder
International Growth and is responsible for its day-to-day management, subject
to the oversight of Aetna and the Fund's Board of Directors. See "Management of
the Portfolios."


                                       -5-
<PAGE>


T. ROWE PRICE GROWTH EQUITY PORTFOLIO

INVESTMENT OBJECTIVE. The T. Rowe Price Growth Equity Portfolio ("T. Rowe Price
Growth Equity") seeks long-term growth of capital and, secondarily, to increase
dividend income by investing primarily in common stocks of well established
growth companies.

INVESTMENT POLICIES. Under normal market conditions, T. Rowe Price Growth Equity
invests primarily in common stocks issued by a diversified group of growth
companies. The companies in which T. Rowe Price Growth Equity invests normally
(but not always) pay dividends, which are generally expected to rise in future
years as earnings increase. Most of its assets will be invested in U.S. common
stocks. However, T. Rowe Price Growth Equity may invest in foreign securities
and convertible securities and warrants, when the Subadviser considers such
investments consistent with the Portfolio's investment objective and policies.

T. Rowe Price Growth Equity generally seeks to invest in securities of companies
that satisfy one or more of several criteria established by the Subadviser. For
example, the Subadviser generally seeks companies with superior growth in
earnings and cash flow; the ability to sustain earnings momentum even during
economic slowdowns by operating in so-called "fertile fields" (areas where
earnings and dividends can outpace inflation and the overall economy); and the
capability to expand even during times of slow growth. The Subadviser generally
favors companies whose profits increase due to economic factors rather than
one-time events such as lower taxes.

T. Rowe Price Growth Equity may engage in strategic transactions, which may
include the use of derivatives. See "Investment Policies and Practices" and
"Risk Factors and Other Considerations."

T. Rowe Price Associates, Inc. ("T. Rowe Price") serves as the Subadviser of T.
Rowe Price Growth Equity and is responsible for its day-to-day management,
subject to the oversight of Aetna and the Fund's Board of Directors. See
"Management of the Portfolios."

                        INVESTMENT POLICIES AND PRACTICES

The Portfolios are managed in accordance with the following investment policies
and practices. See "Risk Considerations" and the Statement for a description of
the risks that these policies and practices may involve.

Investment Policies Generally: When a Portfolio invests "primarily" in
particular securities, it will invest at least 65% of its total assets in those
securities (80% in the case of MFS Emerging Equities).

Repurchase Agreements: Each Portfolio may enter into repurchase agreements in
order to earn income on available cash or as a temporary defensive measure.
Under a repurchase agreement, a Portfolio acquires securities subject to the
seller's agreement to repurchase them at a specified time and price. If the
seller becomes subject to a proceeding under the bankruptcy laws or its assets
are otherwise subject to a stay order, a Portfolio's right to liquidate the
securities may be restricted (during which time the value of the securities
could decline). As discussed in the Statement, the Fund has adopted certain
procedures that are intended to minimize this risk.

Restricted Securities: Each Portfolio may also purchase securities that are not
registered under the Securities Act of 1933 (the "1933 Act") ("restricted
securities"), including those that can be offered and sold to "qualified
institutional buyers" under Rule 144A under the 1933 Act ("Rule 144A
securities"). Under a policy established by the Board of Directors, the
Subadvisers periodically review the trading markets for the


                                       -6-
<PAGE>


specific Rule 144A security and determine whether the security is liquid.
Subject to each Portfolio's respective limitation on investments in illiquid
investments, a Portfolio may also invest in restricted securities that may not
be sold under Rule 144A, which presents certain risks.

Limit: A Portfolio will not invest more than 15% of its net assets in securities
that are deemed to be illiquid.

When-Issued Securities: In order to help ensure the availability of suitable
securities, each Portfolio may purchase securities on a "when-issued" or on a
"forward delivery" basis, which means that the obligations will be delivered to
a Portfolio at a future date, usually beyond customary settlement time. It is
expected that, under normal circumstances, a Portfolio will take delivery of
such securities. In general, a Portfolio does not pay for the securities until
received and does not start earning interest on the obligations until the
contractual settlement date. For a further discussion, see the Statement.

Investments for Temporary Defensive Purposes: During periods of unusual market
conditions when a Subadviser believes that investing for temporary defensive
purposes is appropriate, or in order to meet anticipated redemption requests, a
Portfolio may invest up to 100% of its assets in cash or cash equivalents
including, but not limited to, obligations of banks with assets of $1 billion or
more (including certificates of deposit, bankers' acceptances and repurchase
agreements), commercial paper, short-term notes, obligations issued or
guaranteed by the U.S. Government or any of its agencies, authorities or
instrumentalities and related repurchase agreements. See the Statement for a
description of U.S. Government obligations and certain short-term investments.

Corporate Asset-Backed Securities: MFS Emerging Equities and Scudder
International Growth may invest in corporate asset-backed securities. These
securities, issued by trusts and special purpose corporations, are backed by a
pool of assets, such as credit card or automobile loan receivables, representing
the obligations of a number of different parties. Corporate asset-backed
securities present certain risks. For instance, in the case of credit card
receivables, these securities may not have the benefit of any security interest
in the related collateral. See the Statement for further information about these
securities.

Limit: Neither MFS Emerging Equities nor Scudder International Growth will
invest more than 20% of its total assets at the time of purchase in corporate
asset-backed securities.

Investment Grade Fixed-Income Securities: MFS Emerging Equities, MFS Value
Equity, MFS Research Growth and Scudder International Growth may invest in
"investment grade" fixed-income securities. Investment grade fixed-income
securities are rated Baa or better by Moody's Investors Service, Inc.
("Moody's") or BBB or better by Standard and Poor's Rating Services ("S&P") or
Fitch Investors Service, Inc. ("Fitch"), or, if unrated, are of comparable
quality. See "Risk Factors and Other Considerations."

High-Yield, Below Investment Grade Fixed-Income Securities: MFS Emerging
Equities, MFS Research Growth, MFS Value Equity and Scudder International Growth
may invest in below investment grade fixed-income securities. These securities,
rated lower than Baa by Moody's or BBB by S&P or Fitch, or, if unrated, of
comparable quality, are considered speculative.

Limit: The maximum percentage of its total assets that a Portfolio may invest in
below investment grade fixed-income securities, measured at the time of
purchase, is as follows: MFS Emerging Equities: 5%; MFS Value Equity: 25%; MFS
Research Growth: 10%; Scudder International Growth: 5%.

Foreign Securities: Each Portfolio may invest in securities issued by foreign
companies or governments, and in American Depository Receipts ("ADRs") and
similar securities.

Limit: The limits on Portfolio investment in foreign securities are as follows:
Scudder International Growth: 100% of assets may be invested in foreign
securities (including emerging market securities and


                                       -7-
<PAGE>


Brady Bonds); MFS Value Equity: 50% of net assets may be invested in foreign
securities (including emerging market securities and Brady Bonds), although it
generally expects to invest between 10% and 25% of net assets; MFS Emerging
Equities: 25% of net assets may be invested in foreign securities (including
emerging market securities and Brady Bonds), although it generally expects to
invest up to 15% of net assets; MFS Research Growth: 20% of net assets may be
invested in foreign securities (including emerging market securities); T. Rowe
Price Growth Equity: 30% of total assets (excluding reserves) may be invested in
foreign securities (including emerging market securities). ADRs are included
within these limits with respect to T. Rowe Price Growth Equity, but not for the
other Portfolios.

Foreign Currencies: Each Portfolio may hold foreign currency received in
connection with investments in foreign securities when, in the judgment of its
Subadviser, it would be beneficial to convert such currency into U.S. dollars at
a later date, based on anticipated changes in the relevant exchange rate. Each
Portfolio may also hold foreign currency in anticipation of purchasing foreign
securities. See "Risk Factors and Other Considerations."

Brady Bonds: MFS Value Equity, MFS Emerging Equities and Scudder International
Growth may invest in Brady Bonds, which are securities created through the
exchange of existing commercial bank loans to public and private entities in
certain emerging markets for new bonds in connection with debt restructurings
under a debt restructuring plan introduced by former U.S. Secretary of the
Treasury Nicholas F. Brady (the "Brady Plan"). Brady Bonds have been issued only
recently, and for that reason do not have a long payment history. Brady Bonds
may be collateralized or uncollateralized, are issued in various currencies (but
primarily in the U.S. dollar), and are actively traded in over-the-counter
secondary markets. U.S. dollar-denominated, Brady Bonds, which may be fixed-rate
bonds or floating-rate bonds, are generally collateralized in full as to
principal by U.S. Treasury zero coupon bonds having the same maturity as the
bonds. Investments in Brady Bonds may be viewed as speculative.

Emerging Market Securities: MFS Emerging Equities, MFS Research Growth, MFS
Value Equity and Scudder International Growth may invest in securities of
issuers whose principal activities are located in emerging market countries.
Emerging market countries include any country determined by a Subadviser to have
an emerging market economy, taking into account a number of factors, including
whether the country has a low- to middle-income economy according to the
International Bank for Reconstruction and Development, the country's foreign
currency debt rating, its political and economic stability and the development
of its financial and capital markets. See "Risk Factors and Other
Considerations."

American Depository Receipts: Each Portfolio may invest in ADRs, which are
certificates issued by a U.S. depository (usually a bank) and represent a
specified quantity of shares of an underlying non-U.S. stock on deposit with a
custodian bank as collateral. ADRs are subject to many of the risks of foreign
securities such as exchange rates and more limited information about foreign
issuers. See "Risk Factors and Other Considerations."

Strategic Transactions and Derivatives: Certain Portfolios may, but are not
required to, utilize various investment strategies involving the use of
"derivative instruments" described below. A Portfolio may utilize a strategic
transaction for one or more reasons, including:

    [BULLET]      to hedge various market risks (such as interest rates,
                  currency exchange rates, and broad or specific equity or
                  fixed-income market movements);

    [BULLET]      to manage the effective maturity or duration of fixed-income
                  securities;

    [BULLET]      to establish a position in the  derivatives  market as a
                  temporary substitute for purchasing or selling a particular
                  security or index; or


                                       -8-
<PAGE>


    [BULLET]      to enhance potential gain.

Derivatives are instruments whose value is derived from, or linked to, the value
of another source, typically a commodity, a security, an index, or some other
readily measurable economic variable. These strategies are generally accepted as
part of modern portfolio management and are utilized by many mutual funds and
portfolio managers.

A Portfolio may use any or all of these investment techniques at any time and in
any combination, and there is no particular strategy that dictates the use of
one technique rather than another, or none at all. The ability of a Portfolio to
utilize these transactions successfully will depend on the Subadviser's ability
to predict pertinent market movements, which cannot be assured. Strategic
transactions involve certain risks. See "Risk Factors and Other Considerations."
These strategic transactions are briefly described below and are described in
greater detail in the Statement.

Limit: Unless otherwise noted, a Portfolio may only commit up to 5% of its total
assets, measured at the time of purchase, for initial margin requirements or
premiums to engage in strategic transactions, although MFS Emerging Equities,
MFS Value Equity, Scudder International Growth and T. Rowe Price Growth Equity
are subject to this limit only when they engage in strategic transactions for
non-hedging purposes (that is, for speculation to increase its income rather
than to hedge against adverse price movements). To prevent "leverage," a
Portfolio will, consistent with applicable regulatory requirements, either
"cover" its strategic transaction or segregate liquid assets equal in value to
the exposure created by the transaction.

Options on Securities, Indices and Other Financial Instruments: MFS Emerging
Equities, MFS Value Equity, Scudder International Growth and T. Rowe Price
Growth Equity may purchase and sell exchange-listed and over-the-counter put and
call options on securities, equity and fixed-income indices and other financial
instruments, including foreign currencies. MFS Emerging Equities, MFS Value
Equity and Scudder International Growth may write (sell) calls on securities
only if such calls are covered. Scudder International Growth may sell options on
securities indices only to close out open positions. A Portfolio may also sell
combinations of put and call options on the same security, known as "straddles."
When a Portfolio buys an option, it pays a premium for the right, not the
obligation, to buy or sell a security or index within a certain time at a
certain price. The Portfolio's losses will be limited to the premium it pays for
the option. When a Portfolio sells a call option, it earns a premium and it is
obligated (if the option is exercised) to sell a security or index within a
certain time at a certain price, without regard to current market price. When a
Portfolio sells a put option, it earns a premium and it is obligated (if the
option is exercised) to buy the security or index within a certain time at a
certain price, without regard to current market price.

In certain instances, a Portfolio may enter into options on Treasury securities
which may be referred to as "reset" options or "adjustable strike" options.
These options provide for periodic adjustment of the strike price and may also
provide for the periodic adjustment of the premium during the term of the
option.

Limit: MFS Emerging Equities, MFS Value Equity and T. Rowe Price Growth Equity
will not purchase put and call options if as a result more than 5% of their
total assets would be invested in premiums for those options.

Futures Contracts and Options on Futures Contracts: MFS Emerging Equities, MFS
Value Equity, Scudder International Growth, and T. Rowe Price Growth Equity may
buy and sell futures contracts on indices and financial instruments. When a
Portfolio enters into a futures contract, it becomes obligated to buy or sell an
asset in the future at an agreed-upon price. The Portfolio will pay initial
margin deposits, which usually are small in relation to the size of the value of
the underlying assets. Each of these Portfolios may also buy and sell options on
futures contracts. Options on futures contracts are similar to options on
securities and indices, described above. These Portfolios may engage in "cross
hedges," that is, hedge a


                                       -9-
<PAGE>


particular index or currency as a substitute for another index or currency. For
more information about futures contracts and related options, see "Risk Factors
and Other Considerations" and the Statement.

Limit: MFS Emerging Equities and MFS Value Equity will not enter into a futures
contract if, immediately thereafter, the value of the securities and other
obligations underlying all futures contracts exceeds 50% of their total assets.
Scudder International Growth will invest in futures contracts only for hedging
purposes.

Swaps and Related Transactions: Scudder International Growth may, without limit,
enter into various interest rate transactions, including swaps, caps, floors or
collars, and may enter into currency swaps. Generally, swaps are customized
agreements between two parties to exchange or swap cash flows or assets at
specified intervals in the future.

Hybrid Instruments: T. Rowe Price Growth Equity and MFS Value Equity may enter
into transactions involving hybrid instruments. Hybrid instruments are
derivative instruments whose value is derived from, or linked to, the value of
another source, typically a commodity, a futures contract, an index, or some
other readily measurable economic variable. Issued by banks, brokerage firms,
insurance companies, financial institutions or producers of commodities, hybrid
instruments typically are short- to intermediate-term fixed income securities
that bear interest at below-market or nominal rates. The instrument's value at
maturity, or the interest payable by the issuer, may rise or fall according to
the change in the value of the underlying instrument or index. See "Risk Factors
and Other Considerations."

Limit: Neither T. Rowe Price Growth Equity nor MFS Value Equity will invest more
than 10% of its total assets, measured at the time of purchase, in hybrid
instruments.

                      RISK FACTORS AND OTHER CONSIDERATIONS

General Considerations: Shares of a Portfolio represent an investment in
securities with fluctuating market prices. Thus, the value of those shares will
vary over time as the aggregate value of the securities held by a Portfolio
increases or decreases. Moreover, any dividends a Portfolio pays will increase
or decrease in relation to the income received from its investments.

The different types of securities purchased and investment techniques used by a
Portfolio involve varying amounts of risk. For example, equity securities are
subject to a decline in the stock market or in the value of the issuer, and
preferred stocks have price risk and some interest rate and credit risk. The
value of debt securities may be affected by changes in general interest rates
and in the creditworthiness of the issuer. Debt securities with longer
maturities (for example, over ten years) are generally more affected by changes
in interest rates and provide less price stability than securities with
short-term maturities (for example, one to ten years). Some of the risks
involved in the securities acquired by the Portfolios are discussed in this
section. Additional discussion is contained above under "Investment Techniques"
and in the Statement.

Portfolio Turnover: Portfolio turnover refers to the frequency of portfolio
transactions and the percentage of portfolio assets being bought and sold in the
aggregate during the year. Although the Portfolios do not purchase securities
with the intention of profiting from short-term trading, each Portfolio may buy
and sell securities when the Adviser or Subadviser believes such action is
advisable. It is anticipated that the average annual turnover rate of each of
the Portfolios may exceed 125%. Such turnover rates may result in higher
transaction costs (which are borne directly by the respective Portfolio) and a
possible increase in short-term capital gains (or losses). See "Tax Status" in
the Statement.

Hybrid Instruments: These derivative instruments, which can combine the
characteristics of securities, futures, and options, may be particularly
volatile. Under certain conditions, the redemption value of such an investment
could be zero. Some hybrid instruments in which T. Rowe Price Growth Equity or
MFS Value


                                      -10-
<PAGE>


Equity may invest involve economic leverage, which would increase the
Portfolio's exposure to a commodity, futures contract or index. Some hybrid
instruments have principal protection, while others may have partial principal
protection or none at all. An instrument with full principal protection will pay
the stated principal amount upon maturity. Partially protected instruments may
lose a portion of their principal upon maturity if the underlying commodity,
index or contract to which it is linked declines in value, and a hybrid
instrument without principal protection may lose all its value upon maturity.

Fixed-Income Securities: The net asset value of the shares of an open-end
investment company which may invest to a limited extent in fixed income
securities changes as the general level of interest rates fluctuate. When
interest rates decline, the value of a fixed income portfolio can be expected to
rise. Conversely, when interest rates rise, the value of a fixed income
portfolio can be expected to decline.

High-Yield, Below Investment Grade Fixed-Income Securities: Investments in below
investment grade fixed-income securities, while generally providing greater
income and opportunity for gain than investments in higher-rated securities,
usually entail greater risks. These risks include lack of liquidity; an
unpredictable secondary market; a greater likelihood of default; increased
sensitivity to adverse economic or corporate developments and thus greater price
fluctuation; call provisions that may adversely affect returns; and loss of
principal and interest. Because yields may vary over time, no specified level of
income can ever be assured. Below investment grade fixed-income securities,
which are usually rated lower than Baa by Moody's or BBB by S&P or by Fitch, or,
if unrated, of comparable quality, are considered speculative. For a description
of these and other rating categories, see the Statement.

Options, Futures Contracts and Forward Contracts: Transactions in futures
contracts, options on futures contracts, forward contracts and options involve
certain risks. For example, a lack of correlation between the index or
instrument underlying an option, futures contract or forward contract and the
assets being hedged, or unexpected adverse price movements, could render a
Portfolio's hedging strategy unsuccessful and could result in losses. "Cross
hedging" transactions may involve greater correlation risks. In addition, there
can be no assurance that a liquid secondary market will exist for any contract
purchased or sold, and the Portfolio may be required to maintain a position
until exercise or expiration, which could result in losses. For more information
about these risks, see the Statement.

Foreign Securities: Investing in securities of foreign issuers generally
involves risks not ordinarily associated with investing in securities of
domestic issuers. These include changes in currency rates, exchange control
regulations, governmental administration or economic or monetary policy (in the
United States or abroad) or circumstances in dealings between nations. Costs may
be incurred in connection with conversions between various currencies. Special
considerations may also include more limited information about foreign issuers,
higher brokerage and custodial costs, different accounting standards and thinner
trading markets. Foreign securities markets may also be less liquid, more
volatile and less subject to government supervision than those in the United
States. Investments in foreign countries could be affected by other factors
including expropriation, confiscatory taxation and potential difficulties in
enforcing contractual obligations and could be subject to extended settlement
periods. For more information about the risks involved in foreign securities,
see the Statement.


                                      -11-
<PAGE>


Emerging Market Securities: The risks of investing in foreign securities may be
intensified in the case of investments in emerging markets. Securities of many
issuers in emerging markets may be less liquid and more volatile than securities
of comparable domestic issuers. Emerging markets also have different clearance
and settlement procedures, and in certain markets there have been times when
settlements have been unable to keep pace with the volume of securities
transactions, making it difficult to conduct such transactions. Investment in
certain foreign emerging market debt obligations may be restricted or controlled
to varying degrees. These restrictions or controls may at times preclude
investment in certain foreign emerging market debt obligations or increase the
expenses of a Portfolio.

                             INVESTMENT RESTRICTIONS

In addition to the restrictions discussed under "Investment Policies and
Practices," each Portfolio has adopted other investment restrictions and
limitations, which are described in the Statement. Some of these restrictions
are fundamental, which means that they cannot be changed without shareholder
approval. For example, each Portfolio may not invest more than 25% of its assets
in securities of companies engaged in the same industry (other than U.S.
Government securities). Each Portfolio may borrow money, but not for leverage
purposes. As a matter of non-fundamental policy, no Portfolio may invest more
than 15% of its net assets in securities that are not readily marketable and in
repurchase agreements that mature in more than seven days.

In addition, each Portfolio is "diversified." Generally, this means that with
respect to 75% of its total assets, a Portfolio may not purchase the securities
of any single issuer (other than securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities) if, as a result, (a)
more than 5% of the Portfolio's total assets would be invested in the securities
of that issuer, or (b) the Portfolio would hold more than 10% of the outstanding
voting securities of that issuer.

                          MANAGEMENT OF THE PORTFOLIOS

DIRECTORS. The operations of each Portfolio are managed under the direction of
the Board of Directors ("Directors"). The Directors set broad policies for the
Fund and each Portfolio. Information about the Directors is found in the
Statement.

INVESTMENT ADVISER. Aetna serves as the investment adviser for each of the
Portfolios. Aetna is a Connecticut insurance corporation with its principal
offices at 151 Farmington Avenue, Hartford, Connecticut 06156, and is registered
with the Securities and Exchange Commission as an investment adviser. As of June
30, 1997, Aetna managed over $____ billion in assets. Aetna is an indirect
wholly owned subsidiary of Aetna Retirement Services, Inc., which is in turn an
indirect wholly owned subsidiary of Aetna Inc.

Under the terms of the Investment Advisory Agreement between the Fund and Aetna
with respect to each of the Portfolios, Aetna, subject to the supervision of the
Directors, is obligated to manage and oversee the Fund's day-to-day operations
and to manage the investments of each Portfolio.

The Investment Advisory Agreement gives Aetna broad latitude in selecting
securities for each Portfolio subject to the Directors' oversight. Under the
Investment Advisory Agreement, Aetna may delegate to a subadviser the
responsibility for day-to-day management of the investments of each Portfolio,
subject to Aetna's oversight. Aetna receives a monthly fee from each Portfolio
at an annual rate based on the average daily net assets of each Portfolio as
follows:


                                      -12-
<PAGE>


                  Portfolio                                 Fee
                  ---------                                 ---

         MFS Emerging Equities               0.70% on the first $500 million of
                                             average daily net assets; 0.65% on
                                             assets over $500 million

         MFS Research Growth                 0.70% on the first $500 million of
                                             average daily net assets; 0.65% on
                                             assets over $500 million

         MFS Value Equity                    0.65% of average daily net assets

         Scudder International Growth        0.80% of average daily net assets

         T. Rowe Price Growth Equity         0.60% of average daily net assets

Under the Investment Advisory Agreement, Aetna is responsible for all of its own
costs, including costs of Aetna's personnel, required to carry out its
investment advisory duties.

SUBADVISERS. MFS Emerging Equities, MFS Research Growth and MFS Value Equity.
Aetna has engaged Massachusetts Financial Services Company ("MFS"), 500 Boylston
Street, Boston, Massachusetts 02116, as Subadviser to MFS Emerging Equities, MFS
Research Growth and MFS Value Equity. MFS is a subsidiary of Sun Life of Canada
(U.S.), which is a subsidiary of Sun Life of Canada (U.S.) Holdings, Inc., which
in turn is a wholly owned subsidiary of Sun Life Assurance Company of Canada.
Net assets under management of the MFS Organization were approximately $___
billion as of June 30, 1997. John W. Ballen, a Senior Vice President of MFS, is
portfolio manager of MFS Emerging Equities. Mr. Ballen has been employed as a
portfolio manager by MFS since 1984. Portfolio securities of MFS Research Growth
are selected by a committee of investment research analysts. This committee
includes investment analysts employed not only by MFS but also by MFS
International (U.K.) Limited, a wholly owned subsidiary of MFS. MFS Research
Growth's assets are allocated among industries by the analysts acting together
as a group. Individual analysts are then responsible for selecting what they
view as the securities best suited to meet MFS Research Growth's investment
objective within their assigned industry responsibility. John F. Brennan, Jr., a
Vice President of MFS, is portfolio manager of MFS Value Equity. Mr. Brennan has
been employed by MFS as a portfolio manager since 1985.

Scudder International Growth. Aetna has engaged Scudder, Stevens & Clark, Inc.,
a Delaware corporation ("Scudder"), 345 Park Avenue, New York, New York 10154 as
Subadviser to Scudder International Growth. Scudder managed over $____ billion
as of June 30, 1997. Scudder International Growth is managed by a team of
Scudder professionals, each of whom plays an important role. Co-lead Portfolio
Managers Carol L. Franklin and Irene T. Cheng joined Scudder in 1981 and 1993,
respectively. Ms. Franklin has eighteen years of experience and Ms. Cheng has
twelve years of experience in finance and investing. Nicholas Bratt, portfolio
manager, directs Scudder's overall global equity investment strategies and has
been with Scudder since 1976. Marc Joseph is a senior portfolio manager for
institutional international equity accounts and joined Scudder in 1997. Sheridan
Reilly joined Scudder in 1995 and is a member of Scudder's Global Equity Group.
Mr. Reilly has over ten years of industry experience focusing on strategies for
global portfolios, currency hedging, and foreign equity markets. Joan Gregory,
portfolio manager, focuses on stock selection and has been with Scudder since
1992. Ms. Gregory has been involved with investment in global and international
stocks as an assistant portfolio manager since 1989.

T. Rowe Price Growth Equity. Aetna has engaged T. Rowe Price Associates, Inc.
("T. Rowe Price"), 100 East Pratt Street, Baltimore, Maryland 21202 as
Subadviser to T. Rowe Price Growth Equity. T. Rowe Price and its affiliates
managed over $___ billion as of June 30, 1997. T. Rowe Price Growth Equity is
managed by a committee. The committee chairman, Robert W. Smith, has day-to-day
responsibility for managing T. Rowe Price Growth Equity and works with the
committee in developing and executing its


                                      -14-
<PAGE>


investment program. Mr. Smith joined T. Rowe Price in 1992 and has been managing
investments since 1988.

Under separate subadvisory agreements, each Subadviser, subject to the
supervision of Aetna and the Directors, is responsible for managing the assets
of its respective Portfolio(s) in accordance with the Portfolio's investment
objective and policies. Each Subadviser pays the salaries and other related
costs of personnel engaged in providing investment advice, including office
space, facilities and equipment.

Aetna has overall responsibility for monitoring the investment program
maintained by each Subadviser for compliance with applicable laws and
regulations and the respective Portfolio's investment objective.

Each Subadvisory Agreement gives each Subadviser broad latitude in selecting
securities for each Portfolio subject to Aetna's oversight.

Each Subadvisory Agreement provides that Aetna will pay the Subadviser a fee at
an annual rate based on the average daily net asset value of each Portfolio as
described below. Aetna pays the subadvisory fee out of its advisory fee.

         MFS Emerging Equities              .425% on the first $150 million of
         MFS Research Growth                aggregate average daily
         MFS Value Equity                   net assets under management
                         .                  .40% on the next $150 million
                                            .375% on the next $450 million
                                            .35% on the next $550 million
                                            .30% on the next $200 million
                                            .25% on assets over $1.5 billion

         Scudder International Growth       .75% on the first $20 million of
                                            average daily net assets
                                            .65% on the next $15 million
                                            .50% on the next $65 million
                                            .40% on the next $200 million
                                            .30% on assets over $300 million

         T. Rowe Price Growth Equity        .40% on the first $500 million of
                                            average daily net assets
                                            .375% on assets over $500 million

BROKERAGE ALLOCATION. The Investment Advisory Agreement and each Subadvisory 
Agreement allow Aetna or the Subadviser, as the case may be, to place trades 
through brokers of its choosing and to take into consideration the quality of 
the brokers' services and execution, as well as services such as research 
provided to the Adviser/Subadviser, in setting the amount of commissions paid 
to a broker. The use of research and expense reimbursements in determining and 
paying commissions are referred to as "soft dollar" practices. Aetna and the 
Subadviser will engage in soft dollar practices only to the extent authorized 
by applicable law.

EXPENSES AND PORTFOLIO ADMINISTRATION. Under an Administrative Services
Agreement with the Fund, Aetna provides all administrative services necessary
for the Fund's operations and is responsible for the supervision of the Fund's
other service providers. Aetna also assumes all ordinary recurring direct costs
of the Fund, such as custodian fees, directors fees, transfer agency costs and
accounting expenses. As compensation for these services, Aetna receives a
monthly fee from each Portfolio at an annual rate based on the average daily net
assets of each Portfolio as follows:


                                      -14-
<PAGE>


                  Portfolio                                  Fee
                  ---------                                  ---
         MFS Emerging Equities                               0.13%
         MFS Research Growth                                 0.15%
         MFS Value Equity                                    0.25%
         Scudder International Growth                        0.20%
         T. Rowe Price Growth Equity                         0.15%

CAP ON AGGREGATE FUND FEES AND EXPENSES. Each Portfolio's aggregate expenses are
limited to the advisory and administrative fees disclosed above. Aetna has
agreed to reimburse the Portfolios for expenses and/or waive its fees, so that,
through at least April 30, 1999, the aggregate of each Portfolio's expenses will
not exceed the amounts shown above.

PRINCIPAL UNDERWRITER. Aetna, 151 Farmington Avenue, Hartford, Connecticut
06156, serves as the Fund's principal underwriter.

TRANSFER AGENT. Investors Bank & Trust Company, 200 Clarendon Street, Boston,
Massachusetts 02116, serves as the Fund's Transfer Agent.

CUSTODIAN.  Investors Bank & Trust Company also serves as the Fund's custodian.

                        PURCHASE AND REDEMPTION OF SHARES

Purchases and redemptions of shares may be made only by insurance companies for
their separate accounts at the direction of Participants. Please refer to the
prospectus for your contract or policy for information on how to direct
investments in or redemptions from a Portfolio and any fees that may apply.
Orders received by the insurance company before 4:00 p.m. will be priced at the
net asset value per share ("NAV") calculated that day, as described below. The
Portfolios reserve the right to suspend the offering of shares, or to reject any
specific purchase order. The Portfolios may suspend redemptions or postpone
payments when the New York Stock Exchange is closed or when trading is
restricted for any reason or under emergency circumstances as determined by the
SEC.

                                 NET ASSET VALUE

The NAV of each Portfolio is determined as of the later of 15 minutes following
the close of the New York Stock Exchange or 4:15 p.m. on each day that the New
York Stock Exchange is open for trading. Each Portfolio's NAV is computed by
taking the total value of a Portfolio's securities, plus any cash or other
assets (including dividends and interest accrued but not collected) and
subtracting all liabilities (including accrued expenses), and dividing the total
by the number of shares outstanding. Portfolio securities are valued primarily
by independent pricing services, based on market quotations. Short-term debt
instruments maturing in less than 60 days are valued at amortized cost.
Securities for which market quotations are not readily available are valued at
their fair value in such manner as may be determined, from time to time, in good
faith, by or under the authority of the Directors.


                                      -15-
<PAGE>



                                   PERFORMANCE

PERFORMANCE OF PORTFOLIOS

From time to time advertisements and other sales materials for the Fund may
include information concerning each Portfolio's historical performance. These
advertisements will also describe the performance of the relevant insurance
company separate accounts. Advertising information will include the average
annual total return of the Portfolio calculated on a compounded basis for
specified periods of time. Total return information will be calculated pursuant
to rules established by the SEC. In lieu of or in addition to total return
calculations, such information may include performance rankings and similar
information from independent organizations such as Lipper Analytical Services,
Inc., Morningstar, Business Week, Forbes or other industry publications.

A Portfolio calculates average annual total return by determining the redemption
value at the end of specified periods (assuming reinvestment of all dividends
and distributions) of a $1,000 investment in the Portfolio at the beginning of
the period, deducting the initial $1,000 investment, annualizing the increase or
decrease over the specified period and expressing the result as a percentage.

Total return figures utilized by the Fund are based on historical performance
and are not intended to indicate future performance. Total return and net asset
value per share can be expected to fluctuate over time and, accordingly, upon
redemption shares may be worth more or less than their original cost.

PERFORMANCE OF SIMILARLY MANAGED MUTUAL FUNDS

Each Portfolio is newly organized and does not yet have its own performance
record. Each Portfolio, however, has substantially the same investment
objective, policies and strategies as one or more existing mutual funds ("other
Mutual Funds") that are either sold directly to the public or through variable
products, advised by MFS, Scudder or T. Rowe Price, as the case may be.

The historical performance of the Funds that are comparable to the Portfolios is
presented below. Investors should not consider the performance of the other
Mutual Funds as an indication of the future performance of a similarly managed
Portfolio. The performance figures shown below reflect the deduction of the
historical fees and expenses paid by each other Mutual Fund, and not those to be
paid by the Portfolio. The figures do not reflect the deduction of any insurance
fees or charges that are imposed by the insurance company in connection with its
sale of the VA Contracts and VLI Policies. Investors should refer to the
separate account prospectuses describing the VA Contracts and VLI Policies for
information pertaining to these insurance fees and charges. The insurance
separate account fees will have a detrimental effect on the performance of the
Portfolios. The results shown below reflect the reinvestment of dividends and
distributions, and were calculated in the same manner that will be used by each
Portfolio to calculate its own performance.

The following table shows average annualized total returns of the other Mutual
Funds for the stated periods ending June 30, 1997, as well as a comparison with
the performance of the applicable benchmark.*

- --------
*   The S&P 500 (Standard & Poor's 500) Index is a value-weighted, unmanaged
    index of 500 widely held stocks considered to be representative of the stock
    market in general. The Russell 2000 Index is a value-weighted, unmanaged
    index of small capitalization stocks. Both indices assume reinvestment of
    all dividends. The Morgan Stanley Capital International-Europe, Australia,
    Far East (MSCI EAFE) Index is an unmanaged, market value-weighted average of
    the performance of more than 900 securities listed on the stock exchanges of
    countries in Europe, Australia and the Far East.


                                      -16-
<PAGE>

<TABLE>
<CAPTION>

                                                   One Year          Five Year        Ten Year
<S>                                                  <C>               <C>             <C>

MFS Emerging Growth Fund (Class A)(1)                13.61             24.27           17.00
(Model for MFS Emerging Equities)(2)
Russell 2000                                         16.33             17.88           11.16
S&P 500                                              34.70             19.78           14.65

MFS Research Fund (Class A)(1)                       23.59             22.13           14.13
(Model for MFS Research Growth)(3)
S&P 500                                              34.70             19.78           14.65

MFS Value Fund (Class A)(1)                          17.58             21.80           13.50
(Model for MFS Value Equity)(4)
S&P 500                                              34.70             19.78           14.65

Scudder VLIF International                           19.88             13.61           10.38
Portfolio (Model for Scudder
International Growth)
MSCI EAFE                                            12.84             12.83            6.58

Scudder International Fund                           19.83             13.31            9.47
(Model for Scudder International
Growth)
MSCI EAFE                                            12.84             12.83            6.58

T. Rowe Price Growth Stock Fund                      29.79             18.67           12.63
(Model for T. Rowe Price Growth
Equity)
S&P 500                                              34.70             19.78           14.65
</TABLE>

- --------
(1) Class A share performance includes the performance of the Fund's Class B
    shares for periods prior to the commencement of offering of Class A shares
    on September 13, 1993, adjusted to include Class A's 5.75% front-end sales
    charge, but not adjusted to reflect differences in internal operating
    expenses.

(2) MFS also manages another fund with substantially the same investment
    objective, policies and strategies as those of Portfolio Partners - MFS
    Emerging Equities. The performance of that fund, MFS Variable Insurance
    Trust - Emerging Growth Series, was not included in the chart because it has
    been in existence only since July 24, 1995, and thus has a much shorter
    track record than MFS Emerging Growth Fund (Class A). The performance of MFS
    Variable Insurance Trust - Emerging Growth Series for the one-year period
    ending June 30, 1997, was 12.68%.

(3) MFS also manages another fund with substantially the same investment
    objective, policies and strategies as those of Portfolio Partners - MFS
    Research Growth. The performance of that fund, MFS Variable Insurance Trust
    - Research Series, was not included in the chart because it has been in
    existence only since July 26, 1995, and thus has a much shorter track record
    than MFS Emerging Growth Fund (Class A). The performance of MFS Variable
    Insurance Trust - Research Series for the one-year period ending June 30,
    1997, was 23.98%.

(4) MFS also manages another fund with substantially the same investment
    objective, policies and strategies as those of Portfolio Partners - MFS
    Value Equity. The performance of that fund, MFS Variable Insurance Trust
    Value Series, was not included in the chart because it has been in existence
    only since August 14, 1996.


                                      -17-
<PAGE>


                                   TAX MATTERS

Each Portfolio intends to qualify as a regulated investment company for federal
income tax purposes by satisfying the requirements under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code"), including requirements
with respect to diversification of assets, distribution of income and sources of
income. As a regulated investment company, a Portfolio generally will not be
subject to tax on its ordinary income and net realized capital gains. Each
Portfolio also intends to comply with the diversification requirements of
Section 817(h) of the Code for variable annuity contracts and variable life
insurance policies so that the VA Contract owners and VLI Policy owners should
not be subject to federal tax on distributions of dividends and income from a
Portfolio to the insurance company separate accounts. Contract owners and policy
owners should review the prospectus for their VA Contract or VLI Policy for
information regarding the tax consequences to them of purchasing a contract or
policy.

                               GENERAL INFORMATION

INCORPORATION. The Fund was incorporated under the laws of Maryland on May 7,
1997.

CAPITAL STOCK. The Fund is authorized to issue one billion shares of capital
stock, par value $0.001 per share. All shares are nonassessable, transferable
and redeemable. There are no preemptive rights.

SHAREHOLDER MEETINGS. The Fund is not required and does not intend to hold
annual shareholder meetings. The Fund's Articles of Incorporation provide for
meetings of shareholders to elect Directors at such times as may be determined
by the Directors or as required by the 1940 Act. If requested by the holders of
at least 50% of the Fund's outstanding shares, the Fund will hold a shareholder
meeting for the purpose of voting on the removal and replacement of one or more
Directors and will assist with communication concerning that shareholder
meeting.

VOTING RIGHTS. Each share of the Fund is entitled to one vote for each full
share and fractional votes for fractional shares. Separate votes are taken by a
Portfolio only if the matter affects or requires the vote of only that
Portfolio. The insurance companies holding the shares in their separate accounts
will generally request voting instructions from the Participants and generally
must vote the shares in proportion to the voting instructions received. Voting
rights for VA Contracts and VLI Policies are discussed in the prospectus for the
applicable contract or policy.


                                      -18-
<PAGE>

                   STATEMENT OF ADDITIONAL INFORMATION DATED:
                                 August 21, 1997

                            PORTFOLIO PARTNERS, INC.
                              151 Farmington Avenue
                        Hartford, Connecticut 06156-8962



         This Statement of Additional Information is not a prospectus but should
be read in conjunction with the current prospectus for Portfolio Partners, Inc.
dated August 21, 1997 (the "Prospectus"). This Statement of Additional
Information is incorporated by reference in its entirety into the Prospectus. A
free Prospectus is available upon request by writing to Portfolio Partners, Inc.
at the address listed above or calling 1-800-238-6263.

                     READ THE PROSPECTUS BEFORE YOU INVEST.

                                TABLE OF CONTENTS

                                                                          PAGE
                                                                          ----

GENERAL INFORMATION AND HISTORY
ADDITIONAL INVESTMENT RESTRICTIONS AND POLICIES
  OF THE PORTFOLIOS
DESCRIPTION OF VARIOUS SECURITIES AND
  INVESTMENT POLICIES AND PRACTICES
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
RISKS ASSOCIATED WITH INVESTING IN OPTIONS,
  FUTURES AND FORWARD CONTRACTS
DIRECTORS AND OFFICERS OF THE FUND
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
THE INVESTMENT ADVISORY AGREEMENT
THE SUBADVISORY AGREEMENTS
THE ADMINISTRATIVE SERVICES AGREEMENT
CUSTODIAN
INDEPENDENT AUDITORS
PRINCIPAL UNDERWRITER
BROKERAGE ALLOCATION AND TRADING POLICIES
DESCRIPTION OF SHARES
NET ASSET VALUE
PERFORMANCE INFORMATION
TAX STATUS
VOTING RIGHTS
FINANCIAL STATEMENTS
<PAGE>

                         GENERAL INFORMATION AND HISTORY

         Portfolio Partners, Inc. (the "Fund") was incorporated in 1997 in
Maryland. The Fund is an open-end management investment company. The Fund is
authorized to issue multiple series of shares, each representing a diversified
portfolio of investments with different investment objectives, policies and
restrictions (individually, a "Portfolio" and collectively, the "Portfolios").
The Fund currently has authorized five Portfolios: MFS Emerging Equities
Portfolio ("MFS Emerging Equities"); MFS Research Growth Portfolio ("MFS
Research Growth"); MFS Value Equity Portfolio ("MFS Value Equity"); Scudder
International Growth Portfolio ("Scudder International Growth"); and T. Rowe
Price Growth Equity Portfolio ("T. Rowe Price Growth Equity"). Much of the
information contained in this Statement of Additional Information expands on
subjects discussed in the Prospectus. Capitalized terms not defined herein are
used as defined in the Prospectus.

         The investment objective and general investment policies of each
Portfolio are described in the Prospectus.

                     ADDITIONAL INVESTMENT RESTRICTIONS AND
                           POLICIES OF THE PORTFOLIOS

         The investment policies and restrictions of the Portfolios, set forth
below, are matters of fundamental policy for purposes of the Investment Company
Act of 1940 (the "1940 Act"), and therefore cannot be changed, with regard to a
particular Portfolio, without the approval of a majority of the outstanding
voting securities of that Portfolio as defined by the 1940 Act. This means the
lesser of: (i) 67% of the shares of a Portfolio present at a shareholders'
meeting if the holders of more than 50% of the shares of that Portfolio then
outstanding are present in person or by proxy; or (ii) more than 50% of the
outstanding voting securities of a Portfolio.

         As a matter of fundamental policy, no Portfolio will:

1. Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent a
Portfolio from purchasing or selling options and futures contracts or from
investing in securities or other instruments backed by physical commodities).

2. Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent a Portfolio from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business).

3. Issue any senior security (as defined in the 1940 Act), except that (a) a
Portfolio may engage in transactions that may result in the issuance of senior
securities to the extent permitted under applicable regulations and
interpretations of the 1940 Act or an exemptive order; (b) a Portfolio may
acquire other securities, the acquisition of which may result in the issuance of
a senior security, to the extent permitted under applicable regulations or
interpretations of the 1940 Act; and (c) subject to the restrictions set forth
below, a Portfolio may borrow money as authorized by the 1940 Act.

4. Borrow money, except that (a) a Portfolio may enter into commitments to
purchase securities in accordance with its investment program, including
when-issued securities and reverse repurchase agreements, provided that the
total amount of any such borrowing does not exceed 33-1/3% of the Portfolio's
total assets; and (b) a Portfolio may borrow money in an amount not to exceed
33-1/3% of the value of its total assets at the time the loan is made.

5. Lend any security or make any other loan if, as a result, more than 33-1/3%
of its total assets would be lent to other parties, but this limitation does not
apply to purchases of publicly issued debt securities or to repurchase
agreements.

6. Underwrite securities issued by others, except to the extent that a Portfolio
may be considered an underwriter within the meaning of the Securities Act of
1933 (the "1933 Act") in the disposition of restricted securities.

                                      -2-
<PAGE>

7. Purchase the securities of an issuer if, as a result, more than 25% of its
total assets would be invested in the securities of companies whose principal
business activities are in the same industry. This limitation does not apply to
securities issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities.

With respect to MFS Emerging Equities, MFS Research Growth and MFS Value Equity
only:

8. No Portfolio will purchase securities on margin except for short-term credits
necessary for clearance of portfolio transactions, provided that this
restriction will not be applied to limit the use of options, futures contracts
and related options, in the manner otherwise permitted by the investment
restrictions, policies and investment program of the Portfolio.

9. With respect to 100% of its total assets, purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities) if, as a result, (a) more than 5% of the
Portfolio's total assets would be invested in the securities of that issuer, or
(b) the Portfolio would hold more than 10% of the outstanding voting securities
of that issuer.

With respect to Scudder  International  Growth and T. Rowe Price  Growth  Equity
only:

10. With respect to 75% of its total assets, purchase the securities of any
issuer (other than securities issued or guaranteed by the U.S. Government or any
of its agencies or instrumentalities) if, as a result, (a) more than 5% of the
Portfolio's total assets would be invested in the securities of that issuer, or
(b) the Portfolio would hold more than 10% of the outstanding voting securities
of that issuer.

The following restrictions are not fundamental and may be changed without
shareholder approval:

a. No Portfolio will invest more than 15% of its net assets in illiquid
securities. Illiquid securities are securities that are not readily marketable
or cannot be disposed of promptly within seven days and in the usual course of
business at approximately the price at which a Portfolio has valued them. Such
securities include, but are not limited to, time deposits and repurchase
agreements with maturities longer than seven days. Securities that may be resold
under Rule 144A, securities offered pursuant to Section 4(2) of, or securities
otherwise subject to restrictions on resale under, the 1933 Act ("Restricted
Securities"), shall not be deemed illiquid solely by reason of being
unregistered. A Subadviser determines whether a particular security is deemed to
be liquid based on the trading markets for the specific security and other
factors.

b. No Portfolio will borrow for leverage purposes.

c. No Portfolio will make short sales of securities, other than short sales
"against the box." This restriction does not apply to transactions involving
options, futures contracts and related options, and other strategic
transactions.

d. No Portfolio will lend portfolio securities.

With respect to Scudder International Growth and T. Rowe Price Growth Equity
only:

e. No Portfolio will purchase securities on margin except for short-term credits
necessary for clearance of portfolio transactions, provided that this
restriction will not be applied to limit the use of options, futures contracts
and related options, in the manner otherwise permitted by the investment
restrictions, policies and investment program of the Portfolio.



                                      -3-
<PAGE>

         General. The limitations listed above supplement those set forth in the
Prospectus. Unless otherwise noted, whenever an investment policy or limitation
states a maximum percentage of a Portfolio's assets that may be invested in any
security or other asset, or sets forth a policy regarding quality standards,
such standard or percentage limitation will be determined immediately after and
as a result of the Portfolio's acquisition of such security or other asset
except in the case of borrowing (or other activities that may be deemed to
result in the issuance of a "senior security" under the 1940 Act). Accordingly,
any subsequent change in values, net assets or other circumstances will not be
considered when determining whether the investment complies with the Portfolio's
investment policies and limitations. If the value of a Portfolio's holdings of
illiquid securities at any time exceeds the percentage limitation applicable at
the time of acquisition due to subsequent fluctuations in value or other
reasons, the Directors will consider what actions, if any, are appropriate to
maintain adequate liquidity.

     DESCRIPTION OF VARIOUS SECURITIES AND INVESTMENT POLICIES AND PRACTICES

         "WHEN-ISSUED" SECURITIES - Each Portfolio may purchase securities on
a "when-issued" or on a "forward delivery" basis. It is expected that, under
normal circumstances, a Portfolio will take delivery of such securities. When a
Portfolio commits to purchase a security on a "when-issued" or on a "forward
delivery" basis, it will set up procedures consistent with the applicable
interpretations of the Securities and Exchange Commission (the "SEC") concerning
such purchases. Since that policy currently recommends that an amount of a
Portfolio's assets equal to the amount of the purchase be held aside or
segregated to be used to pay for the commitment, a Portfolio will always have
cash, short-term money market instruments or other liquid securities sufficient
to fulfill any commitments or to limit any potential risk. However, although
such purchases will not be made for speculative purposes and SEC policies will
be adhered to, purchases of securities on such bases may involve more risk than
other types of purchases. For example, a Portfolio may have to sell assets which
have been set aside in order to meet redemptions. Also, if a Portfolio
determines it is necessary to sell the "when-issued" or "forward delivery"
securities before delivery, it may incur a loss because of market fluctuations
since the time the commitment to purchase such securities was made. When the
time comes to pay for "when-issued" or "forward delivery" securities, a
Portfolio will meet its obligations from the then-available cash flow on the
sale of securities, or, although it would not normally expect to do so, from the
sale of the "when-issued" or "forward delivery" securities themselves (which may
have a value greater or less than the Portfolio's payment obligation).

         CORPORATE ASSET-BACKED SECURITIES - As described in the Prospectus, MFS
Emerging Equities and Scudder International Growth may invest in corporate
asset-backed securities. These securities, issued by trusts and special purpose
corporations, are backed by a pool of assets, such as credit card and automobile
loan receivables, representing the obligations of a number of different parties.

         Corporate asset-backed securities present certain risks. For instance,
in the case of credit card receivables, these securities may not have the
benefit of any security interest in the related collateral. Credit card
receivables are generally unsecured and the debtors are entitled to the
protection of a number of state and federal consumer credit laws, many of which
give such debtors the right to set off certain amounts owed on the credit cards,
thereby reducing the balance due. Most issuers of automobile receivables permit
the servicers to retain possession of the underlying obligations. If the
servicer were to sell these obligations to another party, there is a risk that
the purchaser would acquire an interest superior to that of the holders of the
related automobile receivables. In addition, because of the large number of
vehicles involved in a typical issuance and technical requirements under state
laws, the trustee for the holders of the automobile receivables may not have a
proper security interest in all of the obligations backing such receivables.
Therefore, there is the possibility that recoveries on repossessed collateral
may not, in some cases, be available to support payments on these securities.
The underlying assets (e.g., loans) are also subject to prepayments which
shorten the securities' weighted average life and may lower their return.

         Corporate asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. To lessen the
effect of failures by obligors on underlying assets to make payments, the
securities may contain elements of credit support which fall into two
categories: (i) liquidity protection and (ii) protection against losses
resulting from ultimate default by an obligor on the underlying assets.
Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of payments
on the underlying pool occurs in a timely fashion. Protection against losses
resulting from

                                      -4-
<PAGE>

ultimate default ensures payment through insurance policies or letters of credit
obtained by the issuer or sponsor from third parties. The Portfolio will not pay
any additional or separate fees for credit support. The degree of credit support
provided for each issue is generally based on historical  information respecting
the level of credit risk associated with the underlying  assets.  Delinquency or
loss in excess of that  anticipated  or  failure  of the  credit  support  could
adversely affect the return on an investment in such a security.

         REPURCHASE AGREEMENTS - As described in the Prospectus, each of the
Portfolios may enter into repurchase agreements with sellers that are member
firms (or subsidiaries thereof) of the New York Stock Exchange, members of the
Federal Reserve System, recognized primary U.S. Government securities dealers or
institutions which the Subadviser has determined to be of comparable
creditworthiness. The securities that a Portfolio purchases and holds through
its agent are U.S. Government securities, the values, including accrued
interest, of which are equal to or greater than the repurchase price agreed to
be paid by the seller. The repurchase price may be higher than the purchase
price, the difference being income to a Portfolio, or the purchase and
repurchase prices may be same, with interest at a standard rate due to the
Portfolio together with the repurchase price on repurchase. In either case, the
income to a Portfolio is unrelated to the interest rate on the U.S. Government
securities.

         The repurchase agreement provides that in the event the seller fails to
pay the price agreed upon on the agreed upon delivery date or upon demand, as
the case may be, a Portfolio will have the right to liquidate the securities.
If, at the time a Portfolio is contractually entitled to exercise its right to
liquidate the securities, the seller is subject to a proceeding under the
bankruptcy laws or its assets are otherwise subject to a stay order, the
Portfolio's exercise of its right to liquidate the securities may be delayed and
result in certain losses and costs to the Portfolio. The Fund has adopted and
follows procedures which are intended to minimize the risks of repurchase
agreements. For example, a Portfolio only enters into repurchase agreements
after its Subadviser has determined that the seller is creditworthy, and the
Subadviser monitors the seller's creditworthiness on an ongoing basis. Moreover,
under such agreements, the value, including accrued interest, of the securities
(which are marked to market every business day) is required to be greater than
the repurchase price, and the Portfolio has the right to make margin calls at
any time if the value of the securities falls below the agreed upon margin.

         LOAN  PARTICIPATIONS  AND  OTHER  DIRECT  INDEBTEDNESS  - MFS  Emerging
Equities  and MFS Value Equity may each invest up to 5% of their total assets in
loans and other direct  indebtedness.  The highly  leveraged nature of many such
loans and other direct indebtedness may make such loans especially vulnerable to
adverse  changes  in  economic  or market  conditions.  Loans  and other  direct
indebtedness  may  not be in the  form  of  securities  or  may  be  subject  to
restrictions  on transfer,  and only limited  opportunities  may exist to resell
such  instruments.  As a  result,  a  Portfolio  may  be  unable  to  sell  such
investments  at an  opportune  time or may have to resell them at less than fair
market value.

          In purchasing a loan, a Portfolio acquires some or all of the interest
of a bank or other lending institution in a loan to a corporate borrower. Many
such loans are secured, although some may be unsecured. Such loans may be in
default at the time of purchase. Loans and other direct indebtedness that are
fully secured offer a Portfolio more protection than an unsecured loan in the
event of non-payment of scheduled interest or principal. However, there is no
assurance that the liquidation of collateral from a secured loan or other direct
indebtedness would satisfy the corporate borrower's obligation, or that the
collateral can be liquidated.

         These loans and other direct indebtedness are made generally to finance
internal growth, mergers, acquisitions, stock repurchases, leveraged buyouts and
other corporate activities. Such loans and other direct indebtedness loans are
typically made by a syndicate of lending institutions, represented by an agent
lending institution which has negotiated and structured the loan and is
responsible for collecting interest, principal and other amounts due on its own
behalf and on behalf of the others in the syndicate, and for enforcing its and
their other rights against the borrower. Alternatively, such loans and other
direct indebtedness may be structured as a novation, pursuant to which a
Portfolio would assume all of the rights of the lending institution in a loan,
or as an assignment, pursuant to which the Portfolio would purchase an
assignment of a portion of a lender's interest in a loan or other direct
indebtedness either directly from the lender or through an intermediary. A
Portfolio may also purchase trade or other claims against companies, which
generally represent money owed by the company to a supplier of goods or
services. These claims may also be purchased at a time when the company is in
default.

                                      -5-
<PAGE>

         Certain of the loans and other direct indebtedness acquired by a
Portfolio may involve revolving credit facilities or other standby financing
commitments which obligate the Portfolio to pay additional cash on a certain
date or on demand. These commitments may have the effect of requiring a
Portfolio to increase its investment in a company at a time when the Portfolio
might not otherwise decide to do so (including at a time when the company's
financial condition makes it unlikely that such amounts will be repaid). To the
extent that a Portfolio is committed to advance additional funds, it will at all
times hold and maintain in a segregated account cash or other liquid securities
in an amount sufficient to meet such commitments.

         A Portfolio's ability to receive payment of principal, interest and
other amounts due in connection with these investments will depend primarily on
the financial condition of the borrower. In selecting the loans and other direct
indebtedness which a Portfolio will purchase, the Subadviser will rely upon its
own (and not the original lending institution's) credit analysis of the
borrower. As a Portfolio may be required to rely upon another lending
institution to collect and pass on to the Portfolio amounts payable with respect
to the loan and to enforce the Portfolio's rights under the loan and other
direct indebtedness, an insolvency, bankruptcy or reorganization of the lending
institution may delay or prevent the Portfolio from receiving such amounts. In
such cases, a Portfolio will evaluate as well the creditworthiness of the
lending institution and will treat both the borrower and the lending institution
as an "issuer" of the loan for purposes of certain investment restrictions
pertaining to the diversification of the Portfolio's portfolio investments. The
highly leveraged nature of many such loans and other direct indebtedness may
make such loans and other direct indebtedness especially vulnerable to adverse
changes in economic or market conditions. Investments in such loans and other
direct indebtedness may involve additional risk to the Portfolio. For example,
if a loan or other direct indebtedness is foreclosed, the Portfolio could become
part owner of any collateral, and would bear the costs and liabilities
associated with owning and disposing of the collateral. In addition, it is
conceivable that under emerging legal theories of lender liability, the
Portfolio could be held liable. It is unclear whether loans and other forms of
direct indebtedness offer securities law protections against fraud and
misrepresentation. In the absence of definitive regulatory guidance, the
Portfolio relies on the Subadviser's research in an attempt to avoid situations
where fraud and misrepresentation could adversely affect the Portfolio. In
addition, loans and other direct investments may not be in the form of
securities or may be subject to restrictions on transfer, and only limited
opportunities may exist to resell such instruments. As a result, the Portfolio
may be unable to sell such investments at an opportune time or may have to
resell them at less than fair market value. To the extent that the Subadviser
determines that any such investments are illiquid, the Portfolio will include
them in the investment limitations described below.

         FOREIGN  SECURITIES - The Portfolios  may invest in foreign  securities
(and foreign currencies) to the extent described in the Prospectus. Investing in
foreign securities generally presents a greater degree of risk than investing in
domestic  securities.  As a result of its investments in foreign  securities,  a
Portfolio may receive interest or dividend payments, or the proceeds of the sale
or  redemption  of such  securities,  in the  foreign  currencies  in which such
securities  are  denominated.  Under  certain  circumstances,  such  as  where a
Subadviser believes that the applicable exchange rate is unfavorable at the time
the currencies are received or the Subadviser anticipates, for any other reason,
that the exchange rate will improve, a Portfolio may hold such currencies for an
indefinite  period of time.  A  Portfolio  may also  hold  foreign  currency  in
anticipation of purchasing foreign  securities.  While the holding of currencies
will permit the  Portfolio  to take  advantage  of  favorable  movements  in the
applicable  exchange  rate,  such strategy also exposes the Portfolio to risk of
loss if exchange rates move in a direction adverse to the Portfolio's  position.
Such  losses  could  reduce any profits or increase  any losses  sustained  by a
Portfolio  from the sale or redemption of securities and could reduce the dollar
value of interest or dividend payments received.

         AMERICAN DEPOSITARY RECEIPTS - Each Portfolio may invest in ADRs, which
are certificates  issued by a U.S.  depository (usually a bank) that represent a
specified quantity of shares of an underlying  non-U.S.  stock on deposit with a
custodian bank as collateral.  ADRs may be sponsored or unsponsored. A sponsored
ADR is  issued by a  depository  which has an  exclusive  relationship  with the
issuer  of the  underlying  security.  An  unsponsored  ADR may be issued by any
number of U.S.  depositories.  Under the terms of most  sponsored  arrangements,
depositories  agree to  distribute  notices of  shareholder  meetings and voting
instructions, and to provide shareholder communications and other information to
the ADR holders at the request of the issuer of the  deposited  securities.  The
depository of an  unsponsored  ADR, on the other hand, is under no obligation to
distribute shareholder

                                      -6-
<PAGE>

communications  received from the issuer of the deposited  securities or to pass
through voting rights to ADR holders in respect of the deposited  securities.  A
Portfolio may invest in either type of ADR.  Although the U.S.  investor holds a
substitute receipt of ownership rather than direct stock  certificates,  the use
of the  depository  receipts in the United States can reduce costs and delays as
well as potential  currency  exchange and other  difficulties.  A Portfolio  may
purchase  securities  in local  markets and direct  delivery  of these  ordinary
shares to the local  depository  of an ADR agent  bank in the  foreign  country.
Simultaneously,  the  ADR  agents  create  a  certificate  that  settles  at the
Portfolio's  custodian in five days. A Portfolio may also execute  trades on the
U.S. markets using existing ADRs. A foreign issuer of the security underlying an
ADR is generally not subject to the same  reporting  requirements  in the United
States as a domestic  issuer.  Accordingly the  information  available to a U.S.
investor will be limited to the  information  the foreign  issuer is required to
disclose  in its own  country  and the  market  value of an ADR may not  reflect
undisclosed  material  information  concerning  the  issuer  of  the  underlying
security.  ADRs may also be subject  to  exchange  rate risks if the  underlying
foreign securities are traded in foreign currency.

         ZERO COUPON,  DEFERRED INTEREST AND PIK BONDS - Fixed income securities
that MFS Value Equity may invest in include zero coupon bonds, deferred interest
bonds and bonds on which the  interest  is payable in kind ("PIK  bonds").  Zero
coupon and deferred  interest bonds are debt  obligations  which are issued at a
significant discount from face value. The discount approximates the total amount
of interest the bonds will accrue and compound over the period until maturity or
the first interest payment date at a rate of interest reflecting the market rate
of the security at the time of issuance.  While zero coupon bonds do not require
the periodic payment of interest,  deferred  interest bonds provide for a period
of delay  before the  regular  payment of  interest  begins.  PIK bonds are debt
obligations  which  provide  that the issuer  thereof  may, at its  option,  pay
interest on such bonds in cash or in the form of  additional  debt  obligations.
Such investments benefit the issuer by mitigating its need for cash to meet debt
service,  but also require a higher rate of return to attract  investors who are
willing to defer receipt of such cash. Such  investments may experience  greater
volatility in market value than debt  obligations  that make regular payments of
interest.  The  Portfolio  will accrue  income on such  investments  for tax and
accounting  purposes,  as required,  which is  distributable to shareholders and
which,  because no cash is  received  at the time of  accrual,  may  require the
liquidation   of  other   portfolio   securities  to  satisfy  the   Portfolio's
distribution obligations.

         RISK OF INVESTING IN LOWER RATED  FIXED-INCOME  SECURITIES - Certain of
the Portfolios may invest in lower rated  fixed-income  securities  rated Baa by
Moody's Investors Service,  Inc. ("Moody's") or BBB by Standard & Poor's Ratings
Service ("S&P") or by Fitch  Investors  Service,  Inc.  ("Fitch") and comparable
unrated  securities.   These  securities,  while  normally  exhibiting  adequate
protection parameters,  have speculative characteristics and changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make  principal and interest  payments than in the case of higher grade fixed
income securities.

         A Portfolio may also invest in high-yield, below investment grade
fixed-income securities, which are rated Ba or lower by Moody's or BB or lower
by S&P or by Fitch, or, if unrated, of comparable quality, to the extent
described in the Prospectus. No minimum rating standard is required by the
Portfolios. These securities are considered speculative and, while generally
providing greater income than investments in higher rated securities, will
involve greater risk of principal and income (including the possibility of
default or bankruptcy of the issuers of such securities) and may involve greater
volatility of price (especially during periods of economic uncertainty or
change) than securities in the higher rating categories and because yields vary
over time, no specific level of income can ever be assured. High-yield, below
investment grade fixed-income securities generally tend to reflect economic
changes (and the outlook for economic growth), short-term corporate and industry
developments and the market's perception of their credit quality (especially
during times of adverse publicity) to a greater extent than higher rated
securities which react primarily to fluctuations in the general level of
interest rates (although these lower rated fixed income securities are also
affected by changes in interest rates). In the past, economic downturns or an
increase in interest rates have, under certain circumstances, caused a higher
incidence of default by the issuers of these securities and may do so in the
future, especially in the case of highly leveraged issuers. The prices for these
securities may be affected by legislative and regulatory developments. The
market for these lower rated fixed income securities may be less liquid than the
market for investment grade fixed income securities. Furthermore, the liquidity
of these lower rated securities may be affected by the market's perception of
their credit quality. Therefore, the Subadviser's judgment may at times play a
greater role in valuing these securities than in the case of investment grade
fixed income securities, and it also may be more difficult during times of
certain adverse market conditions to sell these

                                      -7-
<PAGE>

lower rated securities to meet redemption requests or to respond to changes in
the market. For a description of the rating categories described above, see
Appendix A.

         While a Subadviser may refer to ratings issued by established credit
rating agencies, it is not the Portfolios' policy to rely exclusively on ratings
issued by these rating agencies, but rather to supplement such ratings with the
Subadviser's own independent and ongoing review of credit quality. To the extent
a Portfolio invests in these lower rated securities, the achievement of its
investment objective may be more dependent on the Subadviser's own credit
analysis than in the case of a fund investing in higher quality fixed income
securities. These lower rated securities may also include zero coupon bonds,
deferred interest bonds and PIK bonds which are described above.

         HYBRID INSTRUMENTS - T. Rowe Price Growth Equity and MFS Value Equity
may invest in hybrid instruments. Hybrid instruments (a type of potentially
high-risk derivative) combine the elements of futures contracts or options with
those of debt, preferred equity or a depository instrument (hereinafter "Hybrid
Instruments"). Generally, a Hybrid Instrument will be a debt security, preferred
stock, depository share, trust certificate, certificate of deposit or other
evidence of indebtedness on which a portion of or all interest payments, and/or
the principal or stated amount payable at maturity, redemption or retirement, is
determined by reference to prices, changes in prices, or differences between
prices, of securities, currencies, intangibles, goods, articles or commodities
(collectively "Underlying Assets") or by another objective index, economic
factor or other measure, such as interest rates, currency exchange rates,
commodity indices, and securities indices (collectively "Benchmarks"). Thus,
Hybrid Instruments may take a variety of forms, including, but not limited to,
debt instruments with interest or principal payments or redemption terms
determined by reference to the value of a currency or commodity or securities
index at a future point in time, preferred stock with dividend rates determined
by reference to the value of a currency, or convertible securities with the
conversion terms related to a particular commodity.

         Hybrid Instruments can be an efficient means of creating exposure to a
particular market, or segment of a market, with the objective of enhancing total
return. For example, the Portfolio may wish to take advantage of expected
declines in interest rates in several European countries, but avoid the
transaction costs associated with buying and currency-hedging the foreign bond
positions. One solution would be to purchase a U.S. dollar-denominated Hybrid
Instrument whose redemption price is linked to the average three year interest
rate in a designated group of countries. The redemption price formula would
provide for payoffs of greater than par if the average interest rate was lower
than a specified level, and payoffs of less than par if rates were above the
specified level. Furthermore, the Portfolio could limit the downside risk of the
security by establishing a minimum redemption price so that the principal paid
at maturity could not be below a predetermined minimum level if interest rates
were to rise significantly. The purpose of this arrangement, known as a
structured security with an embedded put option, would be to give the Portfolio
the desired European bond exposure while avoiding currency risk, limiting
downside market risk, and lowering transactions costs. Of course, there is no
guarantee that the strategy would be successful and the Portfolio could lose
money if, for example, interest rates do not move as anticipated or credit
problems develop with the issuer of the Hybrid Instrument.

         The risks of investing in Hybrid Instruments reflect a combination of
the risks of investing in securities, options, futures and currencies. Thus, an
investment in a Hybrid Instrument may entail significant risks that are not
associated with a similar investment in a traditional debt instrument that has a
fixed principal amount, is denominated in U.S. dollars or bears interest either
at a fixed rate or a floating rate determined by reference to a common,
nationally published Benchmark. The risks of a particular Hybrid Instrument
will, of course, depend upon the terms of the instrument, but may include,
without limitation, the possibility of significant changes in the Benchmarks or
the prices of Underlying Assets to which the instrument is linked. Such risks
generally depend upon factors which are unrelated to the operations or credit
quality of the issuer of the Hybrid Instrument and which may not be readily
foreseen by the purchaser, such as economic and political events, the supply and
demand for the Underlying Assets and interest rate movements. In recent years,
various Benchmarks and prices for Underlying Assets have been highly volatile,
and such volatility may be expected in the future. Reference is also made to the
discussion of futures, options, and forward contracts herein for a discussion of
the risks associated with such investments.

         Hybrid Instruments are potentially more volatile and carry greater
market risks than traditional debt instruments. Depending on the structure of
the particular Hybrid Instrument, changes in a Benchmark may be

                                      -8-
<PAGE>

magnified by the terms of the Hybrid  Instrument  and have an even more dramatic
and substantial effect upon the value of the Hybrid Instrument. Also, the prices
of the Hybrid  Instrument and the Benchmark or Underlying  Asset may not move in
the same direction or at the same time.

         Hybrid Instruments may bear interest or pay preferred dividends at
below market (or even relatively nominal) rates. Alternatively, Hybrid
Instruments may bear interest at above market rates but bear an increased risk
of principal loss (or gain). The latter scenario may result if "leverage" is
used to structure the Hybrid Instrument. Leverage risk occurs when the Hybrid
Instrument is structured so that a given change in a Benchmark or Underlying
Asset is multiplied to produce a greater value change in the Hybrid Instrument,
thereby magnifying the risk of loss as well as the potential for gain.

         Hybrid Instruments may also carry liquidity risk since the instruments
are often "customized" to meet the portfolio needs of a particular investor, and
therefore, the number of investors that are willing and able to buy such
instruments in the secondary market may be smaller than that for more
traditional debt securities. In addition, because the purchase and sale of
Hybrid Instruments could take place in an over-the-counter market without the
guarantee of a central clearing organization or in a transaction between the
Portfolio and the issuer of the Hybrid Instrument, the creditworthiness of the
counterparty or issuer of the Hybrid Instrument would be an additional risk
factor which the Portfolio would have to consider and monitor. Hybrid
Instruments also may not be subject to regulation of the CFTC, which generally
regulates the trading of commodity futures by U.S. persons, the SEC, which
regulates the offer and sale of securities by and to U.S. persons, or any other
governmental regulatory authority.

         The various risks discussed above, particularly the market risk of such
instruments, may in turn cause significant fluctuations in the net asset value
of the Portfolio. Accordingly, each Portfolio will limit its investments in
Hybrid Instruments to 10% of net assets. However, because of their volatility,
it is possible that the Portfolio's investment in Hybrid Instruments will
account for more than 10% of its return (positive or negative).

         The performance of indexed securities depends to a great extent on the
performance of the security, currency, or other instrument to which they are
indexed, and may also be influenced by interest rate changes in the U.S. and
abroad. At the same time, indexed securities are subject to the credit risks
associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations, and certain U.S.
government agencies.

         SWAPS, CAPS, FLOORS AND COLLARS -  Among the transactions into which
Scudder International Growth may enter are interest rate, currency and index
swaps and the purchase or sale of related caps, floors and collars. The
Portfolio expects to enter into these transactions primarily to preserve a
return or spread on a particular investment or portion of its portfolio, to
protect against currency fluctuations, as a duration management technique or to
protect against any increase in the price of securities the Portfolio
anticipates purchasing at a later date. The Portfolio intends to use these
transactions as hedges and not as speculative investments and will not sell
interest rate caps or floors where it does not own securities or other
instruments providing the income stream it may be obligated to pay. Interest
rate swaps involve the exchange by the Portfolio with another party of their
respective commitments to pay or receive interest, e.g., an exchange of floating
rate payments for fixed rate payments with respect to a notional amount of
principal. A currency swap is an agreement to exchange cash flows on a notional
amount of two or more currencies based on the relative value differential among
them and an index swap is an agreement to swap cash flows on a notional amount
based on changes in the values of the reference indices. The purchase of a cap
entitles the purchaser to receive payments on a notional principal amount from
the party selling such cap to the extent that a specified index exceeds a
predetermined interest rate or amount. The purchase of a floor entitles the
purchaser to receive payments on a notional principal amount from the party
selling such floor to the extent that a specified index falls below a
predetermined interest rate or amount. A collar is a combination of a cap and a
floor that preserves a certain return within a predetermined range of interest
rates or values.

         The Portfolio will usually enter into swaps on a net basis, i.e., the
two payment streams are netted out in a cash settlement on the payment date or
dates specified in the instrument, with the Portfolio receiving or paying, as
the case may be, only the net amount of the two payments. Inasmuch as these
swaps, caps, floors and collars are entered

                                      -9-
<PAGE>

into for good faith hedging purposes, the Subadviser and the Portfolio believe
such obligations do not constitute senior securities under the 1940 Act, and,
accordingly, will not treat them as being subject to its borrowing restrictions.
The Portfolio will not enter into any swap, cap, floor or collar transaction
unless, at the time of entering into such transaction, the unsecured long-term
debt of the counterparty, combined with any credit enhancements, is rated at
least A by S&P or Moody's or has an equivalent rating from a NRSRO or is
determined to be of equivalent credit quality by the Subadviser. If there is a
default by the counterparty, the Portfolio may have contractual remedies
pursuant to the agreements related to the transaction. The swap market has grown
substantially in recent years with a large number of banks and investment
banking firms acting both as principals and as agents utilizing standardized
swap documentation. As a result, the swap market has become relatively liquid.
Caps, floors and collars are more recent innovations for which standardized
documentation has not yet been fully developed and, accordingly, they are less
liquid than swaps.

         EURODOLLAR INSTRUMENTS - Scudder International Growth and MFS Value
Equity may make investments in Eurodollar instruments. Eurodollar instruments
are U.S. dollar-denominated futures contracts or options thereon which are
linked to the London Interbank Offered Rate ("LIBOR"), although foreign
currency-denominated instruments are available from time to time. Eurodollar
futures contracts enable purchasers to obtain a fixed rate for the lending of
funds and sellers to obtain a fixed rate for borrowings. Scudder International
Growth might use Eurodollar futures contracts and options thereon to hedge
against changes in LIBOR, to which many interest rate swaps and fixed income
instruments are linked.

         OPTIONS ON SECURITIES - As noted in the Prospectus, MFS Emerging
Equities, MFS Value Equity, Scudder International Growth and T. Rowe Price
Growth Equity may purchase and write (sell) call and put options on securities.
A Portfolio may sell options on securities for the purpose of increasing its
return on such securities and/or to protect the value of its Portfolio. MFS
Emerging Equities, MFS Value Equity and Scudder International Growth may only
sell calls on securities if such calls are "covered," as explained below. A
Portfolio may also write combinations of put and call options on the same
security, known as "straddles." Such transactions can generate additional
premium income but also present increased risk.

         A Portfolio may also purchase put or call options in anticipation of
market fluctuations which may adversely affect the value of its portfolio or the
prices of securities that the Portfolio wants to purchase at a later date. A
Portfolio may sell call and put options only if it takes certain steps to cover
such options or segregates assets, in accordance with regulatory requirements,
as described below.

         A call option sold by a Portfolio is "covered" if the Portfolio owns
the security underlying the call or has an absolute and immediate right to
acquire that security without additional cash consideration (or for additional
cash consideration held in a segregated account by its custodian) upon
conversion or exchange of other securities held in its portfolio. A call option
is considered offset, and thus held in accordance with regulatory requirements,
if a Portfolio holds a call on the same security and in the same principal
amount as the call sold when the exercise price of the call held (a) is equal to
or less than the exercise price of the call sold or (b) is greater than the
exercise price of the call sold if the difference is maintained by the Portfolio
in liquid securities in a segregated account with its custodian. If a put option
is sold by a Portfolio, the Portfolio will maintain liquid securities with a
value equal to the exercise price in a segregated account with its custodian, or
else will hold a put on the same security and in the same principal amount as
the put sold where the exercise price of the put held is equal to or greater
than the exercise price of the put sold or where the exercise price of the put
held is less than the exercise price of the put sold if the Portfolio maintains
in a segregated account with the custodian, liquid securities with an aggregate
value equal to the difference.

         Effecting a closing transaction in the case of a sold call option will
permit a Portfolio to sell another call option on the underlying security with
either a different exercise price or expiration date or both, or in the case of
a sold put option will permit the Portfolio to sell another put option to the
extent that the exercise price thereof is secured by liquid securities in a
segregated account. Such transactions permit a Portfolio to generate additional
premium income, which will partially offset declines in the value of portfolio
securities or increases in the cost of securities to be acquired. Also,
effecting a closing transaction will permit the cash or proceeds from the
concurrent sale of any subject to the option to be used for other investments of
a Portfolio, provided that another option on such security is not sold. If the
Portfolio desires to sell a particular security from its portfolio on which it
has sold a call

                                      -10-
<PAGE>

option, it will effect a closing transaction in connection with the option prior
to or concurrent with the sale of the security.

         A Portfolio will realize a profit from a closing transaction if the
premium paid in connection with the closing of an option sold by the Portfolio
is less than the premium received from selling the option, or if the premium
received in connection with the closing of an option by the Portfolio is more
than the premium paid for the original purchase. Conversely, a Portfolio will
suffer a loss if the premium paid or received in connection with a closing
transaction is more or less, respectively, than the premium received or paid in
establishing the option position. Because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option
previously sold by the Portfolio is likely to be offset in whole or in part by
appreciation of the underlying security owned by the Portfolio.

         A Portfolio may sell options in connection with buy-and-write
transactions; that is, the Portfolio may purchase a security and then sell a
call option against that security. The exercise price of the call a Portfolio
determines to sell will depend upon the expected price movement of the
underlying security. The exercise price of a call option may be below
("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money") the
current value of the underlying security at the time the option is sold.
Buy-and-write transactions using in-the-money call options may be used when it
is expected that the price of the underlying security will decline moderately
during the option period. Buy-and-write transactions using out-of-the-money call
options may be used when it is expected that the premiums received from selling
the call option plus the appreciation in the market price of the underlying
security up to the exercise price will be greater than the appreciation in the
price of the underlying security alone. If the call options are exercised in
such transactions, a Portfolio's maximum gain will be the premium received by it
for selling the option, adjusted upwards or downwards by the difference between
the Portfolio's purchase price of the security and the exercise price, less
related transaction costs. If the options are not exercised and the price of the
underlying security declines, the amount of such decline will be offset in part,
or entirely, by the premium received.

         The selling of put options is similar in terms of risk/return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and the Portfolio's gain will be limited to the
premium received. If the market price of the underlying security declines or
otherwise is below the exercise price, a Portfolio may elect to close the
position or retain the option until it is exercised, at which time the Portfolio
will be required to take delivery of the security at the exercise price; the
Portfolio's return will be the premium received from the put option minus the
amount by which the market price of the security is below the exercise price,
which could result in a loss. Out-of-the-money, at-the-money and in-the-money
put options may be used by a Portfolio in the same market environments that call
options are used in equivalent buy-and-write transactions.

         A Portfolio may also sell combinations of put and call options on the
same security, known as "straddles," with the same exercise price and expiration
date. By entering into a straddle, a Portfolio undertakes a simultaneous
obligation to sell and purchase the same security in the event that one of the
options is exercised. If the price of the security subsequently rises
sufficiently above the exercise price to cover the amount of the premium and
transaction costs, the call will likely be exercised and the Portfolio will be
required to sell the underlying security at a below market price. This loss may
be offset, however, in whole or in part, by the premiums received on the writing
of the call options. Conversely, if the price of the security declines by a
sufficient amount, the put will likely be exercised. Straddles will likely be
effective, therefore, only where the price of the security remains stable and
neither the call nor the put is exercised. In those instances where one of the
options is exercised, the loss on the purchase or sale of the underlying
security may exceed the amount of the premiums received.

         By selling a call option, a Portfolio limits its opportunity to profit
from any increase in the market value of the underlying security above the
exercise price of the option. By selling a put option, a Portfolio assumes the
risk that it may be required to purchase the underlying security for an exercise
price above its then current market value, resulting in a capital loss unless
the security subsequently appreciates in value. The selling of options on
securities will not be undertaken by a Portfolio solely for hedging purposes,
and could involve certain risks which are not present in the case of hedging
transactions. Moreover, even where options are sold for hedging purposes, such

                                      -11-
<PAGE>

transactions constitute only a partial hedge against declines in the value of
portfolio securities or against increases in the value of securities to be
acquired, up to the amount of the premium.

         A Portfolio may purchase options for hedging purposes or to increase
its return. Put options may be purchased to hedge against a decline in the value
of portfolio securities. If such decline occurs, the put options will permit a
Portfolio to sell the securities at the exercise price, or to close out the
options at a profit. By using put options in this way, the Portfolio will reduce
any profit it might otherwise have realized in the underlying security by the
amount of the premium paid for the put option and by transaction costs.

         A Portfolio may purchase call options to hedge against an increase in
the price of securities that the Portfolio anticipates purchasing in the future.
If such increase occurs, the call option will permit the Portfolio to purchase
the securities at the exercise price, or to close out the options at a profit.
The premium paid for the call option plus any transaction costs will reduce the
benefit, if any, realized by the Portfolio upon exercise of the option, and,
unless the price of the underlying security rises sufficiently, the option may
expire worthless to the Portfolio.

         In certain instances, a Portfolio may enter into options on U.S.
Treasury securities which provide for periodic adjustment of the strike price
and may also provide for the periodic adjustment of the premium during the term
of each such option. Like other types of options, these transactions, which may
be referred to as "reset" options or "adjustable strike" options, grant the
purchaser the right to purchase (in the case of a "call"), or sell (in the case
of a "put"), a specified type and series of U.S. Treasury security at any time
up to a stated expiration date (or, in certain instances, on such date). In
contrast to other types of options, however, the price at which the underlying
security may be purchased or sold under a "reset" option is determined at
various intervals during the term of the option, and such price fluctuates from
interval to interval based on changes in the market value of the underlying
security. As a result, the strike price of a "reset" option, at the time of
exercise, may be less advantageous to the Portfolio than if the strike price had
been fixed at the initiation of the option. In addition, the premium paid for
the purchase of the option may be determined at the termination, rather than the
initiation, of the option. If the premium is paid at termination, the Portfolio
assumes the risk that (i) the premium may be less than the premium which would
otherwise have been received at the initiation of the option because of such
factors as the volatility in yield of the underlying Treasury security over the
term of the option and adjustments made to the strike price of the option, and
(ii) the option purchaser may default on its obligation to pay the premium at
the termination of the option.

         OPTIONS ON STOCK INDICES - As noted in the Prospectus, MFS Emerging
Equities, MFS Value Equity, Scudder International Growth and T. Rowe Price
Growth Equity may purchase and sell call and put options on stock indices. A
portfolio generally may sell options on stock indices for the purpose of
increasing gross income and to protect the portfolio against declines in the
value of securities they own or increases in the value of securities to be
acquired, although a Portfolio may also purchase put or call options on stock
indices in order, respectively, to hedge its investments against a decline in
value or to attempt to reduce the risk of missing a market or industry segment
advance. A Portfolio's possible loss in either case will be limited to the
premium paid for the option, plus related transaction costs, although Scudder
International Growth may sell options on indices only to close out open
positions.

          In contrast to an option on a security, an option on a stock index
provides the holder with the right but not the obligation to make or receive a
cash settlement upon exercise of the option, rather than the right to purchase
or sell a security. The amount of this settlement is equal to (i) the amount, if
any, by which the fixed exercise price of the option exceeds (in the case of a
call) or is below (in the case of a put) the closing value of the underlying
index on the date of exercise, multiplied by (ii) a fixed "index multiplier."

         A Portfolio may sell call options on stock indices if it owns
securities whose price changes, in the opinion of the Subadviser, are expected
to be similar to those of the underlying index, or if it has an absolute and
immediate right to acquire such securities without additional cash consideration
(or for additional cash consideration held in a segregated account by its
custodian) upon conversion or exchange of other securities in its Portfolio.
When a Portfolio covers a call option on a stock index it has sold by holding
securities, such securities may not match the composition of the index and, in
that event, the Portfolio will not be fully covered and could be subject to risk
of loss in the event of adverse changes in the value of the index. A Portfolio
may also sell call options on stock indices if it


                                      -12-
<PAGE>

holds a call on the same index and in the same principal amount as the call sold
when the exercise price of the call held (a) is equal to or less than the
exercise price of the call sold or (b) is greater than the exercise price of the
call sold if the difference is maintained by the Portfolio in liquid securities
in a segregated account with its custodian. A Portfolio may sell put options on
stock indices if it maintains liquid securities with a value equal to the
exercise price in a segregated account with its custodian, or by holding a put
on the same stock index and in the same principal amount as the put sold when
the exercise price of the put is equal to or greater than the exercise price of
the put sold if the difference is maintained by the Portfolio in liquid
securities in a segregated account with its custodian. Put and call options on
stock indices may also be covered in such other manner as may be in accordance
with the rules of the exchange on which, or the counterparty with which, the
option is traded and applicable laws and regulations.

         A Portfolio will receive a premium from selling a put or call option,
which increases the Portfolio's gross income in the event the option expires
unexercised or is closed out at a profit. If the value of an index on which a
Portfolio has sold a call option falls or remains the same, the Portfolio will
realize a profit in the form of the premium received (less transaction costs)
that could offset all or a portion of any decline in the value of the securities
it owns. If the value of the index rises, however, the Portfolio will realize a
loss in its call option position, which will reduce the benefit of any
unrealized appreciation in the Portfolio's stock investments. By selling a put
option, the Portfolio assumes the risk of a decline in the index. To the extent
that the price changes of securities owned by the Portfolio correlate with
changes in the value of the index, selling covered put options on indices will
increase the Portfolio's losses in the event of a market decline, although such
losses will be offset in part by the premium received for selling the option.

         A Portfolio may also purchase put options on stock indices to hedge its
investments against a decline in value. By purchasing a put option on a stock
index, the Portfolio will seek to offset a decline in the value of securities it
owns through appreciation of the put option. If the value of the Portfolio's
investments does not decline as anticipated, or if the value of the option does
not increase, the Portfolio's loss will be limited to the premium paid for the
option plus related transaction costs. The success of this strategy will largely
depend on the accuracy of the correlation between the changes in value of the
index and the changes in value of the Portfolio's security holdings.

         The purchase of call options on stock indices may be used by a
Portfolio to attempt to reduce the risk of missing a broad market advance, or an
advance in an industry or market segment at a time when the Portfolio holds
uninvested cash or short-term debt securities awaiting investment. When
purchasing call options for this purpose, the Portfolio will also bear the risk
of losing all or a portion of the premium paid if the value of the index does
not rise. The purchase of call options on stock indices when the Portfolio is
substantially fully invested is a form of leverage, up to the amount of the
premium and related transaction costs, and involves risks of loss and of
increased volatility similar to those involved in purchasing calls on securities
the Portfolio owns.

         The index underlying a stock index option may be a "broad-based" index,
such as the Standard & Poor's 500 Index or the New York Stock Exchange Composite
Index, the changes in value of which ordinarily will reflect movements in the
stock market in general. In contrast, certain options may be based on narrower
market indices, such as the Standard & Poor's 100 Index, or on indices of
securities of particular industry groups, such as those of oil and gas or
technology companies. A stock index assigns relative values to the stocks
included in the index and the index fluctuates with changes in the market values
of the stocks so included. The composition of the index is changed periodically.

         YIELD CURVE OPTIONS - MFS Value Equity may also enter into options on
the "spread," or yield differential, between two fixed income securities, in
transactions referred to as "yield curve" options. In contrast to other types of
options, a yield curve option is based on the difference between the yields of
designated securities, rather than the prices of the individual securities, and
is settled through cash payments. Accordingly, a yield curve option is
profitable to the holder if this differential widens (in the case of a call) or
narrows (in the case of a put), regardless of whether the yields of the
underlying securities increase or decrease.

         Yield curve options may be used for the same purposes as other options
on securities. Specifically, the Portfolio may purchase or sell such options for
hedging purposes. For example, the Portfolio may purchase a call

                                      -13-
<PAGE>

option on the yield spread between two securities, if it owns one of the
securities and anticipates purchasing the other security and wants to hedge
against an adverse change in the yield spread between the two securities. The
Portfolio may also purchase or sell yield curve options for other than hedging
purposes (i.e., in an effort to increase its current income) if, in the judgment
of the Subadviser, the Portfolio will be able to profit from movements in the
spread between the yields of the underlying securities. The trading of yield
curve options is subject to all of the risks associated with the trading of
other types of options. In addition, however, such options present risk of loss
even if the yield of one of the underlying securities remains constant, if the
spread moves in a direction or to an extent which was not anticipated. Yield
curve options will be sold by the Portfolio only if the Portfolio holds another
call (or put) option on the spread between the same two securities and maintains
in a segregated account with its custodian liquid securities sufficient to cover
the Portfolio's net liability under the two options. Therefore, the Portfolio's
liability for such a covered option is generally limited to the difference
between the amount of the Portfolio's liability under the option sold by the
Portfolio less the value of the option held by the Portfolio. Yield curve
options may also be covered in such other manner as may be in accordance with
the requirements of the counterparty with which the option is traded and
applicable laws and regulations. Yield curve options are traded over-the-counter
and because they have been recently introduced, established trading markets for
these securities have not yet developed.

               FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS

         MFS Emerging Equities, MFS Value Equity, Scudder International Growth
and T. Rowe Price Growth Equity may engage in the following types of
transactions:

         FUTURES CONTRACTS - As noted in the Prospectus, the Portfolios may
enter into stock index futures contracts, including futures contracts related to
stock indices and interest rates among others. Such investment strategies will
be used for hedging purposes and for non-hedging purposes, subject to applicable
law. Purchases or sales of stock index futures contracts for hedging purposes
may be used to attempt to protect a Portfolio's current or intended stock
investments from broad fluctuations in stock prices, to act as a substitute for
an underlying investment, or to enhance yield ("speculation").

         A futures contract is a bilateral agreement providing for the purchase
and sale of a specified type and amount of a financial instrument or for the
making and acceptance of a cash settlement, at a stated time in the future for a
fixed price. By its terms, a futures contract provides for a specified
settlement date on which, in the case of stock index futures contracts, the
difference between the price at which the contract was entered into and the
contract's closing value is settled between the purchaser and seller in cash.
Futures contracts differ from options in that they are bilateral agreements,
with both the purchaser and the seller equally obligated to complete the
transaction. Futures contracts call for settlement only on the date and cannot
be "exercised" at any other time during their term.

         The purchase or sale of a futures contract differs from the purchase or
sale of a security or the purchase of an option in that no purchase price is
paid or received. Instead, an amount of cash or cash equivalents, which varies
but may be as low as 5% or less of the value of the contract, must be deposited
with the broker as "initial margin." Subsequent payments to and from the broker,
referred to as "variation margin," are made on a daily basis as the value of the
index or instrument underlying the futures contract fluctuates, making positions
in the futures contract more or less valuable - a process known as "marking to
the market."

         Purchases or sales of stock index futures contracts are used to attempt
to protect the Portfolio's current or intended stock investments from broad
fluctuations in stock prices. For example, a Portfolio may sell stock index
futures contracts in anticipation of or during a market decline to attempt to
offset the decrease in market value of the Portfolio's portfolio securities that
might otherwise result if such decline occurs, because the loss in value of
portfolio securities may be offset, in whole or part, by gains on the futures
position. When a Portfolio is not fully invested in the securities market and
anticipates a significant market advance, it may purchase stock index futures
contracts in order to gain rapid market exposure that may, in part or entirely,
offset increases in the cost of securities that the Portfolio intends to
purchase. As such purchases are made, the corresponding position in stock index
futures contracts will be closed out. In a substantial majority of these
transactions, the Portfolio will purchase such securities upon termination of
the futures position, but under usual market conditions, a long futures position
may be terminated without a related purchase of securities.

                                      -14-
<PAGE>

         When a Portfolio buys or sells a futures contract, unless it already
owns an offsetting position, it will maintain in a segregated account held by
the custodian, liquid securities having an aggregate value at least equal to the
full "notional" value of the futures contract, thereby insuring that the
leveraging effect of such futures contract is minimized, in accordance with
regulatory requirements.

         OPTIONS ON FUTURES CONTRACTS - As noted in the Prospectus, the
Portfolios may purchase and sell options to buy or sell futures contracts in
which they may invest ("options on futures contracts"). Such investment
strategies will be used for hedging purposes and for non-hedging purposes,
subject to applicable law, except that Scudder International Growth may utilize
such strategies only for hedging purposes. Put and call options on futures
contracts may be traded by a Portfolio in order to protect against declines in
the values of portfolio securities or against increases in the cost of
securities to be acquired, to act as a substitute for an underlying investment,
or to enhance yield.

         An option on a futures contract provides the holder with the right to
enter into a "long" position in the underlying futures contract, in the case of
a call option, or a "short" position in the underlying futures contract, in the
case of a put option, at a fixed exercise price up to a stated expiration date
or, in the case of certain options, on such date. Upon exercise of the option by
the holder, the contract market clearinghouse establishes a corresponding short
position for the writer of the option, in the case of a call option, or a
corresponding long position in the case of a put option. In the event that an
option is exercised, the parties will be subject to all the risks associated
with the trading of futures contracts. In addition, the seller of an option on a
futures contract, unlike the holder, is subject to initial and variation margin
requirements on the option position.

         A position in an option on a futures contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.

         Options on futures contracts that are sold or purchased by a Portfolio
on U.S. exchanges are traded on the same contract market as the underlying
futures contract, and, like futures contracts, are subject to regulation by the
Commodities Futures Trading Commission ("CFTC") and the performance guarantee of
the exchange clearinghouse. In addition, options on futures contracts may be
traded on foreign exchanges.

         A Portfolio may sell call options on futures contracts only if it also
(a) purchases the underlying futures contract, (b) owns the instrument, or
instruments included in the index, underlying the futures contract, or (c) holds
a call on the same futures contract and in the same principal amount as the call
sold when the exercise price of the call held (i) is equal to or less than the
exercise price of the call sold or (ii) is greater than the exercise price of
the call sold if the difference is maintained by the Portfolio in liquid
securities in a segregated account with its custodian. A Portfolio may sell put
options on futures contracts only if it also (A) sells the underlying futures
contract, (B) segregates liquid securities in an amount equal to the value of
the security or index underlying the futures contract, or (C) holds a put on the
same futures contract and in the same principal amount as the put sold when the
exercise price of the put held is equal to or greater than the exercise price of
the put written or when the exercise price of the put held is less than the
exercise price of the put sold if the difference is maintained by the Portfolio
in liquid securities in a segregated account with it its custodian. Upon the
exercise of a call option on a futures contract sold by a Portfolio, the
Portfolio will be required to sell the underlying futures contract which, if the
Portfolio has covered its obligation through the purchase of such contract, will
serve to liquidate its futures position. Similarly, where a put option on a
futures contract sold by the Portfolio is exercised, the Portfolio will be
required to purchase the underlying futures contract which, if the Portfolio has
covered its obligation through the sale of such contract, will close out its
futures position.

         The selling of a call option on a futures contract for hedging purposes
constitutes a partial hedge against declining prices of the securities or other
instruments required to be delivered under the terms of the futures contract. If
the futures price at expiration of the option is below the exercise price, the
Portfolio will retain the full amount of

                                      -15-
<PAGE>


the option premium, less related transaction costs, which provides a partial
hedge against any decline that may have occurred in the Portfolio's holdings.
The selling of a put option on a futures contract constitutes a partial hedge
against increasing prices of the securities or other instruments required to be
delivered under the terms of the futures contract. If the futures price at
expiration of the option is higher than the exercise price, the Portfolio will
retain the full amount of the option premium, which provides a partial hedge
against any increase in the price of securities the Portfolio intends to
purchase. If a put or call option the Portfolio has sold is exercised, the
Portfolio will incur a loss which will be reduced by the amount of the premium
it receives. Depending on the degree of correlation between changes in the value
of its portfolio securities and the changes in the value of its futures
positions, the Portfolio's losses from existing options on futures contracts may
to some extent be reduced or increased by changes in the value of portfolio
securities.

         A Portfolio may purchase options on futures contracts for hedging
purposes instead of purchasing or selling the underlying futures contracts. For
example, where a decrease in the value of portfolio securities is anticipated as
a result of a projected market-wide decline or changes in interest or exchange
rates, the Portfolio could, in lieu of selling futures contracts, purchase put
options thereon. In the event that such decrease occurs, it may be offset, in
whole or in part, by a profit on the option. Conversely, where it is projected
that the value of securities to be acquired by the Portfolio will increase prior
to acquisition, due to a market advance or changes in interest or exchange
rates, the Portfolio could purchase call options on futures contracts, rather
than purchasing the underlying futures contracts.

         FORWARD CONTRACTS ON FOREIGN CURRENCY - As noted in the Prospectus,
the Portfolios may enter into forward foreign currency exchange contracts for
hedging and non-hedging purposes. Forward contracts may be used for hedging to
attempt to minimize the risk to a Portfolio from adverse changes in the
relationship between the U.S. dollar and foreign currencies. Each Portfolio
intends to enter into forward contracts for hedging purposes. In particular, a
forward contract to sell a currency may be entered into where the Portfolio
seeks to protect against an anticipated increase in the rate for a specific
currency which could reduce the dollar value of portfolio securities denominated
in such currency. Conversely, a Portfolio may enter into a forward contract to
purchase a given currency to protect against a projected increase in the dollar
value of securities denominated in such currency which the Portfolio intends to
acquire. The Portfolio also may enter into a forward contract in order to assure
itself of a predetermined exchange rate in connection with a security
denominated in a foreign currency. In addition, the Portfolio may enter into
forward contracts for "cross hedging" purposes; e.g., the purchase or sale of a
forward contract on one type of currency as a hedge against adverse fluctuations
in the value of a second type of currency.

         If a hedging transaction in forward contracts is successful, the
decline in the value of portfolio securities or other assets or the increase in
the cost of securities or other assets to be acquired may be offset, at least in
part, by profits on the forward contract. Nevertheless, by entering into such
forward contracts, a Portfolio may be required to forgo all or a portion of the
benefits which otherwise could have been obtained from favorable movements in
exchange rates. The Portfolio will usually seek to close out positions in such
contracts by entering into offsetting transactions, which will serve to fix the
Portfolio's profit or loss based upon the value of the contracts at the time the
offsetting transaction is executed.

         A Portfolio will also enter into transactions in forward contracts for
other than hedging purposes, which present greater profit potential but also
involve increased risk. For example, a Portfolio may purchase a given foreign
currency through a forward contract if, in the judgment of the Subadviser, the
value of such currency is expected to rise relative to the U.S. dollar.
Conversely, the Portfolio may sell the currency through a forward contract if
the Subadviser believes that its value will decline relative to the dollar.

         A Portfolio will profit if the anticipated movements in foreign
currency exchange rates occur which will increase its gross income. Where
exchange rates do not move in the direction or to the extent anticipated,
however, the Portfolio may sustain losses which will reduce its gross income.
Such transactions, therefore, could be considered speculative and could involve
significant risk of loss.

         Each Portfolio has established procedures consistent with statements by
the SEC and its staff regarding the use of forward contracts by registered
investment companies, which require the use of segregated assets or "cover" in

                                      -16-
<PAGE>


connection with the purchase and sale of such contracts. In those instances in
which the Portfolio satisfies this requirement through segregation of assets, it
will maintain, in a segregated account cash, cash equivalents or other liquid
securities, which will be marked to market on a daily basis, in an amount equal
to the value of its commitments under forward contracts. While these contracts
are not presently regulated by the CFTC, the CFTC may in the future assert
authority to regulate forward contracts. In such event the Portfolio's ability
to utilize forward contracts in the manner set forth above may be restricted.

         A Portfolio may hold foreign currency received in connection with
investments in foreign securities when, in the judgment of the Subadviser, it
would be beneficial to convert such currency into U.S. dollars at a later date,
based on anticipated changes in the relevant exchange rate. A Portfolio may also
hold foreign currency in anticipation of purchasing foreign securities.

         OPTIONS ON FOREIGN CURRENCIES - As noted in the Prospectus, the
Portfolios may purchase and sell options on foreign currencies for hedging
purposes in a manner similar to that in which forward contracts will be
utilized. For example, a decline in the dollar value of a foreign currency in
which portfolio securities are denominated will reduce the dollar value of such
securities, even if their value in the foreign currency remains constant. In
order to protect against such diminutions in the value of portfolio securities,
the Portfolio may purchase put options on the foreign currency. If the value of
the currency does decline, the Portfolio will have the right to sell such
currency for a fixed amount in dollars and will thereby offset, in whole or in
part, the adverse effect on its portfolio which otherwise would have resulted.

         Conversely, where a rise in the dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing the
cost of such securities, the Portfolio may purchase call options thereon. The
purchase of such options could offset, at least partially, the effects of the
adverse movements in exchange rates. As in the case of other types of options,
however, the benefit to the Portfolio deriving from purchases of foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, where currency exchange rates do not move in the
direction or to the extent anticipated, the Portfolio could sustain losses on
transactions in foreign currency options which would require it to forgo a
portion or all of the benefits of advantageous changes in such rates.

         A Portfolio may sell options on foreign currencies for the same types
of hedging purposes. For example, where the Portfolio anticipates a decline in
the dollar value of foreign-denominated securities due to adverse fluctuations
in exchange rates it could, instead of purchasing a put option, sell a call
option on the relevant currency. If the expected decline occurs, the option will
most likely not be exercised, and the diminution in value of portfolio
securities will be offset by the amount of the premium received.

         As in the case of other types of options, however, the selling of an
option on foreign currency will constitute only a partial hedge, up to the
amount of the premium received, and the Portfolio could be required to purchase
or sell foreign currencies at disadvantageous exchange rates, thereby incurring
losses. The purchase of an option on foreign currency may constitute an
effective hedge against fluctuations in exchange rates although, in the event of
rate movements adverse to the Portfolio's position, it may forfeit the entire
amount of the premium plus related transaction costs. As in the case of forward
contracts, certain options on foreign currencies are traded over-the-counter and
involve risks which may not be present in the case of exchange-traded
instruments.

         Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the dollar cost of securities to be acquired, the
Portfolio could sell a put option on the relevant currency which, if rates move
in the manner projected, will expire unexercised and allow the Portfolio to
hedge such increased cost up to the amount of the premium. Foreign currency
options sold by the Portfolio will generally be covered in a manner similar to
the covering of other types of options. As in the case of other types of
options, however, the selling of a foreign currency option will constitute only
a partial hedge up to the amount of the premium, and only if rates move in the
expected direction. If this does not occur, the option may be exercised and the
Portfolio would be required to purchase or sell the underlying currency at a
loss which may not be offset by the amount of the premium. Through the selling
of options on foreign currencies, the Portfolio also may be required to forgo
all or a portion of the benefits which might otherwise have been obtained from
favorable movements in exchange rates.

                                      -17-
<PAGE>

  RISKS ASSOCIATED WITH INVESTING IN OPTIONS, FUTURES AND FORWARD TRANSACTIONS

         RISK OF IMPERFECT CORRELATION OF HEDGING INSTRUMENTS WITH A PORTFOLIO'S
SECURITIES - A Portfolio's abilities effectively to hedge all or a portion of
its portfolio through transactions in options, futures contracts, options on
futures contracts, forward contracts and options on foreign currencies depend on
the degree to which price movements in the underlying index or instrument
correlate with price movements in the relevant portion of the Portfolio's
securities. In the case of futures and options based on an index, the Portfolio
will not duplicate the components of the index, and in the case of futures and
options on fixed income securities, the portfolio securities that are being
hedged may not be the same type of obligation underlying such contract. The use
of forward contracts for cross-hedging purposes may involve greater correlation
risks. As a result, the correlation probably will not be exact. Consequently,
the Portfolio bears the risk that the price of the portfolio securities being
hedged will not move in the same amount or direction as the underlying index or
obligation.

         For example, if a Portfolio purchases a put option on an index and the
index decreases less than the value of the hedged securities, the Portfolio
would experience a loss that is not completely offset by the put option. It is
also possible that there may be a negative correlation between the index or
obligation underlying an option or futures contract in which the Portfolio has a
position and the portfolio securities the Portfolio is attempting to hedge,
which could result in a loss on both the portfolio and the hedging instrument.
In addition, a Portfolio may enter into transactions in forward contracts or
options on foreign currencies in order to hedge against exposure arising from
the currencies underlying such forwards. In such instances, the Portfolio will
be subject to the additional risk of imperfect correlation between changes in
the value of the currencies underlying such forwards or options and changes in
the value of the currencies being hedged.

         It should be noted that stock index futures contracts or options based
upon a narrower index of securities, such as those of a particular industry
group, may present greater risk than options or futures based on a broad market
index. This is due to the fact that a narrower index is more susceptible to
rapid and extreme fluctuations as a result of changes in the value of a small
number of securities. Nevertheless, where a Portfolio enters into transactions
in options or futures on narrow-based indices for hedging purposes, movements in
the value of the index should, if the hedge is successful, correlate closely
with the portion of the Portfolio's portfolio or the intended acquisitions being
hedged.

         The trading of futures contracts, options and forward contracts for
hedging purposes entails the additional risk of imperfect correlation between
movements in the futures or option price and the price of the underlying index
or obligation. The anticipated spread between the prices may be distorted due to
the differences in the nature of the markets, such as differences in margin
requirements, the liquidity of such markets and the participation of speculators
in the options, futures and forward markets. In this regard, trading by
speculators in options, futures and forward contracts has in the past
occasionally resulted in market distortions, which may be difficult or
impossible to predict, particularly near the expiration of contracts.

         The trading of options on futures contracts also entails the risk that
changes in the value of the underlying futures contract will not be fully
reflected in the value of the option. The risk of imperfect correlation,
however, generally tends to diminish as the maturity date of the futures
contract or expiration date of the option approaches.

         Further, with respect to options on securities, options on stock
indices, options on currencies and options on futures contracts, the Portfolio
is subject to the risk of market movements between the time that the option is
exercised and the time of performance thereunder. This could increase the extent
of any loss suffered by the Portfolio in connection with such transactions.

         In selling a covered call option on a security, index or futures
contract, a Portfolio also incurs the risk that changes in the value of the
instruments used to cover the position will not correlate closely with changes
in the value of the option or underlying index or instrument. For example, where
the Portfolio sells a call option on a stock index and segregates securities,
such securities may not match the composition of the index, and the

                                      -18-
<PAGE>

Portfolio may not be fully covered. As a result, the Portfolio could be subject
to risk of loss in the event of adverse market movements.

         The selling of options on securities, options on stock indices or
options on futures contracts constitutes only a partial hedge against
fluctuations in value of a Portfolio's portfolio. When a Portfolio sells an
option, it will receive premium income in return for the holder's purchase of
the right to acquire or dispose of the underlying obligation. In the event that
the price of such obligation does not rise sufficiently above the exercise price
of the option, in the case of a call, or fall below the exercise price, in the
case of a put, the option will not be exercised and the Portfolio will retain
the amount of the premium, less related transaction costs, which will constitute
a partial hedge against any decline that may have occurred in the Portfolio's
portfolio holdings or any increase in the cost of the instruments to be
acquired.

         When the price of the underlying obligation moves sufficiently in favor
of the holder to warrant exercise of the option, however, and the option is
exercised, the Portfolio will incur a loss which may only be partially offset by
the amount of the premium it received. Moreover, by selling an option, the
Portfolio may be required to forgo the benefits which might otherwise have been
obtained from an increase in the value of portfolio securities or other assets
or a decline in the value of securities or assets to be acquired.

         In the event of the occurrence of any of the foregoing adverse market
events, the Portfolio's overall return may be lower than if it had not engaged
in the hedging transactions.

         It should also be noted that a Portfolio may enter into transactions in
options (except for options on foreign currencies), futures contracts, options
on futures contracts and forward contracts not only for hedging purposes, but
also for non-hedging purposes intended to increase portfolio returns.
Non-hedging transactions in such investments involve greater risks and may
result in losses which may not be offset by increases in the value of portfolio
securities or declines in the cost of securities to be acquired. A Portfolio
will only sell covered options, such that liquid securities with an aggregate
value equal to an amount necessary to satisfy an option exercise will be
segregated at all times, unless the option is covered in such other manner as
may be in accordance with the rules of the exchange on which the option is
traded and applicable laws and regulations. Nevertheless, the method of covering
an option employed by the Portfolio may not fully protect it against risk of
loss and, in any event, the Portfolio could suffer losses on the option position
which might not be offset by corresponding portfolio gains.

         A Portfolio also may enter into transactions in futures contracts,
options on futures contracts and forward contracts for other than hedging
purposes, which could expose the Portfolio to significant risk of loss if
foreign currency exchange rates do not move in the direction or to the extent
anticipated. In this regard, the foreign currency may be extremely volatile from
time to time, as discussed in the Prospectus and in this Statement, and the use
of such transactions for non-hedging purposes could therefore involve
significant risk of loss.

         With respect to entering into straddles on securities, a Portfolio
incurs the risk that the price of the underlying security will not remain
stable, that one of the options sold will be exercised and that the resulting
loss will not be offset by the amount of the premiums received. Such
transactions, therefore, create an opportunity for increased return by providing
the Portfolio with two simultaneous premiums on the same security, but involve
additional risk, since the Portfolio may have an option exercised against it
regardless of whether the price of the security increases or decreases.

         RISK OF A POTENTIAL LACK OF A LIQUID SECONDARY MARKET - Prior to
exercise or expiration, a futures or option position can only be terminated by
entering into a closing purchase or sale transaction. This requires a secondary
market for such instruments on the exchange on which the initial transaction was
entered into. While a Portfolio will enter into options or futures positions
only if there appears to be a liquid secondary market therefor, there can be no
assurance that such a market will exist for any particular contracts at any
specific time. In that event, it may not be possible to close out a position
held by the Portfolio, and the Portfolio could be required to purchase or sell
the instrument underlying an option, make or receive a cash settlement or meet
ongoing variation margin requirements. Under such circumstances, if a Portfolio
has insufficient cash available to meet margin requirements, it will be
necessary to liquidate portfolio securities or other assets at a time when it is

                                      -19-
<PAGE>

disadvantageous to do so. The inability to close out options and futures
positions, therefore, could have an adverse impact on the Portfolio's ability
effectively to hedge its portfolio, and could result in trading losses.

         The liquidity of a secondary market in the futures contract or option
thereon may be adversely affected by "daily price fluctuation limits,"
established by exchanges, which limit the amount of fluctuation in the price of
a contract during a single trading day. Once the daily limit has been reached in
the contract, no trades may be entered into at a price beyond the limit, thus
preventing the liquidation of open futures or option positions and requiring
traders to make additional margin deposits. Prices have in the past moved the
daily limit on a number of consecutive trading days.

         The trading of futures contracts and options is also subject to the
risk of trading halts, suspensions, exchange or clearinghouse equipment
failures, government intervention, insolvency of a brokerage firm or
clearinghouse or other disruptions of normal trading activity, which could at
times make it difficult or impossible to liquidate existing positions or to
recover excess variation margin payments.

         MARGIN - Because of low initial margin deposits made upon the opening
of a futures or forward position and the selling of an option, such transactions
involve substantial leverage. As a result, relatively small movements in the
price of the contract can result in substantial unrealized gains or losses.
Where a Portfolio enters into such transactions for hedging purposes, any losses
incurred in connection therewith should, if the hedging strategy is successful,
be offset, in whole or in part, by increases in the value of securities or other
assets held by the Portfolio or decreases in the prices of securities or other
assets the Portfolio intends to acquire. Where a Portfolio enters into such
transactions for other than hedging purposes, the margin requirements associated
with such transactions could expose the Portfolio to greater risk.

          TRADING AND POSITION LIMITS - The exchanges on which futures and
options are traded may impose limitations governing the maximum number of
positions on the same side of the market and involving the same underlying
instrument which may be held by a single investor, whether acting alone or in
concert with others (regardless of whether such contracts are held on the same
or different exchanges or held or written in one or more accounts or through one
or more brokers). Further, the CFTC and the various contract markets have
established limits referred to as "speculative position limits" on the maximum
net long or net short position which any person may hold or control in a
particular futures or option contract. An exchange may order the liquidation of
positions found to be in violation of these limits and it may impose other
sanctions or restrictions. The Subadvisers do not believe that these trading and
position limits will have any adverse impact on the strategies for hedging the
portfolio of the Portfolios.

         RISKS OF OPTIONS ON FUTURES CONTRACTS - The amount of risk a
Portfolio assumes when it purchases an option on a futures contract is the
premium paid for the option, plus related transaction costs. In order to profit
from an option purchased, however, it may be necessary to exercise the option
and to liquidate the underlying futures contract subject to the risks of the
availability of a liquid offset market described herein. The seller of an option
on a futures contract is subject to the risks of commodity futures trading,
including the requirement of initial and variation margin payments, as well as
the additional risk that movements in the price of the option may not correlate
with movements in the price underlying security, index, currency or futures
contracts.

         RISKS OF TRANSACTIONS RELATED TO FOREIGN CURRENCIES AND TRANSACTIONS
NOT CONDUCTED ON U.S. EXCHANGES - Transactions in forward contracts on foreign
currencies, as well as futures and options on foreign currencies and
transactions executed on foreign exchanges, are subject to all of the
correlation, liquidity and other risks outlined above. In addition, however,
such transactions are subject to the risk of governmental actions affecting
trading in or the prices of currencies underlying such contracts, which could
restrict or eliminate trading and could have a substantial adverse effect on the
value of positions held by a Portfolio. Further, the value of such positions
could be adversely affected by a number of other complex political and economic
factors applicable to the countries issuing the underlying currencies.

         Further, unlike trading in most other types of instruments, there is no
systematic reporting of last sale information with respect to the foreign
currencies underlying contracts thereon. As a result, the available information

                                      -20-
<PAGE>

on which trading systems will be based may not be as complete as the comparable
data on which the Portfolio makes investment and trading decisions in connection
with other transactions. Moreover, because the foreign currency market is a
global, 24-hour market, events could occur in that market which will not be
reflected in the forward, futures or options markets until the following day,
thereby making it more difficult for the Portfolio to respond to such events in
a timely manner.

         Settlements of exercises of over-the-counter forward contracts or
foreign currency options generally must occur within the country issuing the
underlying currency, which in turn requires traders to accept or make delivery
of such currencies in conformity with any U.S. or foreign restrictions and
regulations regarding the maintenance of foreign banking relationships, fees,
taxes or other charges.

         Unlike transactions entered into by a Portfolio in futures contracts
and exchange-traded options, options on foreign currencies, forward contracts
and over-the-counter options on securities are not traded on contract markets
regulated by the CFTC or (with the exception of certain foreign currency
options) the SEC. To the contrary, such instruments are traded through financial
institutions acting as market-makers, although foreign currency options are also
traded on certain national securities exchanges, such as the Philadelphia Stock
Exchange and the Chicago Board Options Exchange, subject to SEC regulation. In
an over-the-counter trading environment, many of the protections afforded to
exchange participants will not be available. For example, there are no daily
price fluctuation limits, and adverse market movements could therefore continue
to an unlimited extent over a period of time. Although the purchaser of an
option cannot lose more than the amount of the premium plus related transaction
costs, this entire amount could be lost. Moreover, the option seller and a
trader of forward contracts could lose amounts substantially in excess of their
initial investments, due to the margin and collateral requirements associated
with such positions.

         In addition, over-the-counter transactions can only be entered into
with a financial institution willing to take the opposite side, as principal, of
a Portfolio's position unless the institution acts as broker and is able to find
another counterparty willing to enter into the transaction with the Portfolio.
Where no such counterparty is available, it will not be possible to enter into a
desired transaction. There also may be no liquid secondary market in the trading
of over-the-counter contracts, and the Portfolio could be required to retain
options purchased or sold, or forward contracts entered into, until exercise,
expiration or maturity. This in turn could limit the Portfolio's ability to
profit from open positions or to reduce losses experienced, and could result in
greater loses.

         Further, over-the-counter transactions are not subject to the guarantee
of an exchange clearinghouse, and the Portfolio will therefore be subject to the
risk of default by, or the bankruptcy of, the financial institution serving as
its counterparty. One or more of such institutions also may decide to
discontinue their role as market-makers in a particular currency or security,
thereby restricting the Portfolio's ability to enter into desired hedging
transactions. The Portfolio will enter into an over-the-counter transaction only
with parties whose creditworthiness has been reviewed and found satisfactory by
the Subadviser.

         Options on securities, options on stock indexes, futures contracts,
options on futures contracts and options on foreign currencies may be traded on
exchanges located in foreign countries. Such transactions may not be conducted
in the same manner as those entered into on U.S. exchanges, and may be subject
to different margin, exercise, settlement or expiration procedures. As a result,
many of the risks of over-the-counter trading may be present in connection with
such transactions.

         Options on foreign currencies traded on national securities exchanges
are within the jurisdiction of the SEC, as are other securities traded on such
exchanges. As a result, many of the protections provided to traders on organized
exchanges will be available with respect to such transactions. In particular,
all foreign currency option positions entered into on a national securities
exchange are cleared and guaranteed by the Options Clearing Corporation (the
"OCC"), thereby reducing the risk of counterparty default. Further, a liquid
secondary market in options traded on a national securities exchange may be more
readily available than in the over-the-counter market, potentially permitting
the Portfolio to liquidate open positions at a profit prior to exercise or
expiration, or to limit losses in the event of adverse market movements.

                                      -21-
<PAGE>

         The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of the availability of a liquid secondary
market described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities and the effects of other
political and economic events. In addition, exchange-traded options on foreign
currencies involve certain risks not presented by the over-the-counter market.
For example, exercise and settlement of such options must be made exclusively
through the OCC, which has established banking relationships in applicable
foreign countries for this purpose. As a result, the OCC may, if it determines
that foreign governmental restrictions or taxes would prevent the orderly
settlement of foreign currency option exercises, or would result in undue
burdens on the OCC or its clearing member, impose special procedures on exercise
and settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions on exercise.

         POLICIES ON THE USE OF FUTURES AND OPTIONS ON FUTURES CONTRACTS - In
order to assure that a Portfolio will not be deemed to be a "commodity pool" for
purposes of the Commodity Exchange Act, regulations of the CFTC require that a
Portfolio enter into transactions in futures contracts and options on futures
contracts only (i) for bona fide hedging purposes (as defined in CFTC
regulations), or (ii) for non-hedging purposes, provided that the aggregate
initial margin and premiums on such non-hedging positions does not exceed 5% of
the liquidation value of the Portfolio's assets.

         The staff of the SEC has taken the position that over-the-counter
options and assets used to cover sold over-the-counter options are illiquid and,
therefore, together with other illiquid securities held by a Portfolio, cannot
exceed 15% of a Portfolio's assets (the "SEC illiquidity ceiling"). Although the
Subadvisers may disagree with this position, each Subadviser intends to limit
the Portfolios' selling of over-the-counter options in accordance with the
following procedure. Except as provided below, MFS Emerging Growth and MFS Value
Equity intend to sell over-the-counter options only with primary U.S. Government
securities dealers recognized as such by the Federal Reserve Bank of New York.
Also, the contracts a Portfolio has in place with such primary dealers provide
that the Portfolio has the absolute right to repurchase an option it sells at a
maximum price to be calculated by a pre-determined formula. Each Portfolio will
treat all or a portion of the formula as illiquid for purposes of the SEC
illiquidity ceiling test. Each Portfolio may also sell over-the-counter options
with non-primary dealers, including foreign dealers (where applicable), and will
treat the assets used to cover these options as illiquid for purposes of such
SEC illiquidity ceiling test.

         The policies described above are not fundamental and may be changed
without shareholder approval, as may each Portfolio's investment objective.

                       DIRECTORS AND OFFICERS OF THE FUND

         The investments and administration of the Fund are under the direction
of the Board of Directors. The Directors and executive officers of the Fund and
their principal occupations for the past five years are listed below. Persons
who have consented to being referenced in this Statement of Additional
Information as persons about to become Directors, are indicated by an asterisk
(*) below. Some Directors and officers hold similar positions with other
investment companies in the same Fund Complex managed by Aetna as the investment
adviser. The Fund Complex presently consists of Aetna Series Fund, Inc., Aetna
Variable Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna Investment
Advisers Fund, Inc., Aetna GET Fund (Series B and Series C), Aetna Generation
Portfolios, Inc., Aetna Variable Portfolios, Inc. and Portfolio Partners, Inc.

<TABLE>
<CAPTION>
Name, Address and Age              Position(s) Held with Registrant        Principal Occupation During Past Five
- ---------------------              --------------------------------        Years (and Positions held with
                                                                           Affiliated Persons or Principal
                                                                           Underwriter of the Registrant)
                                                                           ------------------------------
<S>                                <C>                                     <C>
Daniel P. Kearney*                 Director and President                  Director, President, and Chief Executive
151 Farmington Avenue              (Interested person, as defined          Officer, Aetna Life Insurance and Annuity
Hartford, Connecticut              by the 1940 Act.)                       Company, December 1993 to present; Executive
Age 57                                                                     Vice President, Aetna Inc. (formerly Aetna
                                                                           Life and Casualty Company), December 1993 to
                                                                           present; Group Executive, Aetna Inc.
                                                                           (formerly Aetna Life and Casualty Company),
                                                                           1991 to 1993; Director, Aetna Investment
                                                                           Services, Inc., November 1994 to present;
                                                                           Director, Aetna Insurance Company of America,
                                                                           May 1994 to present.

Peter C. Aldrich*                  Director                                Chairman and Chief Executive Officer, AEW
151 Coolidge Hill                                                          International, January 1997 to present;
Cambridge, Massachusetts                                                   Co-Chairman, AEW Capital Management, March 1981
Age 53                                                                     to present.

Edward Lowenthal*                  Director                                President, Wellsford Real Properties, Inc.,
201 Hamilton Road                                                          May 1997 to present; President, Wellsford
Ridgewood, New Jersey                                                      Residential Property Trust, August 1986 to
Age 52                                                                     May 1997.

Martin T. Conroy                   Vice President, Chief Financial         Assistant Treasurer, Aetna Life
151 Farmington Avenue              Officer and Treasurer                   Insurance and Annuity Company, October
Hartford, Connecticut                                                      1991 to present.
Age 57

                                      -22-
<PAGE>

Laurie M. LeBlanc, CFP             Vice President                          Vice President, Aetna Retirement
151 Farmington Avenue                                                      Services, Fund Strategy and Management,
Hartford, Connecticut                                                      December 1995 to present; Vice
Age 45                                                                     President, Connecticut Mutual Financial
                                                                           Services, Investment Products, July
                                                                           1994 to December 1995; Vice President,
                                                                           CIGNA Investments, Inc. and CIGNA
                                                                           International Investment Advisers,
                                                                           Ltd., October 1988 to July 1994.

Amy R. Doberman                    Secretary                               Counsel, Aetna Life Insurance and
151 Farmington Avenue                                                      Annuity Company, December 1996 to
Hartford, Connecticut                                                      present; Assistant Chief Counsel,
Age 35                                                                     Division of Investment Management, Securities
                                                                           and Exchange Commission, January 1995
                                                                           to November 1996; Senior Special
                                                                           Counsel, Securities and Exchange
                                                                           Commission, September 1994 to January
                                                                           1995; Special Counsel, Securities and
                                                                           Exchange Commission, September 1993 to
                                                                           September 1994; Staff Attorney,
                                                                           Securities and Exchange Commission,
                                                                           June 1992 to September 1993.

</TABLE>

         Members of the Board of the Fund who are also directors, officers or
employees of Aetna Inc. or its affiliates are not entitled to any compensation
from the Fund. Members of the Board who are not affiliated with Aetna or its
subsidiaries are entitled to receive an annual retainer of $20,000 for service
on the Board. In addition, each such member will receive a fee of $2,500 per
meeting for each regularly scheduled Board meeting; and $1,500 for each
in-person committee meeting on any day on which a regular Board meeting is not
scheduled. A Committee Chairperson fee of $1,500 each will be paid to the
Chairperson of the Valuation and Audit Committees. All of the above fees are to
be paid proportionately by each Portfolio based on the net assets of the
Portfolios as of the date compensation is earned.

                   CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS

         Shares of the Portfolios will be owned by insurance companies as
depositors of separate accounts which are used to fund variable annuity
contracts ("VA Contracts") and variable life insurance policies ("VLI
Policies"). It is currently expected that all shares will be held by separate
accounts of Aetna and its subsidiary, Aetna Insurance Company of America, Inc.,
on behalf of their respective separate accounts. See "Voting Rights" below.

         Aetna is an indirect wholly owned subsidiary of Aetna Retirement
Services, Inc., which is in turn an indirect wholly owned subsidiary of Aetna
Inc. Aetna's principal office is located at 151 Farmington Avenue, Hartford,
Connecticut 06156. Aetna is registered with the SEC as an investment adviser and
as of June 30, 1997, manages over $___ billion in assets.

                                      -23-
<PAGE>


                        THE INVESTMENT ADVISORY AGREEMENT

         On                  , 1997, the Fund's Board of Directors approved an
investment advisory agreement (Investment Advisory Agreement) between the Fund
and Aetna for each of the Portfolios to continue through June 30, 1999.

         Under the Investment Advisory Agreement and subject to the direction of
the Board of Directors of the Fund, Aetna has responsibility, among other
things, to (i) select the securities to be purchased, sold or exchanged by each
Portfolio, and place trades on behalf of each Portfolio, or delegate such
responsibility to one or more subadvisers; (ii) supervise all aspects of the
operations of the Portfolios; (iii) obtain the services of, contract with, and
provide instructions to custodians and/or subcustodians of each Portfolio's
securities, transfer agents, dividend paying agents, pricing services and other
service providers as are necessary to carry out the terms of the Investment
Advisory Agreement; (iv) monitor the investment program maintained by each
Subadviser for the Portfolios and the Subadvisers' compliance programs to ensure
that the Portfolio's assets are invested in compliance with the Subadvisory
Agreement and the Portfolio's investment objectives and policies as adopted by
the Board and described in the most current effective amendment of the
registration statement for the Portfolio, as filed with the Commission under the
1933 Act and the 1940 Act ("Registration Statement"); (v) review all data and
financial reports prepared by each Subadviser to assure that they are in
compliance with applicable requirements and meet the provisions of applicable
laws and regulations; (vi) establish and maintain regular communications with
each Subadviser to share information it obtains with each Subadviser concerning
the effect of developments and data on the investment program maintained by the
Subadviser; (vii) oversee all matters relating to the offer and sale of the
Portfolios' shares, the Fund's corporate governance, reports to the Board,
contracts with all third parties on behalf of the Portfolios for services to the
Portfolios, reports to regulatory authorities and compliance with all applicable
rules and regulations affecting the Portfolios' operations; and (viii) take
other actions that appear to Aetna and the Board to be necessary.

         The Investment Advisory Agreement provides that Aetna shall pay (a) the
salaries, employment benefits and other related costs of those of its personnel
engaged in providing investment advice to the Portfolio, including, without
limitation, office space, office equipment, telephone and postage costs and (b)
any fees and expenses of all Directors, officers and employees, if any, of the
Fund who are employees of Aetna or an affiliated entity and any salaries and
employment benefits payable to those persons.

         The Investment Advisory Agreement has an initial term of just under two
years and provides that it will remain in effect from year-to-year thereafter if
approved annually by a majority vote of the Directors, including a majority of
the Directors who are not "interested persons" as that term is defined in the
1940 Act, of the Fund or of Aetna, in person at a meeting called for that
purpose. The Investment Advisory Agreement may be terminated as to a particular
Portfolio without penalty at any time on sixty days' written notice by (i) the
Directors, (ii) a majority vote of the outstanding voting securities of that
Portfolio, or (iii) Aetna. The Investment Advisory Agreement terminates
automatically in the event of assignment.

         Aetna also serves as investment adviser to the following investment
companies: Aetna Series Fund, Inc., Aetna Variable Fund, Aetna Income Shares,
Aetna Variable Encore Fund, Aetna Investment Advisers Fund, Inc., Aetna GET
Fund, Aetna Generation Portfolios, Inc. and Aetna Variable Portfolios, Inc.

                           THE SUBADVISORY AGREEMENTS

         On                , 1997, the Fund's Board of Directors approved
subadvisory agreements ("Subadvisory Agreements") between Aetna and
Massachusetts Financial Services Company ("MFS") with respect to MFS Emerging
Equities, MFS Research Growth and MFS Value Equity; with Scudder, Stevens &
Clark, Inc. ("Scudder") with respect to Scudder International Portfolio; and
with T. Rowe Price Associates, Inc. ("T. Rowe Price") with respect to T. Rowe
Price Growth Equity, to continue through          . Each Subadvisory Agreement
remains in effect from year-to-year if approved annually by a majority vote of
the Directors, including a majority of the Directors who are not "interested
persons" of the Fund, Aetna or any Subadviser, in person, at a meeting called
for that purpose. Each Subadvisory Agreement may be terminated without penalty
at any time on sixty days' written notice by (i) the Directors, (ii) a majority
vote of the outstanding voting securities of the respective Portfolio, (iii)
Aetna, or (iv) the relevant

                                      -24-
<PAGE>


Subadviser. Each Subadvisory Agreement terminates automatically in the event of
its assignment or in the event of the termination of the Investment Advisory
Agreement with Aetna.

         Under each Subadvisory Agreement, the Subadviser supervises the
investment and reinvestment of cash and securities comprising the assets of the
Portfolios. Each Subadvisory Agreement also directs the Subadviser to (a)
determine the securities to be purchased or sold by the Portfolios, and (b) take
any actions necessary to carry out its investment subadvisory responsibilities.

         Each Subadviser pays the salaries, employment benefits and other
related costs of personnel engaged in providing investment advice including
office space, facilities and equipment.

          As compensation, Aetna pays each Subadviser a monthly fee as described
in the Prospectus. Aetna has certain obligations under the Subadvisory
Agreements and retains overall responsibility for monitoring the investment
program maintained by the Subadviser for compliance with applicable laws and
regulations and each Portfolio's respective investment objectives. In addition,
Aetna will consult with and assist the Subadviser in maintaining appropriate
policies, procedures and records and oversee matters relating to promotion,
marketing materials and reports by the Subadvisers to the Fund's Board of
Directors.

                      THE ADMINISTRATIVE SERVICES AGREEMENT

         Pursuant to an Administrative Services Agreement, between the Fund and
Aetna, Aetna has agreed to provide all administrative services in support of the
Portfolios. As a result, a Portfolio's costs and fees are limited to its
advisory fee, the administrative services charge and transaction costs. The
Administrative Services Agreement will remain in effect until ________ __, 1999.
Thereafter, it will remain in effect from year-to-year if approved annually by a
majority of the Directors. It may be terminated by either party on sixty days'
written notice.

                                    CUSTODIAN

         Investors Bank & Trust Company, Boston, Massachusetts, serves as
custodian for the assets of the Portfolios. The custodian does not participate
in determining the investment policies of a Portfolio or in deciding which
securities are purchased or sold by a Portfolio.

                              INDEPENDENT AUDITORS

         KPMG Peat Marwick LLP, Hartford, Connecticut 06103 will serve as
independent auditors to the Portfolios. KPMG Peat Marwick LLP provides audit
services, assistance and consultation in connection with SEC filings.

                              PRINCIPAL UNDERWRITER

              Shares of the Portfolios are offered on a continuous basis. Aetna
has agreed to use its best efforts to distribute the shares of the Portfolios as
the principal underwriter of the Fund pursuant to an Underwriting Agreement
between it and the Fund. The Agreement was approved on ____________, 1997 to
continue through _______________ . Thereafter, the Underwriting Agreement may be
continued from year to year if approved annually by the Directors or by a vote
of holders of a majority of each Portfolio's shares, and by a vote of a majority
of the Directors who are not "interested persons" of Aetna, or the Fund,
appearing in person at a meeting called for the purpose of approving such
Agreement. This Agreement terminates automatically upon assignment, and may be
terminated at any time on sixty (60) days' written notice by the Directors or
Aetna or by vote of holders of a majority of a Portfolio's shares without the
payment of any penalty.

                                      -25-
<PAGE>


                    BROKERAGE ALLOCATION AND TRADING POLICIES

         Subject to the direction of the Directors, Aetna and the Subadvisers
have responsibility for making the Portfolios' investment decisions, for
effecting the execution of trades for the Portfolios and for negotiating any
brokerage commissions thereof. It is the policy of Aetna and the Subadvisers to
obtain the best quality of execution available, giving attention to net price
(including commissions where applicable), execution capability (including the
adequacy of a brokerage firm's capital position), research and other services
related to execution; the relative priority given to these factors will depend
on all of the circumstances regarding a specific trade. In implementing their
trading policy, Aetna and the Subadvisers may place a Portfolio's transactions
with such brokers or dealers and for execution in such markets as, in the
opinion of the Adviser or Subadvisers, will lead to the best overall quality of
execution for the Portfolio.

         Aetna and the Subadvisers may receive a variety of brokerage and
research services from brokerage firms that execute trades on behalf of the
Portfolios. These services may benefit the Adviser and/or advisory clients other
than the Portfolios. These brokerage and research services include, but are not
limited to, quantitative and qualitative research information and purchase and
sale recommendations regarding securities and industries, analyses and reports
covering a broad range of economic factors and trends, statistical data relating
to the strategy and performance of the Portfolio and other investment companies
and accounts, services related to the execution of trades in a Portfolio's
securities and advice as to the valuation of securities. Aetna and the
Subadvisers may consider the quantity and quality of such brokerage and research
services provided by a brokerage firm along with the nature and difficulty of
the specific transaction in negotiating commissions for trades in a Portfolio's
securities and may pay higher commission rates than the lowest available when it
is reasonable to do so in light of the value of the brokerage and research
services received generally or in connection with a particular transaction.
Aetna's and the Subadvisers' policy in selecting a broker to effect a particular
transaction is to seek to obtain "best execution," which means prompt and
efficient execution of the transaction at the best obtainable price with payment
of commissions that are reasonable in relation to the value of the services
provided by the broker, taking into consideration research and other services
provided. When either Aetna or the Subadvisers believe that more than one broker
can provide best execution, preference may be given to brokers who provide
additional services to Aetna or the Subadvisers.

         Consistent with securities laws and regulations, Aetna and the
Subadvisers may obtain such brokerage and research services regardless of
whether they are paid for (1) by means of commissions; or (2) by means of
separate, non-commission payments. Aetna's and the Subadvisers' judgment as to
whether and how they will obtain the specific brokerage and research services
will be based upon their analysis of the quality of such services and the cost
(depending upon the various methods of payment which may be offered by brokerage
firms) and will reflect Aetna's and the Subadvisers' opinion as to which
services and which means of payment are in the long-term best interests of a
Portfolio. The Portfolios have no present intention to effect any brokerage
transactions in portfolio securities through Aetna, the Subadvisers or any
affiliate thereof. If a Portfolio enters into a transaction with any such person
in the future, the transaction will comply with Rule 17e-1 under the 1940 Act.
Certain officers of Aetna and the Subadvisers also manage the securities
portfolios of their own and their affiliates. Further, Aetna and the Subadvisers
also act as investment adviser to other investment companies registered under
the 1940 Act and other client accounts.

         To the extent Aetna or the Subadvisers desire to buy or sell the same
publicly traded security at or about the same time for more than one client, the
purchases or sales will normally be aggregated, and allocated as nearly as
practicable on a pro rata basis in proportion to the amounts to be purchased or
sold by each, taking into consideration the respective investment objectives of
the clients, the relative size of portfolio holdings of the same or comparable
securities, availability of cash for investment, and the size of their
respective investment commitments. Prices are averaged for those transactions.
In some cases, this procedure may adversely affect the size of the position
obtained for or disposed of by a Portfolio or the price paid or received by a
Portfolio.

         The Board of Directors has adopted a policy allowing trades to be made
between a Portfolio and a registered investment company or series thereof that
is an affiliated person of the Portfolio (and certain noninvestment company
affiliated persons) provided the transactions meet the terms of Rule 17a-7 under
the 1940 Act. Pursuant to this policy, a Portfolio may buy a security from or
sell another security to another registered investment company or private

                                      -26-
<PAGE>


advisory account advised by Aetna or by one of the Subadvisers. The Board of
Directors, Aetna and each Subadviser have also adopted Codes of Ethics governing
personal trading by persons who manage, or who have access to trading activity
by, a Portfolio. The Codes allow trades to be made in securities that may be
held by a Portfolio. However, they prohibit a person from taking advantage of
Portfolio trades or from acting on inside information.

                              DESCRIPTION OF SHARES

         The Articles of Incorporation authorize the Fund to issue one billion
shares of common stock with a par value of $.001 per share. The shares are
nonassessable, transferable, redeemable and do not have pre-emptive rights or
cumulative voting rights. The shares may be issued as whole or fractional shares
and are uncertificated.

         The shares may be issued in series or portfolios having separate assets
and separate investment objectives and policies. Upon liquidation of a
Portfolio, its shareholders are entitled to share pro rata in the net assets of
that portfolio available for distribution to shareholders.

                                 NET ASSET VALUE

         Securities of the Portfolios are generally valued by independent
pricing services. The values for equity securities traded on registered
securities exchanges are based on the last sale price or, if there has been no
sale that day, at the mean of the last bid and asked price on the exchange where
the security is principally traded. Securities traded over-the-counter are
valued at the last sale price or at the last bid price if there has been no sale
that day. Short-term debt securities that have a maturity date of more than
sixty days will be valued at the mean of the last bid and asked price obtained
from principal market makers. Long-term debt securities are valued at the mean
of the last bid and asked price of such securities obtained from a broker that
is a market-maker in the securities or a service providing quotations based upon
the assessment of market-makers in those securities.

         Options are valued at the mean of the last bid and asked price on the
exchange where the option is primarily traded. Stock index futures contracts and
interest rate futures contracts are valued daily at a settlement price based on
rules of the exchange where the futures contract is primarily traded.

                             PERFORMANCE INFORMATION

         Total return of a Portfolio for periods longer than one year is
determined by calculating the actual dollar amount of investment return on a
$1,000 investment in the Portfolio made at the beginning of each period, then
calculating the average annual compounded rate of return which would produce the
same investment return on the $1,000 investment over the same period. Total
return for a period of one year or less is equal to the actual investment return
on a $1,000 investment in the Portfolio during that period. Total return
calculations assume that all Portfolio distributions are reinvested at net asset
value on their respective reinvestment dates.

          The performance of the Portfolios is commonly measured as total
return. An average annual compounded rate of return ("T") may be computed by
using the redeemable value at the end of a specified period ("ERV") of a
hypothetical initial investment of $1,000 ("P") over a period of time ("n")
according to the formula:

                               P ( 1 + T ) (n) = ERV

         Investors should not consider this performance data as an indication of
the future performance of any of the Portfolios.

         The performance of a Portfolio may, from time to time, be compared
to that of other mutual funds tracked by mutual fund rating services, to broad
groups of comparable mutual funds, or to unmanaged indices which may assume
investment of dividends but generally do not reflect deductions for
administrative and management costs.

         Each Portfolio is newly organized and does not yet have its own
performance record. However, each Portfolio has the same investment objective
and follows substantially the same investment strategies as a mutual fund

                                      -27-
<PAGE>


or funds whose shares are currently sold to the public or through variable
insurance products and is/are managed by MFS, Scudder or T. Rowe Price, as
applicable. The Prospectus contains historical performance information of these
similarly managed funds. Advertisements for Portfolio Partners, Inc. may also
include historical performance of these similarly managed Funds, subject to
regulatory approval.

         A Portfolio's investment results will vary from time to time depending
upon market conditions, the composition of its investment portfolio and its
operating expenses. The total return for a Portfolio should be distinguished
from the rate of return of a corresponding division of the insurance company's
separate account, which rate will reflect the deduction of additional insurance
charges, including mortality and expense risk charges, and will therefore be
lower. Accordingly, performance figures for a Portfolio will only be included in
sales literature if comparable performance figures for the corresponding
division of the separate account accompany the sales literature. VA Contract
owners and VLI Policy owners should consult their contract and policy
prospectuses, respectively, for further information. Each Portfolio's results
also should be considered relative to the risks associated with its investment
objectives and policies.

                                   TAX STATUS

         The following is only a summary of certain additional tax
considerations generally affecting each Portfolio that are not described in the
Prospectus. The discussions below and in the Prospectus are not intended as
substitutes for careful tax planning.

         The holders of variable life insurance policies or annuity contracts
should not be subject to tax with respect to distributions made on, or
redemptions of, Portfolio shares, assuming that the variable life insurance
policies and annuity contracts qualify under the Internal Revenue Code of 1986,
as amended (the "Code"), as life insurance or annuities, respectively, and that
the shareholders are treated as owners of the Portfolio shares. See
"Qualification of Segregated Asset Accounts." Thus, this summary does not
describe the tax consequences to a holder of a life insurance policy or annuity
contract as a result of the ownership of such policies or contracts. Policy or
contract holders must consult the prospectuses of their respective policies or
contracts for information concerning the federal income tax consequences of
owning such policies or contracts. This summary also does not describe the tax
consequences applicable to the owners of the Portfolio shares because the
Portfolio shares will be sold only to insurance companies. Thus, purchasers of
Portfolio shares must consult their own tax advisers regarding the federal,
state, and local tax consequences of owning Portfolio shares.

QUALIFICATION AS A REGULATED INVESTMENT COMPANY

         Each Portfolio has elected to be taxed as a regulated investment
company under Subchapter M of the Code. As a regulated investment company, a
Portfolio is not subject to federal income tax on the portion of its net
investment income (i.e., taxable interest, dividends and other taxable ordinary
income, net of expenses) and capital gain net income (i.e., the excess of
capital gains over capital losses) that it distributes to shareholders, provided
that it distributes at least 90% of its investment company taxable income (i.e.,
net investment income and the excess of net short-term capital gain over net
long-term capital loss) for the taxable year (the "Distribution Requirement"),
and satisfies certain other requirements of the Code that are described in this
section. Distributions by a Portfolio made during the taxable year or, under
specified circumstances, within twelve months after the close of the taxable
year, will be considered distributions of income and gains of the taxable year
and will therefore satisfy the Distribution Requirement.

         In addition to satisfying the Distribution Requirement, a regulated
investment company must (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (the "Income Requirement"); and (2) derive less
than 30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or foreign
currencies (or options, futures

                                      -28-
<PAGE>


or forward contracts thereon) held for less than three months (the "Short-Short
Gain Test"). However, foreign currency gains, including those derived from
options, futures and forwards, will not in any event be characterized as
Short-Short Gain if they are directly related to the regulated investment
company's investments in stock or securities (or options or futures thereon).
Because of the Short-Short Gain Test, a Portfolio may have to limit the sale of
appreciated securities that it has held for less than three months. However, the
Short-Short Gain Test will not prevent a Portfolio from disposing of investments
at a loss, since the recognition of a loss before the expiration of the
three-month holding period is disregarded for this purpose. Interest (including
original issue discount) received by a Portfolio at maturity or upon the
disposition of a security held for less than three months will not be treated as
gross income derived from such sale or other disposition of such security within
the meaning of the Short-Short Gain Test. However, income that is attributable
to realized market appreciation will be treated as gross income from such sale
or other disposition of securities for this purpose.

         In general, gain or loss recognized by a Portfolio on the disposition
of an asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by a Portfolio at a market discount
(generally, at a price less than its principal amount) will be treated as
ordinary income to the extent of the portion of the market discount which
accrued during the period of time the Portfolio held the debt obligation. In
addition, under the rules of Code Section 988, gain or loss recognized on the
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto (but only to the extent attributable to changes in foreign
currency exchange rates), and gain or loss recognized on the disposition of a
foreign currency forward contract, futures contract, option or similar financial
instrument, or of foreign currency itself, except for regulated futures
contracts or non-equity options subject to Code Section 1256 (unless the
Portfolio elects otherwise), will generally be treated as ordinary income or
loss.

         In general, for purposes of determining whether capital gain or loss
recognized by a Portfolio on the disposition of an asset is long-term or
short-term, the holding period of the asset may be affected if (as applicable,
depending on the type of Portfolio) (1) the asset is used to close a "short
sale" (which includes for certain purposes the acquisition of a put option) or
is substantially identical to another asset so used, (2) the asset is otherwise
held by the Portfolio as part of a "straddle" (which term generally excludes a
situation where the asset is stock and the Portfolio grants a qualified covered
call option (which, among other things, must not be deep-in-the-money) with
respect thereto) or (3) the asset is stock and the Portfolio grants an
in-the-money qualified covered call option with respect thereto. However, for
purposes of the Short-Short Gain Test, the holding period of the asset disposed
of may be reduced only in the case of clause (1) above. In addition, a Portfolio
may be required to defer the recognition of a loss on the disposition of an
asset held as part of a straddle to the extent of any unrecognized gain on the
offsetting position.

         Any gain recognized by a Portfolio on the lapse of, or any gain or loss
recognized by a Portfolio from a closing transaction with respect to, an option
written by the Portfolio will be treated as a short-term capital gain or loss.
For purposes of the Short-Short Gain Test, the holding period of an option
written by a Portfolio will commence on the date it is written and end on the
date it lapses or the date a closing transaction is entered into. Accordingly, a
Portfolio may be limited in its ability to write options which expire within
three months and to enter into closing transactions at a gain within three
months of the writing of options.

         Certain transactions that may be engaged in by a Portfolio (such as
regulated futures contracts, certain foreign currency contracts, and options on
stock indexes and futures contracts) will be subject to special tax treatment as
"Section 1256 contracts." Section 1256 contracts are treated as if they are sold
for their fair market value on the last day of the taxable year, even though a
taxpayer's obligations (or rights) under such contracts have not terminated (by
delivery, exercise, entering into a closing transaction or otherwise) as of such
date. Any gain or loss recognized as a consequence of the year-end deemed
disposition of Section 1256 contracts is taken into account for the taxable year
together with any other gain or loss that was previously recognized upon the
termination of Section 1256 contracts during that taxable year. Any capital gain
or loss for the taxable year with respect to Section 1256 contracts (including
any capital gain or loss arising as a consequence of the year-end deemed sale of
such contracts) is generally treated as 60% long-term capital gain or loss and
40% short-term capital gain or loss. A Portfolio, however, may elect not to have
this special tax treatment apply to Section 1256 contracts that are part of a
"mixed straddle" with other investments of the Portfolio that are not Section
1256 contracts. Under Treasury regulations, gains arising from

                                      -29-
<PAGE>

Section 1256 contracts will be treated for purposes of the Short-Short Gain Test
as being derived from securities held for not less than three months if the
gains arise as a result of a constructive sale under Code Section 1256.

         A Portfolio may enter into notional principal contracts, including
interest rate swaps, caps, floors, and collars. Under Treasury regulations, in
general, the net income or deduction from a notional principal contract for a
taxable year is included in or deducted from income for that taxable year. The
net income or deduction from a notional principal contract for a taxable year
equals the total of all the periodic payments (generally, payments that are
payable or receivable at fixed periodic intervals of one year or less during the
entire term of the contract) that are recognized from that contract for the
taxable year and all of the non-periodic payments (including premiums for caps,
floors and collars) that are recognized from that contract for the taxable year.
No portion of a payment by a party to a notional principal contract is
recognized prior to the first year to which any portion of a payment by the
counterparty relates. A periodic payment is recognized ratable over the period
to which it relates. In general, a non-periodic payment must be recognized over
the term of the notional principal contract in a manner that reflects the
economic substance of the contract. A non-periodic payment that relates to an
interest rate swap, cap, floor or collar shall be recognized over the term of
the contract by allocating it in accordance with the values of a series of
cash-settled forward or option contracts that reflect the specified index and
notional principal amount upon which the notional principal contract is based
(or, in the case of a swap, a cap or floor, under an alternative method
contained in the regulations).

         A Portfolio may purchase securities of certain foreign investment funds
or trusts which constitute passive foreign investment companies ("PFIC") for
federal income tax purposes. If a Portfolio invests in a PFIC, it may elect to
treat the PFIC as a qualified electing fund (a "QEF") in which event the
Portfolio will each year have ordinary income equal to its pro rata share of the
PFIC's ordinary earnings for the year and long-term capital gain equal to its
pro rata share of the PFIC's net capital gain for the year, regardless of
whether the Portfolio receives distributions of any such ordinary earnings or
capital gain from the PFIC. If a Portfolio does not elect to treat the PFIC as a
QEF, then in general (1) any gain recognized by the Portfolio upon sale or other
disposition of its interest in the PFIC or any excess distribution received by
the Portfolio from the PFIC will be allocated ratably over the Portfolio's
holding period of its interest in the PFIC, (2) the portion of such gain or
excess distribution so allocated to the year in which the gain is recognized or
the excess distribution is received shall be included in the Portfolio's gross
income for such year as ordinary income (and the distribution of such portion by
the Portfolio to shareholders will be taxable as an ordinary income dividend,
but such portion will not be subject to tax at the Portfolio level), (3) the
Portfolio shall be liable for tax on the portions of such gain or excess
distribution so allocated to prior years in an amount equal to, for each such
prior year, the sum of (i) the amount of gain or excess distribution allocated
to such prior year multiplied by the highest tax rate (individual or corporate)
in effect for such prior year and (ii) interest on the amount determined under
clause (i) for the period from the due date for filing a return for such prior
year until the date for filing a return for the year in which the gain is
recognized or the excess distribution is received at the rates and methods
applicable to underpayments of tax for such period, and (4) the distribution by
the portfolio to shareholders of the portions of such gain or excess
distribution so allocated to prior years (net of the tax payable by the
Portfolio thereon) will again be taxable to the shareholders as an ordinary
income dividend.

         Under proposed Treasury Regulations a Portfolio can elect to recognize
as gain the excess, as of the last day of its taxable year, of the fair market
value of each share of PFIC stock over the Portfolio's adjusted tax basis in
that share ("mark to market gain"). Such mark to market gain will constitute
ordinary income and will not be subject to the Short-Short Gain Test, and the
Portfolio's holding period with respect to such PFIC stock will commence on the
first day of the next taxable year. If a Portfolio makes such election in the
first taxable year it holds PFIC stock, it will not incur the tax described in
the previous paragraph.

         Treasury Regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or any part of any net
capital loss, any net long-term capital loss or any net foreign currency loss
incurred after October 31 as if it had been incurred in the succeeding year.

                                      -30-
<PAGE>

         In addition to satisfying the requirements described above, each
Portfolio must satisfy an asset diversification test in order to qualify as a
regulated investment company. Under this test, at the close of each quarter of a
Portfolio's taxable year, at least 50% of the value of the Portfolio's assets
must consist of cash and cash items, U.S. Government securities, securities of
other regulated investment companies, and securities of other issuers (as to
each of which the Portfolio has not invested more than 5% of the value of the
Portfolio's total assets in securities of such issuer and does not hold more
than 10% of the outstanding voting securities of such issuer), and no more than
25% of the value of its total assets may be invested in the securities of any
one issuer (other than U.S. Government securities and securities of other
regulated investment companies), or of two or more issuers which the Portfolio
controls and which are engaged in the same or similar trades or businesses or
related trades or businesses. Generally, an option (call or put) with respect to
a security is treated as issued by the issuer of the security not the issuer of
the option. However, with regard to forward currency contracts, there does not
appear to be any formal or informal authority which identifies the issuer of
such instrument.

         If for any taxable year a Portfolio does not qualify as a regulated
investment company, all of its taxable income (including its net capital gain)
will be subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Portfolio's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.

QUALIFICATION OF SEGREGATED ASSET ACCOUNTS

         Under Code Section 817(h), a variable life insurance or annuity
contract will not be treated as a life insurance policy or annuity contract,
respectively, under the Code, unless the segregated asset account upon which
such contract or policy is based is "adequately diversified." A segregated asset
account will be adequately diversified if it satisfies one of two alternative
tests set forth in the Treasury Regulations. Specifically, the Treasury
Regulations provide that, except as permitted by the "safe harbor" discussed
below, as of the end of each calendar quarter (or within 30 days thereafter) no
more than 55% of the segregated asset account's total assets may be represented
by any one investment, no more than 70% by any two investments, no more than 80%
by any three investments and no more than 90% by any four investments. For this
purpose, all securities of the same issuer are considered a single investment,
and each U.S. Government agency and instrumentality is considered a separate
issuer. As a safe harbor, a segregated asset account will be treated as being
adequately diversified if the diversification requirements under Subchapter M
are satisfied and no more than 55% of the value of the account's total assets
are cash and cash items, U.S. Government securities and securities of other
regulated investment companies. In addition, a segregated asset account with
respect to a variable life insurance contract is treated as adequately
diversified to the extent of its investment in securities issued by the United
States Treasury.

         For purposes of these alternative diversification tests, a segregated
asset account investing in shares of a regulated investment company will be
entitled to "look through" the regulated investment company to its pro rata
portion of the regulated investment company's assets, provided that the shares
of such regulated investment company are held only by insurance companies and
certain fund managers (a "Closed Fund").

         If the segregated asset account upon which a variable contract is based
is not "adequately diversified" under the foregoing rules for each calendar
quarter, then (a) the variable contract is not treated as a life insurance
contract or annuity contract under the Code for all subsequent periods during
which such account is not "adequately diversified" and (b) the holders of such
contract must include as ordinary income the "income on the contract" for each
taxable year. Further, the income on a life insurance contract for all prior
taxable years is treated as received or accrued during the taxable year of the
policyholder in which the contract ceases to meet the definition of a "life
insurance contract" under the Code. The "income on the contract" is, generally,
the excess of (i) the sum of the increase in the net surrender value of the
contract during the taxable year and the cost of the life insurance protection
provided under the contract during the year, over (ii) the premiums paid under
the contract during the taxable year. In addition, if a Portfolio does not
constitute a Closed Fund, the holders of the contracts and annuities which
invest in the Portfolio through a segregated asset account may be treated as
owners of Portfolio shares and may be subject to tax on distributions made by
the Portfolio.

                                      -31-
<PAGE>

EXCISE TAX ON REGULATED INVESTMENT COMPANIES

         A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (a "taxable year election")). The
balance of such income must be distributed during the next calendar year. For
the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.

         For purposes of the excise tax, a regulated investment company shall
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year, and (2) exclude
foreign currency gains and losses from Section 998 transactions incurred after
October 31 of any year (or after the end of its taxable year if it has made a
taxable year election) in determining the amount of ordinary taxable income for
the current calendar year (and, instead, include such gains and losses in
determining ordinary taxable income for the succeeding calendar year).

         Each Portfolio intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that a Portfolio may in certain circumstances be required
to liquidate portfolio investments to make sufficient distributions to avoid
excise tax liability.

EFFECT OF FUTURE LEGISLATION; LOCAL TAX CONSIDERATIONS

         The foregoing general discussion of U.S. federal income tax
consequences is based on the Code and the Treasury Regulations issued thereunder
as in effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.

         Rules of state and local taxation often differ from the rules for U.S.
federal income taxation described above. Shareholders are urged to consult their
tax advisers as to the consequences of state and local tax rules affecting
investment in a Portfolio.

                                  VOTING RIGHTS

         Shareholders are entitled to one vote for each full share held (and
fractional votes for fractional shares held) and will vote in the election of
Directors (to the extent hereinafter provided) and on other matters submitted to
the vote of the shareholders. The shareholders of the Portfolios are the
insurance companies for their separate accounts using the Portfolios to fund VA
Contracts and VLI Policies. The insurance company depositors of the separate
accounts pass voting rights attributable to shares held for VA Contracts and VLI
Policies through to Contract owners and Policy owners as described in the
prospectus for the applicable VA Contract or VLI Policy.

         The Directors of the Fund shall continue to hold office until the
Annual Meeting of Shareholders next held after his/her election, or until
his/her successor is duly elected and qualified. No meeting of the shareholders
for the purpose of electing Directors will be held. However, Shareholders
holding a majority of outstanding shares may request a special meeting for the
purpose of removing and replacing a Director. Vacancies on the Board occurring
between any such meetings shall be filled by the remaining Directors. Any
Director may also voluntarily resign from office. Voting rights are not
cumulative, so that the holders of more than 50% of the shares voting in the
election of Directors can, if they choose to do so, elect all the Directors of
the Fund, in which event the holders of the remaining shares will be unable to
elect any person as a Director.

         Special shareholder meetings may be called when requested in writing by
the holders of not less than 50% of the outstanding voting shares of a
Portfolio. Any request must state the purposes of the proposed meeting.


                                      -32-
<PAGE>



         The Articles may be amended if duly advised by a majority of the
Directors and approved by the affirmative vote of a majority of votes entitled
to be cast.

                                      -33-
<PAGE>

                              FINANCIAL STATEMENTS

      A Statement of Assets and Liabilities of each of the Portfolios as of
                , 1997 and related footnotes is set forth below.

                           [To be filed by amendment]




                                  -34-
<PAGE>


                                   APPENDIX A

                      DESCRIPTION OF CORPORATE BOND RATINGS

MOODY'S INVESTORS SERVICE, INC.

         Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt-edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.

         Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.

         A -- Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment sometime in the
future.

         Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present, but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

         Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

         B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

The modifier 1 indicates that the bond ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates the issuer ranks in the lower end of its rating category.

STANDARD & POOR'S RATING SERVICE

         AAA -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.

         AA -- Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.

         A -- Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.

         BBB -- Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated categories.

                                      A-1
<PAGE>


         BB -- Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, the bonds face major uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.

         B -- Bonds rated B have a greater vulnerability to default but
currently have the capacity to meet interest payments and principal repayments.
Adverse business, financial, or economic conditions will likely impair capacity
or willingness to pay interest and repay principal.

The ratings from "AA" to "B" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.


FITCH INVESTORS SERVICES, INC.

         AAA: Bonds considered to be investment grade and of the highest
quality. The obligor has an exceptionally strong ability to pay interest and
repay principal which is unlikely to be affected by reasonably foreseeable
events.

         AA: Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong although not quite as strong as bonds rated "AAA". Because bonds rated in
the "AAA" and "AA" categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated "F-1+".

         A: Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

         BBB: Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions, however, are more likely
to have adverse impact on these bonds, and therefore impair timely payment. The
likelihood that the ratings of these bonds will fall below investment grade is
higher than for bonds with higher ratings.

         BB: Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.

         B: Bonds are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited margin
of safety and the need for reasonable business and economic activity throughout
the life of the issue.

         CCC: Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.

         CC: Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.

         C:   Bonds are in imminent default in payment of interest or principal.

Plus (+) Minus (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the "AAA" category.

                                      A-2
<PAGE>

NR:   Indicates that Fitch does not rate the specific issue.

Conditional: A conditional rating is premised on the successful completion of a
project or the occurrence of a specific event.

Suspended: A rating is suspended when Fitch deems the amount of information
available from the issuer to be inadequate for rating purposes.

Withdrawn: A rating will be withdrawn when an issue matures or is called or
refinanced, and, at Fitch's discretion, when an issuer fails to furnish proper
and timely information.

FitchAlert: Ratings are placed on FitchAlert to notify investors of an
occurrence that is likely to result in a rating change and the likely direction
of such change. These are designated as "Positive", indicating a potential
upgrade, "Negative", for potential downgrade, or "Evolving", where ratings may
be raised or lowered. FitchAlert is relatively short-term, and should be
resolved within 12 months.

                                      A-3
<PAGE>

                                     PART C
                                OTHER INFORMATION


ITEM  24.    FINANCIAL STATEMENTS AND EXHIBITS

a.       FINANCIAL STATEMENTS

         (1) Included in Part A:
               -- None

         (2) Included in Part B:
               -- To be filed by amendment.

<TABLE>
<CAPTION>
b.    EXHIBITS
<S>      <C>               <C>
         EX-99.B1          Articles of Incorporation
         EX-99.B2          By-laws
         EX-99.B3          Not Applicable
         EX-99.B4          Not Applicable
         EX-99.B5(a)       Form of Investment Advisory Agreement between Portfolio Partners, Inc. and Aetna Life
                           Insurance and Annuity Company ("Aetna")
         EX-99.B5(b)       Form of Subadvisory Agreement between Aetna and Massachusetts Financial Services
                           Company
         EX-99.B5(c)       Form of Subadvisory Agreement between Aetna and Scudder, Stevens & Clark, Inc.
         EX-99.B5(d)       Form of Subadvisory Agreement between Aetna and T. Rowe Price Associates, Inc.
         EX-99.B6          Form of Underwriting Agreement between the Registrant and Aetna Life Insurance and
                           Annuity Company
         EX-99.B7          Not Applicable
         EX-99.B8          Form of Custodian Agreement
         EX-99.B9(a)       Form of Administrative Services Agreement
         EX-99.B9(b)       License Agreement between Aetna and T. Rowe Price Associates, Inc.
         EX-99.B10         Opinion and Consent of Counsel
         EX-99.B11(a)      Consent of Independent Auditors(1)
         EX-99.B11(b)      Form of Consents of proposed Directors
         EX-99.B12         Not Applicable
         EX-99.B13         Agreement re:  Initial Contribution to Working Capital
         EX-99.B14         Not Applicable
         EX-99.B15         Not Applicable
         EX-99.B16         Schedule for Computation of Performance Data(1)
         EX-99.B17         (See Exhibit 27 below)
         EX-99.B18         Not Applicable
         EX-99.B19         Powers of Attorney(1)
         27                Financial Data Schedule(1)
</TABLE>

______________________________
(1)  To be filed by amendment.

                                   -4-
<PAGE>

ITEM  25.        PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

A list of all persons directly or indirectly under common control with the
Registrant which indicates principal business of each such company referenced is
incorporated herein by reference to Item 25 of the Post-Effective Amendment No.
22 to the Registration Statement on Form N-1A (File No. 33-41694), as filed
electronically with the Securities and Exchange Commission on July 9, 1997.

ITEM  26.        NUMBER OF HOLDERS OF SECURITIES

None

ITEM  27.        INDEMNIFICATION

Article Ninth, Section (d) of the Registrant's Articles of Incorporation
provides for indemnification of directors and officers. In addition, the
Registrant's officers and directors will be covered under a directors and
officers errors and omissions liability insurance policy issued by Gulf
Insurance Company.

Reference is also made to Section 2-418 of the Corporations and Associations
Article of the Annotated Code of Maryland which provides generally that (1) a
corporation may (but is not required to) indemnify its directors for judgments,
fines and expenses in proceedings in which the director is named a party solely
by reason of being a director, provided the director has not acted in bad faith,
dishonestly or unlawfully, and provided further that the director has not
received any "improper personal benefit"; and (2) that a corporation must
(unless otherwise provided in the corporation's charter or articles of
incorporation) indemnify a director if he or she is successful on the merits in
defending a suit against him or her by reason of being a director. The statutory
provisions are not exclusive; a corporation may provide greater indemnification
rights than those provided by statute.

ITEM  28.      BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

Aetna Life Insurance and Annuity Company (Aetna) is an insurance company that
issues variable and fixed annuities and variable and universal life insurance
policies, and acts as principal underwriter and depositor for separate accounts
holding assets for variable contracts and policies. Aetna acts as the investment
adviser and principal underwriter for the Registrant, Aetna Variable Fund, Aetna
Income Shares, Aetna Variable Encore Fund, Aetna Investment Advisers Fund, Inc.,
Aetna Generation Portfolios, Inc., Aetna GET Fund and Aetna Variable Portfolios,
Inc. (all management investment companies registered under the Investment
Company Act of 1940 (1940 Act)), and acts as investment adviser only for Aetna
Series Fund, Inc. Additionally, Aetna acts as the principal underwriter and
depositor for Variable Annuity Account B of Aetna, Variable Annuity Account C of
Aetna, Variable Annuity Account G of Aetna, and Variable Life Account B of Aetna
(separate accounts of Aetna registered as unit investment trusts under the 1940
Act). Aetna is also the principal underwriter for Variable Annuity Account I of
Aetna Insurance Company of America (AICA) (a separate account of AICA registered
as a unit investment trust under the 1940 Act).

The following table summarizes the business connections of the directors and
principal officers of the Investment Adviser.

<TABLE>
<CAPTION>
                            Positions and Offices         Other Principal Position(s) Held
Name                      with Investment Adviser         Since Oct. 31, 1994/Addresses*/**
- ----                      -----------------------         ---------------------------------
<S>                      <C>                              <C>
Daniel P. Kearney        Director, President and          Director and President (since March 1996) --
                         Executive Officer                Aetna Retirement Holdings, Inc.; President (since
                                                          December 1995) -- Aetna Retirement Services,
                                                          Inc.; President (since December 1993) -- Aetna
                                                          Life Insurance and Annuity Company; Executive
                                                          Vice President (since

                                                    -5-
<PAGE>

                                                          December 1993) -- Aetna Inc. (formerly Aetna Life
                                                          and Casualty Company); Director (since 1992) --
                                                          MBIA, Inc.

Christopher J. Burns     Director and Senior              Director, Aetna Financial Services, Inc. (since January
                         Vice President                   1996), and Aetna Investment Services, Inc. (since July
                                                          1992); President, Chief Operations Officer (since
                                                          November 1996) -- Aetna Investment Services, Inc.;
                                                          Director (since March 1996) -- Aetna Retirement
                                                          Holdings, Inc.

J. Scott Fox             Director and Senior Vice         Director and Senior Vice President (since March
                         President                        1997) -- Aetna Retirement Holdings, Inc.; Senior
                                                          Vice President (since March 1997) -- Aetna Life
                                                          Insurance and Annuity Company Managing Director,
                                                          Chief Operating Officer, Chief Financial Officer,
                                                          Treasurer (April 1994 - March 1997) -- Aeltus
                                                          Investment Management, Inc.


Timothy A. Holt          Director, Senior Vice            Senior Vice President and Chief Financial Officer
                         President and Chief              (since February 1996) -- Aetna Life Life Insurance
                         Financial Officer                and Annuity Company; Vice President (June 1991 -
                                                          February 1996) -- Portfolio Management/Investment
                                                          Group, Aetna Inc. (formerly known as Aetna Life
                                                          and Casualty Company); Director (since March 1996)
                                                          -- Aetna Retirement Holdings, Inc.; Vice President
                                                          (since September 1996) -- Aetna Retirement
                                                          Holdings, Inc.


John Y. Kim              Director and Senior Vice         President (since December 1995) -- Aeltus Investment
                         President                        Management, Inc.; Chief Investment Officer (since May
                                                          1994) -- Aetna Life Insurance and Annuity Company.

Shaun P. Mathews         Director and Senior Vice         Director (since December 1996) -- Aetna Insurance
                         President                        Agency Holding Company, Inc.; Vice President
                                                          (since February 1996), Senior Vice President
                                                          (March 1991 Present) -- Aetna Life Insurance and
                                                          Annuity Company; Director, Aetna Investment
                                                          Services, Inc. (since July 1993), and Aetna
                                                          Insurance Company of America (since February
                                                          1993).

Glen Salow               Director and Vice President      Vice President (since 1992) -- Aetna Life Insurance and
                                                          Annuity Company.


                                                    -6-
<PAGE>

Kirk P. Wickman          Vice President, General          Vice President, General Counsel and Corporate
                         Counsel and Secretary            Secretary (since March 1997) -- Aetna Retirement
                                                          Holdings, Inc.; Vice President, General Counsel
                                                          and Secretary (since November 1996) -- Aetna Life
                                                          Insurance and Annuity Company; Vice President and
                                                          Counsel (June 1992 - November 1996) -- Aetna Life
                                                          Insurance Company.

Deborah Koltenuk         Vice President and               Vice President, Investment Planning and Financial
                         Treasurer, Corporate             Reporting (April 1996 to July 1996) -- Aetna Life
                         Controller                       Insurance Company; Vice President, Investment
                                                          Planning and Financial Reporting (October 1994 to
                                                          April 1996) Aetna Life Insurance Company, the
                                                          Aetna Casualty and Surety Company and The Standard
                                                          Fire and Insurance Company; Vice President and
                                                          Treasurer, Corporate Controller (since March 1996)
                                                          -- Aetna Retirement Holdings, Inc.

Frederick D. Kelsven     Vice President and Chief         Director of Compliance (January 1985 to September
                         Compliance Officer               1996) -- Nationwide Life Insurance Company.
</TABLE>

     *       The principal business address of each person named is 151
             Farmington Avenue, Hartford, Connecticut 06156.
    **       Certain officers and directors of the Investment Adviser currently
             hold (or have held during the past two years) other positions with
             affiliates of the Registrant which are not deemed to be principal
             positions.

The following information relates to the Subadvisers of the Registrant.

Massachusetts Financial Services Company (MFS)
- ----------------------------------------------

         MFS serves as investment adviser to the following open-end Funds
comprising the MFS Family of Funds: Massachusetts Investors Trust, Massachusetts
Investors Growth Stock Fund, MFS Growth Opportunities Fund, MFS Government
Securities Fund, MFS Government Limited Maturity Fund, MFS Series Trust I (which
has thirteen series: MFS Managed Sectors Fund, MFS Cash Reserve Fund, MFS World
Asset Allocation Fund, MFS Aggressive Growth Fund, MFS Research Growth and
Income Fund, MFS Core Growth Fund, MFS Equity Income Fund, MFS Special
Opportunities Fund, MFS Convertible Securities Fund, MFS Blue Chip Fund, MFS New
Discovery Fund, MFS Science and Technology Fund and MFS Research International
Fund), MFS Series Trust II (which has four series: MFS Emerging Growth Fund, MFS
Capital Growth Fund, MFS Intermediate Income Fund and MFS Gold & Natural
Resources Fund), MFS Series Trust III (which has two series: MFS High Income
Fund and MFS Municipal High Income Fund), MFS Series Trust IV (which has four
series: MFS Money Market Fund, MFS Government Money Market Fund, MFS Municipal
Bond Fund and MFS OTC Fund), MFS Series Trust V (which has two series: MFS Total
Return Fund and MFS Research Fund), MFS Series Trust VI (which has three series:
MFS World Total Return Fund, MFS Utilities Fund and MFS World Equity Fund), MFS
Series Trust VII (which has two series: MFS World Governments Fund and MFS Value
Fund), MFS Series Trust VIII (which has two series: MFS Strategic Income Fund
and MFS World Growth Fund), MFS Series Trust IX (which has three series: MFS
Bond Fund, MFS Limited Maturity Fund and MFS Municipal Limited Maturity Fund),
MFS Series Trust X (which has four series: MFS Government Mortgage Fund,
MFS/Foreign & Colonial Emerging Markets Equity Fund, MFS/Foreign & Colonial
International Growth Fund and MFS/Foreign & Colonial International Growth and
Income Fund), and MFS Municipal Series Trust (which has 16 series: MFS Alabama
Municipal Bond Fund, MFS Arkansas Municipal Bond Fund, MFS California Municipal
Bond Fund, MFS Florida Municipal Bond Fund, MFS Georgia Municipal Bond Fund, MFS
Maryland Municipal Bond Fund, MFS Massachusetts Municipal Bond Fund, MFS
Mississippi Municipal Bond Fund, MFS New York Municipal Bond Fund, MFS North
Carolina Municipal Bond Fund, MFS Pennsylvania

                                       -7-
<PAGE>

Municipal Bond Fund, MFS South Carolina Municipal Bond Fund, MFS Tennessee
Municipal Bond Fund, MFS Virginia Municipal Bond Fund, MFS West Virginia
Municipal Bond Fund and MFS Municipal Income Fund) (the "MFS Funds"). The
principal business address of each of the aforementioned Funds is 500 Boylston
Street, Boston, Massachusetts 02116.

         MFS also serves as investment adviser of the following no-load,
open-end Funds: MFS Institutional Trust ("MFSIT") (which has seven series), MFS
Variable Insurance Trust ("MVI") (which has twelve series) and MFS Union
Standard Trust ("UST"). The principal business address of each of the
aforementioned Funds is 500 Boylston Street, Boston, Massachusetts 02116.

         In addition, MFS serves as investment adviser to the following
closed-end Funds: MFS Municipal Income Trust, MFS Multimarket Income Trust, MFS
Government Markets Income Trust, MFS Intermediate Income Trust, MFS Charter
Income Trust and MFS Special Value Trust (the "MFS Closed-End Funds"). The
principal business address of each of the MFS closed-end Funds is 500 Boylston
Street, Boston, Massachusetts 02116.

         Lastly, MFS serves as investment adviser to MFS/Sun Life Series Trust
("MFS/SL"), Money Market Variable Account, High Yield Variable Account, Capital
Appreciation Variable Account, Government Securities Variable Account, World
Government Variable Account, Total Return Variable Account and Managed Sectors
Variable Account. The principal business address of each of the aforementioned
funds is One Sun Life Executive Park, Wellesley Hills, Massachusetts 02181.

         MFS International Ltd. ("MIL"), a limited liability company organized
under the laws of Bermuda and a subsidiary of MFS, whose principal business
address is Cedar House, 41 Cedar Avenue, Hamilton HM12 Bermuda, serves as
investment adviser to and distributor for MFS American Funds (which has six
portfolios: MFS American Funds-U.S. Equity Fund, MFS American Funds-U.S.
Emerging Growth Fund, MFS American Funds-U.S. High Yield Bond Fund, MFS American
Funds-U.S. Dollar Reserve Fund, MFS American Funds-Charter Income Fund and MFS
American Fund-U.S. Research Fund) (the "MIL Funds"). The MIL Funds are organized
in Luxembourg and qualify as an undertaking for collective investments in
transferable securities (UCITS). The principal business address of the MIL Funds
is 47, Boulevard Royal, L-2449 Luxembourg.

         MIL also serves as investment adviser to and distributor for MFS
Meridian U.S. Government Bond Fund, MFS Meridian Charter Income Fund, MFS
Meridian Global Government Fund, MFS Meridian U.S. Emerging Growth Fund, MFS
Meridian Global Equity Fund, MFS Meridian Limited Maturity Fund, MFS Meridian
World Growth Fund, MFS Meridian Money Market Fund, MFS Meridian World Total
Return Fund, MFS Meridian U.S. Equity Fund, MFS Meridian Research Fund, MFS
Meridian U.S. High Yield Fund and MFS Emerging Markets Debt Fund" (collectively
the "MFS Meridian Funds"). Each of the MFS Meridian Funds is organized as an
exempt company under the laws of the Cayman Islands. The principal business
address of each of the MFS Meridian Funds is P.O. Box 309, Grand Cayman, Cayman
Islands, British West Indies.

         MFS International (U.K.) Ltd. ("MIL-UK"), a private limited company
registered with the Registrar of Companies for England and Wales whose current
address is 4 John Carpenter Street, London, England ED4Y 0NH, is involved
primarily in marketing and investment research activities with respect to
private clients and the MIL Funds and the MFS Meridian Funds.

         MFS Fund Distributors, Inc. ("MFD"), a wholly owned subsidiary of MFS,
serves as distributor for the MFS Funds, MVI, UST and MFSIT.

         Clarendon Insurance Agency, Inc. ("CIAI"), a wholly owned subsidiary of
MFS, serves as distributor for certain life insurance and annuity contracts
issued by Sun Life Assurance Company of Canada (U.S.).

                                      -8-
<PAGE>


         MFS Service Center, Inc. ("MFSC"), a wholly owned subsidiary of MFS,
serves as shareholder servicing agent to the MFS Funds, the MFS Closed-End
Funds, MFSIT, MVI and UST.

         MFS Institutional Advisors, Inc. ("MFSI"), a wholly owned subsidiary of
MFS, provides investment advice to substantial private clients.

         MFS Retirement Services, Inc. ("RSI"), a wholly owned subsidiary of
MFS, markets MFS products to retirement plans and provides administrative and
record keeping services for retirement plans.

         MFS
         ---

         The Directors of MFS are A. Keith Brodkin, Jeffrey L. Shames, Arnold D.
Scott, Donald A. Stewart and John D. McNeil. Mr. Brodkin is the Chairman, Mr.
Shames is the President, Mr. Scott is a Senior Executive Vice President and
Secretary, Bruce C. Avery, William S. Harris, William W. Scott, Jr., Patricia A.
Zlotin, John W. Ballen, Thomas J. Cashman, Jr., Joseph W. Dello Russo and Kevin
R. Parke are Executive Vice Presidents, Stephen E. Cavan is a Senior Vice
President, General Counsel and an Assistant Secretary, Robert T. Burns is a
Senior Vice President, Associate General Counsel and an Assistant Secretary of
MFS, and Thomas B. Hastings is a Vice President and Treasurer of MFS.

         Massachusetts Investors Trust
         -----------------------------
         Massachusetts Investor Growth Stock Fund
         ----------------------------------------
         MFS Growth Opportunities Fund
         -----------------------------
         MFS Government Securities Fund
         ------------------------------
         MFS Series Trust I
         ------------------
         MFS Series Trust V
         ------------------
         MFS Series Trust VI
         -------------------
         MFS Series Trust X
         ------------------
         MFS Government Limited Maturity Fund
         ------------------------------------

         A. Keith Brodkin is the Chairman and President, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost, Vice President of
MFS, is the Assistant Treasurer, James R. Bordewick, Jr., Senior Vice President
and Associate General Counsel of MFS, is the Assistant Secretary.

          MFS Series Trust II
          -------------------

         A. Keith Brodkin is the Chairman and President, Leslie J. Nanberg,
Senior Vice President of MFS, is a Vice President, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant
Treasurer, and James R. Bordewick, Jr., is the Assistant Secretary.

         MFS Government Markets lncome Trust
         -----------------------------------
         MFS Intermediate Income Trust
         -----------------------------

         A. Keith Brodkin is the Chairman and President, Leslie J. Nanberg,
Senior Vice President of MFS, is a Vice President, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant
Treasurer, and James R. Bordewick, Jr., is the Assistant Secretary.

         MFS Series Trust III
         --------------------

         A. Keith Brodkin is the Chairman and President, James T. Swanson,
Robert J. Manning, Cynthia M. Brown and Joan S. Batchelder, Senior Vice
Presidents of MFS, and Bernard Scozzafava, Vice President of MFS are Vice
Presidents, Sheila Burns-Magnan, Assistant Vice President of MFS, and Daniel E.
McManus, Vice President of MFS, are Assistant Vice Presidents, Stephen E. Cavan
is the Secretary, W. Thomas

                                      -9-
<PAGE>

London is the Treasurer, James O. Yost is the Assistant Treasurer, and James R.
Bordewick, Jr., is the Assistant Secretary.

         MFS Series Trust IV
         -------------------
         MFS Series Trust IX
         -------------------

         A. Keith Brodkin is the Chairman and President, Robert A. Dennis and
Geoffrey L. Kurinsky, Senior Vice Presidents of MFS, are Vice Presidents,
Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O.
Yost is the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant
Secretary.

         MFS Series Trust VII
         --------------------

         A. Keith Brodkin is the Chairman and President, Leslie J. Nanberg and
Stephen C. Bryant, Senior Vice Presidents of MFS, are Vice Presidents, Stephen
E. Cavan is the Secretary, W. Thomas London is the Treasurer, James O. Yost is
the Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

         MFS Series Trust VIII
         ---------------------

         A. Keith Brodkin is the Chairman and President, Jeffrey L. Shames,
Leslie J. Nanberg, Patricia A. Zlotin, James T. Swanson and John D. Laupheimer,
Jr., Vice President of MFS, are Vice Presidents, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant
Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

         MFS Municipal Series Trust
         --------------------------

         A. Keith Brodkin is the Chairman and President, Cynthia M. Brown and
Robert A. Dennis are Vice Presidents, David B. Smith, Geoffrey L. Schechter and
David R. King, Vice Presidents of MFS, are Vice Presidents, Daniel E. McManus,
Vice President of MFS, is an Assistant Vice President, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant
Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

         MFS Variable Insurance Trust
         ----------------------------
         MFS Union Standard Trust
         ------------------------
         MFS Institutional Trust
         -----------------------

         A. Keith Brodkin is the Chairman and President, Stephen E. Cavan is the
Secretary, W. Thomas London is the Treasurer, James O. Yost is the Assistant
Treasurer and James R. Bordewick, Jr. is the Assistant Secretary.

         MFS Municipal Income Trust
         --------------------------

         A. Keith Brodkin is the Chairman and President, Cynthia M. Brown and
Robert J. Manning are Vice Presidents, Stephen E. Cavan is the Secretary, W.
Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer and
James R. Bordewick, Jr., is the Assistant Secretary.

         MFS Multimarket Income Trust
         ----------------------------
         MFS Charter Income Trust
         ------------------------

         A. Keith Brodkin is the Chairman and President, Leslie J. Nanberg and
James T. Swanson are Vice Presidents, Stephen E. Cavan is the Secretary, W.
Thomas London is the Treasurer, James O. Yost, Vice President of MFS, is the
Assistant Treasurer and James R. Bordewick, Jr., is the Assistant Secretary.

                                      -10-
<PAGE>

         MFS Special Value Trust
         -----------------------

         A. Keith Brodkin is the Chairman and President, Jeffrey L. Shames and
Robert J. Manning are Vice Presidents, Stephen E. Cavan is the Secretary, W.
Thomas London is the Treasurer, James O. Yost is the Assistant Treasurer and
James R. Bordewick, Jr., is the Assistant Secretary.

         MFS/Sun Life Series Trust
         -------------------------

         John D. McNeil, Chairman and Director of Sun Life Assurance Company of
Canada, is the Chairman, Stephen E. Cavan is the Secretary, W. Thomas London is
the Treasurer, James O. Yost, is the Assistant Treasurer and James R. Bordewick
Jr., is the Assistant Secretary,

         Money Market Variable Account
         -----------------------------
         High Yield Variable Account
         ---------------------------
         Capital Appreciation Variable Account
         -------------------------------------
         Government Securities Variable Account
         --------------------------------------
         Total Return Variable Account
         -----------------------------
         World Governments Variable Account
         ----------------------------------
         Managed Sectors Variable Account
         --------------------------------

         John D. McNeil is the Chairman, Stephen E. Cavan is the Secretary, and
James R. Bordewick, Jr., is the Assistant Secretary.

         MIL
         ---

         A. Keith Brodkin is a Director and the Chairman, Arnold D. Scott and
Jeffrey L. Shames are Directors, Thomas J. Cashman, Jr., an Executive Vice
President of MFS, is a Senior Vice President, Stephen E. Cavan is a Director,
Senior Vice President and the Clerk, James F. Bordewick, Jr. is a Director, Vice
President and an Assistant Clerk, Robert T. Burns is an Assistant Clerk, Joseph
W. Dello Russo, Executive Vice President and Chief Financial Officer of MFS, is
the Treasurer and Thomas D. Hastings is the Assistant Treasurer.

         MIL-UK
         ------

         A. Keith Brodkin is a Director and the Chairman, Arnold D. Scott,
Jeffrey L. Shames, and James R. Bordewick, Jr., are Directors. Stephen E. Cavan
is a Director and the Secretary, James E. Russell is the Treasurer, and Robert
T. Burns is the Assistant Secretary.

         MIL Funds
         ---------

         A. Keith Brodkin is the Chairman, President and a Director, Richard B.
Bailey, John A. Brindle, Richard W. S. Baker and William F. Waters are
Directors, Stephen E. Cavan is the Secretary, W. Thomas London is the Treasurer,
James O. Yost is the Assistant Treasurer and James R. Bordewick, Jr., is the
Assistant Secretary.

         MFS Meridian Funds
         ------------------

         A. Keith Brodkin is the Chairman, President and a Director, Richard B.
Bailey, John A. Brindle, Richard W. S. Baker, Arnold D. Scott, Jeffrey L. Shames
and William F. Waters are Directors, Stephen E. Cavan is the Secretary, W.
Thomas London is the Treasurer, James R. Bordewick, Jr., is the Assistant
Secretary and James O. Yost is the Assistant Treasurer.

                                      -11-
<PAGE>

         MFD
         ---

         A. Keith Brodkin is the Chairman and a Director, Arnold D. Scott and
Jeffrey L. Shames are Directors, William W. Scott, Jr., an Executive Vice
President of MFS, is the President, Stephen E. Cavan is the Secretary, Robert T.
Burns is the Assistant Secretary, Joseph W. Dello Russo is the Treasurer, and
Thomas B. Hastings is the Assistant Treasurer.

         CIAI
         ----

         A. Keith Brodkin is the Chairman and a Director, Arnold D. Scott and
Jeffery L. Shames are Directors, Cynthia Orcott is President, Bruce C. Avery is
the Vice President, Joseph W. Dello Russo is the Treasurer, Thomas B. Hastings
is the Assistant Treasurer, Stephen E. Cavan is the Secretary, and Robert T.
Burns is the Assistant Secretary.

         MFSC
         ----

         A. Keith Brodkin is the Chairman and a Director, Arnold D. Scott and
Jeffrey L. Shames are Directors, Joseph A. Recomendes, a Senior Vice President
of MFS, is Vice Chairman and a Director, Janet A. Clifford is the Executive Vice
President, Joseph W. Dello Russo is the Treasurer, Thomas B. Hastings is the
Assistant Treasurer, Stephen E. Cavan is the Secretary, and Robert T. Burns is
the Assistant Secretary.

         MFSI
         ----

         A. Keith Brodkin is the Chairman and a Director, Jeffrey L. Shames and
Arnold D. Scott are Directors, Thomas J. Cashman, Jr., is the President and a
Director, Leslie J. Nanberg is a Senior Vice President, a Managing Director and
a Director, George F. Bennett, Carol A. Corley, John A. Gee, Brianne Grady and
Kevin R. Parke are Senior Vice Presidents and Managing Directors, Joseph W.
Dello Russo is the Treasurer, Thomas B. Hastings is the Assistant Treasurer and
Robert T. Burns is the Secretary.

         RSI
         ---

         William W. Scott, Jr. and Bruce Avery are Directors, Arnold D. Scott is
the Chairman and a Director, Joseph W. Dello Russo is the Treasurer, Thomas B.
Hastings is the Assistant Treasurer, Stephen E. Cavan is the Secretary, Robert
T. Burns is the Assistant Secretary and Sharon A. Brovelli and Martin E.
Beaulieu are Senior Vice Presidents.

         In addition, the following persons, Directors or officers of MFS, have
the affiliations indicated:

            A. Keith Brodkin       Director, Sun Life Assurance Company of
                                    Canada (U.S.), One Sun Life Executive Park,
                                    Wellesley Hills, Massachusetts
                                   Director, Sun Life Insurance and Annuity
                                    Company of New York, 67 Broad Street, New
                                    York, New York

            Donald A. Stewart      President and a Director, Sun Life Assurance
                                    Company of Canada, Sun Life Centre, 150 King
                                    Street West, Toronto, Ontario, Canada (Mr.
                                    Stewart is also an officer and/or Director
                                    of various subsidiaries and affiliates of
                                    Sun Life)

                                      -12-
<PAGE>


            John D. McNeil         Chairman, Sun Life Assurance Company of
                                    Canada, Sun Life Centre, 150 King Street
                                    West, Toronto, Ontario, Canada (Mr. McNeil
                                    is also an officer and/or Director of
                                    various subsidiaries and affiliates of Sun
                                    Life)

            Joseph W. Dello Russo  Director of Mutual Fund Operations,
                                    The Boston Company, Exchange Place, Boston,
                                    Massachusetts (until August, 1994)

Scudder, Stevens & Clark, Inc.
- ------------------------------
Scudder, Stevens & Clark, Inc. has stockholders and employees who are
denominated officers but do not as such have corporation-wide responsibilities.
Such persons are not considered officers for the purpose of this Item 28.

<TABLE>
<CAPTION>
         Name            Business and Other Connections of Board of Directors
         ----            ----------------------------------------------------
<S>                      <C>
Stephen R. Beckwith      Director, Vice President, Assistant Treasurer, Chief Operating Officer & Chief
                              Financial Officer, Scudder, Stevens & Clark, Inc. (investment adviser)**

Lynn S. Birdsong         Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Supervisory Director, The Latin America Income and Appreciation Fund N.V.
                              (investment company) +
                         Supervisory Director, The Venezuela High Income Fund N.V. (investment company) xx
                         Supervisory Director, Scudder Mortgage Fund (investment company)+
                         Supervisory Director, Scudder Floating Rate Funds for Fannie Mae Mortgage Securities
                             I & II (investment company)+
                         Director, Scudder, Stevens & Clark (Luxembourg) S.A. (investment manager)#
                         Trustee, Scudder Funds Trust (investment company)*
                         President & Director, The Latin America Dollar Income Fund, Inc. (investment
                             company)**
                         President & Director, Scudder World Income Opportunities Fund, Inc. (investment
                             company)**
                         Director, Canadian High Income Fund (investment company)#
                         Director, Hot Growth Companies Fund (investment company)#
                         President, The Japan Fund, Inc. (investment company)**
                         Director, Sovereign High Yield Investment Company (investment company)+

Nicholas Bratt           Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         President & Director, Scudder New Europe Fund, Inc. (investment company)**
                         President & Director, The Brazil Fund, Inc. (investment company)**
                         President & Director, The First Iberian Fund, Inc. (investment company)**
                         President & Director, Scudder International Fund, Inc. (investment company)**
                         President & Director, Scudder Global Fund, Inc. (President on all series except Scudder
                             Global Fund) (investment company)**
                         President & Director, The Korea Fund, Inc. (investment company)**
                         President & Director, Scudder New Asia Fund, Inc. (investment company)**
                         President, The Argentina Fund, Inc. (investment company)**
                         Vice President, Scudder, Stevens & Clark Corporation (Delaware) (investment
                             adviser)**

                                      -13-
<PAGE>

                         Vice President, Scudder, Stevens & Clark Japan, Inc. (investment adviser)###
                         Vice President, Scudder, Stevens & Clark of Canada Ltd. (Canadian investment adviser)
                             Toronto, Ontario, Canada
                         Vice President, Scudder, Stevens & Clark Overseas Corporationoo

E. Michael Brown         Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Trustee, Scudder GNMA Fund (investment company)*
                         Trustee, Scudder U.S. Treasury Fund (investment company)*
                         Trustee, Scudder Tax Free Money Fund (investment company)*
                         Assistant Treasurer, Scudder Investor Services, Inc. (broker/dealer)*
                         Director & President, Scudder Realty Holding Corporation (a real estate holding
                             company)*
                         Director & President, Scudder Trust Company (a trust company)+++
                         Director, Scudder Trust (Cayman) Ltd.

Mark S. Casady           Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Director & Vice President, Scudder Investor Services, Inc. (broker/dealer)*
                         Vice President, Scudder Service Corporation (in-house transfer agent)*
                         Director, SFA, Inc. (advertising agency)*

Linda C. Coughlin        Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Director & Senior Vice President, Scudder Investor Services, Inc. (broker/dealer)*
                         President & Trustee, AARP Cash Investment Funds (investment company)**
                         President & Trustee, AARP Growth Trust (investment company)**
                         President & Trustee, AARP Income Trust (investment company)**
                         President & Trustee, AARP Tax Free Income Trust (investment company)**
                         Director, SFA, Inc. (advertising agency)*

Margaret D. Hadzima      Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Assistant Treasurer, Scudder Investor Services, Inc. (broker/dealer)*

Jerard K. Hartman        Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Vice President, Scudder California Tax Free Trust (investment company)*
                         Vice President, Scudder Equity Trust (investment company)**
                         Vice President, Scudder Cash Investment Trust (investment company)*
                         Vice President, Scudder Fund, Inc. (investment company)**
                         Vice President, Scudder Global Fund, Inc. (investment company)**
                         Vice President, Scudder GNMA Fund (investment company)*
                         Vice President, Scudder Portfolio Trust (investment company)*
                         Vice President, Scudder Institutional Fund, Inc. (investment company)**
                         Vice President, Scudder International Fund, Inc. (investment company)**
                         Vice President, Scudder Investment Trust (investment company)*
                         Vice President, Scudder Municipal Trust (investment company)*
                         Vice President, Scudder Mutual Funds, Inc. (investment company)**
                         Vice President, Scudder New Asia Fund, Inc. (investment company)**
                         Vice President, Scudder New Europe Fund, Inc. (investment company)**
                         Vice President, Scudder Securities Trust (investment company)*
                         Vice President, Scudder State Tax Free Trust (investment company)*
                         Vice President, Scudder Funds Trust (investment company)**
                         Vice President, Scudder Tax Free Money Fund (investment company)*
                         Vice President, Scudder Tax Free Trust (investment company)*
                         Vice President, Scudder U.S. Treasury Money Fund (investment company)*

                                      -14-
<PAGE>

                         Vice President, Scudder Variable Life Investment Fund (investment company)*
                         Vice President, The Brazil Fund, Inc. (investment company)**
                         Vice President, The Korea Fund, Inc. (investment company)**
                         Vice President, The Argentina Fund, Inc. (investment company)**
                         Vice President & Director, Scudder, Stevens & Clark of Canada, Ltd. (Canadian
                             investment adviser) Toronto, Ontario, Canada
                         Vice President, The First Iberian Fund, Inc. (investment company)**
                         Vice President, The Latin America Dollar Income Fund, Inc. (investment company)**
                         Vice President, Scudder World Income Opportunities Fund, Inc. (investment
                             company)**

Richard A. Holt          Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Vice President, Scudder Variable Life Investment Fund (investment company)*

Dudley H. Ladd           Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Director, Scudder Global Fund, Inc. (investment company)**
                         Director, Scudder International Fund, Inc. (investment company)**
                         Senior Vice President & Director, Scudder Investor Services, Inc. (broker/dealer)*
                         President & Director, SFA, Inc. (advertising agency)*
                         Vice President & Trustee, Scudder Cash Investment Trust  (investment company)*
                         Trustee, Scudder Investment Trust (investment company)*
                         Trustee, Scudder Portfolio Trust (investment company)*
                         Trustee, Scudder Municipal Trust (investment company)*
                         Trustee, Scudder Securities Trust (investment company)*
                         Trustee, Scudder State Tax Free Trust (investment company)*
                         Trustee, Scudder Equity Trust (investment company)**
                         Vice President, Scudder U.S. Treasury Money Fund (investment company)*

John T. Packard          Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         President, Montgomery Street Income Securities, Inc. (investment company)(o)
                         Director, Scudder Realty Advisors, Inc. (realty investment adviser)(x)

Daniel Pierce            Chairman & Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Chairman & Director, Scudder New Europe Fund, Inc. (investment company)**
                         Trustee, Scudder California Tax Free Trust (investment company)*
                         President & Trustee, Scudder Equity Trust (investment company)**
                         Director, The First Iberian Fund, Inc. (investment company)**
                         President & Trustee, Scudder GNMA Fund (investment company)*
                         President & Trustee, Scudder Portfolio Trust (investment company)*
                         President & Trustee, Scudder Funds Trust (investment company)**
                         President & Director, Scudder Institutional Fund, Inc. (investment company)**
                         President & Director, Scudder Fund, Inc. (investment company)**
                         Chairman & Director, Scudder International Fund, Inc. (investment company)**
                         President & Trustee, Scudder Investment Trust (investment company)*
                         Vice President & Trustee, Scudder Municipal Trust (investment company)*
                         President & Director, Scudder Mutual Funds, Inc. (investment company)**
                         Director, Scudder New Asia Fund, Inc. (investment company)**
                         President & Trustee, Scudder Securities Trust (investment company)*
                         Trustee, Scudder State Tax Free Trust (investment company)*
                         Vice President & Trustee, Scudder Variable Life Investment Fund (investment
                             company)*
                         Director, The Brazil Fund, Inc. (until 7/94) (investment company)**

                                      -15-
<PAGE>

                         Vice President & Assistant Treasurer, Montgomery Street Income Securities, Inc.
                             (investment company)(o)
                         Chairman, Vice President & Director, Scudder Global Fund, Inc. (investment
                             company)**
                         Vice President, Director & Assistant Treasurer, Scudder Investor Services, Inc.
                             (broker/dealer)*
                         President & Director, Scudder Service Corporation (in-house transfer agent)*
                         Chairman & President, Scudder, Stevens & Clark of Canada, Ltd. (Canadian investment
                             adviser), Toronto, Ontario, Canada
                         President & Director, Scudder Precious Metals, Inc.(xxx)
                         Chairman & Director, Scudder Global Opportunities Funds (investment company)
                             Luxembourg
                         Chairman, Scudder, Stevens & Clark, Ltd. (investment adviser) London, England
                         Director, Scudder Fund Accounting Corporation (in-house fund accounting agent)*
                         Director, Vice President & Assistant Secretary, Scudder Realty Holdings Corporation
                             (a real estate holding company)*
                         Director, Scudder Latin America Investment Trust PLC (investment company)@
                         Incorporator, Scudder Trust Company (a trust company)+++
                         Director, Fiduciary Trust Company (banking & trust company) Boston, MA
                         Director, Fiduciary Company Incorporated (banking & trust company) Boston, MA
                         Trustee, New England Aquarium, Boston, MA

Kathryn L. Quirk         Director & Secretary, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Vice President, Scudder Fund, Inc. (investment company)**
                         Vice President, Scudder Institutional Fund, Inc. (investment company)**
                         Vice President & Assistant Secretary, Scudder World Income Opportunities Fund, Inc.
                             (investment company)**
                         Vice President & Assistant Secretary, The Korea Fund, Inc. (investment company)**
                         Vice President & Assistant Secretary, The Argentina Fund, Inc. (investment
                             company)**
                         Vice President & Assistant Secretary, The Brazil Fund, Inc. (investment company)**
                         Vice President & Assistant Secretary, Scudder International Fund, Inc. (investment
                             company)**
                         Vice President & Assistant Secretary, Scudder Equity Trust (investment company)**
                         Vice President & Assistant Secretary, Scudder Securities Trust (investment company)*
                         Vice President & Assistant Secretary, Scudder Funds Trust (investment company)**
                         Vice President & Assistant Secretary, Scudder Global Fund, Inc.(investment
                             company)**
                         Vice President & Assistant Secretary, Montgomery Street Income Securities, Inc.
                             (investment company)(o)
                         Vice President & Assistant Secretary, Scudder Mutual Funds, Inc. (investment
                              company)**
                         Vice President & Assistant Secretary, Scudder New Europe Fund, Inc. (investment
                             company)**
                         Vice President & Assistant Secretary, Scudder Variable Life Investment Fund (investment
                             company)*
                         Vice President & Assistant Secretary, The First Iberian Fund, Inc.
                            (investment company)**
                         Vice President & Assistant Secretary, The Latin America Dollar Income Fund, Inc.
                             (investment company)**
                         Vice President & Secretary, AARP Growth Trust (investment company)**
                         Vice President & Secretary, AARP Income Trust (investment company)**

                                      -16-
<PAGE>


                          Vice President & Secretary, AARP Tax Free Income Trust (investment company)**
                          Vice President & Secretary, AARP Cash Investment Funds (investment company)**
                          Vice President, Scudder GNMA Fund (investment company)*
                          Vice President & Secretary, The Japan Fund, Inc. (investment company)**
                          Director, Vice President & Secretary, Scudder Fund Accounting Corporation (in-house
                             fund accounting agent)*
                         Senior Vice President, Scudder Investor Services, Inc. (broker/dealer)*
                         Director, Vice President & Secretary, Scudder Realty Holdings Corporation (a real
                             estate holding company)*
                         Vice President & Assistant Secretary, Scudder Precious Metals, Inc.(xxx)

Cornelia M. Small        Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Vice President, Scudder Global Fund, Inc. (investment company)**
                         Vice President, AARP Cash Investment Funds (investment company)**
                         Vice President, AARP Growth Trust (investment company)**
                         Vice President, AARP Income Trust (investment company)**
                         Vice President, AARP Tax Free Income Trust (investment company)**

Edmond D. Villani        Director, President & Chief Executive Officer, Scudder, Stevens & Clark, Inc.
                             (investment adviser)**
                         Chairman & Director, Scudder New Asia Fund, Inc. (investment company)**
                         Chairman & Director, The Argentina Fund, Inc. (investment company)**
                         Director, Scudder Realty Advisors, Inc. (realty investment adviser)(x)
                         Supervisory Director, Scudder Mortgage Fund (investment company)+
                         Chairman & Director, The Latin America Dollar Income Fund, Inc. (investment
                             company)**
                         Director, Scudder, Stevens & Clark Japan, Inc. (investment adviser)###
                         Chairman & Director, Scudder World Income Opportunities Fund, Inc. (investment
                             company)**
                         Supervisory Director, Scudder Floating Rate Funds for Fannie Mae Mortgage Securities
                             & II (investment company)+
                         Director, The Brazil Fund, Inc. (investment company)**
                         Director, Indosuez High Yield Bond Fund (investment company) Luxembourg
                         President & Director, Scudder, Stevens & Clark Overseas Corporation(oo)
                         President & Director, Scudder, Stevens & Clark Corporation (Delaware) (investment
                             adviser)**
                         Director, IBJ Global Investment Management S.A. (Luxembourg investment
                             management company) Luxembourg, Grand-Duchy of Luxembourg

Stephen A. Wohler        Director, Scudder, Stevens & Clark, Inc. (investment adviser)**
                         Vice President, Montgomery Street Income Securities, Inc. (investment company)(o)
</TABLE>

<TABLE>
<S>      <C>      <C>
         *        Two International Place, Boston, MA
         x        333 South Hope Street, Los Angeles, CA
         **       345 Park Avenue, New York, NY
         ++       Two Prudential Plaza, 180 N. Stetson Avenue, Chicago, IL
         +++      5 Industrial Way, Salem, NH
         o        101 California Street, San Francisco, CA
         #        Societe Anonyme, 47, Boulevard Royal, L-2449 Luxembourg, R.C. Luxembourg B 34.564
         +        John B. Gorsiraweg 6, Willemstad Curacao, Netherlands Antilles
         xx       De Ruyterkade 62, P.O. Box 812, Willemstad Curacao, Netherlands Antilles
         ##       2 Boulevard Royal, Luxembourg


                                      -17-
<PAGE>


         ***      B1 2F3F 248 Section 3, Nan King East Road, Taipei, Taiwan
         xxx      Grand Cayman, Cayman Islands, British West Indies
         oo       20-5, Ichibancho, Chiyoda-ku, Tokyo, Japan
         ###      1-7, Kojimachi, Chiyoda-ku, Tokyo, Japan
         @        c/o Sinclair Hendersen Limited, 23 Cathedral Yard, Exeter, Devon
</TABLE>

T. Rowe Price Associates, Inc. (T. Rowe Price)
- ----------------------------------------------

Listed below are the Directors of T. Rowe Price who have other substantial
businesses, professions, vocations, or employment aside from that of Director of
T. Rowe Price:

                  James E. Halbkat, Jr., President of U.S. Monitor Corporation,
                  a provider of public response systems. Mr. Halbkat's address
                  is P.O. Box 23109, Hilton Head Island, South Carolina 29925.

                  Richard L. Menschel, limited partner of the Goldman Sachs
                  Group, L.P. Mr. Menschel's address is 85 Broad Street, 2nd
                  Floor, New York, New York 10004.

                  John W. Rosenblum, Dean of the Jepson School of Leadership
                  Studies at the University of Richmond, and a Director of:
                  Cheaspeake Corporation, a manufacturer of paper products,
                  Camdus Corp., a provider of printing and communication
                  services, Comdial Corporation, a manufacturer of telephone
                  systems for business, Cone Mills Corporation, a textiles
                  producer, and Providence Journal Company, a publisher of
                  newspapers and owner of broadcast television stations. Mr.
                  Rosenblum's address is University of Richmond, Virginia 23173.

                  Robert L. Strickland, Chairman of Loew's Companies, Inc., a
                  retailer of specialty home supplies, and a Director of
                  Hannaford Bros, Co., a food retailer. Mr. Strickland's address
                  is 604 Piedmont Building, Winston-Salem, North Carolina 27104.

                  Phillip C. Walsh, Consultant to Cyprus Amax Minerals Company,
                  Englewood, Colorado. Mr. Walsh's address is Pleasant Valley,
                  Peapack, New Jersey 07977.

                  Ann Marie Whittemore, partner of the law firm of McGuire,
                  Woods, Battle and Boothe and is a director of Owens & Minor,
                  Inc.; USF&G Corporation, the James River Corporation of
                  Virginia, and Albemarle Corporation. Mrs. Whittemore's address
                  is One James Center, Richmond, Virginia 23219.

With the exception of Messrs. Halbkat, Menschel, Rosenblum, Strickland, Walsh,
and Mrs. Whittemore (listed above), all Directors of T. Rowe Price are employees
of T. Rowe Price. Listed below are the additional Directors and the principal
executive officer of T. Rowe Price:

                  James S. Riepe, M. David Testa, Henry H. Hopkins, Charles P.
                  Smith, Peter Van Dyke, James A. C. Kennedy II, John H.
                  Laporte, Jr., William T. Reynolds, Brian C. Rogers, George J.
                  Collins

                  George A. Roche, Chairman of the Board and President of T.
                  Rowe Price.

The address of each of the above individuals is 100 East Pratt Street,
Baltimore, Maryland 21202.

ITEM  29.         PRINCIPAL UNDERWRITERS

(a)      In addition to serving as the principal underwriter and investment
         adviser for the Registrant, Aetna Life Insurance and Annuity Company
         (Aetna) also acts as the principal underwriter and investment adviser
         for

                                      -18-
<PAGE>

         Aetna Variable Fund, Aetna Income Shares, Aetna Variable Encore Fund,
         Aetna Investment Advisers Fund, Inc., Aetna Generation Portfolios,
         Inc., Aetna GET Fund and Aetna Variable Portfolios, Inc. (all
         management investment companies registered under the 1940 Act).
         Additionally, Aetna is the principal underwriter and depositor for
         Variable Annuity Account B of Aetna, Variable Annuity Account C of
         Aetna, Variable Annuity Account G of Aetna and Variable Life Account B
         (separate accounts of Aetna registered as unit investment trusts under
         the 1940 Act). Aetna is also the principal underwriter for Variable
         Annuity Account I AICA (a separate account of AICA registered as a unit
         investment trust under the 1940 Act).

(b)      The following are the directors and principal officers of the
         Underwriter:
<TABLE>
<CAPTION>
Name and Principal                  Positions and Offices                           Positions and Offices
Business Address*                   with Principal Underwriter                      with Registrant
- -----------------                   --------------------------                      ---------------
<S>                                 <C>                                             <C>
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

J. Scott Fox                        Director and Senior Vice President

John Y. Kim                         Director and Senior Vice President

Shaun P. Mathews                    Director and Senior Vice President              Director

Glen Salow                          Director and Vice President

Kirk P. Wickman                     Vice President, General Counsel and Secretary

Deborah Koltenuk                    Vice President and Treasurer, Corporate
                                    Controller

Frederick D. Kelsven                Vice President and Chief Compliance Officer
</TABLE>

*        The principal business address of all directors and officers listed is
         151 Farmington Avenue, Hartford, Connecticut 06156.

         (c)      Not applicable.

ITEM  30.    LOCATION OF ACCOUNTS AND RECORDS

As required by Section 31(a) of the 1940 Act and the rules thereunder, the
Registrant and its investment adviser, Aetna, maintain physical possession of
each account, book or other documents at its principal place of business located
at:
                              151 Farmington Avenue
                          Hartford, Connecticut 06156.

                                      -19-
<PAGE>

Shareholder records are maintained by the transfer agent, Investors Bank & Trust
Company, 200 Clarendon Street, Boston, Massachusetts 02116.

ITEM  31.    MANAGEMENT SERVICES

Not Applicable

ITEM  32.    UNDERTAKINGS

The Registrant undertakes that if requested by the holders of at least 50% of a
Portfolio's outstanding shares, the Registrant will hold a shareholder meeting
for the purpose of voting on the removal of one or more Directors and will
assist with communication concerning that shareholder meeting as if Section
16(c) of the Investment Company Act of 1940 applied.

The Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the Registrant's latest annual report to shareholders, upon
request and without charge.

Insofar as indemnification for liability arising under the Securities Act of
1933 (1933 Act) 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
1933 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 1933 Act and
will be governed by the final adjudication of such issue.

The Registrant undertakes to file a Post-Effective Amendment to this
Registration Statement, using financial statements which need not be certified,
within four to six months from the commencement of operations of Registrant's
1933 Act Registration Statement.

                                      -20-
<PAGE>

                                   SIGNATURES

Pursuant to the Securities Act of 1933 and the Investment Company Act of 1940,
Portfolio Partners, Inc. has duly caused this Registration Statement to be
signed on its behalf by the undersigned thereto duly authorized, in the City of
Hartford and State of Connecticut on the 31st day of July, 1997.


                                          PORTFOLIO PARTNERS, INC.



                                         By: /s/Martin T.Conroy
                                                -----------------------------
                                                Martin T. Conroy
                                                Director, Vice President and
                                                Chief Financial Officer


Pursuant to the requirements of the Securities Act of 1933 this Registration
Statement has been signed below by the following persons on July 31, 1997 in
the capacities indicated.

SIGNATURE                              TITLE

/s/Martin T. Conroy                    Director, Vice President and       
  -----------------------              Chief Financial Officer  
   Martin T. Conroy                    

/s/Laurie M. Leblanc                   Director
  -----------------------
   Laurie M. Leblanc

/s/Shaun P. Mathews                    Director
  -----------------------
   Shaun P. Mathews

                                      -21-
<PAGE>


                            PORTFOLIO PARTNERS, INC.
                                  EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.                Exhibit                                                           Page
- -----------                -------                                                           ----
<S>                        <C>                                                               <C>
EX-99.B1                   Articles of Incorporation                                         ____

EX-99.B2                   Bylaws                                                            ____

EX-99.B5(a)                Form of Investment Advisory Agreement between
                           Portfolio Partners, Inc. and Aetna                                ____

EX-99.B5(b)                Form of Subadvisory Agreement between Aetna and
                           Massachusetts Financial Services Company                          ____

EX-99.B5(c)                Form of Subadvisory Agreement between Aetna and
                           Scudder, Stevens & Clark, Inc.                                    ____

EX-99.B5(d)                Form of Subadvisory Agreement between Aetna and
                           T. Rowe Price Associates, Inc.                                    ____

EX-99.B6                   Form of Underwriting Agreement between the Registrant
                           and Aetna Life Insurance and Annuity Company                      ____

EX-99.B8                   Form of Custodian Agreement                                       ____

EX-99.B9(a)                Form of Administrative Services Agreement                         ____

EX-99.B9(b)                License Agreement between Aetna and T. Rowe Price
                           Associates, Inc.                                                  ____

EX-99.B-10                 Opinion and Consent of Counsel                                    ____

EX-99.B11(a)               Consent of Independent Auditors                                   *

EX-99.B11(b)               Form of Consents of Proposed Directors                            ____

EX-99.B-13                 Agreement re: Initial Contribution to Working Capital             ____

EX-99.B-16                 Schedule for Calculation of Performance Data                      *

EX-99.B19                  Powers of Attorney                                                *

27                         Financial Data Schedule                                           *
</TABLE>


*To be filed by Amendment.


                                      -22-



                            ARTICLES OF INCORPORATION
                                       OF
                            PORTFOLIO PARTNERS, INC.

    The undersigned, Amy R. Doberman, whose post office address is 151
Farmington Avenue, RE4A, Hartford, Connecticut 06156, being at least eighteen
years of age, acting as incorporator, does, under and by virtue of the General
Laws of the State of Maryland authorizing formation of corporations, hereby
forms a corporation.

    FIRST: The name of the Corporation (which is hereinafter referred to as the
"Corporation") is:

                            Portfolio Partners, Inc.

    SECOND: The purposes for which, and any of which, the Corporation is formed,
and the business to be carried on and promoted by it are:

        1. To act as an open-end investment company of the management type
        registered as such with the Securities and Exchange Commission pursuant
        to the Investment Company Act of 1940 (the "1940 Act"), and to perform
        any and all activities necessary or desirable in connection therewith.

        2. To engage in and perform any other activities or functions which may
        lawfully be performed by a business corporation organized under the
        General Laws of the State of Maryland.

        The forgoing enumerated purposes shall be in no way limited or
        restricted by reference to, or inference from, the terms of any clauses
        of this or any other article of these Articles of Incorporation, and
        each shall be regarded as independent; and they are intended to be and
        shall be construed as powers as well as purposes of the Corporation and
        shall be in addition to and not in limitation of the general powers of
        corporations under the General Laws of the State of Maryland.

    THIRD: The post office address of the principal office of the Corporation in
the State of Maryland is c/o The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202.

    FOURTH: The name and address of the resident agent of the Corporation in the
State of Maryland is The Corporation Trust

                                       1
<PAGE>

Incorporated, 32 South Street, Baltimore, Maryland 21202. Said resident agent
is a Maryland corporation.

        FIFTH: (a) The Corporation has the authority to issue an aggregate of
1,000,000,000 shares of Capital Stock (hereinafter referred to as "Shares");

               (b) 500,000,000 of the Shares shall be classified in the
                   following series (each a "Portfolio" and collectively the
                   "Portfolios"):

                   100,000,000 Shares in MFS Emerging Equities Portfolio;

                   100,000,000 Shares in MFS Research Growth Portfolio;

                   100,000,000 Shares in MFS Value Equity Portfolio;

                   100,000,000 Shares in Scudder International Growth Portfolio;
                   and

                   100,000,000 Shares in T.Rowe Price Growth Equity Portfolio;

              (c) 500,000,000 of the Shares shall be unclassified, subject to
classification by the Board of Directors pursuant to the authority granted to
the Board of Directors in Article EIGHTH of these Articles of Incorporation;

              (d) the par value of each Share is $0.001;

              (e) the aggregate par value of all Shares is $1,000,000.

        SIXTH: The Shares of each Portfolio of the Corporation shall have the
following preferences, rights, powers, restrictions, limitations, qualifications
and terms and conditions of redemption, subject to the right of the Board of
Directors acting by properly adopted resolution to amend, add to or remove such
preferences, rights, powers, restrictions, limitations, qualifications and terms
and conditions of redemption of any unissued Shares of any Portfolio:

              (a) Assets. All consideration received by the Corporation from the
sale and/or issuance of Shares of a Portfolio, together with all assets in which
such consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the

                                       2
<PAGE>

sale, exchange or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Portfolio for all purposes, subject only to the
rights of creditors of that Portfolio, and shall be so recorded upon the books
and accounts of the Corporation. Any assets, income, earnings, profits, and
proceeds thereof, funds, or payments of the Corporation which are not readily
identifiable as belonging to any particular Portfolio (collectively "General
Items") shall be allocated by or under the supervision of the Board of
Directors to and among any one or more of the Portfolios of the Corporation and
designated from time to time in such manner and on such basis as the Board of
Directors, in its sole discretion, deems fair and equitable and any General
items so allocated to a particular Portfolio shall belong to that Portfolio.
Each such allocation by the Board of Directors shall be conclusive and binding
for all purposes; and all such consideration, assets, income, earnings, profits,
and proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds, in whatever form the same may be, together with
any General Items allocated to the Portfolio, are herein referred to as "assets
belonging to" that Portfolio.

              (b) Liabilities. The assets belonging to a Portfolio shall be
charged with the liabilities of the Corporation incurred on behalf of the
Portfolio and all expenses, costs, charges and reserves attributable to the
Portfolio. Any general liabilities, expenses, costs, charges or reserves of the
Corporation which are not readily identifiable as belonging to any particular
Portfolio shall be allocated and charged by or under the supervision of the
Board of Directors to and among any one or more of the Portfolio established and
designated from time to time in such manner and on such basis as the Board of
Directors, in its sole discretion, deems fair and equitable. Each allocation of
liabilities, expenses, costs, charges and reserves by the Board of Directors
shall be conclusive and binding for all purposes; and the liabilities, expenses,
costs, charges and reserves allocated and so charged to the Portfolio are herein
referred to as "liabilities belonging to" the Portfolio.

              (c) Income. The Board of Directors shall have full discretion, to
the extent not inconsistent with the General Laws of the State of Maryland and
the 1940 Act, to determine which items shall be treated as income and which
items as capital; and each such determination and allocation shall be conclusive
and binding. "Income belonging to" the Portfolio

                                       3
<PAGE>

includes all income, earnings and profits derived from assets belonging to the
Portfolio, less any expenses, costs, charges or reserves belonging to the
Portfolio, for the relevant time period.

              (d) Dividends. Dividends and distributions on Shares of the
Portfolio may be declared and paid with such frequency, in such form and in such
amount as the Board of Directors may from time to time determine. Dividends may
be declared daily or otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Board of Directors may
determine, after providing for actual and accrued liabilities belonging to the
Portfolio.

              All dividends on Shares of the Portfolio shall be paid only out of
the income belonging to the Portfolio and capital gains distributions on Shares
of the Portfolio shall be paid only out of the capital gains belonging to the
Portfolio. All dividends and distributions on Shares of the Portfolio shall be
distributed pro rata to the holders of Shares ("Shareholders") of the Portfolio
in proportion to the number of Shares of the Portfolio held by each Shareholder
at the date and time of record established for the payment of such dividends or
distributions, except that in connection with any dividend or distribution
program or procedure the Board of Directors may determine that no dividend or
distribution shall be payable on Shares as to which the Shareholder's purchase
order and/or payment have not been received by the time or times established by
the Board of Directors under such program or procedure.

              The Board of Directors shall have the power, in its sole
discretion, to distribute in any fiscal year as dividends, including dividends
designated in whole or in part as capital gains distributions, amounts
sufficient, in the opinion of the Board of Directors, to enable the Corporation
and each Portfolio to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended, (the "Code") or any successor or
comparable statute thereto, regulations promulgated thereunder, and to avoid
liability of the Corporation or Portfolio for Federal income tax in respect of
that year. However, nothing in the foregoing shall limit the authority of the
Board of Directors to make distributions greater than or less than the amount
necessary to qualify as a regulated investment company and to avoid liability of
the Corporation or Portfolio for such tax. Dividends and distributions may be
paid in cash, property or Shares, or a combination thereof, as determined by the
Board of Directors or pursuant to any program that the Board of Directors may

                                      -4-
<PAGE>



have in effect at the time. Dividends or distributions paid in Shares will be
paid at the current net asset value thereof as defined in section (g) of this
Article SIXTH.

              (e) Liquidation. In the event of liquidation of the Corporation or
of any Portfolio, the Shareholders of the Portfolio shall be entitled to receive
when and as declared by the Board of Directors, the excess of the assets
belonging to the Portfolio over the liabilities belonging to it. The
Shareholders of such Portfolio shall not be entitled thereby to any distribution
upon liquidation of any other Portfolio. The assets so distributable to the
Shareholders of the Portfolio shall be distributed among such Shareholders in
proportion to the number of Shares of the Portfolio held by them and recorded on
the books of the Corporation. The liquidation of the Portfolio in which there
are Shares then outstanding may be authorized by vote of a majority of the Board
of Directors then in office, subject to the approval of a majority of the
outstanding Shares of the Portfolio, as defined in the 1940 Act.

              (f) Voting. On each matter submitted to a vote of the
Shareholders, each Shareholder shall be entitled to one vote for each Share
outstanding in name of such Shareholder on the books of the Corporation, and all
Shares of the Portfolio shall vote as a single Portfolio ("Single Portfolio
Voting"); provided, however, that (i) as to any matter with respect to which a
separate vote of the Portfolio is required by the 1940 Act or by the General
Laws of the State of Maryland, such requirement as to a separate vote by that
Portfolio shall apply in lieu of Single Portfolio Voting as described above;
(ii) in the event that the separate vote requirements referred to in (i) above
apply with respect to one or more Portfolio, then Subject to (iii) below, the
Shares of all other Portfolios shall vote as a single Portfolio; and (iii) as to
any matter which does not affect the interest of a particular Portfolio, only
the holders of the Shares of the one or more affected Portfolios shall be
entitled to vote.

              (g) Net Asset Value. The net asset value per Share of the
Portfolio shall be the quotient obtained by dividing the value of the net assets
of the Portfolio (being the value of the assets belonging to the Portfolio less
the liabilities belonging to the Portfolio) by the total number of outstanding
Shares of the Portfolio.

              (h) Equality. All Shares of the Portfolio shall represent an equal
proportionate interest in the assets belonging to the Portfolio (subject to the
liabilities

                                      -5-
<PAGE>


belonging to the Portfolio), and each Share of the Portfolio shall be equal to
each other Share of the Portfolio. The Board of Directors may from time to time
divide or combine the Shares of the Portfolio into a greater or lesser number of
Shares of the Portfolio without thereby changing the proportionate beneficial
interest in the assets belonging to the Portfolio or in any way affecting the
rights of Shares of any other Portfolio.

              (i) Conversion or Exchange Rights. Subject to compliance with the
requirements of the 1940 Act, the Board of Directors shall have the authority to
provide that Shareholders of the Portfolio shall have the right to convert or
exchange said Shares into Shares of one or more other Portfolios of Shares in
accordance with such requirements and procedures as may be established by the
Board of Directors.

              (j) Redemption by the Corporation. The Board of Directors may
cause the Corporation to redeem at current net asset value the Shares of the
Portfolio from a Shareholder whose Shares have an aggregate current net asset
value less than an amount established by the Board of Directors. No such
redemption shall be effected unless the Corporation has given the Shareholder
reasonable notice of its intention to redeem the Shares and an opportunity to
purchase a sufficient number of additional Shares to bring the aggregate current
net asset value of Shares held by such Shareholder to the minimum amount
established. Upon redemption of Shares pursuant to this section (j) of Article
SIXTH, the Corporation shall cause prompt payment of the full redemption price
to be made to the holder of Shares so redeemed. Each Share is subject to
redemption by the Corporation at the redemption price computed in the manner set
forth in section (k) of this Article SIXTH, if at any time the Board of
Directors, in its sole discretion, determines that failure to so redeem may
result in the Corporation being classified as a personal holding company as
defined in the Code.

              (k) Redemption by Shareholders. To the extent the Corporation has
funds or property legally available therefor, each Shareholder of the
Corporation shall have the right at such times as may be permitted by the
Corporation, but no less frequently than once each day, to require the
Corporation to redeem all or any part Shares held by such Shareholder at a
redemption price equal to the net asset value per Share next determined after
the Shares are tendered for redemption; said determination of the net asset
value per Share to be made in accordance with the requirements of the 1940 Act
and the applicable rules and regulations of the Securities and

                                       -6-
<PAGE>



Exchange Commission and in conformity with generally accepted accounting
practices and principles. Notwithstanding the foregoing, the Corporation may
postpone payment or deposit of the redemption price and may suspend the right of
the Shareholders to require the Corporation to redeem Shares pursuant to the
applicable rules and regulations, or any order, of the Securities and Exchange
Commission.

              (l) Transfer. Transfer of Shares will be recorded on the stock
transfer records of the Corporation at the request of the holders thereof at any
time during normal business hours of the Corporation unless the Board of
Directors of the Corporation determines, in its sole discretion, that allowing
such transfer may result in the Corporation being classified as a personal
holding company as defined in the Code.

     SEVENTH: (a) The number of Directors of the Corporation shall be determined
by the Board of Directors in the manner provided by the bylaws of the
Corporation but shall not be less than three (3).

              (b) The names of the Directors who shall act until the first
Annual Meeting of Shareholders and until their successors are duly chosen and
qualify are:

     Martin T. Conroy
     Laurie M. LeBlanc
     Shaun P. Mathews

     EIGHTH: The Board of Directors is empowered to authorize the issuance from
time to time of Shares of the Corporation, whether now or hereafter authorized;
provided, however, that the consideration per Share to be received by the
Corporation upon the issuance or sale of any Shares shall be the net asset value
per Share determined in accordance with the requirements of the 1940 Act and the
applicable rules and regulations of the Securities and Exchange Commission and
in conformity with generally accepted accounting practices and principles. The
Shares may be issued in one or more Portfolios, and each Portfolio may consist
of one or more classes. The Board of Directors of the Corporation shall have the
power and authority to classify or reclassify any unissued Shares, including,
but not limited to, Shares of any Portfolio or any class of any Portfolio, from
time to time by setting or changing the preferences, conversions or other
rights, voting powers, restrictions, limitations as to dividends,
qualifications, terms or conditions of redemption or other terms and conditions
of such Shares. Each Portfolio of Shares and each class of a Portfolio shall be
issued upon such terms and conditions, and shall confer upon the holders of
Shares of such Portfolio or class thereof such

                                      -7-
<PAGE>



rights as are set forth in these Articles of Incorporation or as the Board of
Directors may otherwise determine, consistent with the requirements of the laws
of the State of Maryland and the 1940 Act and the applicable rules and
regulations of the Securities and Exchange Commission, these Articles of
Incorporation and the Bylaws of this Corporation. In addition, the Board of
Directors is hereby expressly authorized to change the designation of any
Portfolio or class, and to increase or decrease the number of Shares of any
Portfolio or class, but the number of Shares of any Portfolio or class shall not
be decreased by the Board of Directors below the number of Shares of such
Portfolio or class then outstanding.

     NINTH: Except as limited specifically by the provisions of this Article
NINTH or any other provision of these Articles of Incorporation, the
Corporation shall have and may exercise and generally enjoy all of the powers,
rights and privileges granted to, or conferred upon, a corporation by the
General Laws of the State of Maryland now or hereafter in force. The following
provisions are hereby adopted for the purpose of defining, limiting and
regulating the powers of the Corporation and of the Directors and Shareholders:

              (a) No Preemptive Rights. No Shareholder shall have any preemptive
or preferential right of subscription to any Shares of any Portfolio or any
class thereof whether now or hereafter authorized. The Board of Directors may
issue Shares without offering the same either in whole or in part to the
Shareholders.

              (b) Contracts with Affiliates. The Corporation may enter into
exclusive or nonexclusive contract(s) for the sale of its Shares and may also
enter into contracts, including but not limited to investment advisory,
management, custodial, transfer agency and administrative services. The terms
and conditions, methods of authorization, renewal, amendment and termination of
the aforesaid contracts shall be as determined at the discretion of the Board of
Directors; subject, however, to the provisions of these Articles of
Incorporation, the bylaws of the Corporation, applicable state law, and the 1940
Act and the rules and regulations of the Securities and Exchange Commission
thereunder.

              (c) Conflicts. Subject to and in compliance with the provisions of
the General Laws of the State of Maryland respecting interest director
transactions, and the 1940 Act and the rules thereunder, the Corporation may
enter into a written underwriting contract, management contract or contracts for
research, advisory or administrative services with Aetna Life Insurance and
Annuity Company or its parent,

                                      -8-
<PAGE>



affiliates or subsidiaries thereof, or its respective successors, or otherwise
do business with such corporations, notwithstanding the fact that one or more of
the Directors of the Corporation and some or all of its officers are, have been,
or may become directors, officers, employees or stockholders of Aetna Life
Insurance and Annuity Company or its parent, affiliates or subsidiaries or
successors, and in the absence of actual fraud the Corporation may deal freely
with Aetna Life Insurance and Annuity Company or its parent, affiliates,
subsidiaries or successors, and neither such underwriting contract, management
contract or contract for research, advisory of administrative services, nor any
other contract or transaction between the Corporation and Aetna Life Insurance
and Annuity Company or its parent, affiliates, subsidiaries or successors shall
be invalidated or in any way affected thereby, nor shall any Director or
officer, of the Corporation be liable to the Corporation or to any Shareholder
or creditor of the Corporation or to any other person for any loss incurred
under or by reason of any such contract or transaction. Notwithstanding the
foregoing, no officer, director, underwriter or investment adviser of the
Corporation shall be protected against any liability to the Corporation or to
its security holders to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his or her office.

              (d) Indemnification. The Corporation shall indemnify its officers
and directors, and any officer or director who serves at the request of the
Corporation as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust or other enterprise as follows:

                        (i) Every person who is or has been a director or
            officer of the Corporation, and every person who while an officer or
            director of the Corporation serves or has served at the
            Corporation's request as director, officer, employee or agent of
            another corporation, partnership, joint venture, trust or other
            enterprise, shall be indemnified by the Corporation to the fullest
            extent permitted by law against liability and against all expenses
            reasonably incurred or paid by him or her in connection with any
            debt, claim, action, demand, suit, proceeding, judgment, decree,
            liability or obligation of any kind in which he or she becomes
            involved as a party or otherwise by virtue of his or her being or
            having been a director or officer of the Corporation or a director,
            officer, employee or agent of another corporation, partnership,
            joint venture, trust or other enterprise at the

                                      -9-
<PAGE>



            request of the Corporation, and against amounts paid or incurred by
            him or her in the settlement thereof.

                        (ii) The words "claim," "action," "suit" or "proceeding"
            shall apply to all claims, actions, suits or proceedings (civil,
            criminal administrative, legislative, investigative or other,
            including appeals), actual or threatened, and the words "liability"
            and "expenses" shall include, without limitation, attorneys' fees,
            costs, judgments, amounts paid in settlement, fines, penalties and
            other liabilities.

                        (iii) No indemnification shall be provided hereunder to
            a director or officer against any liability to the Corporation or
            its Shareholders by reason of willful misfeasance, bad faith, gross
            negligence, or reckless disregard of the duties involved in the
            conduct of his or her office.

                        (iv) The rights of indemnification provided herein may
            be insured against by policies maintained by the Corporation, shall
            be severable, shall not affect any other rights to which any
            director or officer may now or hereafter be entitled, shall continue
            as to a person who has ceased to be such director or officer and
            shall inure to the benefit of the heirs, executors and
            administrators of such a person.

                        (v) In the absence of a final decision on the merits by
            a court or other body before which such proceeding was brought, an
            indemnification payment will not be made, except as provided in
            subsection (vi) of this Section (d) of Article NINTH, unless in the
            absence of such a decision, a reasonable determination based upon a
            factual review has been made:

                                    (1) by a majority vote of a quorum of
                        non-party Directors who are not "interested" persons of
                        the Corporation (as defined in the 1940 Act), or

                                    (2) by independent legal counsel in a
                        written opinion that the indemnitee was not liable for
                        an act of willful misfeasance, bad faith, gross
                        negligence, or reckless disregard of duties.

                        (vi) The Corporation further undertakes that advancement
            of expenses incurred in the defense of a proceeding (upon
            undertaking for repayment unless it is ultimately determined that
            indemnification is appropriate) against an officer, director or
            controlling person of the

                                      -10-
<PAGE>



            Corporation will not be made absent the fulfillment of at least one
            of the following conditions: (1) the indemnitee provides security
            for his undertaking, (2) the Corporation is insured against losses
            arising by reason of any lawful advances or (3) a majority of a
            quorum of non-party Directors who are not "interested" persons or
            independent legal counsel in a written opinion makes a factual
            determination that there is a reason to believe the indemnitee will
            be entitled to indemnification.

              The Corporation may, with the approval of the Board of Directors,
provide such indemnification and advancement of expenses as set forth in
subsections (i) through (vi) of this Section (d) of Article Ninth to employees
and agents of the Corporation and to any person (other than officers or
directors of the Corporation) who serves at the request for the Corporation as
an officer, director, employee or agent of another corporation, partnership,
joint venture or other enterprise.

              Any repeal or amendment of any of the provisions of this section
(d) of Article NINTH, and any adoption or amendment of any other provision of
the Charter or bylaws of the Corporation which may be inconsistent with the
provisions of this section (d) of Article NINTH, shall be prospective in
operation and effect only, and shall not affect in any manner any right to
indemnification hereunder existing at the time of any such repeal, amendment or
adoption.

              (e) Limitation of Liability. The liability of the directors and
officers of the Corporation to the Corporation or its Shareholders for money
damages shall be limited to the fullest extent permitted under the General Laws
of the State of Maryland now or hereafter in force, including, but not limited
to, section 5-349 of the Courts and Judicial Proceedings Article of the
Annotated Code of Maryland, or any successor provision or law of similar import,
and the directors and officers of the Corporation shall have no liability
whatsoever to the Corporation or its shareholders for money damages except to
the extent which such liability cannot be limited or restricted under the
General Laws of the State of Maryland now or hereafter enforced. Any repeal or
amendment of the foregoing sentence of this Section (e) of Article NINTH, and
any adoption or amendment of any other provision of the Charter or Bylaws of the
Corporation which may be inconsistent with the foregoing sentence, shall be
prospective in operation and effect only, and shall affect in any manner the
applicability of the foregoing sentence with respect to any act or omission of
any director or officer

                                      -11-
<PAGE>



occurring prior to any such repeal, amendment or adoption.

              (f) Books and Records. The Board of Directors shall, subject to
the General Laws of the State of Maryland, have the power to determine, from
time to time, whether and to what extent and at what times and places and under
what conditions and regulations any accounts and books of the Corporation, or
any of them, shall be open to the inspection of Shareholders.

              (g) Voting. Notwithstanding any provision of law requiring a
greater proportion than a majority of the votes of all classes of Shares
entitled to be cast to take or authorize any action, the Corporation may take or
authorize any action upon the concurrence of a majority of the aggregate number
of the votes entitled to be cast thereon.

              (h) Amendments. The Corporation reserves the right from time to
time to make any amendment to its Articles of Incorporation now or thereafter
authorized by law, including any amendment which alters the contract rights, as
expressly set forth in the Articles of Incorporation, or any outstanding Shares,
except that no action affecting the validity or accessibility of such Shares
shall be taken without the unanimous approval of the outstanding Shares affected
thereby.

              (i) Additional Powers. In addition to the powers and authority
conferred upon them by the Articles of Incorporation of the Corporation or
Bylaws, the Board of Directors may exercise all such powers and authority and do
all such acts and things as may be exercised or done by the Corporation,
subject, nevertheless, to the provisions of applicable state law and the
Articles of Incorporation and Bylaws of the Corporation.

              (j) Financial Matters. The Board of Directors is expressly
authorized to determine in accordance with generally accepted accounting
principles and practices what constitutes net profits, earnings, surplus or net
assets in excess of capital, and to determine what accounting periods shall be
used by the Corporation for any purpose, whether annual or any other period,
including daily; to set apart from any funds of the Corporation such reserves
for such purposes as it shall determine and to abolish the same; to declare and
pay dividends and distributions in cash, securities or other property from
surplus or any funds legally available therefor, at such intervals (which may be
as frequent as daily) or on such other periodic basis, as it shall determine; to
declare such dividends or distributions by means of a formula or other method of
determination, at meetings held less frequently than

                                      -12-
<PAGE>



the frequency of the effectiveness of such declarations; to establish payment
dates for dividends or any other distributions on any basis, including dates
occurring less frequently than the effectiveness of declarations thereof; and to
provide for the payment of declared dividends on a date earlier or later than
the specified payment date in the case of Shareholders redeeming their entire
ownership of Shares.

     TENTH: The duration of the Corporation shall be perpetual.

     IN WITNESS WHEREOF, the undersigned has signed these Articles of
Incorporation on the 6th day of May, 1997 and by her signature hereby
acknowledges the same to be her act and that, to the best of her knowledge, the
matters and facts set forth herein are true in all material respects under the
penalties of perjury.

WITNESS:

/s/ Bonita C. McCoy                  /s/ Amy R. Doberman
                                         Amy R. Doberman

                                      -13-



                            PORTFOLIO PARTNERS, INC.

                                     BYLAWS


                                    ARTICLE I

                             MEETING OF SHAREHOLDERS


   Section 1. ANNUAL MEETINGS. An annual meeting of Shareholders of the
Corporation shall be held only in those years in which the election of Directors
is required to be acted on under the Investment Company Act of 1940 ("1940
Act"). At each annual meeting, any other proper business within the power of
Shareholders may be transacted. An annual meeting shall be held on a date and at
a time designated by the Board of Directors.

   Section 2. SPECIAL MEETINGS. Special meetings of Shareholders may be called
by the President or by the Board of Directors; and shall be called by the
President, Secretary or any Director at the request in writing of the holders of
the outstanding voting shares of the capital stock of the corporation
(hereinafter, the outstanding voting shares of the capital stock of the
Corporation are referred to as "Shares") entitled to cast not less than 50% of
the votes entitled to be cast at such meeting. Any such request shall state the
purposes of the proposed meeting.

   Section 3. PLACE OF MEETINGS. All meetings of the Shareholders shall be held
at the office of the Corporation in Hartford, Connecticut, or at such other
place within or outside the State of Maryland as may be fixed by the party or
parties making the call as stated in the notice thereof.

   Section 4. NOTICE. Not less than ten or more than ninety days before the date
of every Annual or Special Meeting of Shareholders, the Secretary or an
Assistant Secretary shall give to each Shareholder of record notice of such
meeting by mail, telegraph, cable or radio. Such notice shall be deemed to have
been given when deposited in the mail or with a telegraph or cable office or
radio station for transmission to the Shareholder at his address appearing on
the books of the Corporation. It shall not be necessary to set forth the
business proposed to be transacted in the notice of any Annual Meeting, except
that any proposal to amend the Articles of Incorporation of the Corporation
shall be set forth in such notice. Notice of a Special Meeting shall state the
purpose or purposes for which it is called.

   Section 5. QUORUM. At all meetings of the Shareholders (including meetings of
Shareholders of a particular series), the presence in person or by proxy of
Shareholders entitled to cast a majority in number of votes shall be necessary
to constitute a quorum for the transaction of business. In the absence of a
quorum at any meeting, a majority of those Shareholders present in person or by
proxy may adjourn the meeting from time to time to be held at the same place
without further notice other than by announcement until a quorum, as
<PAGE>


above defined, shall be present, whereupon any business may be transacted which
might have been transacted at the meeting originally called had the same been
held at the time so called.

   Section 6. VOTING. At all meetings of Shareholders, each Shareholder shall be
entitled to one vote or fraction thereof for each Share standing in his name on
the books of the Corporation on the date for the determination of Shareholders
entitled to vote at such meeting. On any matter submitted to a vote of
Shareholders, all Shares of the Corporation then issued and outstanding and
entitled to vote shall be voted in the aggregate and not by class except that
(1) when otherwise expressly required by the Maryland General Corporation Law or
the 1940 Act, Shares shall be voted by individual class; and (2) only Shares of
the respective Portfolios are entitled to vote on matters concerning only that
Portfolio.

   Section 7. PROXIES. Any Shareholder entitled to vote at any meeting of
Shareholders may vote either in person or by proxy, but no proxy which is dated
more than eleven months before the meeting named therein shall be accepted.
Every proxy shall be in writing subscribed by the Shareholder or his duly
authorized attorney and dated, but need not be sealed, witnessed or
acknowledged. All proxies shall be filed with and verified by the Secretary or
an Assistant Secretary of the Corporation.

   Section 8. NOMINATIONS AND SHAREHOLDER BUSINESS.

   (a) Annual Meetings of Shareholders.

       (1) Nominations of persons for election to the Board of Directors and the
proposal of business to be considered by the Shareholders may be made at an
annual meeting of Shareholders (i) pursuant to the Corporation's notice of
meeting; (ii) by or at the direction of the Board of Directors; or (iii) by any
Shareholder of the Corporation who was a Shareholder of record at the time of
giving of notice provided for in this Section 8(a), who is entitled to vote at
the meeting and who complied with the notice procedures set forth in this
Section 8(a).

       (2) For nominations or other business to be properly brought before an
annual meeting by a Shareholder pursuant to clause (iii) of paragraph (a)(1) of
this Section 8, the Shareholder must have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, a Shareholder's notice shall
be delivered to the Secretary at the principal executive offices of the
Corporation not earlier than the 90th day prior to such annual meeting and not
later than the close of business on the later of the 60th day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made. Such Shareholder's notice shall set
forth (i) as to each person whom the Shareholder proposes to nominate for
election or reelection as a Director, all information relating to such person
that is required to be disclosed in solicitations of proxies for election of
Directors, or is otherwise required, in each case pursuant to applicable federal
securities laws, rules and regulations (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a director
if elected); (ii) as to any other business that the Shareholder proposes to
bring before the meeting, a brief description of the business desired to be
brought


                                       -2-
<PAGE>


before the meeting, the reason for conducting such business at the meeting and
any material interest in such business of such Shareholder and of the beneficial
owner, if any, on whose behalf the proposal is made; and (iii) as  to the
Shareholder giving the notice and the beneficial owner, if any, on whose
behalf the nomination or proposal is made, (x) the name and address of such
Shareholder, as they appear on the Corporation's books, and of such beneficial
owner and (y) the class and number of shares of stock of the Corporation which
are owned beneficially and of record by such Shareholder and such beneficial
owner.

   (b) Special Meetings of Shareholders.

       (1) Only such business shall be conducted at a special meeting of
Shareholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a meeting of Shareholders at which directors
are to be elected (i) pursuant to the Corporation's notice of meeting, (ii) by
or at the direction of the Board of Directors or (iii) provided that the Board
of Directors has determined that directors shall be elected at such special
meeting, by any Shareholder of the Corporation who is a Shareholder of record at
the time of giving of notice provided for in this Section 8(b), who is entitled
to vote at the meeting and who complied with the notice procedures set forth in
this Section 8(b).

       (2) In the event the Corporation calls a special meeting of Shareholders
for the purpose of electing one or more directors to the Board of Directors, any
such Shareholder may nominate a person or persons (as the case may be) for
election to such position as specified in the Corporation's notice of meeting,
if the Shareholder's notice required by paragraph (a) (2) of this Section 8
shall be delivered to the secretary at the principal executive offices of the
Corporation not earlier than the 90th day prior to such special meeting and not
later of the close of business on the later of the 60th day prior to such
special meeting or the tenth day following the day on which public announcement
is first made of the date of the special meeting and of the nominees proposed by
the Board of Directors to be elected at such meeting.

   (c) General

       (1) Only such persons who are nominated in accordance with the procedures
set forth in this Section 8 shall be eligible to serve as Directors and only
such business shall be conducted at a meeting of Shareholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
Section 8. The presiding officer of the meeting shall have the power an duty to
determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in this Section 8
and, if any proposed nomination or business is not in compliance with this
Section 8, to declare that such defective nomination or proposal be disregarded.

       (2) For purposes of this Section 8, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service, Associated
Press or comparable news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to applicable
federal securities laws, rules or regulations.


                                       -3-
<PAGE>


       (3) Notwithstanding the foregoing provisions of this Section 8, a
Shareholder shall also comply with all applicable requirements of state law and
of federal securities laws, rules and regulations with respect to the matters
set forth in this Section 8. Nothing in this Section 8 shall be deemed to affect
any rights of Shareholders to request inclusion of proposals in the
Corporation's proxy statement pursuant to applicable federal securities laws,
rules and regulations.

   Section 9. CONSENTS. Any action required or permitted to be taken at any
meeting of Shareholders may be taken without a meeting if a written consent,
setting forth such action, is signed by all the Shareholders entitled to vote on
the subject matter thereof, and such consent is filed with the records of the
Corporation.


                                   ARTICLE II

                               BOARD OF DIRECTIONS


   Section 1. POWERS. The Board of Directors shall have control and management
of the affairs, business and properties of the Corporation. They shall have and
exercise in the name and on behalf of the Corporation all the rights and
privileges legally exercisable by the Corporation except as otherwise provided
by law, the Articles of Incorporation or these Bylaws.

   Section 2. NUMBER, QUALIFICATIONS, MANNER OF ELECTION AND TERM OF OFFICE. The
number of Directors of the Corporation shall be fixed from time to time by a
majority of the entire Board of Directors but shall be not less than three nor
more than twenty. Subject to the foregoing, the Board of Directors may from time
to time by a majority of the entire Board increase or decrease the number of
Directors to such number as they deem expedient and fill the vacancies so
created. The term of office of a Director shall not be affected by any decrease
in the number of Directors made by the Board pursuant to the foregoing
authorization. Directors need not be Shareholders. Until the first Annual
Meeting of Shareholders or until successors are duly elected and qualified, the
Board of Directors shall consist of the persons named as such in the Articles of
Incorporation. The members of the Board of Directors shall be elected by the
Shareholders at the Annual Meeting of Shareholders or at a Special Meeting of
Shareholders called for that purpose. Each Director shall hold office until the
Annual Meeting next held after his election or until his successor shall be
elected and qualified.

   Section 3. PLACE OF MEETING. The Board of Directors may hold its meetings at
such place or places within or without the State of Maryland as the Board may
from time to time determine.


                                       -4-
<PAGE>


   Section 4. ANNUAL MEETINGS. The Board of Directors shall meet for the
election of officers and any other business as promptly as possible after the
adjournment of the Annual Meeting of Shareholders or at such other time as the
Board of Directors may designate.

   Section 5. REGULAR MEETINGS. Regular meetings of the Board of Directors shall
be held at such intervals and on such dates as the Board may from time to time
designate.

   Section 6. SPECIAL MEETINGS. Special meetings of the Board of Directors may
be held at such times and at such places as may be designated in the call of
such meeting. Special meetings shall be called by the Secretary or Assistant
Secretary at the request of the President or any Director.

   Section 7. NOTICE. The Secretary or Assistant Secretary shall give notice of
each Annual, Regular or Special Meeting of the Board of Directors to each member
of the Board at least two days before the meeting by mail, facsimile, telegram
or telephone to his last known address. It should not be necessary to state the
purpose or business to be transacted in the notice of any Annual or Regular
meeting. The notice of a Special Meeting shall state the purpose or purposes for
which it is called. Personal attendance at any meeting by a Director other than
to protest the validity of said meeting shall constitute a waiver of the
foregoing requirement of notice.

   Section 8. CONDUCT OF MEETINGS AND BUSINESS. The Board of Directors may adopt
such rules and regulations for the conduct of their meetings and the management
of the affairs of the Corporation as they may deem proper and not inconsistent
with applicable law, the Article of Incorporation of the Corporation or these
Bylaws.

   Section 9. QUORUM. A majority of the total membership of the Board of
Directors shall constitute a quorum at any meeting of the Board of Directors.
The action of a majority of Directors present at any meeting at which a quorum
is present shall be the action of the Board of Directors unless the concurrence
of a greater proportion is required by applicable law, the Articles of
Incorporation of the Corporation or these Bylaws. In the absence of a quorum at
any meeting a majority of the Directors present may adjourn the meeting from day
to day or for such longer periods as they may designate without notice other
than by announcement at the meeting.

   Section 10. RESIGNATIONS. Any Director of the Corporation may resign at any
time by mailing or delivering, or transmitting by radio, telegraph or cable,
written notice to the President or to the Secretary of the Corporation. The
resignation of any Director shall take effect at the time specified therein and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.

   Section 11. REMOVAL. At any meeting of Shareholders duly called for the
purpose, any Director may by the vote of a majority of all of the Shares
entitled to vote be removed from office. At the same meeting, the vacancy in the
Board of Directors may be filled by


                                       -5-
<PAGE>


the election of a Director to serve for the remainder of the term and until the
election and qualification of his successor.

   Section 12. VACANCIES. Except as otherwise provided by the 1940 Act or other
applicable law, any vacancy occurring in the Board of Directors for any cause
other than by reason of an increase in the number of Directors may be filled by
a majority of the remaining members of the Board of Directors although such
majority is less than a quorum, and any vacancy occurring by reason of an
increase in the number of Directors may be filled by action of a majority of the
entire Board of Directors. A Director elected by the Board to fill a vacancy
shall be elected to hold office until the next Annual Meeting of Shareholders or
until his successor is duly elected and qualified. Notwithstanding the
foregoing, the Shareholders may, at any time during the term of such Director,
elect to fill a vacancy or elect some other person to fill said vacancy and
thereupon the election by the Board shall be superseded and the election by the
Shareholders shall be deemed a filling of the vacancy and not a removal any may
be made at any meeting called for such purpose.

   Section 13. COMPENSATION OF DIRECTORS. The Directors may receive a stated
salary for their services as Directors, and by Resolution of the Board of
Directors a fixed fee and expenses of attendance may be allowed for attendance
at each Meeting. Nothing herein contained shall be construed to preclude any
Director from serving the Corporation in any other capacity, as an officer,
agent or otherwise, and receiving compensation therefor.

   Section 14. TELEPHONE PARTICIPATION. Unless otherwise restricted by law, the
Articles of Incorporation of the Corporation or these Bylaws, any member of the
Board of Directors may participate in any meeting of the Board by conference
telephone or similar communications equipment whereby all persons participating
in the meeting can hear each other, and such participation shall constitute
presence in person at the meeting.

   Section 15. CONSENTS. Any action required or permitted to be taken at any
Annual, Regular or Special Meeting of the Board of Directors may be taken
without a meeting if a written consent, setting forth such action, is signed by
all members of the Board and such consent is filed with the minutes of
proceedings of the Board.

   Section 16. POWER TO DECLARE DIVIDENDS. The Board of Directors is expressly
authorized to determine in accordance with generally accepted accounting
principles and practices what constitutes net profits, earnings, surplus or net
assets in excess of capital, and to determine what accounting periods shall be
used by the Corporation for any purpose, whether annual or any other period,
including daily; to set apart out of any funds of the corporation such reserves
for such purposes as it shall determined and to abolish the same; to declare and
pay dividends and distributions on any series by means of a formula or other
method of determination, at meetings held less frequently than the frequency of
the effectiveness of such declarations; to establish payment dates for dividends
or any other distributions on any basis, including dates occurring less
frequently than the effectiveness of declarations thereof; and to provide for
the payment of declared dividends on a date earlier or later than the specified
payment date in the case of Shareholders redeeming their entire ownership of
shares.


                                       -6-
<PAGE>


                                   ARTICLE III

                         EXECUTIVE AND OTHER COMMITTEES


   Section 1. APPOINTMENT AND TERM OF OFFICE. The Board of Directors, by
resolution passed by a vote of at least a majority of the entire Board, may
appoint an Executive Committee, which shall consist of two (2) or more
Directors.

   Section 2. VACANCIES. Vacancies occurring in the Executive Committee from any
cause shall be filled by the Board of Directors at any Meeting thereof by a vote
of the majority of the entire Board.

   Section 3. REPORTS TO BOARD. All actions by the Executive Committee shall be
reported to the Board of Directors at its meeting next succeeding such action.

   Section 4. PROCEDURES. The Executive Committee shall fix its own rules of
procedure not inconsistent with these Bylaws or with any directions of the Board
of Directors. It shall meet at such times and places and upon such notice as
shall be provided by such rules or by resolution of the Board of Directors. The
presence of a majority shall constitute a quorum for the transaction of
business, and the vote of a majority of the members of the Committee present at
which a quorum is present shall be necessary for the taking of any action.

   Section 5. POWERS OF EXECUTIVE COMMITTEE. During the intervals between the
meetings of the Board of Directors, the Executive Committee, except as limited
by the Bylaws of the corporation or by specific directions of the Board of
Directors, shall possess and may exercise all the powers of the Board of
Directors in the management and direction of the business and conduct of the
affairs of the Corporation in such manner as the Executive Committee shall deem
to be in the best interests of the Corporation, and shall have power to
authorize the Seal of the Corporation to be affixed to all instruments and
documents requiring same. Notwithstanding the foregoing, the Executive Committee
shall not have the power to elect Directors, increase or decrease the number of
Directors, elect or remove any officer, declare dividends, issue shares or
[recommend to Shareholders] by action requiring Shareholder approval.

   Section 6. OTHER COMMITTEES. From time to time the Board of Directors may
appoint any other Committee or Committees for any purpose or purposes to the
extent lawful, which shall have such powers as shall be specified in the
resolution of appointment.

   Section 7. COMPENSATION. The members of any duly appointed Committee shall
receive such compensation and/or fees as may be fixed from time to time by the
Board of Directors.


                                       -7-
<PAGE>


   Section 8. TELEPHONE PARTICIPATION. Unless otherwise restricted by law, the
Articles of Incorporation or these Bylaws, any member of any Committee of the
Board may participate in any meeting of such Committee by conference telephone
or similar communications equipment whereby all persons participating in the
meeting can hear each other, and such participation shall constitute presence in
person at the meeting.

   Section 9. CONSENTS. Any action required or permitted to be taken at any
meeting of the Executive Committee or any other duly appointed Committee may be
taken without a meeting if a written consent, setting forth such action, is
signed by all members of such Committee and such consent is filed with the
minutes of the proceedings of such Committee.


                                   ARTICLE IV

                                    OFFICERS


   Section 1. GENERAL PROVISIONS. The officers of the Corporation shall be the
President, one or more Vice Presidents, a Treasurer and a Secretary. The Board
of Directors shall elect or appoint such other officers or agents as the
business of the Corporation may require, including one or more Assistant Vice
Presidents, one or more Assistant Secretaries and one or more Assistant
Treasurers. The same person may hold any two offices except those of President
and Vice President.

   Section 2. ELECTION, TERM OF OFFICE AND QUALIFICATIONS. The officers shall be
elected annually by the Board of Directors at its Annual Meeting following the
Annual Meeting of Shareholders, if an Annual Meeting of Shareholders is held.
Each officer shall hold office until the Annual Meeting in the next year and
until the election and qualification of his successor. Any vacancy in any of the
offices may be filled for the unexpired portion of the term by the Board of
Directors at any Regular or Special Meeting of the Board. The Board of Directors
may elect or appoint additional officers or agents at any Regular or Special
Meeting of the Board.

   Section 3. REMOVAL. Any officer elected by the Board of Directors may be
removed with or without cause at any time upon a vote of the majority of the
entire Board of Directors. Any other employee of the Corporation may be removed
or dismissed at any time by the President.

   Section 4. RESIGNATIONS. Any officer may resign at any time by giving written
notice to the Board of Directors. Any such resignation shall take effect at the
date of receipt of each notice or at any later time specified therein, and
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.

   Section 5. VACANCIES. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled for the unexpired
portion of


                                       -8-
<PAGE>


the term in the manner prescribed in these Bylaws for regular election or
appointment to such office.

   Section 6. PRESIDENT. The President shall be the chief executive officer of
the Corporation. The President shall, unless other provisions are made therefor
by the Board or Executive Committee, employ and define the duties of all
employees of the corporation; have the power to discharge any such employees;
exercise general supervision over the affairs of the corporation; and perform
such other duties as may be assigned from time to time by the Board of
Directors. In the absence of the President, an officer or Director appointed by
the President shall preside at all meetings of Shareholders.

   Section 7. VICE PRESIDENT. The Vice President (or if more than one, the
Senior Vice President) in the absence of the President shall perform all duties
and may exercise any of the powers of the President subject to the control of
the Board. Each Vice President shall perform such other duties as may be
assigned from time to time by the Board of Directors, the Executive Committee,
or the President.

   Section 8. SECRETARY. The Secretary shall (i) keep or cause to be kept in
books provided for the purpose the Minutes of the Meetings of the Shareholders
and of the Board of Directors; (ii) see that all Notices are duly given in
accordance with the provisions of these Bylaws and as required by law; (iii) be
custodian of the records and of the Seal of the Corporation and see that the
Seal is affixed to all documents which have been duly authorized to be executed
on behalf of the Corporation under its seal; (iv) keep directly or through a
transfer agent a register of the post office address of each Shareholder and
make all proper changes in such register, retaining and filing his authority for
such entries; (v) see that the books, reports, statements, certificates and all
other documents and records required by law are properly kept and filed; and
(vi) in general perform all duties incident to the office of secretary and such
other duties as may, from time to time, be assigned by the Board of Directors,
the Executive Committee, or the President.

   Section 9. TREASURER. The Treasurer shall have supervision of the custody of
the funds and securities of the corporation, subject to the Articles of
Incorporation of the Corporation and applicable law. The Treasurer shall submit
to the Annual Meeting of Shareholders a statement of the financial condition of
the Corporation and whenever required by the Board of Directors shall make and
render a statement of the accounts of the Corporation and such other statements
as may be required. The Treasurer shall cause to be kept in books of the
Corporation a full and accurate account of all moneys received and paid out for
the account of the Corporation and perform such other duties as may be from time
to time be assigned by the Board of Directors, the Executive Committee, or the
President.

   Section 10. ASSISTANT VICE PRESIDENT. The Assistant Vice President or Vice
Presidents of the Corporation shall have such authority and perform such duties
as may be assigned to them by the Board of Directors, the Executive Committee,
or the President of the Corporation.


                                       -9-
<PAGE>


   Section 11. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The Assistant
Secretary or Secretaries and the Assistant Treasurer or Treasurers of the
Corporation shall perform the duties of the Secretary and of the Treasurer,
respectively, in the absence of those officers and shall have such further
powers and perform such other duties as may be assigned to them, respectively,
by the Board of Directors, the Executive Committee or the President.

   Section 12. SALARIES. The salaries of the officers shall be fixed from time
to time by the Board of Directors. No officer shall be prevented from receiving
such salary by reason of the fact that he is also a Director of the Corporation.


                                    ARTICLE V

                            SHARES AND THEIR TRANSFER


   Section 1. REGISTER OF SHARES. A register of shares shall be kept at the
principal office of the Corporation or of any transfer agent duly appointed by
the Board of Directors and shall contain the names and addresses of all the
Shareholders, the number of shares held by them and a record of all transfers
thereof. Fractional shares may be issued. Share certificates will not be issued.

   Section 2. TRANSFER OF SHARES. Shares shall be transferable on the books of
the Corporation by request of the holder thereof in person or by duly authorized
attorney.

   Section 3. CLOSING OF TRANSFER BOOKS AND FIXING RECORD DATE. The Board of
Directors may fix in advance a date as the record date for the purpose of
determining Shareholders entitled to notice of or to vote at any Meeting of
Shareholders or Shareholders entitled to receive payment of any dividend. Such
date shall in any case not be more than 60 days and, in case of a Meeting of
Shareholders, not less than 10 days prior to the date on which the particular
action is to be taken. In lieu of fixing a record date, the Board of Directors
may provide that the share transfer books of the Corporation shall be closed for
a stated period not to exceed in any case 20 days. If the share transfer books
are closed for the purpose of determining Shareholders entitled to notice of or
to vote at a Meeting of Shareholders, such books shall be closed for at least 10
days immediately preceding such meeting.


                                      -10-
<PAGE>


   Section 4. TRANSFER AGENT; REGULATIONS. The Board of Directors shall have
power and authority to make all such rules and regulations as they may deem
expedient concerning the issuance and transfer of shares and may appoint a
Transfer Agent for that purpose.

                                   ARTICLE VI

                 AGREEMENTS, CHECKS, DRAFTS, ENDORSEMENTS, ETC.

   Section 1. AGREEMENTS, ETC. The Board of Directors or the Executive Committee
may authorize any officer or officers or agent or agents of the Corporation to
enter into any Agreement or execute and deliver any instrument in the name and
on behalf of the Corporation, and such authority may be general or confined to
specific instances. Unless so authorized by the Board of Directors or by the
Executive Committee or these Bylaws, no officer, agent or employee shall have
any power or authority to bind the Corporation by any Agreement or engagement,
to pledge its credit, or to render it liable pecuniarily for any purpose or to
any amount.

   Section 2. CHECKS, DRAFTS, ETC. All checks, drafts, or orders for the payment
of money, noted and other evidences of indebtedness shall be signed by such
officer or officers, employee or employees, or agent or agents as shall be from
time to time designated by the Board of Directors or the Executive Committee, or
as may be specified in or pursuant to the agreement between the Corporation and
the bank or trust company appointed as custodian, pursuant to the provisions of
the Articles of Incorporation of the Corporation.

   Section 3. ENDORSEMENTS, ASSIGNMENTS AND TRANSFER OF SECURITIES. All
endorsements, assignments, stock powers or other instruments of transfer of
securities standing in the name of the Corporation or its nominee, or directions
for the transfer of securities belonging to the Corporation, shall be made by
such officer or officers, employee or employees, or agent or agents as may be
authorized by the Board of Directors or the Executive Committee.

   Section 4. EVIDENCE OF AUTHORITY. Anyone dealing with the Corporation shall
be fully justified in relying on a copy of a resolution of the Board of
Directors or of any Committee thereof empowered to act in the premises which is
certified as true by the Secretary or an Assistant Secretary under the Seal of
the Corporation.

   Section 5. DESIGNATION OF A CUSTODIAN. The Corporation shall place and at all
times maintain in the custody of a Custodian all funds, securities and similar
investments owned by the Corporation, with the exception of securities loaned
under a properly authorized securities loan agreement. The Custodian shall be a
bank having not less than $5,000,000 aggregate capital, surplus and undivided
profits and shall be appointed from time to time by the Board of Directors,
which shall fix its remuneration.


                                      -11-
<PAGE>


   Section 6. ACTION UPON TERMINATION OF A CUSTODIAN AGREEMENT. Upon termination
of a Custodian Agreement or inability of the Custodian to continue to serve, the
Board of Directors shall promptly appoint a successor custodian.

   Section 7. WHEN TO DETERMINE NET ASSET VALUE. The net asset value per Share
of the outstanding Shares shall be determined at such times as the Board of
Directors shall prescribe, provided that such net asset value shall be
determined at least weekly.

                                   ARTICLE VII

                                  MISCELLANEOUS

   Section 1. SEAL. The Seal of the Corporation shall be a disk inscribed with
the words "PORTFOLIO PARTNERS, INC."

   Section 2. WAIVER OF NOTICE. Whenever under the provisions of these Bylaws or
of any law, the Shareholders or Directors or members of the Executive Committee
or other Committee are authorized to hold any meeting after notice or after the
lapse of any prescribed period of time, such meeting may be held without notice
or without such lapse of time by the written waiver of notice signed by every
person entitled to notice or if every person entitled to notice shall be present
at such meeting.

   Section 3. BOOKS AND RECORDS. The books and records of the Corporation,
including the stock ledger or ledgers, may be kept in or outside the State of
Maryland at such office or agency of the Corporation as may from time to time be
determined by the Board of Directors.

                                  ARTICLE VIII

                                   AMENDMENTS

                  The Board of Directors shall have the exclusive power to
alter, amend or repeal any Bylaws of the Corporation and to make new Bylaws.


                                      -12-



                          INVESTMENT ADVISORY AGREEMENT


THIS AGREEMENT is made by and between AETNA LIFE INSURANCE AND ANNUITY COMPANY,
a Connecticut corporation (the "Adviser") and PORTFOLIO PARTNERS, INC., a
Maryland corporation (the "Company"), on behalf of each of its Series, MFS
Emerging Equities Portfolio, MFS Research Growth Portfolio, MFS Value Equity
Portfolio, and Scudder International Growth Portfolio, T. Rowe Price Growth
Equity Portfolio (the "Series"), as of the date set forth below the parties'
signatures.

                               W I T N E S S E T H

WHEREAS, the Company is registered with the Securities and Exchange Commission
(the "Commission") as an open-end, diversified, management investment company
under the Investment Company Act of 1940 (the "1940 Act"); and

WHEREAS, the Company has established the Series; and

WHEREAS, the Adviser is registered with the Commission as an investment adviser
under the Investment Advisers Act of 1940 (the "Advisers Act"), and is in the
business of acting as an investment adviser; and

WHEREAS, the Company, on behalf of the Series, and the Adviser desire to enter
into an agreement to provide for investment advisory and management services for
the Company on the terms and conditions hereinafter set forth;

NOW THEREFORE, the parties agree as follows:

I.       APPOINTMENT AND OBLIGATIONS OF THE ADVISER

Subject to the terms and conditions of this Agreement and the policies and
control of the Company's Board of Directors (the "Board"), the Company, on
behalf of the Series, hereby appoints the Adviser to serve as its investment
adviser, to provide the investment advisory services set forth below in Section
II. The Adviser agrees that, except as required to carry out its duties under
this Agreement or otherwise expressly authorized, it is acting as an independent
contractor and not as an agent of the Company and has no authority to act for or
represent the Company in any way.

II.      DUTIES OF THE ADVISER

In carrying out the terms of this Agreement, the Adviser shall do the following:

        1.        supervise all aspects of the operations of the Company;

        2.        select the securities to be purchased, sold or exchanged by
                  the Series or otherwise represented in the Series' investment
                  portfolio, place trades for all such securities and regularly
                  report thereon to the Board;
<PAGE>



        3.        formulate and implement continuing programs for the purchase
                  and sale of securities and regularly report thereon to the
                  Board;

        4.        obtain and evaluate pertinent information about significant
                  developments and economic, statistical and financial data,
                  domestic, foreign or otherwise, whether affecting the economy
                  generally, the Series, securities held by or under
                  consideration for the Series, or the issuers of those
                  securities;

        5.        provide economic research and securities analyses as the
                  Adviser considers necessary or advisable in connection with
                  the Adviser's performance of its duties hereunder;

        6.        obtain the services of, contract with, and provide
                  instructions to custodians and/or subcustodians of the Series'
                  securities, transfer agents, dividend paying agents, pricing
                  services and other service providers as are necessary to carry
                  out the terms of this Agreement;

        7.        prepare financial and performance reports, calculate and
                  report daily net asset values, and prepare any other financial
                  data or reports, as the Adviser from time to time, deems
                  necessary or as are requested by the Board; and

        8.        take any other actions which appear to the Adviser and the
                  Board necessary to carry into effect the purposes of this
                  Agreement.

III.     REPRESENTATIONS AND WARRANTIES

         A.       Representations and Warranties of the Adviser

         Adviser hereby represents and warrants to the Company as follows:

                  1.       Due Incorporation and Organization. The Adviser is
                           duly organized and is in good standing under the laws
                           of the State of Connecticut and is fully authorized
                           to enter into this Agreement and carry out its duties
                           and obligations hereunder.

                  2.       Registration. The Adviser is registered as an
                           investment adviser with the Commission under the
                           Advisers Act. The Adviser shall maintain such
                           registration in effect at all times during the term
                           of this Agreement.

                  3.       Best Efforts. The Adviser at all times shall provide
                           its best judgment and effort to the Series in
                           carrying out its obligations hereunder.

         B.       Representations and Warranties of the Company

         The Company, on behalf of the Series, hereby represents and warrants to
the Adviser as follows:

                  1.       Due Incorporation and Organization. The Company has
                           been duly incorporated under the laws of the State of
                           Maryland and it is authorized to enter into this
                           Agreement and carry out its obligations hereunder.

                                      2
<PAGE>


                  2.       Registration. The Company is registered as an
                           investment company with the Commission under the 1940
                           Act and shares of the Series are registered or
                           qualified for offer and sale to the public under the
                           Securities Act of 1933 (the "1933 Act") and all
                           applicable state securities laws. Such registrations
                           or qualifications will be kept in effect during the
                           term of this Agreement.

IV.      DELEGATION OF RESPONSIBILITIES

         A.       Appointment of Subadviser(s)

         Subject to the approval of the Board and the shareholders of the
         Series, the Adviser may enter into a Subadvisory Agreement to engage
         one or more subadvisers (the "Subadviser") to the Adviser with respect
         to the Series.

         B.       Duties of Subadviser

         Under a Subadvisory Agreement, the Subadviser may be delegated some or
         all of the following duties of the Adviser:

                  1.       determine which securities from which issuers shall
                           be purchased, sold or exchanged by the Series or
                           otherwise represented in the Series' investment
                           portfolio, place trades for all such securities,
                           select brokers or dealers for the execution thereof,
                           and regularly report thereon to the Board;

                  2.       formulate and implement continuing programs for the
                           purchase and sale of the securities of such issuers
                           and regularly report thereon to the Board;

                  3.       obtain and evaluate pertinent information about
                           significant developments and economic, statistical
                           and financial data, domestic, foreign or otherwise,
                           whether affecting the economy generally, the Series,
                           securities held by or under consideration for the
                           Series, or the issuers of those securities;

                  4.       provide economic research and securities analyses as
                           the Adviser considers necessary or advisable in
                           connection with the Adviser's performance of its
                           duties hereunder;

                  5.       give instructions to the custodian and/or
                           sub-custodian of the Series appointed by the Board,
                           as to deliveries of securities, transfers of
                           currencies and payments of cash for the Series as
                           required to carry out the investment activities of
                           the Series, in relation to the matters contemplated
                           by this Agreement; and

                  6.       provide such financial support, administrative
                           services and other duties as the Adviser deems
                           necessary and appropriate.

         C.       Duties of the Adviser

                                       3
<PAGE>

         In the event the Adviser delegates certain responsibilities hereunder
         to a Subadviser, the Adviser shall, among other things:

                  1.       monitor the investment program maintained by the
                           Subadviser for the Series and the Subadviser's
                           compliance program to ensure that the Series' assets
                           are invested in compliance with the Subadvisory
                           Agreement and the Series' investment objectives and
                           policies as adopted by the Board and described in the
                           most current effective amendment of the registration
                           statement, as filed with the Commission under the
                           1933 Act and the 1940 Act ("Registration Statement");

                  2.       review all data and financial reports prepared by the
                           Subadviser to assure that they are in compliance with
                           applicable requirements and meet the provisions of
                           applicable laws and regulations;

                  3.       establish and maintain regular communications with
                           the Subadviser to share information it obtains with
                           the Subadviser concerning the effect of developments
                           and data on the investment program maintained by the
                           Subadviser; and

                  4.       oversee all matters relating to the offer and sale of
                           the Series' shares, the Company's corporate
                           governance, reports to the Board, contracts with all
                           third parties on behalf of the Company for services
                           to the Series, reports to regulatory authorities and
                           compliance with all applicable rules and regulations
                           affecting the Company's operations.

V.       BROKER-DEALER RELATIONSHIPS

         A.       Portfolio Trades

         The Adviser, at its own expense, shall place all orders for the
         purchase and sale of portfolio securities with brokers or dealers
         selected by the Adviser, which may include brokers or dealers
         affiliated with the Adviser. The Adviser shall use its best efforts to
         seek to execute portfolio transactions at prices that are advantageous
         to the Series and at commission rates that are reasonable in relation
         to the benefits received.


         B.       Selection of Broker-Dealers

         In selecting broker-dealers qualified to execute a particular
         transaction, brokers or dealers may be selected who also provide
         brokerage and research services (as those terms are defined in Section
         28(e) of the Securities Exchange Act of 1934) to the Series and/or the
         other accounts over which the Adviser or its affiliates exercise
         investment discretion. The Adviser may also select brokers or dealers
         to effect transactions for the Series who provide payment for expenses
         of the Series. The Adviser is authorized to pay a broker or dealer who
         provides such brokerage and research services or expenses, and that
         have provided assistance in the distribution of shares of the Series to
         the extent permitted by law, a commission for executing a portfolio
         transaction for the Series that is in excess of the amount of
         commission another broker or dealer would have charged for effecting
         that transaction if the Adviser determines in good faith that such
         amount of commission

                                       4
<PAGE>

         is reasonable in relation to the value of the brokerage and research
         services provided by such broker or dealer and is paid in compliance
         with Section 28(e) or other rules and regulations of the Commission.
         This determination may be viewed in terms of either that particular
         transaction or the overall responsibilities that the Adviser and its
         affiliates have with respect to accounts over which they exercise
         investment discretion. The Board shall periodically review the
         commissions paid by the Series to determine if the commissions paid
         over representative periods of time were reasonable in relation to the
         benefits received.

         Any delegation to a Subadviser (as authorized in Section IV above) of
         the selection of broker-dealers to execute portfolio transactions will
         include instructions consistent with the parameters outlined in this
         Section.

VI.      CONTROL BY THE BOARD

Any investment program undertaken by the Adviser pursuant to this Agreement, as
well as any other activities undertaken by the Adviser on behalf of the Series
pursuant thereto, shall at all times be subject to any directives of the Board.

VII.     COMPLIANCE WITH APPLICABLE REQUIREMENTS

In carrying out its obligations under this Agreement, the Adviser shall at all
times conform to:

         1.       all applicable provisions of the 1940 Act;

         2.       the provisions of the current Registration Statement of the
                  Company;

         3.       the provisions of the Fund's Articles of Incorporation, as
                  amended;

         4.       the provisions of the Bylaws of the Fund, as amended; and

         5.       any other applicable provisions of state or federal law.

VIII.    COMPENSATION

For the services to be rendered, the facilities furnished and the expenses
assumed by the Adviser, the Company, on behalf of the Series, shall pay to the
Adviser an annual fee, payable monthly, based upon the following average daily
net assets of the Series:

                   Rate                Assets
                   ----                ------






Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily at the rate of 1/365 of the annual advisory fee
applied to the daily net assets of the Series. If this

                                       5
<PAGE>

Agreement becomes effective subsequent to the first day of a month or terminates
before the last day of a month, compensation for that part of the month this
Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fees set forth above. Subject to the provisions of Section X
hereof, payment of the Adviser's compensation for the preceding month shall be
made as promptly as possible. For so long as a Subadvisory Agreement is in
effect, the Company acknowledges on behalf of the Series that the Adviser will
pay to the Subadviser, as compensation for acting as Subadviser to the Series,
the fees specified in the Subadvisory Agreement.

IX.      EXPENSES

The expenses in connection with the management of the Company shall be allocated
between the Series and the Adviser as follows:

         A.       Expenses of the Adviser

         The Adviser shall pay:

                  1.       the salaries, employment benefits and other related
                           costs and expenses of those of its personnel engaged
                           in providing investment advice to the Series,
                           including without limitation, office space, office
                           equipment, telephone and postage costs;

                  2.       all fees and expenses of all directors, officers and
                           employees, if any, of the Company who are employees
                           of the Adviser or an affiliated entity, including any
                           salaries and employment benefits payable to those
                           persons;

         B.       Expenses of the Series

         The Series shall pay:

                  1.       investment advisory fees pursuant to this Agreement;

                  2.       brokers' commissions, issue and transfer taxes or
                           other transaction fees payable in connection with any
                           transactions in the securities in the Series'
                           investment portfolio or other investment transactions
                           incurred in managing the Series' assets, including
                           portions of commissions that may be paid to reflect
                           brokerage research services provided to the Adviser;

                  3.       fees and expenses of the Company's independent
                           accountants and legal counsel and the independent
                           Directors' legal counsel;

                  4.       fees and expenses of any administrator, transfer
                           agent, custodian, dividend, accounting, pricing or
                           disbursing agent of the Series;

                  5.       interest and taxes;

                                       6
<PAGE>


                  6.       fees and expenses of any membership in the Investment
                           Company Institute or any similar organization in
                           which the Board deems it advisable for the Company to
                           maintain membership;

                  7.       insurance premiums on property or personnel
                           (including officers and directors) of the Company
                           which benefit the Series;

                  8.       all fees and expenses of the Company's directors, who
                           are not "interested persons" (as defined in the 1940
                           Act) of the Company or the Adviser;

                  9.       expenses of preparing, printing and distributing
                           proxies, proxy statements, prospectuses and reports
                           to shareholders of the Series, except for those
                           expenses paid by third parties in connection with the
                           distribution of Series shares and all costs and
                           expenses of shareholders' meetings;

                  10.      all expenses incident to the payment of any dividend,
                           distribution, withdrawal or redemption, whether in
                           shares of the Series or in cash;

                  11.      costs and expenses (other than those detailed in
                           paragraph 9 above) of promoting the sale of shares
                           issued by the Series, provided that nothing in this
                           Agreement shall prevent the charging of such costs to
                           third parties involved in the distribution of shares
                           issued by the Series;

                  12.      fees payable by the Series to the Commission or to
                           any state securities regulator or other regulatory
                           authority for the registration of shares of the
                           Series in any state or territory of the United States
                           or of the District of Columbia;

                  13.      all costs attributable to investor services,
                           administering shareholder accounts and handling
                           shareholder relations (including, without limitation,
                           telephone and personnel expenses), which costs may
                           also be charged to third parties by the Adviser; and

                  14.      any other ordinary, routine expenses incurred in the
                           management of the Series' assets, and any
                           nonrecurring or extraordinary expenses, including
                           organizational expenses, litigation affecting the
                           Series and any indemnification by the Company of its
                           officers, directors or agents.

X.       NONEXCLUSIVITY

The services of the Adviser to the Company are not to be deemed to be exclusive,
and the Adviser shall be free to render investment advisory or other services to
others (including other investment companies) and to engage in other activities,
so long as its services under this Agreement are not impaired thereby. It is
understood and agreed that officers and directors of the Adviser may serve as
officers or directors of the Company, and that officers or directors of the
Company may serve as officers or directors of the Adviser to the extent
permitted by law; and that the officers and directors of the Adviser are not
prohibited from engaging in any other business activity or from rendering
services to any other person,


                                       7
<PAGE>

or from serving as partners, officers, directors or trustees of any other firm
or trust, including other investment companies.

XI.      TERM

This Agreement shall become effective at the close of business on            ,
1997, and shall remain in force and effect through              , 1998, unless
earlier terminated under the provisions of Article XIII.

XII.     RENEWAL

Following the expiration of its initial term, the Agreement shall continue in
force and effect from year to year, provided that such continuance is
specifically approved at least annually:

         1.       a.  by the Board, or

                  b.  by the vote of a majority of the Series' outstanding
                      voting securities (as defined in Section 2(a)(42) of
                      the 1940 Act), and

         2.       by the affirmative vote of a majority of the directors who are
                  not parties to this Agreement or interested persons of a party
                  to this Agreement (other than as a director of the Company),
                  by votes cast in person at a meeting specifically called for
                  such purpose.

XIII.    TERMINATION

This Agreement may be terminated at any time, without the payment of any
penalty, by vote of the Board or by vote of a majority of the Series'
outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act),
or by the Adviser, on sixty (60) days' written notice to the other party. The
notice provided for herein may be waived by the party required to be notified.
This Agreement shall automatically terminate in the event of its "assignment,"
as that term is defined in Section 2(a)(4) of the 1940 Act.

XIV.     LIABILITY

The Adviser shall be liable to the Company and shall indemnify the Company for
any losses incurred by the Company, whether in the purchase, holding or sale of
any security or otherwise, to the extent that such losses resulted from an act
or omission on the part of the Adviser or its officers, directors or employees,
that is found to involve willful misfeasance, bad faith or negligence, or
reckless disregard by the Adviser of its duties under this Agreement, in
connection with the services rendered by the Adviser hereunder.

XV.      NOTICES

Any notices under this Agreement shall be in writing, addressed and delivered,
mailed postage paid, or sent by other delivery service, or by facsimile
transmission to each party at such address as each party may designate for the
receipt of notice. Until further notice, such addresses shall be:

                                       8
<PAGE>

         if to the Company, the Series or the Adviser:
         Martin T. Conroy
         151 Farmington Avenue, TS31
         Hartford, Connecticut  06156
         Fax number: 860/273-9614

XVI.  QUESTIONS OF INTERPRETATION

This Agreement shall be governed by the laws of the State of Connecticut. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or, in the absence
of any controlling decision of any such court, by rules, releases or orders of
the Commission issued pursuant to the 1940 Act. In addition, where the effect of
a requirement of the 1940 Act reflected in the provisions of this Agreement is
revised by rule, release or order of the Commission, such provisions shall be
deemed to incorporate the effect of such rule, release or order.


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on ___________, 1997.


                                        Aetna Life Insurance and Annuity Company

                                        By:
                                             ----------------------------------
Attest:                                 Name:
      ------------------------------         ----------------------------------
      Assistant Corporate Secretary
                                        Title:
                                              ----------------------------------



                                        Portfolio Partners, Inc.
                                        on behalf of its series,
                                        MFS Emerging Equities Portfolio,
                                        MFS Research Growth Portfolio,
                                        MFS Value Equity Portfolio,
                                        Scudder International Growth Portfolio
                                        T. Rowe Price Growth Equity Portfolio



                                               By:
Attest:                                              --------------------------
        ------------------------------         Name:
        Secretary                                    --------------------------
                                               Title:
                                                     --------------------------


                                       9




                        INVESTMENT SUBADVISORY AGREEMENT

                                     Between

                    Aetna Life Insurance and Annuity Company

                                       and

                    Massachusetts Financial Services Company

INVESTMENT SUBADVISORY AGREEMENT, made as of the ______ day of August, 1997,
between Aetna Life Insurance and Annuity Company (the "Adviser"), an insurance
corporation organized and existing under the laws of the State of Connecticut,
and Massachusetts Financial Services Company ("Subadviser"), a business trust
organized and existing under the laws of the State of Delaware.

WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated as
of the _____ day of ________, 1997 ("Advisory Agreement") with Portfolio
Partners, Inc. ("Company"), which is engaged in business as an open-end
management investment company registered under the Investment Company Act of
1940 ("1940 Act"); and

WHEREAS, the Company is and will continue to be a series fund having two or more
investment portfolios, each with its own assets, investment objectives, policies
and restrictions; and

WHEREAS, the Company shareholders are and will be separate accounts maintained
by insurance companies for variable life insurance policies and variable annuity
contracts (the "Policies") under which income, gains, and losses, whether or not
realized, from assets allocated to such accounts are, in accordance with the
Policies, credited to or charged against such accounts without regard to other
income, gains, or losses of such insurance companies; and

WHEREAS, the Subadviser is engaged principally in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940 ("Advisers Act"); and

WHEREAS, the Board of Directors and the Adviser desire to retain the Subadviser
as subadviser for MFS Emerging Equities Portfolio, MFS Research Growth Portfolio
and MFS Value Equity Portfolio, portfolios of the Company (collectively, the
"Portfolios"), to furnish certain investment advisory services to the Adviser
and the Company and the Subadviser is willing to furnish such services;

NOW, THEREFORE, in consideration of the premises and mutual promises herein set
forth, the parties hereto agree as follows:
<PAGE>


1. Appointment. Adviser hereby appoints the Subadviser as its investment
Subadviser with respect to the Portfolios for the period and on the terms set
forth in this Agreement. The Subadviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.

2. Duties of the Subadviser

   A. Investment Subadvisory Services. Subject to the supervision of the
   Company's Board of Directors ("Board") and the Adviser, the Subadviser shall
   act as the investment Subadviser and shall supervise and direct the
   investments of each Portfolio in accordance with its investment objective,
   policies, and restrictions as provided in the Company's Prospectus and
   Statement of Additional Information, as currently in effect and as amended or
   supplemented from time to time (hereinafter referred to as the "Prospectus"),
   and such other limitations as the Company may impose by notice in writing to
   the Subadviser. The Subadviser shall obtain and evaluate such information
   relating to the economy, industries, businesses, securities markets, and
   individual securities as it may deem necessary or useful in the discharge of
   its obligations hereunder and shall formulate and implement a continuing
   program for the management of the assets and resources of each Portfolio in a
   manner consistent with each Portfolio's investment objective, policies, and
   restrictions, and in compliance with the requirements applicable to
   registered investment companies under applicable laws and those requirements
   applicable to both regulated investment companies and segregated asset
   accounts under Subchapters M and L of the Internal Revenue Code of 1986, as
   amended ("Code"). To implement its duties, the Subadviser is hereby
   authorized to:

      (i)   buy, sell, exchange, convert, lend, and otherwise trade in any
            stocks, bonds, and other securities or assets on behalf of each
            Portfolio; and

      (ii)  place orders and negotiate the commissions (if any) for the
            execution of transactions in securities or other assets with or
            through such brokers, dealers, underwriters or issuers as the
            Subadviser may select.

   B. Subadviser Undertakings. In all matters relating to the performance of
   this Agreement, the Subadviser shall act in conformity with the Company's
   Articles of Incorporation, By-Laws, and current Prospectus and with the
   written instructions and directions of the Board and the Adviser. The
   Subadviser hereby agrees to:

      (i)   regularly (but no less frequently than quarterly) report to the
            Board and the Adviser (in such form as the Adviser and Subadviser
            mutually agree) with respect to the implementation of the investment
            program and, in addition, provide such statistical information and
            special reports concerning the Portfolios and/or important
            developments materially affecting the investments held, or
            contemplated to be purchased, by the Portfolios, as may reasonably
            be requested by the Board or the Adviser and agreed to by the
            Subadviser, including attendance at Board


                                        2
<PAGE>


            meetings, as reasonably requested, to present such information and
            reports to the Board;

      (ii)  consult with the Company's pricing agent regarding the valuation of
            securities that are not registered for public sale, not traded on
            any securities markets, or otherwise may be deemed illiquid for
            purposes of the 1940 Act and for which market quotations are not
            readily available;

      (iii) provide any and all information, records and supporting
            documentation about accounts the Subadviser manages that have
            investment objectives, policies, and strategies substantially
            similar to those employed by the Subadviser in managing the
            Portfolios which may be reasonably necessary, under applicable laws,
            to allow the Company or its agent to present historical performance
            information concerning the Subadviser's similarly managed accounts,
            for inclusion in the Company's Prospectus and any other reports and
            materials prepared by the Company or its agent, in accordance with
            regulatory requirements;

      (iv)  establish appropriate personal contacts with the Adviser and the
            Company's Administrator in order to provide the Adviser and
            Administrator with information as reasonably requested by the
            Adviser or Administrator; and

      (v)   execute account documentation, agreements, contracts and other
            documents as the Adviser shall be requested by brokers, dealers,
            counterparties and other persons to execute in connection with its
            management of the assets of the Portfolios, provided that the
            Subadviser receives the express agreement and consent of the Adviser
            and/or the Board to execute such documentation, agreements,
            contracts and other documents. In such respect, and only for this
            limited purpose, the Subadviser shall act as the Adviser and/or the
            Portfolios' agent and attorney-in-fact.

   C. The Subadviser, at its expense, will furnish: (i) all necessary investment
   and management facilities and investment personnel, including salaries,
   expenses and fees of any personnel required for it to faithfully perform its
   duties under this Agreement; and (ii) administrative facilities, including
   bookkeeping, clerical personnel and equipment required for it to faithfully
   and fully perform its duties and obligations under this Agreement.

   D. The Subadviser will select brokers and dealers to effect all Portfolio
   transactions subject to the conditions set forth herein. The Subadviser will
   place all necessary orders with brokers, dealers, or issuers, and will
   negotiate brokerage commissions if applicable. The Subadviser is directed at
   all times to seek to execute brokerage transactions for the Portfolios in
   accordance with such policies or practices as may be established by the Board
   and the Adviser and described in the current Prospectus as amended from time
   to time. In placing orders for the purchase or sale of investments for the
   Portfolios, in the name of the Portfolios or their nominees, the Subadviser
   shall use its best efforts to obtain for the Portfolios the most favorable
   price and best execution available, considering all of the


                                        3
<PAGE>


   circumstances, and shall maintain records adequate to demonstrate compliance
   with this requirement.

   Subject to the appropriate policies and procedures approved by the Adviser
   and the Board, the Subadviser may, to the extent authorized by Section 28(e)
   of the Securities Exchange Act of 1934, cause the Portfolio to pay a broker
   or dealer that provides brokerage or research services to the Subadviser, an
   amount of commission for effecting a portfolio transaction in excess of the
   amount of commission another broker or dealer would have charged for
   effecting that transaction if the Subadviser determines, in good faith, that
   such amount of commission is reasonable in relationship to the value of such
   brokerage or research services provided viewed in terms of that particular
   transaction or the Subadviser's overall responsibilities to the Portfolio or
   its other advisory clients. To the extent authorized by said Section 28(e)
   and the Adviser and the Board, the Subadviser shall not be deemed to have
   acted unlawfully or to have breached any duty created by this Agreement or
   otherwise solely by reason of such action. In addition, subject to seeking
   the best execution available, the Subadviser may also consider sales of
   shares of the Portfolio as a factor in the selection of brokers and dealers.

   E. On occasions when the Subadviser deems the purchase or sale of a security
   to be in the best interest of a Portfolio as well as other clients of the
   Subadviser, the Subadviser to the extent permitted by applicable laws and
   regulations, and subject to the Adviser approval of the Subadviser
   procedures, may, but shall be under no obligation to, aggregate the orders
   for securities to be purchased or sold to attempt to obtain a more favorable
   price or lower brokerage commissions and efficient execution. In such event,
   allocation of the securities so purchased or sold, as well as the expenses
   incurred in the transaction, will be made by the Subadviser in the manner the
   Subadviser considers to be the most equitable and consistent with its
   fiduciary obligations to the Portfolios and to its other clients.

   F. With respect to the provision of services by the Subadviser hereunder, the
   Subadviser will maintain all accounts, books and records with respect to each
   Portfolio as are required of an investment adviser of a registered investment
   company pursuant to the 1940 Act and the Advisers Act and the rules under
   both statutes.

   G. The Subadviser and the Adviser acknowledge that the Subadviser is not the
   compliance agent for the Portfolios, and does not have access to all of the
   Company's books and records necessary to perform certain compliance testing.
   However, to the extent that the Subadviser has agreed to perform the services
   specified in this Agreement, the Subadviser shall perform compliance testing
   with respect to the Portfolios based upon information in its possession and
   upon information and written instructions received from the Adviser or the
   Administrator and shall not be held in breach of this Agreement so long as it
   performs in accordance with such information and instructions. The Adviser or
   Administrator shall promptly provide the Subadviser with copies of the
   Company's current Prospectus and any written policies or procedures adopted
   by the Board applicable to the Portfolios and any amendments or revisions
   thereto.


                                        4
<PAGE>


   H. Unless the Adviser gives the Subadviser written instructions to the
   contrary, the Subadviser shall use its good faith judgment in a manner which
   it reasonably believes best serves the interests of a Portfolio's
   shareholders to vote or abstain from voting all proxies solicited by or with
   respect to the issuers of securities in which assets of the Portfolio may be
   invested. The Adviser shall furnish the Subadviser with any further
   documents, materials or information that the Subadviser may reasonably
   request to enable it to perform its duties pursuant to this Agreement.

   I. Subadviser hereby authorizes Adviser to use Subadviser's name and any
   applicable trademarks in the Company's Prospectus, as well as in any
   advertisement or sales literature used by the Adviser or its agents to
   promote the Company and/or to provide information to shareholders of the
   Portfolios.

   During the term of this Agreement, the Adviser shall furnish to the
   Subadviser at its principal office all prospectuses, proxy statements,
   reports to shareholders, sales literature, or other material prepared for
   distribution to shareholders of the Company or the public, which refer to the
   Subadviser or its clients in any way, prior to the use thereof, and the
   Adviser shall not use any such materials if the Subadviser reasonably objects
   within three business days (or such other time as may be mutually agreed)
   after receipt thereof. The Adviser shall ensure that materials prepared by
   employees or agents of the Adviser or its affiliates that refer to the
   Subadviser or its clients in any way are consistent with those materials
   previously approved by the Subadviser.

3. Compensation of Subadviser. The Adviser will pay the Subadviser, with respect
to each Portfolio, the compensation specified in Appendix A to this Agreement.
Payments shall be made to the Subadviser on the second day of each month;
however, this advisory fee will be calculated based on the daily average value
of the aggregate assets of all Portfolios subject to the Subadviser's management
and accrued on a daily basis. Compensation for any partial period shall be
pro-rated based on the length of the period.

4. Liability of Subadviser. Neither the Subadviser nor any of its directors,
officers, employees or agents shall be liable to the Adviser or the Company for
any loss or expense suffered by the Adviser or the Company resulting from its
acts or omissions as Subadviser to the Portfolios, except for losses or expenses
to the Adviser or the Company resulting from willful misconduct, bad faith, or
gross negligence in the performance of, or from reckless disregard of, the
Subadviser's duties under this Agreement. Neither the Subadviser nor any of its
agents shall be liable to the Adviser or the Company for any loss or expense
suffered as a consequence of any action or inaction of other service providers
to the Company in failing to observe the instructions of the Adviser, provided
such action or inaction of such other service providers to the Company is not a
result of the willful misconduct, bad faith or gross negligence in the
performance of, or from reckless disregard of, the duties of the Subadviser
under this Agreement.

5. Non-Exclusivity. The services of the Subadviser to the Portfolios and the
Company are not to be deemed to be exclusive, and the Subadviser shall be free
to render investment advisory or other services to others (including other
investment companies) and to engage in other activities.


                                        5
<PAGE>


It is understood and agreed that the directors, officers, and employees of the
Subadviser are not prohibited from engaging in any other business activity or
from rendering services to any other person, or from serving as partners,
officers, directors, trustees, or employees of any other firm or corporation,
including other investment companies.

6. Adviser Oversight and Cooperation with Regulators. The Adviser and Subadviser
shall cooperate with each other in providing records, reports and other
materials to regulatory and administrative bodies having proper jurisdiction
over the Company, the Adviser and the Subadviser, in connection with the
services provided pursuant to this Agreement; provided, however, that this
agreement to cooperate does not apply to the provision of information, reports
and other materials which either the Subadviser or Adviser reasonably believes
the regulatory or administrative body does not have the authority to request or
which is privileged or confidential information of the Subadviser.

7. Records. The records relating to the services provided under this Agreement
required to be established and maintained by an investment adviser under
applicable law or those required by the Adviser or the Board of Directors for
the Subadviser to prepare and provide shall be the property of the Company and
shall be under its control; however, the Company shall permit the Subadviser to
retain such records (either in original or in duplicate form) as it shall
reasonably require. In the event of the termination of this Agreement, such
records shall promptly be returned to the Company by the Subadviser free from
any claim or retention of rights therein; provided however, that the Subadviser
may retain copies thereof. The Subadviser shall keep confidential any nonpublic
information concerning the Adviser or any Subadviser's duties hereunder and
shall disclose such information only if the Company has authorized such
disclosure or if such disclosure is expressly required or requested by
applicable federal or state regulatory authorities.

8. Duration of Agreement. This Agreement shall become effective with respect to
the Portfolios on the later of the date of its execution or the date of the
commencement of operations of the Portfolios. This Agreement will continue in
effect for a period of more than two years from the date of its execution only
so long as such continuance is specifically approved at least annually by the
Board, provided that in such event such continuance shall also be approved by
the vote of a majority of the Directors who are not "interested persons" (as
defined in the 1940 Act) ("Independent Directors") of any party to this
Agreement cast in person at a meeting called for the purpose of voting on such
approval or by a vote of a majority of the outstanding voting securities (as
determined in accordance with the 1940 Act).

9. Representations of Subadviser. The Subadviser represents, warrants, and
agrees as follows:

   A. The Subadviser: (i) is registered as an investment adviser under the
   Advisers Act and will continue to be so registered for so long as this
   Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
   Advisers Act from performing the services contemplated by this Agreement;
   (iii) has met, and will continue to meet for so long as this Agreement
   remains in effect, any other applicable federal or state requirements, or the
   applicable requirements of any regulatory or industry self-regulatory
   organization, necessary to be met


                                        6
<PAGE>


   in order to perform the services contemplated by this Agreement; (iv) has the
   authority to enter into and perform the services contemplated by this
   Agreement; and (v) will immediately notify the Adviser of the occurrence of
   any event that would disqualify the Subadviser from serving as an investment
   adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
   otherwise.

   B. The Subadviser has adopted a written code of ethics complying with the
   requirements of Rule 17j-1 under the 1940 Act and, if it has not already done
   so, will provide the Adviser and the Company with a copy of such code of
   ethics, together with evidence of its adoption.

   C. The Subadviser has provided the Adviser and the Company with a copy of its
   Form ADV as most recently filed with the SEC and will, promptly after filing
   any amendment to its Form ADV with the SEC, furnish a copy of such amendment
   to the Adviser.

10. Provision of Certain Information by Subadviser. The Subadviser will promptly
notify the Adviser in writing of the occurrence of any of the following events:

   A. the Subadviser fails to be registered as an investment adviser under the
   Advisers Act or under the laws of any jurisdiction in which the Subadviser is
   required to be registered as an investment adviser in order to perform its
   obligations under this Agreement;

   B. the Subadviser is served or otherwise receives notice of any action, suit,
   proceeding, inquiry, or investigation, at law or in equity, before or by any
   court, public board, or body, involving the affairs of the Company;

   C. a controlling stockholder of the Subadviser or the portfolio manager of a
   Portfolio changes or there is otherwise an actual change in control or
   management of the Subadviser.

11. Provision of Certain Information by the Adviser. The Adviser will promptly
notify the Subadviser in writing of the occurrence of any of the following
events:

   A. the Adviser fails to be registered as an investment adviser under the
   Advisers Act or under the laws of any jurisdiction in which the Adviser is
   required to be registered as an investment adviser in order to perform its
   obligations under this Agreement;

   B. the Adviser is served or otherwise receives notice of any action, suit,
   proceeding, inquiry, or investigation, at law or in equity, before or by any
   court, public board, or body, involving the affairs of the Company;

   C. a controlling stockholder of the Adviser changes or there is otherwise an
   actual change in control or management of the Adviser.

12. Termination of Agreement. Notwithstanding the foregoing, this Agreement may
be terminated at any time with respect to a Portfolio, without the payment of
any penalty, by vote of the Board or by a vote of a majority of the outstanding
voting securities of such Portfolio on 60


                                        7
<PAGE>


days' prior written notice to the Subadviser. This Agreement may also be
terminated by the Adviser: (i) on at least 120 days' prior written notice to the
Subadviser, without the payment of any penalty; (ii) upon material breach by the
Subadviser of any of the repretsentations and warranties, if such breach shall
not have been cured within a 20-day period after notice of such breach; or (iii)
if the Subadviser becomes unable to discharge its duties and obligations under
this Agreement. The Subadviser may terminate this Agreement at any time, without
the payment of any penalty, on at least 90 days' prior notice to the Adviser.
This Agreement shall terminate automatically in the event of its assignment or
upon termination of the Advisory Agreement between the Company and the Adviser.

13. Amendment of Agreement. No provision of this Agreement may be changed,
waived, discharged, or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge,
or termination is sought, and no material amendment of this Agreement shall be
effective until approved by vote of a majority of the Independent Directors cast
in person at a meeting called for the purpose of such approval.

14. Miscellaneous.

   A. Governing Law. This Agreement shall be construed in accordance with the
   laws of the State of Maryland without giving effect to the conflicts of laws
   principles thereof, and the 1940 Act. To the extent that the applicable laws
   of the State of Maryland conflict with the applicable provisions of the 1940
   Act, the latter shall control.

   B. Captions. The Captions contained in this Agreement are included for
   convenience of reference only and in no way define or delimit any of the
   provisions hereof or otherwise affect their construction or effect.

   C. Entire Agreement. This Agreement represents the entire agreement and
   understanding of the parties hereto and shall supersede any prior agreements
   between the parties concerning management of the Portfolios and all such
   prior agreements shall be deemed terminated upon the effectiveness of this
   Agreement.

   D. Interpretation. Nothing herein contained shall be deemed to require the
   Company to take any action contrary to its Articles of Incorporation,
   By-Laws, or any applicable statutory or regulatory requirement to which it is
   subject or by which it is bound, or to relieve or deprive the Board of its
   responsibility for and control of the conduct of the affairs of the Company.

   E. Definitions. Any question of interpretation of any term or provision of
   this Agreement having a counterpart in or otherwise derived from a term or
   provision of the 1940 Act shall be resolved by reference to such term or
   provision of the 1940 Act and to interpretations thereof, if any, by the
   United States courts or, in the absence of any controlling decision of any
   such court, by rules, releases or orders of the SEC validly issued pursuant
   to the Act. As used in this Agreement, the terms "majority of the outstanding
   voting securities," "affiliated person," "interested person," "assignment,"
   "broker," "investment adviser," "net


                                        8
<PAGE>


   assets," "sale," "sell," and "security" shall have the same meaning as such
   terms have in the 1940 Act, subject to such exemptions as may be granted by
   the SEC by any rule, release or order. Where the effect of a requirement of
   the federal securities laws reflected in any provision of this Agreement is
   made less restrictive by a rule, release, or order of the SEC, whether of
   special or general application, such provision shall be deemed to incorporate
   the effect of such rule, release, or order.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.

                                       Aetna Life Insurance and Annuity Company



Attest:                                By:_____________________________________


___________________________________


                                       Massachusetts Financial Services Company



Attest:                                By:_____________________________________


___________________________________



                                        9
<PAGE>


                                   Appendix A

                                  Fee Schedule


         MFS Emerging Equities              .425% on the first $150 million of
                                            aggregate average daily
         MFS Research Growth                net assets under management

         MFS Value Equity                   .40% on the next $150 million
                                            .375% on the next $450 million
                                            .35% on the next $550 million
                                            .30% on the next $200 million
                                            .25% on assets over $1.5 billion


                                       10




                        INVESTMENT SUBADVISORY AGREEMENT

                                     Between

                    Aetna Life Insurance and Annuity Company

                                       and

                         Scudder, Stevens & Clark, Inc.

INVESTMENT SUBADVISORY AGREEMENT, made as of the ______ day of __________, 1997,
between Aetna Life Insurance and Annuity Company (the "Adviser"), an insurance
corporation organized and existing under the laws of the State of Connecticut,
and Scudder, Stevens & Clark, Inc. ("Subadviser"), a corporation organized and
existing under the laws of the State of Delaware .

WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated as
of the _____ day of ________, 1997 ("Advisory Agreement") with Portfolio
Partners, Inc. ("Company"), which is engaged in business as an open-end
management investment company registered under the Investment Company Act of
1940 ("1940 Act"); and

WHEREAS, the Company is and will continue to be a series fund having two or more
investment portfolios, each with its own assets, investment objectives, policies
and restrictions; and

WHEREAS, the Company shareholders are and will be separate accounts maintained
by insurance companies for variable life insurance policies and variable annuity
contracts (the "Policies") under which income, gains, and losses, whether or not
realized, from assets allocated to such accounts are, in accordance with the
Policies, credited to or charged against such accounts without regard to other
income, gains, or losses of such insurance companies; and

WHEREAS, the Subadviser is engaged principally in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940 ("Advisers Act"); and

WHEREAS, the Board of Directors and the Adviser desire to retain the Subadviser
as subadviser for the Scudder International Growth Portfolio (the "Portfolio"),
a portfolio of the Company, to furnish certain investment advisory services to
the Adviser and the Company and the Subadviser is willing to furnish such
services;

NOW, THEREFORE, in consideration of the premises and mutual promises herein set
forth, the parties hereto agree as follows:

1. Appointment. Adviser hereby appoints the Subadviser as its investment
Subadviser with respect to the Portfolio for the period and on the terms set
forth in this Agreement. The
<PAGE>


Subadviser accepts such appointment and agrees to render the services herein set
forth, for the compensation herein provided.

   The Adviser and the Company understand that the Subadviser has entered into
an agreement with Zurich Insurance Group ("Zurich") under which Zurich will
acquire a majority interest in the Portfolio Manager and Zurich Kemper
Investments, Inc. (an investment management company and a subsidiary of Zurich)
will become part of the Subadviser. The Subadviser's name will be changed to
Scudder Kemper Investments, Inc. ("SKI"). The Subadviser's current
employee-shareholders will retain a significant minority ownership interest in
SKI. Under the Advisers Act, the transaction will constitute an "assignment" of
this contract. By signing below, notwithstanding anything in this Agreement to
the contrary, the Adviser consents to the assignment and agrees that SKI and/or
its subsidiaries may continue to provide the services described herein to the
Adviser and the Company following the closing. The Subadviser agrees to pay
costs associated with any amendments to the Company's Registration Statement and
mailings to Company shareholders necessitated by this assignment.

2. Duties of the Subadviser

   A. Investment Subadvisory Services. Subject to the supervision of the
   Company's Board of Directors ("Board") and the Adviser, the Subadviser shall
   act as the investment Subadviser and shall supervise and direct the
   investments of the Portfolio in accordance with the portfolio's investment
   objective, policies, and restrictions as provided in the Company's Prospectus
   and Statement of Additional Information, as currently in effect and as
   amended or supplemented from time to time (hereinafter referred to as the
   "Prospectus"), and such other limitations as the Company may impose by notice
   in writing to the Subadviser. The Subadviser shall obtain and evaluate such
   information relating to the economy, industries, businesses, securities
   markets, and individual securities as it may deem necessary or useful in the
   discharge of its obligations hereunder and shall formulate and implement a
   continuing program for the management of the assets and resources of the
   Portfolio in a manner consistent with the Portfolio's investment objective,
   policies, and restrictions, and in compliance with the requirements
   applicable to registered investment companies under applicable laws and those
   requirements applicable to both regulated investment companies and segregated
   asset accounts under Subchapters M and L of the Internal Revenue Code of
   1986, as amended ("Code"). To implement its duties, the Subadviser is hereby
   authorized to:

      (i)   buy, sell, exchange, convert, lend, and otherwise trade in any
            stocks, bonds, and other securities or assets on behalf of the
            Portfolio; and

      (ii)  directly or through the trading desks of the Subadviser or its
            affiliate place orders and negotiate the commissions (if any) for
            the execution of transactions in securities or other assets with or
            through such brokers, dealers, underwriters or issuers as the
            Subadviser may select.


                                        2
<PAGE>


   B. Subadviser Undertakings. In all matters relating to the performance of
   this Agreement, the Subadviser shall act in conformity with the Company's
   Articles of Incorporation, By-Laws, and current Prospectus and with the
   written instructions and directions of the Board and the Adviser. The
   Subadviser hereby agrees to:

      (i)   regularly (but no less frequently than quarterly) report to the
            Board and the Adviser with respect to the implementation of the
            investment program and, in addition, provide such statistical
            information and special reports concerning the Portfolio and/or
            important developments materially affecting the investments held, or
            contemplated to be purchased, by the Portfolio, as may reasonably be
            requested by the Board or the Adviser and agreed to by the
            Subadviser, including attendance at Board meetings, as reasonably
            requested, to present such information and reports to the Board;

      (ii)  consult with the Company's pricing agent regarding the valuation of
            securities that are not registered for public sale, not traded on
            any securities markets, or otherwise may be deemed illiquid for
            purposes of the 1940 Act and for which market quotations are not
            readily available;

      (iii) provide any and all information, records and supporting
            documentation about accounts the Subadviser manages that have
            investment objectives, policies, and strategies substantially
            similar to those employed by the Subadviser in managing the
            Portfolio which may be reasonably necessary, under applicable laws,
            to allow the Company or its agent to present historical performance
            information concerning the Subadviser's similarly managed accounts,
            for inclusion in the Company's Prospectus and any other reports and
            materials prepared by the Company or its agent, in accordance with
            regulatory requirements;

      (iv)  establish appropriate personal contacts with the Adviser and the
            Company's Administrator in order to provide the Adviser and
            Administrator with information as reasonably requested by the
            Adviser or Administrator; and

      (v)   execute account documentation, agreements, contracts and other
            documents as the Adviser shall be requested by brokers, dealers,
            counterparties and other persons to execute in connection with its
            management of the assets of the Portfolio, provided that the
            Subadviser receives the express agreement and consent of the Adviser
            and/or the Board to execute such documentation, agreements,
            contracts and other documents. In such respect, and only for this
            limited purpose, the Subadviser shall act as the Adviser and/or the
            Portfolio's agent and attorney-in-fact.

   C. Adviser and Company Undertakings. To facilitate the Subadviser's
   fulfillment of its obligations under this Agreement, the Adviser and the
   Company will undertake the following:


                                        3
<PAGE>


      (i)   the Adviser agrees promptly to provide the Subadviser with all
            amendments or supplements to the Prospectus, the Company's Articles
            of Incorporation, and By-Laws;

      (ii)  the Company and the Adviser each agrees, on an ongoing basis, to
            notify the Subadviser expressly in writing of each change in the
            fundamental and nonfundamental investment policies of the Portfolio;

      (iii) the Adviser agrees to provide or cause to be provided to the
            Subadviser with such assistance as may be reasonably requested by
            the Subadviser in connection with its activities pertaining to the
            Portfolio under this Agreement, including, without limitation,
            information concerning the Portfolio, its available funds, or funds
            that may reasonably become available for investment, and information
            as to the general condition of the Portfolio's affairs;

      (iv)  the Adviser agrees to provide or cause to be provided to the
            Subadviser on an ongoing basis, such information as is reasonably
            requested by the Subadviser for performance by the Subadviser of its
            obligations under this Agreement, and the Subadviser shall not be in
            breach of any term of this Agreement or be deemed to have acted
            negligently if the Adviser fails to provide or cause to be provided
            such requested information and the Subadviser relies on the
            information most recently furnished to the Subadviser; and

      (v)   the Adviser will promptly provide the Subadviser with any guidelines
            and procedures applicable to the Subadviser or the Portfolio adopted
            from time to time by the Board and agrees to promptly provide the
            Subadviser copies of all amendments thereto.

   D. The Subadviser, at its expense, will furnish: (i) all necessary investment
   and management facilities and investment personnel, including salaries,
   expenses and fees of any personnel required for it to faithfully perform its
   duties under this Agreement; and (ii) administrative facilities, including
   bookkeeping, clerical personnel and equipment required for it to faithfully
   and fully perform its duties and obligations under this Agreement.

   E. The Subadviser will select brokers and dealers to effect all Portfolio
   transactions subject to the conditions set forth herein. The Subadviser will
   place all necessary orders with brokers, dealers, or issuers, and will
   negotiate brokerage commissions if applicable. The Subadviser is directed at
   all times to seek to execute brokerage transactions for the Portfolio in
   accordance with such policies or practices as may be established by the Board
   and the Adviser and described in the current Prospectus as amended from time
   to time. In placing orders for the purchase or sale of investments for the
   Portfolio, in the name of the Portfolio or its nominees, the Subadviser shall
   use its best efforts to obtain for the Portfolio the most favorable price and
   best execution available, considering all of the circumstances, and shall
   maintain such records as are required of an investment adviser under
   applicable law.


                                        4
<PAGE>


   Subject to the appropriate policies and procedures approved by the Adviser
   and the Board, the Subadviser may, to the extent authorized by Section 28(e)
   of the Securities Exchange Act of 1934, cause the Portfolio to pay a broker
   or dealer that provides brokerage or research services to the Subadviser, an
   amount of commission for effecting a portfolio transaction in excess of the
   amount of commission another broker or dealer would have charged for
   effecting that transaction if the Subadviser determines, in good faith, that
   such amount of commission is reasonable in relationship to the value of such
   brokerage or research services provided viewed in terms of that particular
   transaction or the Subadviser's overall responsibilities to the Portfolio or
   its other advisory clients. To the extent authorized by said Section 28(e)
   and the Adviser and the Board, the Subadviser shall not be deemed to have
   acted unlawfully or to have breached any duty created by this Agreement or
   otherwise solely by reason of such action. In addition, subject to seeking
   the best execution available, the Subadviser may also consider sales of
   shares of the Portfolio as a factor in the selection of brokers and dealers.

   F. On occasions when the Subadviser deems the purchase or sale of a security
   to be in the best interest of the Portfolio as well as other clients of the
   Subadviser, the Subadviser to the extent permitted by applicable laws and
   regulations, and subject to the Adviser approval of the Subadviser's
   procedures, may, but shall be under no obligation to, aggregate the orders
   for securities to be purchased or sold to attempt to obtain a more favorable
   price or lower brokerage commissions and efficient execution. In such event,
   allocation of the securities so purchased or sold, as well as the expenses
   incurred in the transaction, will be made by the Subadviser in the manner the
   Subadviser considers to be the most equitable and consistent with its
   fiduciary obligations to the Portfolio and to its other clients.

   G. With respect to the provision of services by the Subadviser hereunder, the
   Subadviser will maintain all accounts, books and records with respect to the
   Portfolio as are required of an investment adviser of a registered investment
   company pursuant to the 1940 Act and the Advisers Act and the rules under
   both statutes.

   H. The Subadviser and the Adviser acknowledge that the Subadviser is not the
   compliance agent for the Portfolio, and does not have access to all of the
   Company's books and records necessary to perform certain compliance testing.
   However, to the extent that the Subadviser has agreed to perform the services
   specified in Section 2A, the Subadviser shall perform compliance testing with
   respect to the Portfolio based upon information in its possession and upon
   information and written instructions received from the Adviser or the
   Administrator.

   I. Unless the Adviser gives the Subadviser written instructions to the
   contrary, the Subadviser shall use its good faith judgment in a manner which
   it reasonably believes best serves the interests of the Portfolio's
   shareholders to vote or abstain from voting all proxies solicited by or with
   respect to the issuers of securities in which assets of the Portfolio may be
   invested. The Adviser shall furnish the Subadviser with any further
   documents, materials


                                        5
<PAGE>


   or information that the Subadviser may reasonably request to enable it to
   perform its duties pursuant to this Agreement.

   J. Subadviser hereby authorizes Adviser to use Subadviser's name and any
   applicable trademarks in the Company's Prospectus, as well as in any
   advertisement or sales literature used by the Adviser or its agents to
   promote the Company and/or to provide information to shareholders of the
   Portfolio. Upon termination of this Agreement, the Adviser and the Company
   shall immediately cease to use such name and trademarks, except as necessary
   to comply with disclosure requirements under the federal securities laws.

   During the term of this Agreement, the Adviser shall furnish to the
   Subadviser at its principal office all prospectuses, proxy statements,
   reports to shareholders, sales literature, or other material prepared for
   distribution to shareholders of the Company or the public, which refer to the
   Subadviser or its clients in any way, prior to the use thereof, and the
   Adviser shall not use any such materials if the Subadviser reasonably objects
   within five business days (or such other time as may be mutually agreed)
   after receipt thereof. The Adviser shall ensure that materials prepared by
   employees or agents of the Adviser or its affiliates that refer to the
   Subadviser or its clients in any way are consistent with those materials
   previously approved by the Subadviser. Subadviser will provide reasonable
   marketing support to Adviser in connection with the promotion of the
   Portfolio.

3. Compensation of Subadviser. The Adviser will pay the Subadviser, with respect
to the Portfolio, the compensation specified in Appendix A to this Agreement.
Payments shall be made to the Subadviser on the second business day of each
month; however, this advisory fee will be calculated based on the daily average
value of the Portfolio's assets and accrued on a daily basis. Compensation for
any partial period shall be pro-rated based on the length of the period.

4. Liability of Subadviser. Neither the Subadviser nor any of its directors,
officers, employees or agents shall be liable to the Adviser or the Company for
any loss or expense suffered by the Adviser or the Company resulting from its
acts or omissions as Subadviser to the Portfolio, except for losses or expenses
to the Adviser or the Company resulting from willful misconduct, bad faith, or
gross negligence in the performance of, or from reckless disregard of, the
Subadviser's duties under this Agreement. Neither the Subadviser nor any of its
agents shall be liable to the Adviser or the Company for any loss or expense
suffered as a consequence of any action or inaction of other service providers
to the Company in failing to observe the instructions of the Adviser, provided
such action or inaction of such other service providers to the Company is not a
result of the willful misconduct, bad faith or gross negligence in the
performance of, or from reckless disregard of, the duties of the Subadviser
under this Agreement.

5. Non-Exclusivity. The services of the Subadviser to the Portfolio and the
Company are not to be deemed to be exclusive, and the Subadviser shall be free
to render investment advisory or other services to others (including other
investment companies) and to engage in other activities. It is understood and
agreed that the directors, officers, and employees of the Subadviser are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors,
trustees, or employees of any other firm or


                                        6
<PAGE>


corporation, including other investment companies. Furthermore, the Company and
the Adviser recognize that the Subadviser may give advice, and take action, with
respect to its other clients that may differ from the advice given, or the time
or nature of action taken, with respect to the Portfolio.

6. Adviser Oversight and Cooperation with Regulators. The Subadviser shall
cooperate in providing records, reports and other materials relating to the
Company that are in its possession, at the request of the Adviser, and in
response to inquiries by regulatory and administrative bodies having proper
jurisdiction over the Company, in connection with the services provided pursuant
to this Agreement; provided, however, that this agreement to cooperate does not
apply to the provision of information, reports and other materials which the
Subadviser reasonably believes the regulatory or administrative body does not
have the authority to request or which is privileged or confidential information
of the Subadviser.

7. Records. The records relating to the services provided under this Agreement
required to be established and maintained by an investment adviser under
applicable law or those required by the Adviser or the Board of Directors for
the Subadviser to prepare and provide shall be the property of the Company and
shall be under its control; however, the Company shall permit the Subadviser to
retain such records (either in original or in duplicate form) as it shall
reasonably require in order to carry out its duties. In the event of the
termination of this Agreement, such records shall promptly be returned to the
Company by the Subadviser free from any claim or retention of rights therein.
The Subadviser shall keep confidential any information concerning the Adviser or
any Subadviser's duties hereunder and shall disclose such information only if
the Company has authorized such disclosure or if such disclosure is expressly
required or requested by applicable federal or state regulatory authorities.

8. Duration of Agreement. This Agreement shall become effective with respect to
the Portfolio on the later of the date of its execution or the date of the
commencement of operations of the Portfolio. This Agreement will continue in
effect for a period of more than two years from the date of its execution only
so long as such continuance is specifically approved at least annually by the
Board, provided that in such event such continuance shall also be approved by
the vote of a majority of the Directors who are not "interested persons" (as
defined in the 1940 Act) of any party to this Agreement ("Independent
Directors") cast in person at a meeting called for the purpose of voting on such
approval or by a vote of a majority of the outstanding voting securities (as
determined in accordance with the 1940 Act).

9. Representations of Subadviser. The Subadviser represents, warrants, and
agrees as follows:

   A. The Subadviser: (i) is registered as an investment adviser under the
   Advisers Act and will continue to be so registered for so long as this
   Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
   Advisers Act from performing the services contemplated by this Agreement;
   (iii) has met, and will continue to meet for so long as this Agreement
   remains in effect, any other applicable federal or state requirements, or the
   applicable requirements of any regulatory or industry self-regulatory
   organization, necessary to be met


                                        7
<PAGE>


   in order to perform the services contemplated by this Agreement; (iv) has the
   authority to enter into and perform the services contemplated by this
   Agreement; and (v) will immediately notify the Adviser of the occurrence of
   any event that would disqualify the Subadviser from serving as an investment
   adviser of an investment company pursuant to Section 9(a) of the 1940 Act or
   otherwise.

   B. The Subadviser has adopted a written code of ethics complying with the
   requirements of Rule 17j-1 under the 1940 Act and, if it has not already done
   so, will provide the Adviser and the Company with a copy of such code of
   ethics, together with evidence of its adoption.

   C. The Subadviser has provided the Adviser and the Company with a copy of its
   Form ADV as most recently filed with the SEC and will, promptly after filing
   any amendment to its Form ADV with the SEC, furnish a copy of such amendment
   to the Adviser.

10. Provision of Certain Information by Subadviser. The Subadviser will promptly
notify the Adviser in writing of the occurrence of any of the following events:

   A. the Subadviser fails to be registered as an investment adviser under the
   Advisers Act or under the laws of any jurisdiction in which the Subadviser is
   required to be registered as an investment adviser in order to perform its
   obligations under this Agreement;

   B. the Subadviser is served or otherwise receives notice of any action, suit,
   proceeding, inquiry, or investigation, at law or in equity, before or by any
   court, public board, or body, involving the affairs of the Company;

   C. a controlling stockholder of the Subadviser or the portfolio manager of
   the Portfolio changes or there is otherwise an actual change in control or
   management of the Subadviser.

11. Provision of Certain Information by the Adviser. The Adviser will promptly
notify the Subadviser in writing of the occurrence of any of the following
events:

   A. the Adviser fails to be registered as an investment adviser under the
   Advisers Act or under the laws of any jurisdiction in which the Adviser is
   required to be registered as an investment adviser in order to perform its
   obligations under this Agreement;

   B. the Adviser is served or otherwise receives notice of any action, suit,
   proceeding, inquiry, or investigation, at law or in equity, before or by any
   court, public board, or body, involving the affairs of the Company;

   C. a controlling stockholder of the Adviser changes or there is otherwise an
   actual change in control or management of the Adviser.

12. Termination of Agreement. Notwithstanding the foregoing, this Agreement may
be terminated at any time, without the payment of any penalty, by vote of the
Board or by a vote of a majority of the outstanding voting securities of the
Portfolio on 60 days' prior written notice to


                                        8
<PAGE>


the Subadviser. This Agreement may also be terminated by the Adviser: (i) on at
least 60 days' prior written notice to the Subadviser, without the payment of
any penalty; (ii) upon material breach by the Subadviser of any of the
representations and warranties, if such breach shall not have been cured within
a 20-day period after notice of such breach; or (iii) if the Subadviser becomes
unable to discharge its duties and obligations under this Agreement. The
Subadviser may terminate this Agreement at any time, without the payment of any
penalty, on at least 60 days' prior notice to the Adviser. This Agreement shall
terminate automatically in the event of its assignment or upon termination of
the Advisory Agreement between the Company and the Adviser.

13. Amendment of Agreement. No provision of this Agreement may be changed,
waived, discharged, or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge,
or termination is sought, and no material amendment of this Agreement shall be
effective until approved by vote of a majority of the Independent Directors cast
in person at a meeting called for the purpose of such approval.

14. Miscellaneous.

   A. Governing Law. This Agreement shall be construed in accordance with the
   laws of the State of Maryland without giving effect to the conflicts of laws
   principles thereof, and the 1940 Act. To the extent that the applicable laws
   of the State of Maryland conflict with the applicable provisions of the 1940
   Act, the latter shall control.

   B. Captions. The Captions contained in this Agreement are included for
   convenience of reference only and in no way define or delimit any of the
   provisions hereof or otherwise affect their construction or effect.

   C. Entire Agreement. This Agreement represents the entire agreement and
   understanding of the parties hereto and shall supersede any prior agreements
   between the parties concerning management of the Portfolio and all such prior
   agreements shall be deemed terminated upon the effectiveness of this
   Agreement.

   D. Interpretation. Nothing herein contained shall be deemed to require the
   Company to take any action contrary to its Articles of Incorporation,
   By-Laws, or any applicable statutory or regulatory requirement to which it is
   subject or by which it is bound, or to relieve or deprive the Board of its
   responsibility for and control of the conduct of the affairs of the Company.

   E. Definitions. Any question of interpretation of any term or provision of
   this Agreement having a counterpart in or otherwise derived from a term or
   provision of the 1940 Act shall be resolved by reference to such term or
   provision of the 1940 Act and to interpretations thereof, if any, by the
   United States courts or, in the absence of any controlling decision of any
   such court, by rules, releases or orders of the SEC validly issued pursuant
   to the Act. As used in this Agreement, the terms "majority of the outstanding
   voting securities," "affiliated person," "interested person," "assignment,"
   "broker," "investment adviser," "net


                                       9
<PAGE>


   assets," "sale," "sell," and "security" shall have the same meaning as such
   terms have in the 1940 Act, subject to such exemptions as may be granted by
   the SEC by any rule, release or order. Where the effect of a requirement of
   the federal securities laws reflected in any provision of this Agreement is
   made less restrictive by a rule, release, or order of the SEC, whether of
   special or general application, such provision shall be deemed to incorporate
   the effect of such rule, release, or order.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.


                                       Aetna Life Insurance and Annuity Company



Attest:                                By:_____________________________________


___________________________________

                                       Scudder, Stevens & Clark, Inc.


                                       By:_____________________________________
Attest:


___________________________________



                                       10
<PAGE>



                                   Appendix A

                                  Fee Schedule



         Scudder International Growth        .75% on the first $20 million of
                                             average daily net assets
                                             .65% on the next $15 million
                                             .50% on the next $65 million
                                             .40% on the next $200 million
                                             .30% on assets over $300 million


                                       11


                        INVESTMENT SUBADVISORY AGREEMENT

                                     Between

                    Aetna Life Insurance and Annuity Company

                                       and

                         T. Rowe Price Associates, Inc.

INVESTMENT SUBADVISORY AGREEMENT, made as of the ______ day of __________, 1997,
between Aetna Life Insurance and Annuity Company (the "Adviser"), an insurance
corporation organized and existing under the laws of the State of Connecticut,
and T. Rowe Price Associates, Inc. ("Subadviser"), a corporation organized and
existing under the laws of the State of Maryland .

WHEREAS, the Adviser has entered into an Investment Advisory Agreement dated as
of the _____ day of ________, 1997 ("Advisory Agreement") with Portfolio
Partners, Inc. ("Company"), which is engaged in business as an open-end
management investment company registered under the Investment Company Act of
1940 ("1940 Act"); and

WHEREAS, the Company is and will continue to be a series fund having two or more
investment portfolios, each with its own assets, investment objectives, policies
and restrictions; and

WHEREAS, the Company shareholders are and will be separate accounts maintained
by insurance companies for variable life insurance policies and variable annuity
contracts (the "Policies") under which income, gains, and losses, whether or not
realized, from assets allocated to such accounts are, in accordance with the
Policies, credited to or charged against such accounts without regard to other
income, gains, or losses of such insurance companies; and

WHEREAS, the Subadviser is engaged principally in the business of rendering
investment advisory services and is registered as an investment adviser under
the Investment Advisers Act of 1940 ("Advisers Act"); and

WHEREAS, the Board of Directors and the Adviser desire to retain the Subadviser
as subadviser for the T. Rowe Price Growth Equity Portfolio (the "Portfolio"), a
portfolio of the Company, to furnish certain investment advisory services to the
Adviser and the Company and the Subadviser is willing to furnish such services;

NOW, THEREFORE, in consideration of the premises and mutual promises herein set
forth, the parties hereto agree as follows:
<PAGE>


1. Appointment. Adviser hereby appoints the Subadviser as its investment
Subadviser with respect to the Portfolio for the period and on the terms set
forth in this Agreement. The Subadviser accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.

2. Duties of the Subadviser

   A. Investment Subadvisory Services. Subject to the supervision of the
   Company's Board of Directors ("Board") and the Adviser, the Subadviser shall
   act as the investment Subadviser and shall supervise and direct the
   investments of the Portfolio in accordance with the portfolio's investment
   objective, policies, and restrictions as provided in the Company's Prospectus
   and Statement of Additional Information, as currently in effect and as
   amended or supplemented from time to time (hereinafter referred to as the
   "Prospectus"), and such other limitations as the Company may impose by notice
   in writing to the Subadviser. The Subadviser shall obtain and evaluate such
   information relating to the economy, industries, businesses, securities
   markets, and individual securities as it may deem necessary or useful in the
   discharge of its obligations hereunder and shall formulate and implement a
   continuing program for the management of the assets and resources of the
   Portfolio in a manner consistent with the Portfolio's investment objective,
   policies, and restrictions, and in compliance with the requirements
   applicable to registered investment companies under applicable laws and those
   requirements applicable to both regulated investment companies and segregated
   asset accounts under Subchapters M and L of the Internal Revenue Code of
   1986, as amended ("Code"). To implement its duties, the Subadviser is hereby
   authorized to:

      (i)   buy, sell, exchange, convert, lend, and otherwise trade in any
            stocks, bonds, and other securities or assets on behalf of the
            Portfolio; and

      (ii)  directly or through the trading desks of T. Rowe Price Associates,
            Inc. place orders and negotiate the commissions (if any) for the
            execution of transactions in securities or other assets with or
            through such brokers, dealers, underwriters or issuers as the
            Subadviser may select.

   B. Subadviser Undertakings. In all matters relating to the performance of
   this Agreement, the Subadviser shall act in conformity with the Company's
   Articles of Incorporation, By-Laws, and current Prospectus and with the
   written instructions and directions of the Board and the Adviser. The
   Subadviser hereby agrees to:

      (i)   regularly (but no less frequently than quarterly) report to the
            Board and the Adviser with respect to the implementation of the
            investment program and, in addition, provide such statistical
            information and special reports concerning the Portfolio and/or
            important developments materially affecting the investments held, or
            contemplated to be purchased, by the Portfolio, as may reasonably be
            requested by the Board or the Adviser and agreed to by the
            Subadviser,


                                        2
<PAGE>


            including attendance at Board meetings, as reasonably requested, to
            present such information and reports to the Board;

      (ii)  consult with the Company's pricing agent regarding the valuation of
            securities that are not registered for public sale, not traded on
            any securities markets, or otherwise may be deemed illiquid for
            purposes of the 1940 Act and for which market quotations are not
            readily available;

      (iii) establish appropriate personal contacts with the Adviser and the
            Company's Administrator in order to provide the Adviser and
            Administrator with information as reasonably requested by the
            Adviser or Administrator; and

      (iv)  execute account documentation, agreements, contracts and other
            documents as the Adviser shall be requested by brokers, dealers,
            counterparties and other persons to execute in connection with its
            management of the assets of the Portfolio, provided that the
            Subadviser receives the express agreement and consent of the Adviser
            and/or the Board to execute such documentation, agreements,
            contracts and other documents. In such respect, and only for this
            limited purpose, the Subadviser shall act as the Adviser and/or the
            Portfolio's agent and attorney-in-fact.

   C. The Subadviser, at its expense, will furnish: (i) all necessary investment
   and management facilities and investment personnel, including salaries,
   expenses and fees of any personnel required for it to faithfully perform its
   duties under this Agreement; and (ii) administrative facilities, including
   bookkeeping, clerical personnel and equipment required for it to faithfully
   and fully perform its duties and obligations under this Agreement.

   D. The Subadviser will select brokers and dealers to effect all Portfolio
   transactions subject to the conditions set forth herein. The Subadviser will
   place all necessary orders with brokers, dealers, or issuers, and will
   negotiate brokerage commissions if applicable. The Subadviser is directed at
   all times to seek to execute brokerage transactions for the Portfolio in
   accordance with such policies or practices as may be established by the Board
   and the Adviser and described in the current Prospectus as amended from time
   to time. In placing orders for the purchase or sale of investments for the
   Portfolio, in the name of the Portfolio or its nominees, the Subadviser shall
   use its best efforts to obtain for the Portfolio the best execution
   available, considering all of the circumstances, and shall maintain records
   adequate to demonstrate compliance with this requirement.

   Subject to the appropriate policies and procedures approved by the Adviser
   and the Board, the Subadviser may, to the extent authorized by Section 28(e)
   of the Securities Exchange Act of 1934, cause the Portfolio to pay a broker
   or dealer that provides brokerage or research services to the Subadviser, an
   amount of commission for effecting a portfolio transaction in excess of the
   amount of commission another broker or dealer would have charged for
   effecting that transaction if the Subadviser determines, in good faith, that
   such


                                        3
<PAGE>


   amount of commission is reasonable in relationship to the value of such
   brokerage or research services provided viewed in terms of that particular
   transaction or the Subadviser's overall responsibilities to the Portfolio or
   its other advisory clients. To the extent authorized by said Section 28(e)
   and the Adviser and the Board, the Subadviser shall not be deemed to have
   acted unlawfully or to have breached any duty created by this Agreement or
   otherwise solely by reason of such action. In addition, subject to seeking
   the best execution available, the Subadviser may also consider sales of
   shares of the Portfolio as a factor in the selection of brokers and dealers.

   E. On occasions when the Subadviser deems the purchase or sale of a security
   to be in the best interest of the Portfolio as well as other clients of the
   Subadviser, the Subadviser, to the extent permitted by applicable laws and
   regulations, and subject to the Adviser's initial approval of the
   Subadviser's procedures, may, but shall be under no obligation to, aggregate
   the orders for securities to be purchased or sold to attempt to obtain a more
   favorable price or lower brokerage commissions and efficient execution. In
   such event, allocation of the securities so purchased or sold, as well as the
   expenses incurred in the transaction, will be made by the Subadviser in the
   manner the Subadviser considers to be the most equitable and consistent with
   its fiduciary obligations to the Portfolio and to its other clients.

   F. With respect to the provision of services by the Subadviser hereunder, the
   Subadviser will maintain all accounts, books and records with respect to the
   Portfolio as are required of an investment adviser of a registered investment
   company pursuant to the 1940 Act and the Advisers Act and the rules under
   both statutes.

   G. The Subadviser and the Adviser acknowledge that the Subadviser is not the
   compliance agent for the Portfolio, and does not have access to all of the
   Company's books and records necessary to perform certain compliance testing.
   However, to the extent that the Subadviser has agreed to perform the services
   specified in Section 2A, the Subadviser shall perform compliance testing with
   respect to the Portfolio based upon information in its possession and upon
   information and written instructions received from the Adviser or the
   Administrator. The Adviser or Administrator shall promptly provide the
   Subadviser with copies of the Company's current Prospectus, Articles of
   Incorporation and By-Laws and any written policies or procedures adopted by
   the Board applicable to the Portfolio and any amendments or revisions
   thereto.

   H. Unless the Adviser gives the Subadviser written instructions to the
   contrary, the Subadviser shall use its good faith judgment in a manner which
   it reasonably believes best serves the interests of the Portfolio's
   shareholders to vote or abstain from voting all proxies solicited by or with
   respect to the issuers of securities in which assets of the Portfolio may be
   invested. The Adviser shall furnish the Subadviser with any further
   documents, materials or information that the Subadviser may reasonably
   request to enable it to perform its duties pursuant to this Agreement.


                                        4
<PAGE>


   I. Subadviser hereby authorizes Adviser to use Subadviser's name and any
   applicable trademarks in the Company's Prospectus, as well as in any
   advertisement or sales literature used by the Adviser or its agents to
   promote the Company and/or to provide information to shareholders of the
   Portfolio in accordance with the terms of the License Agreement entered into
   between the parties hereto dated _______________, 1997.

   Subadviser will provide reasonable marketing support to Adviser in connection
   with the promotion of the Portfolio.

3. Compensation of Subadviser. The Adviser will pay the Subadviser, with respect
to the Portfolio, the compensation specified in Appendix A to this Agreement.
Payments shall be made to the Subadviser on the second day of each month;
however, this advisory fee will be calculated based on the daily average value
of the Portfolio's assets and accrued on a daily basis. Compensation for any
partial period shall be pro-rated based on the length of the period.

4. Liability of Subadviser. Neither the Subadviser nor any of its directors,
officers, employees or agents shall be liable to the Adviser, the Company, or
the Company's shareholders for any loss or expense suffered by the Adviser, the
Company, or the Company's shareholders resulting from its acts or omissions as
Subadviser to the Portfolio, except for losses or expenses to the Adviser, the
Company, or the Company's shareholders resulting from willful misconduct, bad
faith, or gross negligence in the performance of, or from reckless disregard of,
the Subadviser's duties under this Agreement. Neither the Subadviser nor any of
its agents shall be liable to the Adviser, the Company, or the Company's
shareholders for any loss or expense suffered as a consequence of any action or
inaction of other service providers to the Company in failing to observe the
instructions of the Adviser, provided such action or inaction of such other
service providers to the Company is not a result of the willful misconduct, bad
faith or gross negligence in the performance of, or from reckless disregard of,
the duties of the Subadviser under this Agreement.

5. Non-Exclusivity. The services of the Subadviser to the Portfolio and the
Company are not to be deemed to be exclusive, and the Subadviser shall be free
to render investment advisory or other services to others (including other
investment companies) and to engage in other activities. It is understood and
agreed that the directors, officers, and employees of the Subadviser are not
prohibited from engaging in any other business activity or from rendering
services to any other person, or from serving as partners, officers, directors,
trustees, or employees of any other firm or corporation, including other
investment companies.

6. Adviser Oversight and Cooperation with Regulators. The Subadviser shall
cooperate in providing records, reports and other materials relating to the
Company that are in its possession, at the request of the Adviser, and in
response to inquiries by regulatory and administrative bodies having proper
jurisdiction over the Company, in connection with the services provided pursuant
to this Agreement; provided, however, that this agreement to cooperate does not
apply to the provision of information, reports and other materials which the
Subadviser reasonably believes the


                                        5
<PAGE>


regulatory or administrative body does not have the authority to request or
which is privileged or confidential information of the Subadviser.

7. Records. The records relating to the services provided under this Agreement
required to be established and maintained by an investment adviser under
applicable law or those required by the Adviser or the Board of Directors for
the Subadviser to prepare and provide shall be the property of the Company and
shall be under its control; however, the Company shall permit the Subadviser to
retain such records (either in original or in duplicate form) as it shall
reasonably require in order to carry out its duties. In the event of the
termination of this Agreement, such records shall promptly be returned to the
Company by the Subadviser free from any claim or retention of rights therein.
The Subadviser shall keep confidential any information concerning the Adviser or
any Subadviser's duties hereunder and shall disclose such information only if
the Company has authorized such disclosure or if such disclosure is expressly
required or requested by applicable federal or state regulatory authorities.

8. Duration of Agreement. This Agreement shall become effective with respect to
the Portfolio on the later of the date of its execution or the date of the
commencement of operations of the Portfolio. This Agreement will continue in
effect for a period of more than two years from the date of its execution only
so long as such continuance is specifically approved at least annually by the
Board, provided that in such event such continuance shall also be approved by
the vote of a majority of the Directors who are not "interested persons" (as
defined in the 1940 Act) of any party to this Agreement ("Independent
Directors") cast in person at a meeting called for the purpose of voting on such
approval or by a vote of a majority of the outstanding voting securities (as
determined in accordance with the 1940 Act).

9. Representations of Subadviser. The Subadviser represents, warrants, and
agrees as follows:

   A. The Subadviser: (i) is registered as an investment adviser under the
   Advisers Act and will continue to be so registered for so long as this
   Agreement remains in effect; (ii) is not prohibited by the 1940 Act or the
   Advisers Act from performing the services contemplated by this Agreement;
   (iii) has met, and will use its best efforts to continue to meet for so long
   as this Agreement remains in effect, any other applicable federal or state
   requirements, or the applicable requirements of any regulatory or industry
   self-regulatory organization, necessary to be met in order to perform the
   services contemplated by this Agreement; (iv) has the authority to enter into
   and perform the services contemplated by this Agreement; and (v) will
   immediately notify the Adviser of the occurrence of any event that would
   disqualify the Subadviser from serving as an investment adviser of an
   investment company pursuant to Section 9(a) of the 1940 Act or otherwise.

   B. The Subadviser has adopted a written code of ethics complying with the
   requirements of Rule 17j-1 under the 1940 Act and, if it has not already done
   so, will provide the Adviser and the Company with a copy of such code of
   ethics, together with evidence of its adoption.


                                        6
<PAGE>


   C. The Subadviser has provided the Adviser and the Company with a copy of its
   Form ADV as most recently filed with the SEC and hereafter will furnish a
   copy of its annual amendment to the Adviser.

10. Provision of Certain Information by Subadviser. The Subadviser will promptly
notify the Adviser in writing of the occurrence of any of the following events:

   A. the Subadviser fails to be registered as an investment adviser under the
   Advisers Act or under the laws of any jurisdiction in which the Subadviser is
   required to be registered as an investment adviser in order to perform its
   obligations under this Agreement;

   B. the Subadviser or the Company is served or otherwise receives notice of
   any action, suit, proceeding, inquiry, or investigation, at law or in equity,
   before or by any court, public board, or body, involving the affairs of the
   Company;

   C. a controlling stockholder of the Subadviser or the portfolio manager of
   the Portfolio changes or there is otherwise an actual change in control or
   management of the Subadviser.

11. Provision of Certain Information by the Adviser. The Adviser will promptly
notify the Subadviser in writing of the occurrence of any of the following
events:

   A. the Adviser fails to be registered as an investment adviser under the
   Advisers Act or under the laws of any jurisdiction in which the Adviser is
   required to be registered as an investment adviser in order to perform its
   obligations under this Agreement;

   B. the Adviser is served or otherwise receives notice of any action, suit,
   proceeding, inquiry, or investigation, at law or in equity, before or by any
   court, public board, or body, involving the affairs of the Company;

   C. a controlling stockholder of the Adviser changes or there is otherwise an
   actual change in control or management of the Adviser.

12. Termination of Agreement. Notwithstanding the foregoing, this Agreement may
be terminated at any time, without the payment of any penalty, by vote of the
Board or by a vote of a majority of the outstanding voting securities of the
Portfolio on 60 days' prior written notice to the Subadviser. This Agreement may
also be terminated by the Adviser: (i) on at least 120 days' prior written
notice to the Subadviser, without the payment of any penalty; (ii) upon material
breach by the Subadviser of any of the representations and warranties, if such
breach shall not have been cured within a 20-day period after notice of such
breach; or (iii) if the Subadviser becomes unable to discharge its duties and
obligations under this Agreement. The Subadviser may terminate this Agreement at
any time, without the payment of any penalty, on at least 90 days' prior notice
to the Adviser. This Agreement shall terminate automatically in the event of its
assignment or upon termination of the Advisory Agreement between the Company and
the Adviser.


                                        7
<PAGE>


13. Amendment of Agreement. No provision of this Agreement may be changed,
waived, discharged, or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge,
or termination is sought, and no material amendment of this Agreement shall be
effective until approved by vote of a majority of the Independent Directors cast
in person at a meeting called for the purpose of such approval.

14. Miscellaneous.

   A. Governing Law. This Agreement shall be construed in accordance with the
   laws of the State of Maryland without giving effect to the conflicts of laws
   principles thereof, and the 1940 Act. To the extent that the applicable laws
   of the State of Maryland conflict with the applicable provisions of the 1940
   Act, the latter shall control.

   B. Captions. The Captions contained in this Agreement are included for
   convenience of reference only and in no way define or delimit any of the
   provisions hereof or otherwise affect their construction or effect.

   C. Entire Agreement. This Agreement represents the entire agreement and
   understanding of the parties hereto and shall supersede any prior agreements
   between the parties concerning management of the Portfolio and all such prior
   agreements shall be deemed terminated upon the effectiveness of this
   Agreement.

   D. Interpretation. Nothing herein contained shall be deemed to require the
   Company to take any action contrary to its Articles of Incorporation,
   By-Laws, or any applicable statutory or regulatory requirement to which it is
   subject or by which it is bound, or to relieve or deprive the Board of its
   responsibility for and control of the conduct of the affairs of the Company.

   E. Definitions. Any question of interpretation of any term or provision of
   this Agreement having a counterpart in or otherwise derived from a term or
   provision of the 1940 Act shall be resolved by reference to such term or
   provision of the 1940 Act and to interpretations thereof, if any, by the
   United States courts or, in the absence of any controlling decision of any
   such court, by rules, releases or orders of the SEC validly issued pursuant
   to the Act. As used in this Agreement, the terms "majority of the outstanding
   voting securities," "affiliated person," "interested person," "assignment,"
   "broker," "investment adviser," "net assets," "sale," "sell," and "security"
   shall have the same meaning as such terms have in the 1940 Act, subject to
   such exemptions as may be granted by the SEC by any rule, release or order.
   Where the effect of a requirement of the federal securities laws reflected in
   any


                                        8
<PAGE>


   provision of this Agreement is made less restrictive by a rule, release, or
   order of the SEC, whether of special or general application, such provision
   shall be deemed to incorporate the effect of such rule, release, or order.

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.


                                       Aetna Life Insurance and Annuity Company



                                       By:_____________________________________
Attest:


___________________________________


                                        T. Rowe Price Associates, Inc.



                                        By:____________________________________
Attest:


___________________________________


                                        9
<PAGE>


                                   APPENDIX A

                                  Fee Schedule





T. Rowe Price Growth Equity                  .40% on the first $500 million of
                                             average daily net assets
                                             .375% on assets over $500 million




                                     FORM OF
                             UNDERWRITING AGREEMENT

                            PORTFOLIO PARTNERS, INC.


THIS AGREEMENT, is entered into this     day of         , 1997, by and between
Aetna Life Insurance and Annuity Company, Inc. ("Aetna"), a Connecticut
corporation, and Portfolio Partners, Inc. (the "Fund") on behalf of its
investment portfolios (the "Portfolios").

WHEREAS, the Fund is an open-end management investment company registered with
the Securities and Exchange Commission ("Commission") under the Investment
Company Act of 1940 ("1940 Act") and is authorized to issue shares of distinct
investment portfolios; and

WHEREAS the Fund has registered the shares of its common stock ("Shares") in its
Portfolios for offer and sale to the public under the Securities Act of 1933;
and

WHEREAS, the Fund wishes to retain Aetna, and Aetna is willing to act, as
principal underwriter in connection with the offer and sale of the Shares;

NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, the parties agree as follows:

1. Appointment of Underwriter. The Fund hereby appoints Aetna and Aetna hereby
accepts appointment as underwriter in connection with the distribution of the
Shares. The Fund authorizes Aetna to solicit orders for the purchase of the
Shares as set forth in the Registration Statement on Form N-1A currently
effective with the Commission. It is understood that the Shares are offered only
through variable annuity contracts and variable life policies issued by Aetna
and its affiliates.

2. Compensation. Aetna shall receive no separate compensation for providing
services under this Agreement. It is understood that the compensation Aetna
receives in connection with the issuance of the variable annuity contracts or
variable life policies shall be the only consideration it receives for serving
as underwriter hereunder.

3. Aetna Expenses. Aetna shall be responsible for any costs of printing and
distributing prospectuses and statements of additional information necessary to
offer and sell the Shares, and such other sales literature, reports, forms and
advertisements as it elects to prepare, provided such materials comply with the
applicable provisions of federal and state law.

4. Fund Expenses. The Fund shall be responsible for the costs of registering the
Shares with the Commission and for the costs of preparing prospectuses,
statements of additional information and such other documents as are required to
maintain the registration of the Shares with the Commission.
<PAGE>


5. Share Certificates. The Fund shall not issue certificates representing
Shares.

6. Status of underwriter and Other Persons. Aetna is an independent contractor
and shall be agent for the Fund only in respect to the sale and redemption of
the Shares. Any person, even though also an officer, director, employee or agent
of Aetna, who may be or become an officer, director, employee or agent of the
Fund, shall be deemed, when rendering services to the Fund or acting in any
business of the Fund, to be rendering such services to or acting solely for the
Fund and not as an officer, director, employee or agent or one under the control
or direction of Aetna even though paid by Aetna.

7. Nonexclusivity. The services of Aetna to the Fund under this Agreement are
not to be deemed exclusive, and Aetna shall be free to render similar services
or other services to others and to engage in other activities related or
unrelated to those provided under this Agreement.

8. Effectiveness and Termination of Agreement. This Agreement shall become
effective at the close of business on the date set forth in the first paragraph
of this Agreement and shall remain in force and effect,
through_________________, unless earlier terminated under the provisions of
Section 9. Following the expiration of its initial term, the Agreement shall
continue in force and effect for one-year periods, provided such continuance is
specifically approved at least annually by the Fund's Board of Directors, or by
the vote of a majority of the Fund's outstanding voting securities (as defined
in Section 2(a)(42) of the 1940 Act), and approved by vote of a majority of
Directors who are not parties to this Agreement or interested persons (as
defined in Section 2(a)(19) of the 1940 Act) of the Fund or of Aetna, cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement will automatically terminate in the event of its assignment.

9. Termination. This Agreement may be terminated at any time, by either party,
without the payment of any penalty, on sixty (60) days' written notice to the
other party.

10. Liability of Aetna. Aetna shall be liable to the Fund and shall indemnify
the Fund for any losses incurred by the Fund, to the extent that such losses
resulted from an act or omission on the part of Aetna or its officers, directors
or employees in carrying out its duties hereunder, that is found to involve
willful misfeasance, bad faith or negligence, or reckless disregard by Aetna of
its duties under this Agreement.

11. Amendments. This Agreement may be amended or changed only by an instrument
in writing signed by both parties.

12. Applicable Law. This Agreement shall be construed in accordance with the
laws of the State of Connecticut and the 1940 Act. To the extent that the
applicable laws of the State of Connecticut conflict with the applicable
provisions of the 1940 Act, however, the latter shall control.

13. Notices. Any notices under this Agreement shall be in writing, addressed and
delivered, mailed postage paid, or sent by other delivery service, or by
facsimile transmission to each party


                                      -2-
<PAGE>

at such address as each party may designate for the receipt of notice. Until
further notice, such addresses shall be:

         if to the Fund or Aetna:

         151 Farmington Avenue, RE4A
         Hartford, Connecticut  06156
         Fax number: 860/273-8340


14. Questions of Interpretation. This Agreement shall be governed by the laws of
the State of Connecticut. Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise derived from a
term or provision of the 1940 Act shall be resolved by reference to such term or
provision of the 1940 Act and to interpretations thereof, if any, by the United
States Courts or, in the absence of any controlling decision of any such court,
by rules, releases or orders of the Commission issued pursuant to the 1940 Act.
In addition, where the effect of a requirement of the 1940 Act reflected in the
provisions of this Agreement is revised by rule, release or order of the
Commission, such provisions shall be deemed to incorporate the effect of such
rule, release or order.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the      day of            , 1997.



                                            AETNA LIFE INSURANCE AND ANNUITY
                                            COMPANY

Attest:                                     By
                                                 ------------------------------
                                            Name:
                                                 ------------------------------
- ------------------------------              Title
                                                 ------------------------------
Assistant Secretary


                                            PORTFOLIO PARTNERS, INC.

                                            By:
                                                 ------------------------------
                                            Name:
                                                 ------------------------------
Attest:                                     Title:
                                                 ------------------------------


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

Secretary

                                      -3-



                               CUSTODIAN AGREEMENT

                                     BETWEEN

                            PORTFOLIO PARTNERS, INC.

                                       AND

                         INVESTORS BANK & TRUST COMPANY
<PAGE>

<TABLE>
<CAPTION>
                                                 TABLE OF CONTENTS

<S>   <C>         <C>      <C>                                                                           <C>

                                                                                                         Page

1.   Bank Appointed Custodian.........................................................................    1

2.   Definitions......................................................................................    1


                  2.1      Authorized Person..........................................................    1
                  2.2      Board    ..................................................................    1
                  2.3      Security ..................................................................    1
                  2.4      Portfolio Security.........................................................    1
                  2.5      Officers' Certificate......................................................    2
                  2.6      Book-Entry System..........................................................    2
                  2.7      Depository.................................................................    2
                  2.8      Proper Instructions........................................................    2

3.   Separate Accounts ...............................................................................    2

4.   Certification as to Authorized Persons...........................................................    2

5.   Custody of Cash   ...............................................................................    3

                  5.1      Purchase of Securities.....................................................    3
                  5.2      Redemptions      ..........................................................    3
                  5.3      Distributions and Expenses of Fund.........................................    3
                  5.4      Payment in Respect of Securities...........................................    3
                  5.5      Repayment of Loans.........................................................    3
                  5.6      Repayment of Cash..........................................................    3
                  5.7      Foreign Exchange Transactions..............................................    4
                  5.8      Other Authorized Payments..................................................    4
                  5.9      Termination................................................................    4

6.   Securities.......................................................................................    4

                  6.1      Segregation and Registration...............................................    4
                  6.2      Voting and Proxies.........................................................    5
                  6.3      Corporate Action ..........................................................    5
                  6.4      Book-Entry System..........................................................    5
                  6.5      Use of a Depository........................................................    6
                  6.6      Use of Book-Entry System for Commercial Paper..............................    7
                  6.7      Use of Immobilization Programs.............................................    8
                  6.8      Eurodollar CDs   ..........................................................    8
                  6.9      Options and Futures Transactions...........................................    8
                           (a)      Puts and Calls Traded on Securities Exchanges,
                                    NASDAQ or Over-the-Counter........................................    8
                           (b)      Puts, Calls, and Futures Traded
                                    on Commodities Exchanges..........................................    9
                  6.10     Segregated Account.........................................................    9

                                       2
<PAGE>


Page

                  6.11     Interest Bearing Call or Time Deposits.....................................    10
                  6.12     Transfer of Securities.....................................................    10

7.   Redemptions       ...............................................................................    12

8.   Merger, Dissolution, etc. of Series..............................................................    12

9.   Actions of Bank Without Prior Authorization......................................................    12

10.  Collection and Defaults..........................................................................    13

11.  Maintenance of Records and Accounting Services...................................................    13

12.  Fund Evaluation and Yield Calculation............................................................    13

                  12.1     Fund Evaluation............................................................    13
                  12.2     Yield Calculation..........................................................    14

13.  Additional Services        ......................................................................    15

14.  Duties of the Bank         ......................................................................    15

                  14.1     Performance of Duties and
                           Standard of Care ..........................................................    15
                  14.2     Agents and Subcustodians with Respect to Property
                           of the Company Held in the United States...................................    15
                  14.3     Duties of the Bank with Respect to Property of the Company
                           Held Outside of the United States..........................................    16
                  14.4     Insurance..................................................................    18
                  14.5     Fees and Expenses of Bank..................................................    18
                  14.6     Advances by  Bank..........................................................    18

15.  Limitation of Liability..........................................................................    19

                  15.1     Liability of the Custodian with Respect to Use of
                           Securities Systems and Foreign Depositories................................    19
                  15.2     Standard of Care; Liability; Indemnification...............................    19

16.  Termination......................................................................................    20

17.  Confidentiality..................................................................................    21

18.  Notices  ........................................................................................    21

19.  Amendments.......................................................................................    22


                                       3
<PAGE>


Page

20.  Parties  ........................................................................................       22

21.  Governing Law....................................................................................       22

22.  Counterparts.....................................................................................       22

23.  Entire Agreement.................................................................................       22

24.  Limitation of Liability..........................................................................       22

</TABLE>


                                           APPENDICES


Appendix A        ...................................     Fee Schedule

Appendix B        ...................................     Additional Services


                                       4
<PAGE>


                               CUSTODIAN AGREEMENT


         THIS AGREEMENT made as of this _____ day of __________, 1997, between
Portfolio Partners, Inc., a company organized under the laws of the State of
Maryland (the "Company"), and Investors Bank & Trust Company, a Massachusetts
trust company (the "Bank").

         WHEREAS, the Company is registered under the Investment Company Act of
1940 (the "1940 Act") as an open-end, diversified management investment company
that currently issues five series of shares, each of which represents a separate
investment portfolio and which may create additional series in the future; and

         WHEREAS, the Company, for which Aetna Life Insurance and Annuity
Company ("Adviser") serves as investment adviser, desires to retain the Bank to
serve as the Company's custodian for each such existing investment portfolio
("Series"), as well as for some or all of any additional Series created by the
Company in the future and the Bank is willing to serve as custodian for each
such Series on the terms set forth herein;

         NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:

         1. Bank Appointed Custodian. The Company hereby appoints the Bank as
custodian of its Portfolio Securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth. For the services rendered pursuant to this
Agreement the Company agrees to pay to the Bank the fees set forth on Appendix A
hereto.

         2.  Definitions.  Whenever used herein, the terms listed below will
have the following meaning:

            2.1 Authorized Person. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Company by appropriate resolution of its Board, or as authorized by the
Company's Administrator (the "Administrator"), and set forth in a certificate as
required by Section 4 hereof.

            2.2  Board.  Board will mean the Board of Directors of the Company.

            2.3 Security. The term security as used herein will have the same
meaning assigned to such term in the Securities Act of 1933, including, without
limitation, any note, stock, treasury stock, bond, debenture, evidence of
indebtedness, certificate of interest or participation in any profit sharing
agreement, collateral-trust certificate, preorganization certificate or
subscription, transferable share, investment contract, voting-trust certificate,
certificate of deposit for a security, fractional undivided interest in oil,
gas, or other mineral rights, any put, call, straddle, option, or privilege on
any security, certificate of deposit, or group or index of securities (including
any interest therein or based on the value thereof), or any put, call, straddle,
option, or privilege entered into on a national securities exchange relating to
a foreign currency, or, in general, any interest or instrument commonly known as
a "security," or any certificate of interest or participation in, temporary or
interim certificate for, receipt for, guarantee of, or warrant or right to
subscribe to, or option contract to purchase or sell any of the foregoing, and
futures, forward contracts and options thereon.

            2.4  Portfolio  Security.  Portfolio  Security  will mean any
security  owned by the Series  within the Company.
<PAGE>


            2.5 Officers' Certificate. Officers' Certificate will mean, unless
otherwise indicated, any request, direction, instruction, or certification in
writing signed or initialed on behalf of the Company by one or more person or
persons as the Board of Directors shall have from time to time authorized.

            2.6 Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank, its
successor or successors and its nominee or nominees.

            2.7 Depository. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its nominee
or nominees, specifically identified in a certified copy of a resolution of the
Board.

            2.8 Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person,
such instructions to be given in such form and manner as the Bank and the
Administrator shall agree upon from time to time, and (ii) instructions (which
may be continuing instructions) regarding other matters signed or initialed by
an Authorized Person. Oral instructions will be considered Proper Instructions
if the Bank reasonably believes them to have been given by an Authorized Person.
All oral instructions are to be promptly confirmed in writing. The Bank shall
act upon and comply with any subsequent Proper Instruction that modifies a prior
instruction and the sole obligation of the Bank with respect to any follow-up or
confirmatory instruction shall be to make reasonable efforts to detect any
discrepancy between the original instruction and such confirmation and to report
such discrepancy to the Administrator. The Administrator shall be responsible,
at the Administrator's expense, for taking any action, including any
reprocessing, necessary to correct any such discrepancy or error, and to the
extent such action requires the Bank to act, the Administrator shall give the
Bank specific Proper Instructions as to the action required. Upon receipt by the
Bank of an Officers' Certificate as to the authorization by the Board
accompanied by a detailed description of procedures approved by the
Administrator, Proper Instructions may include communication effected directly
between electro-mechanical or electronic devices provided that the Administrator
and the Bank agree in writing that such procedures afford adequate safeguards
for the Company's assets.

         3. Separate Accounts. The Bank will segregate the assets of each Series
to which this Agreement relates into a separate account for each such Series
containing the assets of such Series (and all investment earnings thereon).
Unless the context otherwise requires, any reference in this Agreement to any
actions to be taken by the Administrator shall be deemed to refer to the Company
acting on behalf of one or more of its Series, any reference in this Agreement
to any assets of the Company, including, without limitation, any Portfolio
Securities and cash and earnings thereon, shall be deemed to refer only to
assets of the applicable Series, any duty or obligation of the Bank hereunder to
the Company shall be deemed to refer to duties and obligations with respect to
such individual Series and any obligation or liability of the Company hereunder
shall be binding only with respect to such individual Series, and shall be
discharged only out of the assets of such Series.

         4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Company will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank, of
(i) the names and signatures of the Authorized Persons and (ii) the names of the
members of the Board, it being understood that upon the occurrence of any change
in the


                                       2
<PAGE>

information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Company will sign a new or amended certification setting forth
the change and the new, additional or omitted names or signatures. The Bank will
be entitled to rely and act upon any Officers' Certificate given to it by the
Company which has been signed by Authorized Persons named in the most recent
certification received by the Bank.

         5. Custody of Cash. As custodian for the Company, the Bank will open
and maintain a separate account or accounts in the name of each Series within
the Company or in the name of the Bank, as Custodian for the Company's Series,
and will deposit to the account of the Series all of the cash, except for cash
held by a subcustodian appointed pursuant to Sections 14.2 or 14.3 hereof,
including borrowed funds, delivered to the Bank, subject only to draft or order
by the Bank acting pursuant to the terms of this Agreement. Pursuant to the
Bank's internal policies regarding the management of cash accounts, the Bank may
segregate certain portions of the cash of the Series as permitted in subsections
5.1-5.9 below.

            5.1 Purchase of Securities. Upon the purchase of securities for the
Series, against contemporaneous receipt of such securities by the Bank or
against delivery of such securities to the Bank in accordance with generally
accepted settlement practices and customs in the jurisdiction or market in which
the transaction occurs registered in the name of the Series or in the name of,
or properly endorsed and in form for transfer to, the Bank, or a nominee of the
Bank, or receipt for the account of the Bank pursuant to the provisions of
Section 6 below, each such payment to be made at the purchase price shown on a
broker's confirmation (or transaction report in the case of Book Entry Paper (as
that term is defined in Section 6.6 hereof) of purchase of the securities
received by the Bank before such payment is made, as confirmed in the Proper
Instructions received by the Bank before such payment is made.

            5.2 Redemptions. In such amount as may be necessary for the
repurchase or redemption of common shares of the Series offered for repurchase
or redemption in accordance with Section 7 of this Agreement.

            5.3 Distributions and Expenses of Fund. For the payment on the
account of a Series of dividends or other distributions to shareholders as may
from time to time be declared by the Board, interest, taxes, management,
administrative or supervisory fees, distribution fees, fees of the Bank for its
services hereunder and reimbursement of the expenses and liabilities of the Bank
as provided hereunder, fees of any transfer agent, fees for legal, accounting,
and auditing services, or other operating expenses of the Series.

            5.4 Payment in Respect of Securities. For payments in connection
with the conversion, exchange or surrender of Portfolio Securities or securities
subscribed to by the Series held by or to be delivered to the Bank.

            5.5 Repayment of Loans. To repay loans of money made to a Series,
but, in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan;

            5.6 Repayment of Cash. To repay the cash delivered to a Series for
the purpose of collateralizing the obligation to return to the Series
certificates borrowed from the Series representing Portfolio Securities, but
only upon redelivery to the Bank of such borrowed certificates.

                                       3
<PAGE>


            5.7  Foreign Exchange Transactions.

                  (a) For payments in connection with foreign exchange contracts
or options to purchase and sell foreign currencies for spot and future delivery
(collectively, "Foreign Exchange Agreements") which may be entered into by the
Bank on behalf of a Series upon the receipt of Proper Instructions, such Proper
Instructions to specify the currency broker or banking institution (which may be
the Bank, or any other subcustodian or agent hereunder, acting as principal)
with which the contract or option is made, and the Bank shall have no duty with
respect to the selection of such currency brokers or banking institutions with
which the Series deals or for their failure to comply with the terms of any
contract or option.

                 (b) In order to secure any payments in connection with Foreign
Exchange Agreements that may be entered into by the Bank pursuant to Proper
Instructions, each Series agrees that the Bank shall have a continuing lien and
security interest, to the extent of any payment due under any Foreign Exchange
Agreement, in and to any property at any time held by the Bank for the Series'
benefit or in which the Series has an interest and which is then in the Bank's
possession or control (or in the possession or control of any third party acting
on the Bank's behalf). The Series authorize the Bank, in the Bank's sole
discretion, at any time to charge any such payment due under any Foreign
Exchange Agreement against any balance of account standing to the credit of such
Series on the Bank's books.

            5.8 Other Authorized Payments. For other authorized transactions of
a Series, or other obligations of a Series incurred for proper Series purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Series, or
specifying the amount of the obligation for which payment is to be made, setting
forth the purpose for which such obligation was incurred and declaring such
purpose to be a proper corporate purpose.

            5.9 Termination: Upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 16 of this Agreement.

         6.  Securities.

            6.1 Segregation and Registration. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian appointed
pursuant to Sections 14.2 or 14.3 hereof, the Bank as custodian will receive and
hold pursuant to the provisions hereof, in a separate account or accounts and
physically segregated at all times from those of other persons, any and all
Portfolio Securities which may now or hereafter be delivered to it by or for the
account of each Series. All such Portfolio Securities will be held or disposed
of by the Bank for, and subject at all times to, the instructions of the Company
pursuant to the terms of this Agreement. Subject to the specific provisions
herein relating to Portfolio Securities that are not physically held by the
Bank, the Bank will register all Portfolio Securities (unless otherwise directed
by Proper Instructions or an Officers' Certificate) in the name of a registered
nominee of the Bank as defined in the Internal Revenue Code and any Regulations
of the Treasury Department issued thereunder, and will execute and deliver all
such certificates in connection therewith as may be required by such laws or
regulations or under the laws of any state.


                                       4
<PAGE>

                  The Company will from time to time furnish to the Bank
appropriate instruments to enable it to hold or deliver in proper form for
transfer, or to register in the name of its registered nominee, any Portfolio
Securities which may from time to time be registered in the name of a Series.

            6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute and
deliver, or cause to be executed and delivered, to each Series all notices,
proxies and proxy soliciting materials delivered to the Bank with respect to
such Securities, such proxies to be executed by the registered holder of such
Securities [(if registered otherwise than in the name of the Series)], but
without indicating the manner in which such proxies are to be voted.

            6.3 Corporate Action. If at any time the Bank is notified that an
issuer of any Portfolio Security has taken or intends to take a corporate action
(a "Corporate Action") that affects the rights, privileges, powers, preferences,
qualifications or ownership of a Portfolio Security, including without
limitation, liquidation, consolidation, merger, recapitalization,
reorganization, reclassification, subdivision, combination, stock split or stock
dividend, which Corporate Action requires an affirmative response or action on
the part of the holder of such Portfolio Security (a "Response"), the Bank shall
notify the affected Series promptly of the Corporate Action, the Response
required in connection with the Corporate Action and the Bank's deadline for
receipt of Proper Instructions regarding the Response (the "Response Deadline").
The Bank shall forward to the Series via telecopier and/or overnight courier all
notices, information statements or other materials relating to the Corporate
Action within twenty-four (24) hours of receipt of such materials by the Bank.

                  (a) The Bank shall act upon a required Response only after
receipt by the Bank of Proper Instructions from the Series no later than 5:00
p.m. on the date specified as the Response Deadline and only if the Bank (or its
agent or subcustodian hereunder) has actual possession of all necessary
Securities, consents and other materials no later than 5:00 p.m. on the date
specified as the Response Deadline.

                  (b) The Bank shall have no duty to act upon a required
Response if Proper Instructions relating to such Response and all necessary
Securities, consents and other materials are not received by and in the
possession of the Bank no later than 5:00 p.m. on the date specified as the
Response Deadline. Notwithstanding, the Bank may, in its sole discretion, use
its best efforts to act upon a Response for which Proper Instructions and/or
necessary Securities, consents or other materials are received by the Bank after
5:00 p.m. on the date specified as the Response Deadline, it being acknowledged
and agreed by the parties that any undertaking by the Bank to use its best
efforts in such circumstances shall in no way create any duty upon the Bank to
complete such Response prior to its expiration.

                  (c) In the event that a Series notifies the Bank of a
Corporate Action requiring a Response and the Bank has received no other notice
of such Corporate Action, the Response Deadline shall be 48 hours prior to the
Response expiration time set by the depository processing such Corporate Action.

                  (d) Section 14.3(g) of this Agreement shall govern any
Corporate Action involving Foreign Portfolio Securities held by a Selected
Foreign Subcustodian.


            6.4 Book-Entry System. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits of
Company assets in the Book-Entry System, and (ii) for any

                                       5
<PAGE>

subsequent changes to such arrangements following such approval, the Board has
reviewed and approved the arrangement and has not delivered an Officer's
Certificate to the Bank indicating that the Board has withdrawn its approval:

                  (a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;

                  (b) The records of the Bank (and any such agent) with respect
to a Series' participation in the Book-Entry System through the Bank (or any
such agent) will identify by book entry the Portfolio Securities which are
included with other securities deposited in the Account and shall at all times
during the regular business hours of the Bank (or such agent) be open for
inspection by duly authorized officers, employees or agents of the Company.
Where securities are transferred to a Series' account, the Bank shall also, by
book entry or otherwise, identify as belonging to the Series a quantity of
securities in a fungible bulk of securities (i) registered in the name of the
Bank or its nominee, or (ii) shown on the Bank's account on the books of the
Federal Reserve Bank;

                  (c) The Bank (or its agent) shall pay for securities purchased
for the account of the Series or shall pay cash collateral against the return of
Portfolio Securities loaned by the Series upon (i) receipt of advice from the
Book-Entry System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent) to reflect
such payment and transfer for the account of the Series. The Bank (or its agent)
shall transfer securities sold or loaned for the account of the Series upon

                          (i) receipt of advice from the Book-Entry System that
payment for securities sold or payment of the initial cash collateral against
the delivery of securities loaned by the Series has been transferred to the
Account; and

                          (ii) the making of an entry on the records of the Bank
(or its agent) to reflect such transfer and payment for the account of the
Series. Copies of all advices from the Book-Entry System of transfers of
securities for the account of the Series shall identify the Series, be
maintained for the Series by the Bank and shall be provided to the Series at its
request. The Bank shall send the Series a confirmation, as defined by Rule 17f-4
under the 1940 Act, of any transfers to or from the account of the Series;

                  (d) The Bank will promptly provide the Company with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System.

            6.5 Use of a Depository. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits in
DTC or other such Depository and (ii) for any subsequent changes to such
arrangements following such approval, the Board has reviewed and approved the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:

                  (a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of a Series all income and other payments thereon and to
take all steps necessary and proper in connection with the collection thereof;

                                       6
<PAGE>

                  (b) Registration of Portfolio Securities may be made in the
name of any nominee or nominees used by such Depository;

                  (c) Payment for securities purchased and sold may be made
through the clearing medium employed by such Depository for transactions of
participants acting through it. Upon any purchase of Portfolio Securities,
payment will be made only upon delivery of the securities to or for the account
of the Series and the Series shall pay cash collateral against the return of
Portfolio Securities loaned by the Series only upon delivery of the Securities
to or for the account of the Series; and upon any sale of Portfolio Securities,
delivery of the Securities will be made only against payment therefor or, in the
event Portfolio Securities are loaned, delivery of Securities will be made only
against receipt of the initial cash collateral to or for the account of the
Series; and

                  (d) The Bank shall use its best efforts to provide that:

                          (i) The Depository obtains replacement of any
certificated Portfolio Security deposited with it in the event such Security is
lost, destroyed, wrongfully taken or otherwise not available to be returned to
the Bank upon its request;

                          (ii) Proxy materials received by a Depository with
respect to Portfolio Securities held by a Series deposited with such Depository
are forwarded immediately to the Bank for prompt transmittal to the Series;

                          (iii) Such Depository promptly forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities on behalf of a
Series and of the appropriate book entry made by such Depository to the Series'
account;

                          (iv) Such Depository prepares and delivers to the Bank
such records with respect to the performance of the Bank's obligations and
duties hereunder as may be necessary for the Series to comply with the
recordkeeping requirements of Section 31(a) of the 1940 Act and Rule 31(a)
thereunder; and

                          (v) Such Depository delivers to the Bank all internal
accounting control reports, whether or not audited by an independent public
accountant, as well as such other reports as the Series may reasonably request
in order to verify the Portfolio Securities held by such Depository.

            6.6 Use of Book-Entry System for Commercial Paper. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has reviewed the arrangement, upon receipt of
Proper Instructions and upon receipt of confirmation from an Issuer (as defined
below) that the Series has purchased such Issuer's Book-Entry Paper, the Bank
shall issue and hold in book-entry form, on behalf of each Series, commercial
paper issued by issuers with whom the Bank has entered into a book-entry
agreement (the "Issuers"). In maintaining procedures for Book-Entry Paper, the
Bank agrees that:

                  (a) The Bank will maintain all Book-Entry Paper held by the
Series in an account of the Bank that includes only assets held by it for
customers;

                  (b) The records of the Bank with respect to each Series'
purchase of Book-Entry Paper through the Bank will identify, by book-entry,
commercial paper belonging to each Series which is


                                        7
<PAGE>

included in the Book-Entry System and shall at all times during the regular
business hours of the Bank be open for inspection by duly authorized officers,
employees or agents of that Series;

                  (c) The Bank shall pay for Book-Entry Paper purchased for the
account of each Series upon contemporaneous (i) receipt of advice from the
Issuer that such sale of Book-Entry Paper has been effected, and (ii) the making
of an entry on the records of the Bank to reflect such payment and transfer for
the account of the Series;

                  (d) The Bank shall cancel such Book-Entry Paper obligation
upon the maturity thereof upon contemporaneous (i) receipt of advice that
payment for such Book-Entry Paper has been transferred to a Series, and (ii) the
making of an entry on the records of the Bank to reflect such payment for the
account of the Series; and

                  (e) The Bank will send to the Company such reports on its
system of internal accounting control with respect to the Book-Entry Paper as
the Company may reasonably request from time to time.

            6.7 Use of Immobilization Programs. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated by
a bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and
(ii) for each year following such approval the Board has reviewed the
arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.

            6.8 Eurodollar CDs. Any Portfolio Securities that are Eurodollar CDs
may be physically held by the European branch of the U.S. banking institution
that is the issuer of such Eurodollar CD (a "European Branch"), provided that
such Portfolio Securities are identified on the books of the Bank as belonging
to a Series and that the books of the Bank identify the European Branch holding
such Portfolio Securities. Notwithstanding any other provision of this Agreement
to the contrary, except as stated in the first sentence of this subsection 6.8,
the Bank shall be under no other duty with respect to such Eurodollar CDs
belonging to a Series.

            6.9  Options and Futures Transactions.

                  (a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.

                          (i) The Bank shall take action as to put options
("puts") and call options ("calls") purchased or sold (written) by a Series
regarding escrow or other arrangements (i) in accordance with the provisions of
any agreement entered into upon receipt of Proper Instructions among the Bank,
any broker-dealer registered with the National Association of Securities
Dealers, Inc. (the "NASD"), and, if necessary, the Series, relating to the
compliance with the rules of the Options Clearing Corporation and of any
registered national securities exchange, or of any similar organization or
organizations.

                          (ii) The Bank shall be under a duty and obligation to
see that each Series has deposited or is maintaining adequate margin, as
required, with any broker in connection with any option, and the Bank shall be
under duty and obligation to present such option to the broker for exercise upon
receiving Proper Instructions from the Series. The Bank shall have
responsibility for the legality of any put or call purchased or sold on behalf
of a Series, the propriety of any such purchase or sale, or the adequacy of any
collateral delivered to a broker in connection with an option or deposited to or

                                       8
<PAGE>

withdrawn from a Segregated Account (as defined in subsection 6.10 below). The
Bank specifically, but not by way of limitation, shall be under any duty and
obligation to: (i) periodically check and notify the Series that the amount of
such collateral held by a broker or held in a Segregated Account is insufficient
to protect such broker or the Series against any loss; (ii) effect the return of
any collateral delivered to a broker; or (iii) advise the Series that any option
it holds has or is about to expire. Such duties or obligations shall be the
responsibility of the Bank and the Series.

                  (b) Puts, Calls and Futures Traded on Commodities Exchanges

                          (i) The Bank shall take action as to puts, calls and
futures contracts ("Futures") purchased or sold by a Series in accordance with
the provisions of any agreement entered into upon the receipt of Proper
Instructions among the Series, the Bank and a Futures Commission Merchant
registered under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract Market, or
any similar organization or organizations, regarding account deposits in
connection with transactions by the Series.

                          (ii) The responsibilities of the Bank as to futures,
puts and calls traded on commodities exchanges, any Futures Commission Merchant
account and the Segregated Account shall be limited as set forth in subparagraph
(a)(2) of this Section 6.9 as if such subparagraph referred to Futures
Commission Merchants rather than brokers, and Futures and puts and calls thereon
instead of options.

            6.10 Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of each Series.

                  (a) Cash and/or Portfolio Securities may be transferred into a
Segregated Account upon receipt of Proper Instructions in the following
circumstances:

                          (i) in accordance with the provisions of any agreement
among the Series, the Bank and a broker-dealer registered under the Exchange Act
and a member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in connection
with transactions by the Series;

                          (ii) for the purpose of segregating cash or securities
in connection with options purchased or written by the Series or commodity
futures purchased or written by the Series;

                          (iii) for the deposit of liquid assets, having a
market value (marked-to-market on a daily basis) at all times equal to not less
than the aggregate purchase price due on the settlement dates of the Series'
then outstanding forward commitments or "when-issued" agreements relating to the
purchase of Portfolio Securities and the Series' then outstanding commitments
under reverse repurchase agreements entered into with broker-dealer firms;

                          (iv) for the purposes of compliance by the Series with
the procedures required by Investment Company Act Release No. 10666, or any
subsequent Commission releases or Commission staff positions relating to the
maintenance of Segregated Accounts by registered investment companies;

                                       9
<PAGE>

                          (v) for other proper corporate purposes, but only, in
the case of this clause (e), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board, or of the executive
committee of the Board signed by an officer of the Company and certified by the
Secretary or an Assistant Secretary, setting forth the purpose or purposes of
such Segregated Account and declaring such purposes to be proper corporate
purposes.

                  (b) Cash and/or Portfolio Securities may be withdrawn from a
Segregated Account pursuant to Proper Instructions in the following
circumstances:

                          (i) with respect to assets deposited in accordance
with the provisions of any agreements referenced in (a)(i) or (a)(ii) above, in
accordance with the provisions of such agreements;

                          (ii) with respect to assets deposited pursuant to
(a)(iii) or (a)(iv) above, for sale or delivery to meet the Series' obligations
under outstanding forward commitment or when-issued agreements for the purchase
of Portfolio Securities and under reverse repurchase agreements;

                          (iii) for exchange for other liquid assets of equal or
greater value deposited in the Segregated Account;

                          (iv) to the extent that the Series' outstanding
forward commitment or when-issued agreements for the purchase of Portfolio
Securities or reverse repurchase agreements are sold to other parties or the
Series' obligations thereunder are met from assets of the Series other than
those in the Segregated Account;

                          (v) for delivery upon settlement of a forward
commitment or when-issued agreement for the sale of Portfolio Securities; or

                          (vi) with respect to assets deposited pursuant to (e)
above, in accordance with the purposes of such account as set forth in Proper
Instructions.

            6.11 Interest Bearing Call or Time Deposits. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by a Series of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Series appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Series and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's responsibility in
respect of other Portfolio Securities of the Series.

            6.12 Transfer of Securities. The Bank will transfer, exchange,
deliver or release Portfolio Securities held by it hereunder, insofar as such
Securities are available for such purpose, provided that before making any
transfer, exchange, delivery or release under this Section only upon receipt of
Proper Instructions. The Proper Instructions shall state that such transfer,
exchange or delivery is for a purpose permitted under the terms of this Section
6.11, and shall specify the applicable subsection, or describe the purpose of
the transaction with sufficient particularity to permit the Bank to ascertain
the applicable subsection. After receipt of such Proper Instructions, the Bank
will transfer, exchange, deliver or release Portfolio Securities only in the
following circumstances:


                                       10
<PAGE>

                  (a) Upon sales of Portfolio Securities for the account of the
Series, against contemporaneous receipt by the Bank of payment therefor in full,
or against payment to the Bank in accordance with generally accepted settlement
practices and customs in the jurisdiction or market in which the transaction
occurs, each such payment to be in the amount of the sale price shown in a
broker's confirmation of sale received by the Bank before such payment is made,
as confirmed in the Proper Instructions received by the Bank before such payment
is made;

                  (b) In exchange for or upon conversion into other securities
alone or other securities and cash pursuant to any plan of merger,
consolidation, reorganization, share split-up, change in par value,
recapitalization or readjustment or otherwise, upon exercise of subscription,
purchase or sale or other similar rights represented by such Portfolio
Securities, or for the purpose of tendering shares in the event of a tender
offer therefor, provided, however, that in the event of an offer of exchange,
tender offer, or other exercise of rights requiring the physical tender or
delivery of Portfolio Securities, the Bank shall have no liability for failure
to so tender in a timely manner unless such Proper Instructions are received by
the Bank at least two business days prior to the date required for tender, and
unless the Bank (or its agent or subcustodian hereunder) has actual possession
of such Security at least two business days prior to the date of tender;

                  (c) Upon conversion of Portfolio Securities pursuant to their
terms into other securities;

                  (d) For the purpose of redeeming in-kind shares of a Series
upon authorization from the Company;

                  (e) In the case of option contracts owned by a Series, for
presentation to the endorsing broker;

                  (f) When such Portfolio Securities are called, redeemed or
retired or otherwise become payable;

                  (g) For the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to a Series by
any bank, including the Bank; provided, however, that such Portfolio Securities
will be released only upon payment to the Bank for the account of the Series of
the moneys borrowed, provided further, however, that in cases where additional
collateral is required to secure a borrowing already made, and such fact is made
to appear in the Proper Instructions, Portfolio Securities may be released for
that purpose without any such payment. In the event that any pledged Portfolio
Securities are held by the Bank, they will be so held for the account of the
lender, and after notice to the Fund from the lender in accordance with the
normal procedures of the lender and any loan agreement between the fund and the
lender that an event of deficiency or default on the loan has occurred, the Bank
may deliver such pledged Portfolio Securities to or for the account of the
lender;

                  (h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions received
by the Bank before such payment is made;

                  (i) for the purpose of delivering securities lent by a Series
to a bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided herein, of adequate collateral as
agreed upon from time to time by the Series and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such securities
entered into by the Series;


                                       11
<PAGE>

                  (j) for other authorized transactions of a Series or for other
proper corporate purposes; provided that before making such transfer, the Bank
will also receive a certified copy of resolutions of the Board, signed by an
authorized officer of the Company (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to be
an authorized transaction of the Company or such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
securities shall be made; and

                  (k) upon termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 16 of this Agreement.

         As to any deliveries made by the Bank pursuant to this Section 6.12,
securities or cash receivable in exchange therefor shall be delivered to the
Bank.

         7. Redemptions. In the case of payment of assets of a Series held by
the Bank in connection with redemptions and repurchases by the Series of
outstanding common shares, the Bank will rely on notification by the Series'
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Articles of Incorporation or Declaration of Trust
and By-laws of the Company (the "Articles"), from assets available for said
purpose.

         8. Merger, Dissolution, etc. of a Series. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of a
Series into or the consolidation of a Series with another investment company or
series thereof, the sale by a Series of all, or substantially all, of its assets
to another investment company or series thereof, or the liquidation or
dissolution of a Series and distribution of its assets, the Bank will deliver
the Portfolio Securities held by it under this Agreement and disburse cash only
upon the order of the Company set forth in an Officers' Certificate, accompanied
by a certified copy of a resolution of the Board authorizing any of the
foregoing transactions. Upon completion of such delivery and disbursement and
the payment of the fees, disbursements and expenses of the Bank, this Agreement
will terminate and the Bank shall be released from any and all obligations
hereunder.

         9. Actions of Bank Without Prior Authorization. Notwithstanding
anything herein to the contrary, unless and until the Bank receives an Officers'
Certificate to the contrary, the Bank will take the following actions without
prior authorization or instruction of the Company or the transfer agent:

            9.1 Endorse for collection and collect on behalf of and in the name
of the Series all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Series and hold for the account of the Series all income,
dividends, interest and other payments or distributions of cash with respect to
the Portfolio Securities held thereunder;

            9.2 Present for payment all coupons and other income items held by
it for the account of the Series which call for payment upon presentation and
hold the cash received by it upon such payment for the account of the Series;

            9.3 Receive and hold for the account of the Series all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization,


                                       12
<PAGE>

merger, consolidation, readjustment, distribution of rights and similar
securities issued with respect to any Portfolio Securities held by it hereunder.

            9.4 Execute as agent on behalf of the Series all necessary ownership
and other certificates and affidavits required by the Internal Revenue Code or
the regulations of the Treasury Department issued thereunder, or by the laws of
any State, now or hereafter in effect, inserting the Series' name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any State;

            9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of each Series; and

            9.6 Exchange interim receipts or temporary securities for definitive
securities.

         10. Collections and Defaults. The Bank will use reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Series notice actually received by it of any call for
redemption, offer of exchange, right of subscription, reorganization or other
proceedings affecting such Securities. If Portfolio Securities upon which such
income is payable are in default or payment is refused after due demand or
presentation, the Bank will notify the Series in writing of any default or
refusal to pay within two business days from the day on which it receives
knowledge of such default or refusal.

         11. Maintenance of Records and Accounting Services. The Bank will
maintain records with respect to transactions for which the Bank is responsible
pursuant to the terms and conditions of this Agreement, and in compliance with
the applicable rules and regulations of the 1940 Act. The books and records of
the Bank pertaining to its actions under this Agreement and reports by the Bank
or its independent accountants concerning its accounting system, procedures for
safeguarding securities and internal accounting controls will be open to
inspection and audit at reasonable times by officers of or auditors employed by
the Company and will be preserved by the Bank in the manner and in accordance
with the applicable rules and regulations under the 1940 Act.

         The Bank shall perform fund accounting and shall keep the books of
account and render statements or copies from time to time as reasonably
requested by the Treasurer or any executive officer of the Company.

         The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.

         12.  Fund Evaluation and Yield Calculation

            12.1 Fund Evaluation. The Bank shall compute and, unless otherwise
directed by the Board, determine as of the close of regular trading on the New
York Stock Exchange on each day on which said Exchange is open for unrestricted
trading and as of such other days, or hours, if any, as may be authorized by the
Board, the net asset value and the public offering price of a share of capital
stock of each Series of the Company, such determination to be made in accordance
with the provisions of the Articles and By-laws of the Company and the
Prospectus and Statement of Additional Information

                                       13
<PAGE>

relating to the Company, as they may from time to time be amended, and any
applicable resolutions of the Board at the time in force and applicable; and
promptly to notify the Company, the proper exchange and the NASD or such other
persons as the Company may request of the results of such computation and
determination. In computing the net asset value hereunder, the Bank may rely in
good faith upon information furnished to it by any Authorized Person in respect
of (i) the manner of accrual of the liabilities of each Series and in respect of
liabilities of each Series not appearing on its books of account kept by the
Bank, (ii) reserves, if any, authorized by the Board or that no such reserves
have been authorized, (iii) the source of the quotations to be used in computing
the net asset value, (iv) the value to be assigned to any security for which no
price quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.

            12.2. Yield Calculation. The Bank will compute the performance
results of each Series (the "Yield Calculation") in accordance with the
provisions of Release No. 33-6753 and Release No. IC-16245 (February 2, 1988)
(the "Releases") promulgated by the Securities and Exchange Commission, and any
subsequent amendments to, published interpretations of or general conventions
accepted by the staff of the Securities and Exchange Commission with respect to
such releases or the subject matter thereof ("Subsequent Staff Positions"),
subject to the terms set forth below:

                  (a) The Bank shall compute the Yield Calculation for each
Series for the stated periods of time as shall be mutually agreed upon, and
communicate in a timely manner the result of such computation to the Series.

                  (b) In performing the Yield Calculation, the Bank will derive
the items of data necessary for the computation from the records it generates
and maintains for each Series pursuant Section 11 hereof. The Bank shall have no
responsibility to review, confirm, or otherwise assume any duty or liability
with respect to the accuracy or correctness of any such data supplied to it by
the Series, any of the Series' designated agents or any of the Series'
designated third party providers.

                  (c) At the request of the Bank, the Company shall provide, and
the Bank shall be entitled to rely on, written standards and guidelines to be
followed by the Bank in interpreting and applying the computation methods set
forth in the Releases or any Subsequent Staff Positions as they specifically
apply to the Series. In the event that the computation methods in the Releases
or the Subsequent Staff Positions or the application to the Series of a standard
or guideline is not free from doubt or in the event there is any question of
interpretation as to the characterization of a particular security or any aspect
of a security or a payment with respect thereto (e.g., original issue discount,
participating debt security, income or return of capital, etc.) or otherwise or
as to any other element of the computation which is pertinent to the Series, the
Company or its designated agent shall have the full responsibility for making
the determination of how the security or payment is to be treated for purposes
of the computation and how the computation is to be made and shall inform the
Bank thereof on a timely basis. The Bank shall have no responsibility to make
independent determinations with respect to any item which is covered by this
Section, and shall not be responsible for its computations made in accordance
with such determinations so long as such computations are mathematically
correct.

                  (d) The Company shall keep the Bank informed of all publicly
available information and of any non-public advice, or information obtained by
the Company from its independent auditors or by its personnel or the personnel
of its investment adviser, or Subsequent Staff Positions related to the
computations to be undertaken by the Bank pursuant to this Agreement and the
Bank shall not be deemed

                                       14
<PAGE>

to have knowledge of such information (except as contained in the Releases)
unless it has been furnished to the Bank in writing.

         13. Additional Services. The Bank shall perform the additional services
for the Company as are set forth on Appendix B hereto. Appendix B may be amended
from time to time upon agreement of the parties to include further additional
services to be provided by the Bank to the Company, at which time the fees set
forth in Appendix A shall be appropriately increased.

         14.  Duties of the Bank.

            14.1 Performance of Duties and Standard of Care. In performing its
duties hereunder and any other duties listed on any Schedule hereto, if any, the
Bank will be entitled to receive and act upon the advice of independent counsel
of its own selection, which may be counsel for the Company, and will be without
liability for any action taken or thing done or omitted to be done in accordance
with this Agreement in good faith in conformity with such advice.

         The Bank will be under no duty or obligation to inquire into and will
not be liable for:

                  (a) the validity of the issue of any Portfolio Securities
purchased by or for the Series, the legality of the purchases thereof or the
propriety of the price incurred therefor;

                  (b) the legality of any sale of any Portfolio Securities by or
for any Series or the propriety of the amount for which the same are sold;

                  (c) the legality of an issue or sale of any common shares of a
Series or the sufficiency of the amount to be received therefor;

                  (d) the legality of the repurchase of any common shares of a
Series or the propriety of the amount to be paid therefor;

                  (e) the legality of the declaration of any dividend by a
Series or the legality of the distribution of any Portfolio Securities as
payment in kind of such dividend; and

                  (f) any property or moneys of a Series unless and until
received by it, and any such property or moneys delivered or paid by it pursuant
to the terms hereof.

            Moreover, the Bank will not be under any duty or obligation to
ascertain whether any Portfolio Securities at any time delivered to or held by
it for the account of a Series are such as may properly be held by the Series
under the provisions of the Company's Articles, By-laws, any federal or state
statutes or any rule or regulation of any governmental agency.

            14.2 Agents and Subcustodians with Respect to Property of the
Company Held in the United States. The Bank may employ agents in the performance
of its duties hereunder and shall be responsible for the acts and omissions of
such agents as if performed by the Bank hereunder. Without limiting the
foregoing, certain duties of the Bank hereunder may be performed by one or more
affiliates of the Bank.

            Upon receipt of Proper Instructions, the Bank may employ
subcustodians selected by or at the direction of the Company, provided that any
such subcustodian meets at least the minimum qualifications required by Section
17(f)(1) of the 1940 Act to act as a custodian of the Company's assets with
respect to property of the Company held in the United States.

                                       15
<PAGE>

            14.3 Duties of the Bank with Respect to Property of the Company Held
Outside of the United States.

                  (a) Appointment of Foreign Subcustodians. The Company hereby
authorizes and instructs the Bank to employ as subcustodians for the Company's
Portfolio Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated on
the Schedule attached hereto (each, a "Selected Foreign Subcustodian"). Upon
receipt of Proper Instructions, the Bank and the Company may agree to designate
additional foreign banking institutions and foreign securities depositories to
act as Selected Foreign Subcustodians hereunder.

Upon receipt of Proper Instructions, the Company, upon recommendation of the
Bank, may instruct the Bank to cease the employment of any one or more such
Selected Foreign Subcustodians for maintaining custody of the Company's assets,
and the Bank shall so cease to employ such subcustodian as soon as alternate
custodial arrangements have been implemented.

                  (b) Foreign Securities Depositories. Except as may otherwise
be agreed upon in writing by the Bank and the Company, assets of the Company
shall be maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as Selected Foreign
Subcustodians pursuant to the terms hereof. Where possible, such arrangements
shall include entry into agreements containing the provisions set forth in
subparagraph (d) hereof. Notwithstanding the foregoing, except as may otherwise
be agreed upon in writing by the Bank and the Company, the Company authorizes
the use of Foreign Securities Depositories as recommended by the Bank including:
deposit in Euro-clear, the securities clearance and depository facilities
operated by Morgan Guaranty Trust Company of New York in Brussels, Belgium, of
Foreign Portfolio Securities eligible for deposit therein and the use of
Euro-clear in connection with settlements of purchases and sales of securities
and deliveries and returns of securities, until notified to the contrary
pursuant to subparagraph (a) hereunder.

                  (c) Segregation of Securities. The Bank shall identify on its
books as belonging to each Series the Foreign Portfolio Securities held by each
Selected Foreign Subcustodian. Each agreement pursuant to which the Bank employs
a foreign banking institution shall require that such institution establish a
custody account for the Bank and hold in that account Foreign Portfolio
Securities and other assets of the Series, and, in the event that such
institution deposits Foreign Portfolio Securities in a foreign securities
depository, that it shall identify on its books as belonging to the Bank the
securities so deposited.

                  (d) Agreements with Foreign Banking Institutions. Each of the
agreements pursuant to which a foreign banking institution holds assets of a
Series (each, a "Foreign Subcustodian Agreement") shall be substantially in the
form provided to the Series and shall provide that: (a) the Series' assets will
not be subject to any right, charge, security interest, lien or claim of any
kind in favor of the foreign banking institution or its creditors or agent,
except a claim of payment for their safe custody or administration (including,
without limitation, any fees or taxes payable upon transfers or reregistration
of securities); (b) beneficial ownership of the Series' assets will be freely
transferable without the payment of money or value other than for custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (c) adequate records will be
maintained identifying the assets as belonging to the Bank; (d) officers of or
auditors employed by, or other representatives of the Bank, including to the
extent permitted under applicable law, the independent public accountants for
the Company, will be given access to the books and records of the foreign
banking institution relating to its actions under its agreement with the Bank;
and (e) assets of the

                                       16
<PAGE>

Series held by the Selected Foreign Subcustodian will be subject only to the
instructions of the Bank or its agents.

                  (e) Access of Independent Accountants of the Company. Upon
request of the Company, the Bank will use its best efforts to arrange for the
independent accountants of the Company to be afforded access to the books and
records of any foreign banking institution employed as a Selected Foreign
Subcustodian insofar as such books and records relate to the performance of such
foreign banking institution under its Foreign Subcustodian Agreement.

                  (f) Reports by Bank. The Bank will supply to the Company from
time to time, as mutually agreed upon, statements in respect of the securities
and other assets of each Series held by Selected Foreign Subcustodians,
including but not limited to an identification of entities having possession of
the Foreign Portfolio Securities and other assets of the Series.

                  (g) Transactions in Foreign Custody Account. Transactions with
respect to the assets of each Series held by a Selected Foreign Subcustodian
shall be effected pursuant to Proper Instructions from the Series to the Bank
and shall be effected in accordance with the applicable Foreign Subcustodian
Agreement. If at any time any Foreign Portfolio Securities shall be registered
in the name of the nominee of the Selected Foreign Subcustodian, each Series
agrees to hold any such nominee harmless from any liability by reason of the
registration of such securities in the name of such nominee.

                  Notwithstanding any provision of this Agreement to the
contrary, settlement and payment for Foreign Portfolio Securities received for
the account of a Series and delivery of Foreign Portfolio Securities maintained
for the account of the Series may be effected in accordance with the customary
established securities trading or securities processing practices and procedures
in the jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof or to a
dealer therefor (or an agent for such purchaser or dealer) against a receipt
with the expectation of receiving later payment for such securities from such
purchaser or dealer.

                  In connection with any action to be taken with respect to the
Foreign Portfolio Securities held hereunder, including, without limitation, the
exercise of any voting rights, subscription rights, redemption rights, exchange
rights, conversion rights or tender rights, or any other action in connection
with any other right, interest or privilege with respect to such Securities
(collectively, the "Rights"), the Bank shall promptly transmit to the Series
such information in connection therewith as is made available to the Bank by the
Foreign Subcustodian, and shall promptly forward to the applicable Foreign
Subcustodian any instructions, forms or certifications with respect to such
Rights, and any instructions relating to the actions to be taken in connection
therewith, as the Bank shall receive from the Series pursuant to Proper
Instructions. Notwithstanding the foregoing, the Bank shall have no further duty
or obligation with respect to such Rights, including, without limitation, the
determination of whether the Series is entitled to participate in such Rights
under applicable U.S. and foreign laws, or the determination of whether any
action proposed to be taken with respect to such Rights by the Series or by the
applicable Foreign Subcustodian will comply with all applicable terms and
conditions of any such Rights or any applicable laws or regulations, or market
practices within the market in which such action is to be taken or omitted.

                  (h) Liability of Selected Foreign Subcustodians. Each Foreign
Subcustodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Bank and each Series from and against certain
losses, damages, costs, expenses, liabilities or claims arising out of or in
connection with the institution's performance of such obligations, all as set
forth in the applicable Foreign Subcustodian


                                       17
<PAGE>

Agreement. The Company acknowledges that the Bank, as a participant in
Euro-clear, is subject to the Terms and Conditions Governing the Euro-Clear
System, a copy of which has been made available to the Company. The Company
acknowledges that pursuant to such Terms and Conditions, Morgan Guaranty
Brussels shall have the sole right to exercise or assert any and all rights or
claims in respect of actions or omissions of, or the bankruptcy or insolvency
of, any other depository, clearance system or custodian utilized by Euro-clear
in connection with each Series' Portfolio Securities and other assets.

                  (i) Monitoring Responsibilities. The Bank shall furnish
annually to the Company information concerning the Selected Foreign
Subcustodians employed hereunder for use by the Company in evaluating such
Selected Foreign Subcustodians to ensure compliance with the requirements of
Rule 17f-5 under the 1940 Act. In addition, the Bank will promptly inform the
Company in the event that the Bank is notified by a Selected Foreign
Subcustodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below US$200 million (or the equivalent
thereof) or that its shareholders' equity has declined below US$200 million (in
each case computed in accordance with generally accepted U.S. accounting
principles) or any other capital adequacy test applicable to it by exemptive
order, or if the Bank has actual knowledge of any material loss of the assets of
a Series held by a Foreign Subcustodian.

                  (j) Tax Law. The Bank shall have no responsibility or
liability for any obligations now or hereafter imposed on a Series or the Bank
as custodian for the Series by the tax laws of any jurisdiction, and it shall be
the responsibility of the Series to notify the Bank of the obligations imposed
on the Series or the Bank as the custodian for the Series by the tax law of any
non-U.S. jurisdiction, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and governmental
reporting. The sole responsibility of the Selected Foreign Subcustodian with
regard to such tax law shall be to use reasonable efforts to assist the Series
with respect to any claim for exemption or refund under the tax law of
jurisdictions for which the Series has provided such information.

            14.4 Insurance. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Series held by it as it uses
in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Series.

            14.5. Fees and Expenses of the Bank. The Series will pay or
reimburse the Bank from time to time for any transfer taxes payable upon
transfer of Portfolio Securities made hereunder, and for all necessary proper
disbursements, expenses and charges made or incurred by the Bank in the
performance of this Agreement (including any duties listed on any Schedule
hereto, if any) including any indemnities for any loss, liabilities or expense
to the Bank as provided above. For the services rendered by the Bank hereunder,
the Company will pay to the Bank such compensation or fees at such rate and at
such times as shall be agreed upon in writing by the parties from time to time.
The Bank will also be entitled to reimbursement by the Company for all
reasonable expenses incurred in conjunction with termination of this Agreement.

            14.6 Advances by the Bank. The Bank may, in its sole discretion,
advance funds on behalf of a Series to make any payment permitted by this
Agreement upon receipt of any proper authorization required by this Agreement
for such payments by a Series. Should such a payment or payments, with advanced
funds, result in an overdraft (due to insufficiencies of the Series' account
with the Bank, or for any other reason) this Agreement deems any such overdraft
or related indebtedness a loan made by the Bank to the Series payable on demand.
Such overdraft shall bear interest at the current rate charged by the Bank for
such loans unless the Series shall provide the Bank with agreed upon
compensating balances. The Series agree that the Bank shall have a continuing
lien and security interest to the extent of


                                       18
<PAGE>

any overdraft or indebtedness, in and to any property at any time held by it for
the Series' benefit or in which the Series has an interest and which is then in
the Bank's possession or control (or in the possession or control of any third
party acting on the Bank's behalf). The Series authorizes the Bank, in the
Bank's sole discretion, at any time to charge any overdraft or indebtedness,
together with interest due thereon, against any balance of account standing to
the credit of the Series on the Bank's books.

15.      Limitation of Liability.

            15.1 Liability of the Custodian with Respect to Use of Securities
Systems and Foreign Depositories. With respect to the Portfolio Securities, cash
and other property of a Series held by a Securities system or by a Foreign
Depository utilized by the Custodian or any Subcustodian, the Custodian shall be
liable to the Series only for any loss or damage to the Series resulting from
use of the Securities System or Foreign Depository if caused by any negligence,
misfeasance or misconduct of the Custodian or any of its agents or of any of its
agents' employees or from any failure of the Custodian or any such agent to
undertake reasonable efforts to enforce effectively such rights as it may have
against the Securities System or Foreign Depository. At the election of the
Company, it shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System, Foreign Depository or
any other person which the Custodian may have as a consequence of any such loss
or damage to the Series if and to the extent that the Series has not been made
whole for any such loss or damage.

            15.2 Standard of Care; Liability; Indemnification. The Custodian
shall be held only to the exercise of reasonable care and diligence in carrying
out the provisions of this Agreement, provided that the Custodian shall not
thereby be required to take any action which is in contravention of any
applicable law, rule or regulation or any order or judgment of any court of
competent jurisdiction.

         The Company agrees to indemnify and hold harmless the Custodian and its
nominees from all claims and liabilities (including counsel fees) incurred or
assessed against it or its nominees in connection with the Custodian's
performance of this Agreement, except such as may arise from the Custodian's or
its nominee's negligence or willful misconduct. Without limiting the foregoing
indemnification obligation of the Company, the Company agrees to indemnify the
Custodian and any nominee in whose name Portfolio Securities or other property
of the Series is registered against any liability the Custodian or such nominee
may incur by reason of taxes assessed to the Custodian or such nominee or other
costs, liability or expense incurred by the Custodian or such nominee resulting
directly or indirectly from the fact that Portfolio Securities or other property
of the Series is registered in the name of the Custodian or such nominee.

         Without limiting the foregoing, neither the Bank nor the Indemnified
Parties shall be liable for, and the Bank and the Indemnified Parties shall be
indemnified against, any Claim arising as a result of:

                  (a) Any act or omission by the Bank or any Indemnified Party
in good faith reliance upon the terms of this Agreement, any Officer's
Certificate, Proper Instructions, resolution of the Board, telegram, telecopier,
notice, request, certificate or other instrument reasonably believed by the Bank
to genuine;

                  (b) Any act or omission of any subcustodian selected by or at
the direction of the Company;

                  (c) Any act or omission of a Selected Foreign Subcustodian to
the extent which such Selected Foreign Subcustodian is not liable to the Bank;

                                       19
<PAGE>

                  (d) Any Corporate Action requiring a Response for which the
Bank has not received Proper Instructions or obtained actual possession of all
necessary Securities, consents or other materials by 5:00 p.m. on the date
specified as the Response Deadline;

                  (e) Any act or omission of any European Branch of a U.S.
banking institution that is the issuer of Eurodollar CDs in connection with any
Eurodollar CDs held by such European Branch;

                  (f) Information relied on in good faith by the Bank and
supplied by any Authorized Person in connection with the calculation of (i) the
net asset value and public offering price of the shares of capital stock of the
Series or (ii) the Yield Calculation.

         In no event shall the Custodian incur liability under this Agreement if
the Custodian or any Subcustodian, Securities System, Foreign Depository,
Banking Institution or any agent or entity utilized by any of them is prevented,
forbidden or delayed from performing, or omits to perform, any act or thing
which this Agreement provides shall be performed or omitted to be performed, by
reason of (i) any Sovereign Risk or (ii) any provision of any present or future
law or regulation or order of the United States of America or any state thereof,
or of any foreign country or political subdividion thereof, or of any securities
depository or clearing agency which operates a central system for handling of
securities or equivalent book-entries, or (iii) any provision of any order or
judgment of any court of competent jurisdiction. A "Sovereign Risk" shall mean
nationalization, expropriation, devaluation, revaluation, confiscation, seizure,
cancellation, destruction or similar action by any governmental authority, de
facto or de jure; or enactment, promulgation, imposition or enforcement by any
such governmental authority of currency restrictions, exchange controls, taxes,
levies or other charges affecting the Company's property; or acts of war,
terrorism, insurrection or revolution, strikes, riots, epidemics or any other
act or event beyond the Custodian's control.

         Notwithstand anything to the contrary in this Agreement, in no event
shall the Bank or the Indemnified Parties be liable to the Fund or any third
party for lost revenues or any special, consequential, punitive or incidental
damages of any kind whatsoever in connection with this Agreement or any
activities hereunder.

         16.  Termination.

            16.1 The term of this Agreement shall be three years commencing upon
the date of conversion of the Company's assets to the Bank (the "Initial Term"),
unless earlier terminated as provided herein. After the expiration of the
Initial Term, the term of this Agreement shall automatically renew for
successive one-year terms (each a "Renewal Term") unless notice of non-renewal
is delivered by the non-renewing party to the other party no later than sixty
days prior to the expiration of the Initial Term or any Renewal Term, as the
case may be.

                  (a) Either party hereto may terminate this Agreement prior to
the expiration of the Initial Term in the event the other party violates any
material provision of this Agreement, provided that the non-violating party
gives written notice of such violation to the violating party and the violating
party does not cure such violation within 90 days of receipt of such notice.

                  (b) Either party may terminate this Agreement during any
Renewal Term upon sixty days written notice to the other party. Any termination
pursuant to this paragraph 16.1(b) shall be effective upon expiration of such
sixty days, provided, however, that the effective date of such termination may
be postponed to a date not more than ninety days after delivery of the written
notice: (i)

                                       20
<PAGE>

at the request of the Bank, in order to prepare for the transfer by the Bank of
all of the assets of the Company held hereunder; or (ii) at the request of the
Company, in order to give the Company an opportunity to make suitable
arrangements for a successor custodian.

            16.2 In the event of the termination of this Agreement, the Bank
will immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Company. The obligation of the Bank to deliver and transfer over the assets of
the Company held by it directly to such successor custodian will commence as
soon as such successor is appointed and will continue until completed as
aforesaid. If the Company does not select a successor custodian within ninety
(90) days from the date of delivery of notice of termination the Bank may,
subject to the provisions of subsection (16.3), deliver the Portfolio Securities
and cash of each Series held by the Bank to a bank or trust company of the
Bank's own selection meeting the requirements of Section 17(f)(1) of the 1940
Act and has a reported capital, surplus and undivided profits aggregating not
less than $2,000,000, to be held as the property of the Company under terms
similar to those on which they were held by the Bank, whereupon such bank or
trust company so selected by the Bank will become the successor custodian of
such assets of the Company with the same effect as though selected by the Board.
Thereafter, the Bank shall be released from any and all obligations under this
Agreement.

            16.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Company may furnish the Bank with an order of
the Company advising that a successor custodian cannot be found willing and able
to act upon reasonable and customary terms and that there has been submitted to
the shareholders of the Series the question of whether the Series will be
liquidated or will function without a custodian for the assets of the Series
held by the Bank. In that event the Bank will deliver the Portfolio Securities
and cash of each Series held by it, subject as aforesaid, in accordance with one
of such alternatives which may be approved by the requisite vote of
shareholders, upon receipt by the Bank of a copy of the minutes of the meeting
of shareholders at which action was taken, certified by the Company's Secretary
and an opinion of counsel to the Company in form and content satisfactory to the
Bank. Thereafter, the Bank shall be released from any and all obligations under
this Agreement.

            16.4 The Company shall reimburse the Bank for any reasonable
expenses incurred by the Bank in connection with the termination of this
Agreement, unless such termination is sought by the Company as a result of a
material violation of this Agreement committed by the Bank, in accordance with
paragraph 16.1(a) above.

            16.5 At any time after the termination of this Agreement, the
Company may, upon written request, have reasonable access to the records of the
Bank relating to its performance of its duties as custodian.

         17. Confidentiality. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed without the consent of the other party, except as may be
required by applicable law or at the request of a governmental agency. The
parties further agree that a breach of this provision would irreparably damage
the other party and accordingly agree that each of them is entitled, in addition
to all other remedies at law or in equity, to an injunction or injunctions
without bond or other security to prevent breaches of this provision.

         18. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and delivered via (i)

                                       21
<PAGE>

United States Postal Service registered mail, (ii) telecopier with written
confirmation, (iii) hand delivery with signature to such party at its office at
the address set forth below, namely:

                  (a) In the case of notices sent to the Company to:

                           Martin T. Conroy, TS31
                           Aetna Life Insurance and Annuity Company
                           151 Farmington Avenue
                           Hartford, CT 06156


                  (b) In the case of notices sent to the Bank to:

                           Investors Bank & Trust Company
                           200 Clarendon Street
                           Boston, Massachusetts 02116
                           Attention: [Client Manager]
                           With a copy to:  John E. Henry, General Counsel

                  or at such other place as such party may from time to time
designate in writing.

         19. Amendments. This Agreement may not be altered or amended, except by
an instrument in writing, executed by both parties.

         20. Parties. This Agreement will be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Company
without the written consent of the Bank or by the Bank without the written
consent of the Company, authorized and approved by its Board; and provided
further that termination proceedings pursuant to Section 16 hereof will not be
deemed to be an assignment within the meaning of this provision.

         21. Governing Law. This Agreement and all performance hereunder will be
governed by the laws of the Commonwealth of Massachusetts, without regard to
conflict of laws provisions.

         22. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.

         23. Entire Agreement. This Agreement, together with its Appendices,
constitutes the sole and entire agreement between the parties relating to the
subject matter herein and does not operate as an acceptance of any conflicting
terms or provisions of any other instrument and terminates and supersedes any
and all prior agreements and undertakings between the parties relating to the
subject matter herein.

         24. Limitation of Liability. The Bank agrees that the obligations
assumed by the Company hereunder shall be limited in all cases to the assets of
the Company and that the Bank shall not seek satisfaction of any such obligation
from the officers, agents, employees, trustees, or shareholders of the Company.

                                       22
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.


                                  PORTFOLIO PARTNERS, INC.



                                  By:_________________________________________
                                      Name:
                                      Title:


                                  INVESTORS BANK & TRUST COMPANY



                                  By:_________________________________________
                                      Name:
                                      Title:

                                       23




                        ADMINISTRATIVE SERVICES AGREEMENT


         THIS AGREEMENT is made by and between PORTFOLIO PARTNERS, INC., a
Maryland corporation (the "Company"), on behalf of each of its Series, MFS
Emerging Equities Portfolio, MFS Research Growth Portfolio, MFS Value Equity
Portfolio, Scudder International Growth Portfolio, T.Rowe Price Growth Equity
Portfolio, and AETNA LIFE INSURANCE AND ANNUITY COMPANY, a Connecticut insurance
corporation ("Aetna" or the "Administrator"), with respect to the following
recital of facts:

                                  R E C I T A L

         WHEREAS, the Company is registered as an open-end diversified
management investment company under the Investment Company Act of 1940 (the
"1940 Act"); and

         WHEREAS, the Administrator is registered as an investment adviser under
the Investment Advisers Act of 1940 (the "Advisers Act"), and engages in the
business of acting as an investment adviser and an administrator of investment
companies; and

         WHEREAS, the Company has established the Series; and

         WHEREAS, the Company, on behalf of each of its Series, and the
Administrator desire to enter into an agreement to provide for administrative
services for the Series on the terms and conditions hereinafter set forth;

         NOW THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

I.       APPOINTMENT AND OBLIGATIONS OF THE ADMINISTRATOR

         Aetna is hereby appointed to serve as the Administrator to the Company,
to provide the administrative services described herein and assume the
obligations set forth in Section II, subject to the terms of this Agreement and
the control of the Company's Board of Directors (the "Board"). The Administrator
shall, for all purposes herein, be deemed an independent contractor and shall
have, unless otherwise expressly provided or authorized, no authority to act for
or represent the Company in any way or otherwise be deemed an agent of the
Company or its Series.

II.      DUTIES OF THE ADMINISTRATOR

         In carrying out the terms of this Agreement, the Administrator shall:

         A. provide office space, equipment and facilities (which may belong to
the Administrator or its affiliates) for maintaining the Company's organization,
for meetings of the Company's Board of Directors and shareholders, and for
performing administrative services hereunder;


                                       1
<PAGE>

         B. supervise and manage all aspects of the Company's operations (other
than investment advisory activities), and supervise relations with, and monitor
the performance of, custodians, depositories, transfer and pricing agents,
accountants, attorneys, underwriters, brokers and dealers, insurers and other
persons in any capacity deemed to be necessary and desirable by the Board;

         C. determine and arrange for the publication of the net asset value of
the shares of each Series;

         D. provide non-investment related statistical and research data and
such other reports, evaluations and information as the Series may request from
time to time;

         E. provide internal clerical, accounting and legal services, and
stationery and office supplies;

         F. prepare, amend, and update (with the advice of the Company's
counsel) the Company's Registration Statement on Form N-1A and state Blue Sky
filings, and prepare any necessary proxy statements and all annual and
semi-annual reports to shareholders;

         G. arrange for the printing and mailing (at the expense of the Company
or affected Series) of proxy statements and other reports or other materials
provided to shareholders;

         H. prepare for execution and file each Series' federal and state tax
returns and required tax filings other than those required to be made by the
Series' custodian and transfer agent;

         I. maintain the Company's existence, and during such times as the
shares of the Series are publicly offered, maintain the registration and
qualification of the shares under federal and state law;

         J. keep and maintain the financial accounts and records of the Company;

         K. develop and implement, if appropriate, management or shareholder
services designed to enhance the convenience of investing in the Series;

         L. provide the Board on a regular basis with reports and analyses of
the Series' operations and the operations of comparable investment companies;

         M. respond to inquiries from shareholders or participants of employee
benefit plans (for which the Administrator or any affiliate provides
recordkeeping) relating to the Series, concerning, among other things, exchanges
among Series, refer any such inquiries to the Company's officers or the Series'
transfer agent;

         N. provide recordkeeping services; and


                                      -2-
<PAGE>

         O. provide such information as may be reasonably requested by a
shareholder representative of or a participant in an employee benefit plan to
comply with applicable federal or state laws.

III.     REPRESENTATIONS AND WARRANTIES

         A. REPRESENTATIONS AND WARRANTIES OF THE ADMINISTRATOR

         The Administrator hereby represents and warrants to the Fund as
follows:

         1. Incorporation and Organization. The Administrator is duly organized
and is in good standing under the laws of the State of Connecticut and is fully
authorized to enter into this Agreement and carry out its duties and obligations
hereunder.

         2. Best Efforts. The Administrator at all times shall provide its best
judgment and effort to the Company in carrying out its obligations hereunder.

         B. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

                  The Company, on behalf of each of its Series, hereby
represents and warrants to the Administrator as follows:

         1. Incorporation and Organization. The Company has been duly
incorporated under the laws of the State of Maryland and it is authorized to
enter into this Agreement and carry out its terms.

         2. Registration. The Company is registered as an investment company
with the SEC under the 1940 Act and shares of the Series are registered or
qualified for offer and sale to the public under the Securities Act of 1933 (the
"1933 Act") and all applicable state securities laws. Such registrations or
qualifications will be kept in effect during the term of this Agreement.

IV.      CONTROL BY THE BOARD OF DIRECTORS

         Any activities undertaken by the Administrator pursuant to this
Agreement on behalf of the Company shall at all times be subject to any
directives of the Board.

V.       COMPLIANCE WITH APPLICABLE REQUIREMENTS

         In carrying out its obligations under this Agreement, the Administrator
shall at all times conform to:

         A. all applicable provisions of the 1940 Act;

         B. the provisions of the Company's Registration Statement;

                                      -3-
<PAGE>

         C. the provisions of the Company's Articles of Incorporation;

         D. the provisions of the By-Laws of the Company; and

         E. any other applicable provisions of state or federal law.

VI.      DELEGATION OF RESPONSIBILITIES

         All services to be provided by the Administrator under this Agreement
may be furnished by any directors, officers or employees of the Administrator or
the Administrator may retain the services of any other entity to provide certain
administrative duties under the Administrator's supervision.

VII.     COMPENSATION

         For the services to be rendered, the facilities furnished and the
expenses assumed by the Administrator, the Company, on behalf of each of its
Series, shall pay to the Administrator an annual fee, payable monthly, based
upon the following average daily net assets of each of its Series:

Series                     Rate                      Net Assets
- ------                     ----                      ----------





Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily at the rate of 1/365 of the annual administration
fee applied to the daily net assets of each Series. If this Agreement becomes
effective subsequent to the first day of a month or shall terminate before the
last day of a month, compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above.

VIII.    NON-EXCLUSIVITY

         The services of the Administrator to the Company are not to be deemed
to be exclusive, and the Administrator shall be free to render administrative or
other services to others (including other investment companies) and to engage in
other activities, so long as its services under this Agreement are not impaired
thereby. It is understood and agreed that officers and directors of the
Administrator may serve as officers or directors of the Company, and that
officers or directors of the Company may serve as officers or directors of the
Administrator to the extent permitted by law; and that the officers and
directors of the Administrator are not prohibited from engaging in any other
business activity or from rendering services to any other person, or from
serving as partners, officers, directors or trustees of any other firm or trust,
including other investment companies.

IX.      TERM

         This Agreement shall become effective at the close of business on the
date hereof and shall continue through December 31, 1999. Thereafter it shall
continue for successive annual periods,

                                      -4-
<PAGE>

provided such continuance is specifically approved at least annually by the
Company's directors who are not parties to this Agreement or "interested
persons" as defined in the 1940 Act ("disinterested directors"), or by the vote
of the holders of a "majority" as so defined in Section 2(a)(42) of the 1940 Act
("majority") of the outstanding voting securities of the Series and by a
majority of the disinterested directors.

X.       TERMINATION

         This Agreement may be terminated at any time, without the payment of
any penalty, by vote of the Company's directors or by vote of a majority of the
Series' outstanding voting securities, as defined in Section 2(a)(42) of the
1940 Act, or by the Administrator, on sixty (60) days' written notice to the
other party.

XI.      LIABILITY OF ADMINISTRATOR AND INDEMNIFICATION

         A. LIABILITY

         The Administrator shall be liable to the Company and shall indemnify
the Company for any losses incurred by the Company, whether in the purchase,
holding or sale of any security or otherwise, to the extent that such losses
resulted from an act or omission on the part of the Administrator or its
officers, directors or employees, that is found to involve willful misfeasance,
bad faith or negligence, or reckless disregard by the Administrator of its
duties under this Agreement, in connection with the services rendered by the
Administrator hereunder.

         B. INDEMNIFICATION

         In the absence of willful misfeasance, bad faith, negligence or
reckless disregard of obligations or duties hereunder on the part of the
Administrator or any officer, director or employee of the Administrator, to the
extent permitted by applicable law, the Company hereby agrees to indemnify and
hold the Administrator harmless from and against all claims, actions, suits and
proceedings at law or in equity, whether brought or asserted by a private party
or a governmental agency, instrumentality or entity of any kind, relating to the
sale, purchase, pledge of, advertisement of, or solicitation of sales or
purchases, of any security by or on behalf of the Series, or issued by the
Series, in alleged violation of applicable federal, state or foreign laws, rules
or regulations.

XII.     MATERIALS FOR DISTRIBUTION TO SHAREHOLDERS

         During the term of this Agreement, the Company shall furnish to the
Administrator at its principal office copies of all prospectuses, proxy
statements, reports to shareholders, sales literature and other material
referring to the Administrator that were prepared for distribution to
shareholders of the Company and to participants in employee benefit plans owning
interests in the Series (prior to the public distribution of such materials).
The Company shall not use any such materials that refer to the Administrator if
the Administrator reasonably objects in writing within five business days (or
such other time as the parties may agree) after receipt thereof, unless prior to
such use the material is modified in a manner that is satisfactory to the
Administrator. Subsequent to the termination of this

                                      -5-
<PAGE>

Agreement, the Company will continue to furnish to the Administrator copies of
such materials. The Company shall also furnish or otherwise make available to
the Administrator other information relating to the business affairs of the
Company as the Administrator reasonably requests from time to time.

XIII.    NOTICES

         Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Administrator and that
of the Company for this purpose shall be 151 Farmington Avenue, Hartford,
Connecticut 06156.

XIV.     QUESTIONS OF INTERPRETATION

         This Agreement shall be governed by the laws of the State of
Connecticut. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act shall be resolved by reference to such term or provision of the
1940 Act and to interpretations thereof, if any, by the United States Courts or,
in the absence of any controlling decision of any such court, by rules, releases
or orders of the SEC issued pursuant to said Act. In addition, where the effect
of a requirement of the 1940 Act reflected in the provisions of this Agreement
is revised by rule, release or order of the SEC, such provisions shall be deemed
to incorporate the effect of such rule, release or order.

                                      -6-
<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the         day of
July, 1997.



AETNA LIFE INSURANCE                      PORTFOLIO PARTNERS, INC. on
AND ANNUITY COMPANY                       behalf of its Series,
                                          MFS Emerging  Equities Portfolio
                                          MFS Research Growth Portfolio
                                          MFS Value Equity Portfolio
By _____________________________          Scudder International Growth Portfolio
     Name:                                T. Rowe Price Growth Equity Portfolio
     Title:


Attest:


________________________________
Karen A. Peddle
Assistant Corporate Secretary
Aetna Life Insurance and Annuity Company


                                          By __________________________________
                                               Name:  Martin T. Conroy
                                               Title:


                                          Attest:



                                          _____________________________________
                                          Amy R. Doberman
                                          Secretary


                                      -7-


                                LICENSE AGREEMENT


        Agreement effective as of this     day of         , 1997, between
T. Rowe Price Associates, Inc. (hereinafter called "Price"), a corporation
organized and existing under the laws of the State of Maryland, with a principal
place of business at 100 East Pratt Street, Baltimore, Maryland, and Aetna Life
Insurance and Annuity Company (hereinafter called "Company"), a Connecticut
corporation whose principal offices are located at 151 Farmington Avenue,
Hartford, Connecticut.

        WHEREAS, Price and Company have entered into a Subadvisory Agreement
dated as of               for the purpose of engaging Price to manage the assets
of the T. Rowe Price Growth Equity Portfolio, a series of Portfolio Partners,
Inc. ("Subadvisory Agreement"); and

        WHEREAS, Price is the owner of the registered service mark and tradename
T. Rowe Price and a service mark in a bighorn sheep design a copy of which is
attached hereto as Exhibit "1" (hereinafter, collectively the "Price
Trademarks"); and

        WHEREAS, Company is desirous of using the Price Trademarks in connection
with distribution of prospectuses, sales literature and other promotional
material with information, including the Price Trademarks, printed in said
material (such material hereinafter called the "Promotional Material"); and

        WHEREAS, Price is desirous of having the Price Trademarks used in
connection with the Promotional Material.

NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy thereof is hereby acknowledged,
and of the mutual promises hereinafter set forth, the parties hereby agree as
follows:

        1. Price hereby grants to Company a non-exclusive, non-transferable
license to use the Price Trademarks in connection with the distribution of the
Promotional Material and Company accepts said license, subject to the terms and
conditions set forth herein.

        2. Company acknowledges that Price is the owner of all right, title and
interest in the Price Trademarks and agrees that benefit of the use of the Price
Trademarks inures to Price, that it will do nothing inconsistent with the
ownership of the Price Trademarks by Price, and that it will not, now or
hereafter, contest any registration or application for registration of the Price
Trademarks by Price, nor will it, now or hereafter, aid anyone in contesting any
registration or application for registration of the Price Trademarks by Price.

        3. Company agrees to use the Price Trademarks only in the form and
manner depicted in Exhibit 1 or otherwise approved in writing by Price and not
use any other trademark, service mark or registered trademark in connection with
Promotional Material offered under any of the Price Trademarks without prior
written approval by Price.
<PAGE>

                                      - 2 -

        4. Company agrees that it will place all necessary and proper notices
and legends in order to protect the interests of Price therein pertaining to the
Price Trademarks on the Promotional Material including, but not limited to,
common law trademark symbol; "TM", common law service mark symbol "SM", and
registered mark symbol "(R)". Company will place such symbols and legends on the
Promotional Material as requested by Price upon receipt of notice of same from
Price. Company will include a legend on the Promotional Material stating that
"[t]he mark T. Rowe Price and the Bighorn Sheep logo are owned by T. Rowe Price
Associates, Inc." The legend shall appear on the title verso page, front cover,
back cover or first page of the Promotional Material. The foregoing shall not
apply to the use of the name T. Rowe Price in the prospectus.

        5. Company agrees that its use of the Price Trademarks in any and all
Promotional Material distributed by the Company and or any of its affiliates
shall conform to the standards and guidelines established and communicated by
Price in respect of the use thereof.

        6. Company agrees to cooperate with Price in facilitating Price s
control of the use of the Price Trademarks and of the quality of the Promotional
Material to permit reasonable inspection of samples of same by Price and to
supply Price with reasonable quantities of samples of the Promotional Material
upon request. Price, recognizing the time-sensitivity involved in the
publication of Promotional Material, agrees to use its best efforts to inspect
such Promotional Material in a timely fashion; the inspection period for which
shall not exceed five (5) business days from the receipt thereof.

        7. Company shall comply in all material respects with all applicable
laws and regulations pertaining to the distribution of said Promotional
Material.

        8. Company agrees to notify Price of any unauthorized use of the Price
Trademarks by others promptly in the event the Company obtains actual knowledge
of such unauthorized use. Price shall have the sole right and discretion to
commence actions or other proceedings for infringement, unfair competition or
the like involving the Price Trademarks and Company shall cooperate, at Price s
expense, in any such proceedings if so requested by Price.

        9. This agreement shall continue in force until terminated by Price.
This agreement shall automatically terminate upon termination of the Subadvisory
Agreement. In addition, Price shall have the right to terminate this agreement
without cause at any time upon ninety days written notice to the Company. Within
ninety days after notice of such termination, Company agrees to cease all use of
the Price Trademarks and destroy, at the Company s expense, any and all
materials in its possession bearing the Price Trademarks. Notwithstanding the
foregoing, Price shall also have the right to terminate this agreement for cause
at any time upon written notice to the Company, and in such a case, Company
agrees that as soon as practicable, but in no event more than thirty days after
such termination, Company shall cease all use of the Price Trademarks and
destroy, at the Company expense, any and all materials in its possession bearing
the Price Trademarks. Company agrees that both during the term of this agreement
and upon termination all rights in the Price Trademarks and in the goodwill
connected therewith shall remain the property of Price. Notwithstanding the
foregoing, Company shall have the right to use the name "T. Rowe Price Growth
Equity Portfolio" or any abbreviation thereof and to use the tradename "T. Rowe
Price" in Promotional Material, if required to comply with federal securities
law disclosure requirements.
<PAGE>

                                      -3-

        10. Company shall indemnify Price and hold it harmless from and against
any loss, damage, liability, cost or expense of any nature whatsoever, including
without limitation, reasonable attorneys' fees and all court costs, arising
directly out of use of the Price Trademarks' by Company in a manner inconsistent
with the terms hereof. Price shall indemnify the Company and hold it harmless
from and against any loss, damage, liability, cost or expense of any nature
whatsoever, including without limitation, reasonable attorneys' fees and court
costs, arising directly out of its use of the Price Trademarks; provided,
however, that the Company shall not be entitled to indemnification for losses,
damages, liabilities, costs or expenses resulting from its use of a Price
Trademark in a manner inconsistent with the terms hereof.

        11. In consideration for the promotion and advertising of Price as a
result of the distribution by Company of the Promotional Material, Company shall
not pay any monies as a royalty to Price for this license.

        12. This agreement is not intended in any manner to modify the terms and
conditions of the Subadvisory Agreement. In the event of any conflict between
the terms and conditions herein and thereof, the terms and conditions of the
Subadvisory Agreement shall control.

        13. This agreement shall be interpreted according to the laws of
Maryland.

        IN WITNESS WHEREOF, the parties hereunto set their hands and seals, and
hereby execute this agreement, as of the date first above written.

                                 T. ROWE PRICE ASSOCIATES, INC.


                                 BY: ___________________________________

                                 TITLE: ________________________________

                                 DATE: _________________________________


                                 AETNA LIFE INSURANCE AND ANNUITY COMPANY


                                 BY:  __________________________________

                                 TITLE: ________________________________

                                 DATE: _________________________________



[Aetna Letterhead]                               151 Farmington Avenue
[Aetna Logo]                                     Hartford, CT 06156

                                                 Amy R. Doberman          
                                                 Counsel
                                                 Portfolio Partners Inc.
                                                 (860) 273-1409
                                                 Fax: (860) 273-9407
                                                 
July 31, 1997

U.S. Securities and Exchange Commission
450 Fifth  Street, N.W.
Washington, D.C. 20549

Re: Portfolio Partners, Inc.
    Registration Statement on Form N-1A

Dear Sir:

The undersigned serves as counsel to Portfolio Partners, Inc., a Maryland
corporation (the "Company"). It is my understanding that the Company has
registered an indefinite number of shares of beneficial interest under the
Securities Act of 1933 (the "1933 Act") pursuant to Rule 24f-2 under the
Investment Company Act of 1940 (the "1940 Act").

Insofar as it relates or pertains to the Company, I have reviewed the prospectus
and the Company's Registration Statement on Form N-1A filed with the Securities
and Exchange Commission under the Securities Act and the Investment Company Act,
pursuant to which the Shares will be sold (the "Registration Statement"). I have
also examined originals or copies, certified or otherwise identified to my
satisfaction, of such documents and other instruments I have deemed necessary or
appropriate for the purpose of this opinion. For purposes of such examination, I
have assumed the genuineness of all signatures on original documents and the
conformity to the original of all copies.

I am admitted to practice law in Maryland and the District of Columbia. My
opinion herein as to Maryland law is based upon a limited inquiry thereof that I
have deemed appropriate under the circumstances.

Based upon the foregoing, and assuming the securities are issued and sold in
accordance with the provisions of the Company's Articles of Incorporation and
the Registration Statement, I am of the opinion that the securities will when
sold be legally issued, fully paid and nonassessable.

I consent to the filing of this opinion as an exhibit to the Registration
Statement.

Sincerely,

/s/ Amy R. Doberman

Amy R. Doberman
Counsel




                                    FORM OF
                          CONSENT OF PERSONS ABOUT TO
                                BECOME DIRECTORS




In accordance with Rule 438 under the Securities Act of 1933, the undersigned
hereby consent to being referenced in the Registration Statement on Form N-1A
for Portfolio Partners, Inc. as persons about to become directors of Portfolio
Partners, Inc.




/s/ Peter C. Aldrich               7/25/97
- -------------------------------------------
    Peter C. Aldrich                Date

/s/ Edward Lowenthal               7/25/97
- -------------------------------------------
    Edward Lowenthal                Date

/s/ Daniel P. Kearney              7/25/97
- -------------------------------------------
    Daniel P. Kearney               Date




[Aetna Letterhead]                            151 Farmington Avenue
[Aetna Logo]                                  Hartford, CT 06156

                                              Shaun P. Mathews 
                                              Vice President
                                              Aetna Life Insurance and Annuity
                                                Company, TN41
                                              (860) 273-4908
                                              Fax: (860) 273-4247

Board of Directors
Portfolio Partners, Inc.
151 Farmington Avenue 
Hartford, CT 06156    

Ladies and Gentlemen:

Aetna Life Insurance and Annuity Company ("Aetna") will provide on or before
August 21, 1997 a minimum of $20,000 of initial capital to each of the various
series ("Portfolios") of Portfolio Partners, Inc. (the "Fund").

Form N-1A under the Securities Act of 1933 and the Investment Company Act of
1940 requires that there be filed with the Fund's registration statement, as an
exhibit, "copies of any agreements or understandings made in consideration for
providing the initial capital between or among the Registrant, the underwriter,
adviser, promoter or initial stockholders and written assurances from promoters
or initial stockholders that their purchases were made for investment purposes
without any present intention of redeeming or reselling;..."

This will advise you that, while there are no formal agreements or
understandings between the Fund and Aetna in consideration for Aetna's providing
the initial capital, Aetna hereby assures you that its purchase of $20,000 worth
of shares of each of the Portfolios was made for investment purposes and that
Aetna has no present intention of redeeming or reselling those shares. Aetna
does, however, reserve the right to make additional investments in shares of
each of the Portfolios and to redeem any or all of its shares in a manner which
would be consistent with the Securities Act of 1933 and the Investment Company
Act of 1940.

Sincerely,

Shaun P. Mathews
Vice President
Aetna Life Insurance and Annuity Company




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